Bay Area Air Quality Management District
Title V Operating Permit Program Evaluation
Final Report
January 11, 2024
Conducted by the
U.S. Environmental Protection Agency
Region 9
75 Hawthorne Street
San Francisco, California 94105
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Table of Contents
Acknowledgments
7
Glossary of Acronyms and Abbreviations
8
Executive Summary
9
1.
Introduction
13
Background
13
Title V Program Evaluation at the Bay Area Air Quality Management District
14
Description of the BAAQMD
15
The EPA's Findings and Recommendations
18
2.
Permit Preparation and Content
19
2.1 Finding: The District's title V permits generally incorporate all applicable requirements.
However, requirements that are only listed in Table IV (Source-Specific Applicable Requirements) of
the title V permit and not in permit conditions may not be enforceable as a practical matter.19
2.2 Finding: Certain BAAQMD title V permits contain permit shield language that may unnecessarily
limit the District's and EPA's authority to initiate an enforcement action for a source that violates an
applicable requirement 20
2.3 Finding: The BAAQMD has an internal quality assurance process for reviewing draft versions of
permits, which minimizes opportunities for errors before the documents are made available for review
by the public and the EPA 20
2.4 Finding: The BAAQMD has improved its statements of basis over time, and generally produces
detailed statements of basis in accordance with EPA guidance 21
2.5 Finding: The BAAQMD uses template permit documents and has several guidance documents
for reference, which promotes consistency in its permits 22
2.6 Finding: The District's statements of basis do not consistently include an analysis of potential
environmental justice issues, which could be used to inform outreach efforts 23
2.7 Finding: While the BAAQMD generally references the underlying origin and authority for permit
conditions, the references to the underlying origin often lack specificity 24
2.8 Finding: The BAAQMD generally processes title V permit renewal applications in a consistent
and proper manner similar to its initial title V permit applications 25
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2.9 Finding: Most title V permit conditions with District rule requirements are appropriately marked
as not federally enforceable. Additionally, most conditions appropriately reference the current SIP
rules most recently approved by EPA 25
2.10 Finding: While District staff and management are generally satisfied with the District's title V
permit format, the District has made no decisions on template changes that were under discussion
during our 2009 Evaluation 26
2.11 Finding: The District routinely performs single stationary source determinations for CAA
permitting purposes and documents these decisions in the statement of basis, a necessary practice in
determining the applicable requirements 27
2.12 Finding: The District has improved its streamlining practices in the rare scenarios where
streamlining occurs 28
3. Monitoring 29
3.1 Finding: The BAAQMD usually includes a detailed CAM analysis in their statements of basis that
clearly documents the BAAQMD's determination and explains the applicable monitoring
requirements 29
3.2 Finding: The BAAQMD's title V permit conditions generally contain monitoring that is sufficient
to determine compliance with emissions limits, as required by the Part 70 regulations, except for
volatile organic compound (VOC)-emitting equipment and certain aspects of the enforceability of
monitoring requirements 30
3.3 Finding: Emissions limitations used to avoid requirements like major NSR ortitle V are generally
enforceable 31
4. Public Participation and Affected State Review 33
4.1 Finding: The District is generally transitioning toward a more proactive community engagement
approach but has not incorporated this approach into its title V program 33
4.2 Finding: The BAAQMD maintains a detailed public website and uses e-noticing methods to meet
the public noticing requirements of title V 35
4.3 Finding: The District provides appropriate notification regarding the public's right to petition
the EPA Administrator to object to a title V permit but could improve the information provided to the
public by including links to the EPA's title V permit dashboard in all public notices 36
4.4 Finding: The District's practices around concurrent public and EPA review of title V permits are
implemented consistent with current EPA regulations and guidance. However, the District has not
adopted the recently amended language from 40 CFR 70.8(a)(1) into its title V program rules.36
4.5 Finding: The BAAQMD implements a business assistance program (BAP) to provide assistance
to small business owners 38
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4.6 Finding: We did not find evidence that the BAAQMD notified nearby tribes of title V permitting
actions 38
4.7 Finding: While the District rarely receives comments on title V actions, when comments are
received, the response to comments documents ("RTC") clearly address all issues raised by
commenters and explain if and why changes were or were not made 39
5. Permit Issuance / Revision / Renewal 41
5.1 Finding: The District does not process title V actions in a timely manner, impeding the public's
right to enforce all applicable requirements 41
5.2 Finding: Though not always timely, the BAAQMD generally processes title V permit actions in
accordance with the District's EPA-approved title V program and the federal part 70 regulations.
42
5.3 Finding: The District does not consistently evaluate the potential emissions from sources
without title V permits to determine if they are major sources, which could result in sources improperly
avoiding title V, major NSR, and other requirements 43
5.4 Finding: The District provides the EPA and the public with an opportunity to review and
comment on proposed initial synthetic minor permits but does not do so for proposed revisions to
synthetic minor operating permits 44
6. Compliance 45
6.1 Finding: The District's Compliance and Enforcement Division reviews nearly all title V deviation
reports, annual compliance certifications, and semiannual monitoring reports submitted by Part 70
sources and uses the deviation reports to identify compliance issues 45
6.2 Finding: The District's Compliance and Enforcement Division is involved in title V permit review
for initial and renewal actions prior to public notice, which may improve the enforceability of the
District's permits 45
6.3 Finding: The District incorporates compliance schedules in permits when required, while the
practice to generally resolve compliance issues before permit issuance minimizes the need to include
them. 46
6.4 Finding: Compliance and Enforcement Division staff have the necessary equipment to perform
their job duties 47
7. Resources and Internal Management 48
7.1 Finding: Engineering and Compliance and Enforcement Division staff generally report that they
receive effective legal support from the District Counsel's office but would like more information on
the resolution of enforcement cases 48
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7.2 Finding: While the District tracks title V program expenses and revenue and those funds are
spent solely to support the title V program, it is unclear whether these fees are sufficient to fully
administer a successful program given the large permitting backlog and resource issues 49
7.3 Finding: Communication between the Engineering Division and Compliance and Enforcement
Division is inconsistent, which may impede the resolution of complex compliance issues at facilities.
50
7.4 Finding: While the BAAQMD uses the EPA, the California Air Resources Board (CARB), and in-
house courses to train permit staff, BAAQMD staff may benefit from additional training 51
7.5 Finding: The BAAQMD's Engineering Division staff reported that supervisors are regularly
available for one-on-one consultation, providing an opportunity for staff to discuss permitting issues.
52
7.6 Finding: The District's Engineering Division faces staffing challenges, resulting in several issues
including a permitting backlog of over 150 overdue open applications 52
7.7 Finding: The BAAQMD Engineering Division is generally grouped by industry sector, which helps
the Engineering Division staff become experts on sector-specific issues 52
8. Records Management 54
8.1 Finding: The District's permit record typically includes sufficient information used to inform
permitting decisions 54
8.2 Finding: The District has a written file retention policy. However, most staff interviewed were
not aware of the District's record retention schedules 55
8.3 Finding: The BAAQMD tracks title V permit data in a remotely hosted legacy system that is being
phased out, negatively affecting permit data retrievability and representing a risk to retention of
permitting data 55
Appendix A. Air Pollution Control Agencies in California 57
Appendix B. Title V Questionnaire and the BAAQMD Responses 58
Appendix C. BAAQMD Title V Permitting Policies 59
Appendix D. U.S. EPA Statement of Basis Guidance 60
Appendix E. Map of Linguistically Isolated Households in the BAAQMD 61
Appendix F. BAAQMD Title V Permit Application Report, February 3, 2023 62
Appendix G. BAAQMD Enforcement Referral Form 63
Appendix H. BAAQMD Fee Information 64
Appendix I. Fee Guidances 65
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Appendix J. BAAQMD Record Retention Schedule 66
Appendix K. BAAQMD Comments on Draft Report 67
Appendix L. EPA's Response to Comments 68
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Acknowledgments
The EPA Region 9 acknowledges the cooperation of the staff and management of the Bay Area Air
Quality Management District (BAAQMD). We appreciate their willingness to respond to information
requests and share their experiences regarding the implementation of the BAAQMD's title V program
under the Clean Air Act.
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Glossary of Acronyms and Abbreviations
AB
Assembly Bill
Act
Clean Air Act [42 USC Section 7401 et seq.]
ATC
Authority to Construct
BAAQMD
Bay Area Air Quality Management District
BACT
Best Available Control Technology
BAP
Business Assistance Program
CAA
Clean Air Act [42 USC Section 7401 et seq.]
CAM
Compliance Assurance Monitoring
CARB
California Air Resources Board
CFR
Code of Federal Regulations
District
Bay Area Air Quality Management District
EPA
U.S. Environmental Protection Agency
EPS
Electronic Permit System
FR
Federal Register
HAP
hazardous air pollutants
NESHAP
National Emission Standards for Hazardous Air Pollutants, 40 CFR Parts 61 & 63
NOV
Notice of Violation
NSPS
New Source Performance Standards, 40 CFR Part 60
NSR
New Source Review
OIG
EPA Office of Inspector General
PSD
Prevention of Significant Deterioration
PTE
Potential to Emit
PTO
Permit to Operate
RACT
Reasonably Achievable Control Technology
Region
U.S. Environmental Protection Agency Region 9
RTC
Response to Comments document
SIC
Standard Industrial Classification
SIP
State Implementation Plan
Team
EPA Region 9 Program Evaluation Team
We
U.S. Environmental Protection Agency
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Executive Summary
In response to the recommendations of a 2002 Office of Inspector General (OIG) audit, the U.S.
Environmental Protection Agency (EPA or "we") re-examined the ways that we could improve state
and local operating permit programs under title V of the Clean Air Act ("title V programs") and expedite
permit issuance. Specifically, the EPA developed an action plan for performing program evaluations of
title V programs for each air pollution control agency beginning in fiscal year 2003. The purpose of
these program evaluations is to identify good practices, document areas needing improvement, and
learn how the EPA can help the permitting agencies improve their performance.
The EPA's Region 9 (the "Region") oversees 47 air permitting authorities with title V programs in the
Pacific Southwest. Of these, 43 are state or local authorities approved pursuant to title 40 of the Code
of Federal Regulations (CFR) part 70 (35 in California, three in Nevada, four in Arizona, and one in
Hawaii), referred to as "Part 70" programs. The terms "title V" and "Part 70" are used interchangeably
in this report. The Region also oversees a delegated title V permitting program in Navajo Nation under
40 CFR part 71 and title V programs in Guam, American Samoa, and the Commonwealth of the
Northern Mariana Islands under 40 CFR part 69, referred to, respectively, as "Part 71" and "Part 69"
programs. Because of the significant number of permitting authorities, the Region has committed to
performing, on an annual basis, one comprehensive title V program evaluation of a permitting
authority with 20 or more title V sources. This approach covers at least 85% of the title V sources
within the Region 9 jurisdiction.
The Region initially conducted a title V program evaluation of the Bay Area Air Quality Management
District (BAAQMD or "District") in 2009 ("2009 Evaluation").1 This is the second title V program
evaluation the EPA has conducted for the BAAQMD. The EPA Region 9 program evaluation team
("Team") for this evaluation consisted of the following EPA personnel: Meredith Bauer, Air and
Radiation Division Assistant Director; Gerardo Rios, Manager of the Air Permits Section; Anna Mebust,
Acting Manager of the Air Permits Section; Noah Smith, Attorney Advisor; Ken Israels, Program
Evaluation Advisor; Amber Batchelder, Program Evaluation Coordinator; Manny Aquitania, BAAQMD
Oversight Team; Shaheerah Kelly, BAAQMD Oversight Team; Lisa Beckham, Program Evaluation Team
Member; Tina Su, Program Evaluation Team Member; Po-Chieh Ting, Program Evaluation Team
Member; Nidia Trejo, Program Evaluation Team Member; and Catherine Valladolid, Program
Evaluation Team Member.
The program evaluation was conducted in four stages. During the first stage, the Region sent the
BAAQMD a questionnaire focusing on title V program implementation in preparation for the interviews
(see Appendix B). During the second stage, the Team conducted an internal review of requested
BAAQMD permit files. The third stage of the program evaluation was a hybrid site visit, which consisted
of Region 9 representatives visiting the BAAQMD offices in San Francisco and Richmond, California to
conduct interviews of the BAAQMD staff and managers. Because this was a hybrid site visit, some of
the interviews were conducted virtually through video conferencing while others were conducted in-
1 Bay Area Air Quality Management District; Title V Operating Permit Program Evaluation, dated September 29, 2009. See
https://www.epa.gov/sites/default/files/2015-07/documents/bavarea-final-report9-29-09.pdf.
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person. The site visit took place February 27 - March 2, 2023. Finally, the fourth stage involved follow-
up and clarification of issues for completion of the draft report. We recognize that the District has
experienced several changes in the last few years: leadership changes, working through a pandemic,
and several retirements of seasoned staff. The Region's 2023 evaluation of the BAAQMD's
implementation of the Part 70 program concludes that the BAAQMD's title V program issues permits
that are generally consistent with the Part 70 program, but the program is under-resourced, and
permits are not issued in a timely manner.
Overall, the District's title V permits generally contain sufficient monitoring, recordkeeping, and
reporting requirements to determine compliance with emissions limits. Permit engineers understand
the importance of documenting their decisions in the support document that explains the legal and
factual basis for permit conditions (referred to as the "statement of basis"). Also, the District's
Compliance and Enforcement Division staff generally review all title V deviation, annual, and
semiannual reports submitted by Part 70 sources. However, the District lacks sufficient resources to
implement an effective program. We are concerned the District's approach to administering the
program could impede the public's right to enforce the applicable requirements that should be
incorporated into the title V permit.
The major critical findings from our report are listed below in priority order. Higher priority findings
generally fall into one or more of the following categories: (1) may have a greater impact on the public;
(2) are over-arching programmatic issues; and/or (3) were also identified during the 2009 Evaluation.
1. The District does not process title V actions in a timely manner, impeding the public's right to
enforce all applicable requirements. (Finding 5.1)
2. The District's Engineering Division faces staffing challenges, resulting in several issues including
a permitting backlog of over 150 overdue open applications. (Finding 7.6)
3. The District's title V permits generally incorporate all applicable requirements. However,
requirements that are only listed in Table IV (Source-Specific Applicable Requirements) of the
title V permit and not in permit conditions may not be enforceable as a practical matter.
(Finding 2.1)
4. Certain BAAQMD title V permits contain permit shield language that may unnecessarily limit
the District's and EPA's authority to initiate an enforcement action for a source that violates an
applicable requirement. (Finding 2.2)
5. The District does not consistently evaluate the potential emissions from sources without title V
permits to determine if they are major sources, which could result in sources improperly
avoiding title V, major NSR, and other requirements. (Finding 5.3)
6. While the District tracks title V program expenses and revenue and those funds are spent solely
to support the title V program, it is unclear whether these fees are sufficient to fully administer
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a successful program given the large permitting backlog and resource issues. (Finding 7.2)
7. The District is generally transitioning toward a more proactive community engagement
approach but has not incorporated this approach into its title V program. (Finding 4.1)
8. The BAAQMD tracks title V permit data in a remotely hosted legacy system that is being phased
out, negatively affecting permit data retrievability and representing a risk to retention of
permitting data. (Finding 8.3)
9. Communication between the Engineering Division and Compliance and Enforcement Division is
inconsistent, which may impede the resolution of complex compliance issues at facilities.
(Finding 7.3)
Some of our findings that reflect the District's strengths include:
1. The BAAQMD has improved its statements of basis over time, and generally produces detailed
statements of basis in accordance with EPA guidance. (Finding 2.4)
2. The BAAQMD usually includes a detailed CAM analysis in their statements of basis that clearly
documents the BAAQMD's determination and explains the applicable monitoring requirements.
(Finding 3.1)
3. The District's permit record typically includes sufficient information used to inform permitting
decisions. (Finding 8.1)
4. The BAAQMD maintains a detailed public website and uses e-noticing methods to meet the
public noticing requirements of title V. (Finding 4.2)
5. The District's Compliance and Enforcement Division reviews nearly all title V deviation reports,
annual compliance certifications, and semiannual monitoring reports submitted by Part 70
sources and uses the deviation reports to identify compliance issues. (Finding 6.1)
Our report provides a full set of findings (including those listed above), and each finding includes
recommendations that should be considered in addressing the findings. As part of the program
evaluation process, the BAAQMD has been given an opportunity to review these findings and consider
our recommendations.
As part of the program evaluation process, the BAAQMD had an opportunity to review these findings
and consider our recommendations on August 28, 2023, when we emailed an electronic copy of the
draft report to the BAAQMD for comment. We received the BAAQMD's response and comments on
October 13, 2023 (see Appendix K). Based on the comments received from the BAAQMD, the EPA
made certain changes in the final report. A copy of the Response to Comments and discussion of
changes can be found in Appendix L.
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In addition, our evaluation considered whether issues found during our 2009 Evaluation have since
been addressed. For example, as discussed in Findings 2.9, 2.11, 2.12, and 3.1, the District has
improved its practice of documenting support facility tests, compliance assurance monitoring (CAM)
requirements, and streamlining (when applicable) in statements of basis. Additionally, the District's
permits clearly document which conditions are federally enforceable. However, as discussed in
Findings 2.2, 5.1, and 5.4, the District has not fully addressed issues related to restrictive language in
permit shields, consistently processing title V actions in a timely manner, and consistently providing
the public and the EPA an opportunity to review and comment on synthetic minor permit actions.
We recommend the District review its procedures to identify specific process delays and resource
needs within the District's title V program. To better communicate our recommendations and work
together on the recommended improvements, we request an initial kick-off meeting within 90 days of
the BAAQMD's receipt of the final report to discuss developing a workplan. A workplan typically
includes specific goals and milestones that can be used to demonstrate progress. We commit to meet
with the BAAQMD regularly to discuss progress until both the BAAQMD and the EPA mutually agree
the workplan items are sufficiently complete. The EPA intends to use the workplan and follow-up
meetings to assess whether the District is taking actions to ensure adequate administration of the title
V program.
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1. Introduction
Background
In 2000, the EPA's Office of Inspector General (OIG) initiated an evaluation on the progress that the
EPA and state and local agencies were making in issuing title V permits under the Clean Air Act (CAA or
the "Act"). The purpose of OIG's evaluation was to identify factors delaying the issuance of title V
permits by selected state and local agencies and to identify practices contributing to timely issuance of
permits by those same agencies.
After reviewing several selected state and local air pollution control agencies, the OIG issued a report
on the progress of title V permit issuance by the EPA and states.2 In the report, the OIG concluded that
(1) a lack of resources, complex EPA regulations, and conflicting priorities contributed to permit delays;
(2) EPA oversight and technical assistance had little impact on issuing title V permits; and (3) state
agency management support for the title V program, state agency and industry partnering, and permit
engineer site visits to facilities contributed to the progress that agencies made in issuing title V
operating permits.
The OIG's report provided several recommendations for the EPA to improve title V programs and
increase the issuance of title V permits. In response to the OIG's recommendations, the EPA made a
commitment in July 2002 to carry out comprehensive title V program evaluations nationwide. The
goals of these evaluations are to identify where the EPA's oversight role can be improved, where air
pollution control agencies are taking unique approaches that may benefit other agencies, and where
local programs need improvement. The EPA's effort to perform title V program evaluations for each air
pollution control agency began in fiscal year 2003.
On October 20, 2014, the OIG issued a report, "Enhanced EPA Oversight Needed to Address Risks From
Declining Clean Air Act Title V Revenues," that recommended, in part, that the EPA: establish a fee
oversight strategy to ensure consistent and timely actions to identify and address violations of title 40
of the Code of Federal Regulations (CFR) part 70; emphasize and require periodic reviews of title V fee
revenue and accounting practices in title V program evaluations; and pursue corrective actions, as
necessary.3
The Region oversees 47 air permitting authorities with title V programs in the Pacific Southwest. Of
these, 43 are state or local authorities approved pursuant to 40 CFR part 70 (35 in California, three in
Nevada, four in Arizona, and one in Hawaii), referred to as "Part 70" programs. The terms "title V' and
"Part 70" are used interchangeably in this report. The Region also oversees a delegated title V
permitting program in Navajo Nation under 40 CFR part 71 and title V programs in Guam, American
2 Report No. 2002-P-00008, Office of Inspector General Evaluation Report, "EPA and State Progress In Issuing title V
Permits", dated March 29, 2002. See https://www.epa.gov/sites/production/files/2015-12/documents/titlev.pdf.
3 Report No. 15-P-0006, Office of Inspector General Evaluation Report, "Enhanced EPA Oversight Needed to Address Risks
From Declining Clean Air Act Title V Revenues", dated October 20, 2014. See
https://www.epa.gov/sites/production/files/2015-09/documents/20141020-15-p-00Q6.pdf.
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Samoa, and the Commonwealth of the Northern Mariana Islands under 40 CFR part 69, referred to,
respectively, as "Part 71" and "Part 69" programs. Because of the significant number of permitting
authorities, the Region has committed to performing, on an annual basis, one comprehensive title V
program evaluation of a permitting authority with 20 or more title V sources. This approach covers at
least 85% of the title V sources within the Region 9 jurisdiction.
Title V Program Evaluation at the Bay Area Air Quality Management District
This is the second title V program evaluation the EPA has conducted for the BAAQMD. The first title V
program evaluation was conducted in 2009. Thus, this evaluation is a follow-up to the BAAQMD's 2009
Evaluation. The EPA Region 9 program evaluation team ("Team") for this evaluation consisted of the
following EPA personnel: Meredith Bauer, Air and Radiation Division Assistant Director; Gerardo Rios,
Manager of the Air Permits Section; Anna Mebust, Acting Manager of the Air Permits Section; Noah
Smith, Attorney Advisor; Ken Israels, Program Evaluation Advisor; Amber Batchelder, Program
Evaluation Coordinator; Manny Aquitania, BAAQMD Oversight Team; Shaheerah Kelly, BAAQMD
Oversight Team; Lisa Beckham, Program Evaluation Team Member; Tina Su, Program Evaluation Team
Member; Po-Chieh Ting, Program Evaluation Team Member; Nidia Trejo, Program Evaluation Team
Member; and Catherine Valladolid, Program Evaluation Team Member.
The objectives of the evaluation were to assess how the BAAQMD implements its title V permitting
program, evaluate the overall effectiveness of the BAAQMD's title V program, identify areas of the
BAAQMD's title V program that need improvement, identify areas where the EPA's oversight role can
be improved, and highlight the unique and innovative aspects of the BAAQMD's program that may be
beneficial to transfer to other permitting authorities. The program evaluation was conducted in four
stages. In the first stage, the EPA sent the BAAQMD a questionnaire focusing on title V program
implementation in preparation for the interviews (see Appendix B.) The Title V Questionnaire was
developed by the EPA nationally and covers the following program areas: (1) Title V Permit Preparation
and Content; (2) General Permits; (3) Monitoring; (4) Public Participation and Affected State Review;
(5) Permit Issuance/Revision/Renewal Processes; (6) Compliance; (7) Resources & Internal
Management Support; and (8) Title V Benefits.
During the second stage of the program evaluation, the Region conducted an internal review of
requested BAAQMD title V permit files. The BAAQMD submits title V permits to the Region in
accordance with its EPA-approved title V program and the Part 70 regulations.
The third stage of the program evaluation was a hybrid site visit, which consisted of Region 9
representatives visiting the BAAQMD offices in San Francisco and Richmond, California to conduct
interviews of the BAAQMD staff and managers in person. Because this was a hybrid site visit, some of
the interviews were conducted virtually through video conferencing while others were conducted in-
person. The purpose of the interviews was to confirm the responses in the completed questionnaire
and to ask clarifying questions. The site visit took place February 27 - March 2, 2023.
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The fourth stage of the program evaluation was follow-up and clarification of issues for completion of
the draft report. The Region compiled and summarized interview notes and asked follow-up questions
to clarify the Region's understanding of various aspects of the BAAQMD's title V program.
Description of the BAAQMD
The BAAQMD's mission is to "protect and improve public health, air quality, and the global climate."
The BAAQMD is currently organized into ten departments: (1) Administration, (2) Communications, (3)
Community Engagement, (4) Compliance and Enforcement, (5) Engineering, (6) Information Services,
(7) Legal, (8) Planning and Research, (9) Strategic Incentives, and (10) Technical Services.4 The
BAAQMD is further organized into several divisions. Stationary source operating permits, including title
V permits, are issued by the Engineering Division. Compliance and enforcement activities, such as
facility inspections and preparing enforcement cases are handled by the Compliance and Enforcement
Division. Source testing is conducted by the Meteorology and Measurements Division. The BAAQMD's
headquarters office is located in San Francisco, California.
The first meeting of the Air District's Board of Directors, comprised of local officials, occurred in
November of 1955.5 Currently, the Air District's Board of Directors is made up of 24 locally elected
representatives from nine Bay Area counties. Each county's population determines the number of
representatives on the Board, as follows:
• Marin and Napa: 1 representative each,
• Solano and Sonoma: 2 representatives each,
• San Francisco and San Mateo: 3 representatives each,
• Alameda, Contra Costa, and Santa Clara: 4 representatives each.6
The BAAQMD recently had several experienced staff retire and selected a new Air Pollution Control
Officer.
The EPA granted the BAAQMD's title V program interim approval effective July 24,1995 (see 60
Federal Register (FR) 32603 and 60 FR 32606, July 23,1995), and full approval effective November 30,
2001 (see 66 FR 63503, December 7, 2001). The EPA also later granted approval of program revisions
that were effective on January 1, 2004.7 In 2013 and 2017, the District submitted additional updates to
its title V program, for EPA approval, that the EPA is currently processing.
The Part 70 program generally requires that a permitting authority take final action within 18 months
after receipt of a complete permit application. Additionally, a permitting authority must take action on
an application for a minor modification within 90 days of receipt of a complete application (or 15 days
after the EPA's 45-day review period, whichever is later) and the permitting authority has 60 days to
4 See https://www.baaqmd.gov/about-the-air-district/departments.
5 See https://www.baaqmd.gov/about-the-air-district/history-of-air-district.
6 See https://www.baaqmd.gov/about-the-air-district/board-of-directors.
7 See Appendix A, 40 CFR part 70, and 68 FR 65637 (November 21, 2003).
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act on requests for administrative permit amendments.8 The BAAQMD's local rules regarding title V
permit issuance contain the same or more stringent timeframes as the Part 70 program.9
According to the District's response to our questionnaire, there are 82 title V sources in the BAAQMD
jurisdiction. Unlike our 2009 Evaluation where we found that the District generally has sufficient
permitting resources, the District does not currently have sufficient permitting resources and is unable
to process title V permit applications within the timeframes required by regulation, resulting in a title V
permit application backlog.10
BAAQMD's Approach to the Title V Program
Consistent with the other permitting authorities in California, when the EPA approved the BAAQMD's
title V operating permit program, the District had already been implementing an operating permit
program locally for many years. As a result, the title V program was implemented as an overlay to the
District's local permitting program. Each Authority to Construct (ATC) permit is issued prior to the
construction of the emissions unit(s) and typically contains conditions required for the construction
and initial operation. The ATC permit is then converted to a Permit to Operate (PTO) after construction
is completed and before operation of the emissions unit has commenced. During the conversion from
ATC to PTO, certain ATC permit conditions are not retained in the PTO if the ATC conditions are
determined to be obsolete or irrelevant because they were construction related. Furthermore,
because these operating permits are linked to fee payment and renewed annually, new permit
conditions can be added or revised each year as applicable. However, these local PTOs do not meet all
the requirements for an operating permit required by title V of the CAA.
The BAAQMD's title V permits generally include all the applicable requirements from District rules and
federal requirements. The permits also include title V program-specific conditions such as semi-annual
monitoring, annual compliance certifications, deviation reporting, and additional monitoring to assure
compliance. For New Source Review (NSR) purposes (i.e. preconstruction permitting), the District
generally issues an ATC, which is converted to a PTO after construction, so title V sources typically have
two sets of operating permits (PTO and title V permit) with overlapping requirements.
When a permit modification is needed, the applicant generally submits both an ATC application and a
title V application. The District has a policy titled Simultaneous Drafting of NSR Permit Evaluation and
Title V Statement of Basis for minor permit modifications, which requires the permit engineer to
include the title V statement of basis with the NSR permit evaluation. The NSR permit is usually issued
first and the title V modification permit is generally incorporated into a subsequent title V permit
action (e.g., renewal or another title V permit revision) (see Appendix C). The District has a procedure
titled Grouping Title V Revision Applications for Combined Issuance on an Annual Basis. The procedure
requires permit engineers to combine all outstanding title V revision applications for an individual
source into one permit action. This process is triggered on September 1st of each year and the
combined title V permit revision must be issued within 6 months (see Appendix C).
8 See 40 CFR 70.7(a)(2) and 70.7(e)(2)(iv).
9 See the BAAQMD Regulation 2 Rule 6.
10 See Finding 5.1 of this report for more discussion on the District's title V backlog.
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During our site visit, we learned that the BAAQMD has experienced many changes in the last few years,
including leadership changes, working through a pandemic, and several retirements of seasoned staff.
We acknowledge that the BAAQMD has experienced and is still experiencing many changes; we are
conducting our evaluation based on what we learned, and we hope to assist the District in its title V
program implementation going forward.
Sections 2 through 8 of this report contain the EPA's findings regarding implementation of the title V
permit program by the BAAQMD.
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The EPA's Findings and Recommendations
The following sections include a brief introduction, and a series of findings, discussions, and
recommendations. The findings are grouped in the order of the program areas as they appear in the
Title V Questionnaire.
The findings and recommendations in this report are based on the District's responses to the Title V
Questionnaire, the EPA's internal file reviews, interviews conducted during the February 27 - March 2,
2023 site visit,11 and follow-up emails subsequent to the site visit.
11 Due to scheduling conflicts, the EPA rescheduled one interview after the site visit on March 3, 2023.
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2.
Permit Preparation and Content
The purpose of this section is to evaluate the permitting authority's procedures for preparing title V
permits. Part 70 outlines the necessary elements of a title V permit application under 40 CFR 70.5, and
it specifies the requirements that must be included in each title V permit under 40 CFR 70.6. Title V
permits must address all applicable requirements, as well as necessary testing, monitoring,
recordkeeping, and reporting requirements sufficient to assure compliance with the terms and
conditions of the permit.
2.1 Finding: The District's title V permits generally incorporate all applicable requirements.
However, requirements that are only listed in Table IV (Source-Specific Applicable
Requirements) of the title V permit and not in permit conditions may not be enforceable as a
practical matter.
Discussion: A primary objective of the title V program is to provide each major source with a
single permit that describes how a source ensures compliance with all applicable CAA
requirements. To accomplish this objective, permitting authorities must incorporate applicable
requirements in sufficient detail such that the public, facility owners and operators, and
regulating agencies can clearly understand which requirements apply to the source. These
requirements include emissions limits, operating limits, work practice standards, and
monitoring, recordkeeping, and reporting provisions that must be enforceable as a practical
matter.
During our file review, we found that the BAAQMD's title V permits do not consistently
incorporate all applicable requirements in a manner that is clear and enforceable. The
BAAQMD's title V permits list applicable requirements in Section IV (Source-Specific Applicable
Requirements) by tabulating applicable SIP-approved rules, federal regulations, and NSR permit
conditions in Table IV with a short title or description of each requirement. However, some
applicable requirements are not included in Section VI (Permit Conditions) of the title V
permits, which can create confusion about what requirements the source must comply with.
For example, during our file review we found that some permits identify 40 CFR part 63,
subpart ZZZZ as an applicable requirement in Table IV. However, the maintenance
requirements from that subpart (e.g., 40 CFR 63.6603(a)) are not expressly included in Section
VI. EPA's "White Paper Number 2 for Improved Implementation of The Part 70 Operating
Permit Program" provides guidance for including a sufficient level of detail when using
citations, cross references, and incorporations by reference.12
During our interviews, we also found that District staff were concerned about whether some
facilities had followed their schedule of compliance, which is incorporated into Section V
12 See https://www.epa.gov/title-v-operating-permits/white-paper-number-2-improved-implementation-part-70-operating-
permits.
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(Schedule of Compliance) of a BAAQMD title V permit but generally not into any source-specific
applicable requirement in Section IV or any permit condition in Section VI of a title V permit.
Recommendation: The BAAQMD should continue identifying all applicable requirements in its
title V permits; however, the District must incorporate these requirements and approved
schedules of compliance in a clearly enforceable manner.
2.2 Finding: Certain BAAQMD title V permits contain permit shield language that may unnecessarily
limit the District's and EPA's authority to initiate an enforcement action for a source that
violates an applicable requirement.
Discussion: The majority of permits we reviewed did not include a permit shield. Some permits
included a permit shield that explains the shield regarding non-applicable requirements and the
subsumed applicable requirements. Overall, those sections of the permit properly discussed the
bases of the non-applicable requirements and what specific permit conditions would ensure
compliance with the subsumed applicable requirements. However, similar to our 2009
Evaluation,13 we found some of the permit shield language could unnecessarily limit the
District's and EPA's authority to initiate an enforcement action. For example, we found the
following language in the non-applicable requirements section of a permit: "...Enforcement
actions and litigation may not be initiated against the source or group of sources covered by this
shield based on the regulatory and/or statutory provisions cited, as long as the reasons listed
below remain valid for the source or group of sources covered by this shield", and in the
subsumed requirement section: "...Enforcement actions and litigation may not be initiated
against the source or group of sources covered by this shield based on the subsumed monitoring
requirements cited". Such language regarding enforcement actions is not appropriate, because
an enforcement action can still be taken if there are reasons not explicitly stated in the permit
that the shield should be invalidated.
Recommendation: To ensure the permit shield will not unnecessarily limit the authority of the
District, EPA, and the public to initiate enforcement actions, the District must remove the
permit shield language regarding enforcement actions and litigation by amending the permit
shield language in the District's Regulation 2, Rule 6. The District should consider including the
language in 40 CFR 70.6(f)(3) in its permit shields.
2.3 Finding: The BAAQMD has an internal quality assurance process for reviewing draft versions of
permits, which minimizes opportunities for errors before the documents are made available for
review by the public and the EPA.
Discussion: The District reported that all draft title V permits are routed through the Senior
Engineer dedicated to the title V program to ensure consistency. The District uses a title V
checklist that documents what parts of the permit and statement of basis have been reviewed
by staff. The District included a copy of this checklist in response to our questionnaire (see
13 See Finding 2.4 in the 2009 Evaluation.
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Appendix B). During interviews, Engineering Division staff referenced several guidance
documents and templates used to promote consistency in title V permits.14
Based on the District's checklist, our understanding is that draft title V permits are generally
reviewed by District personnel in the following order: permit engineer, permit engineer's
supervisor, the senior engineer dedicated to the title V program, the title V supervising
engineer, the permit engineer's manager, the manager assigned to the District's title V
program, and finally by the Engineering Division Director (as needed). These reviews occur
within the Engineering Division and are documented in the District's title V checklist.
Though not included in the checklist, Engineering Division staff reported that initial and renewal
draft title V permits are also reviewed by the Compliance and Enforcement Division, and the
Legal Division reviews all draft permits excluding administrative amendment actions.
Recommendation: The EPA commends the BAAQMD for its comprehensive internal draft
permit review practices. The EPA recommends that the District update its title V checklist to
document the review by the Compliance and Enforcement and Legal Divisions.
2.4 Finding: The BAAQMD has improved its statements of basis over time, and generally produces
detailed statements of basis in accordance with EPA guidance.
Discussion: 40 CFR 70.7(a)(5) requires the District to provide "a statement that sets forth the
legal and factual basis for the draft permit conditions" and is commonly referred to as the
"statement of basis." The purpose of this requirement is to provide the public and the EPA with
the District's rationale on applicability determinations and technical issues supporting the
issuance of proposed title V permits. A statement of basis documents the regulatory and policy
issues applicable to the source and is an essential tool for conducting meaningful permit
review.
The EPA has issued guidance on the required content of a statement of basis on several
occasions, most recently in 2014. This guidance has consistently explained the need for
permitting authorities to develop a statement of basis with sufficient detail to document the
decisions made in the permitting process. The EPA provided an overview of this guidance in a
2006 title V petition order, In the Matter of Onyx Environmental Services, Order on Petition No.
V-2005-1 (February 1, 2006) (Onyx Order). In the Onyx Order, in the context of a general
overview statement on the statement of basis, the EPA explained:
A statement of basis must describe the origin or basis of each permit condition or
exemption. However, it is more than just a short form of the permit. It should highlight
elements that U.S. EPA and the public would find important to review. Rather than
restating the permit, it should list anything that deviates from simply a straight
recitation of applicable requirements. The statement of basis should highlight items such
14 See Finding 2.5 of this report for more discussion on template and guidance documents.
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as the permit shield, streamlined conditions, or any monitoring that is required under 40
C.F.R. § 70.6(a)(3)(i)(B). Thus, it should include a discussion of the decision-making that
went into the development of the title V permit and provide the permitting authority, the
public, and U.S. EPA a record of the applicability and technical issues surrounding the
issuance of the permit. (Footnotes omitted.) See, e.g., In Re Port Hudson Operations,
Georgia Pacific, Petition No. 6-03-01, at pages 37-40 (May 9, 2003) ("Georgia Pacific");
In Re Doe Run Company Buick Mill and Mine, Petition No. VII-1999-001, at pages 24-25
(July 31, 2002) ("Doe Run"); In Re Fort James Camas Mill, Petition No. X-1999-1, at page
8 (December 22, 2000) ("Ft. James").
Onyx Order at 13-14. Appendix D of this report contains a summary of the EPA guidance to date
on the suggested elements to be included in a statement of basis.
The BAAQMD's statements of basis consistently contain a record of what changes are being
made to permits using redline/strikethrough and a discussion on permitting history and
compliance status, and generally provide a clear basis for the BAAQMD's determination of New
Source Performance Standards (NSPS) or National Emission Standards for Hazardous Air
Pollutants (NESHAP) applicability as well as the applicability of State Implementation Plan (SIP)-
approved rules. During interviews, staff reported that the Compliance and Enforcement
Division used to develop a report on the Source's compliance history for inclusion in the
statement of basis; however, this practice discontinued due to competing workload priorities.
Recommendation: The EPA commends the BAAQMD for its efforts in producing detailed
statements of basis that clearly state why the permitted source is subject to a standard. To
improve, the EPA recommends the BAAQMD also include a summary of the source's
compliance history in the statement of basis.
2.5 Finding: The BAAQMD uses template permit documents and has several guidance documents
for reference, which promotes consistency in its permits.
Discussion: During staff interviews, we learned that the BAAQMD uses templates for title V
renewal permits and corresponding statements of basis.15 The title V checklist discussed in
Finding 2.3 above also serves as a checklist for the permit engineer during permit development.
The BAAQMD's title V renewal permit template includes a cover page with the Source's general
information, responsible official, and signature line for the Air Pollution Control Officer. The
template title V permit is divided into 11 sections: Standard Conditions, Equipment, Generally
Applicable Requirements, Source-Specific Applicable Requirements, Schedule of Compliance,
Permit Conditions, Applicable Limits & Compliance Monitoring Requirements, Test Methods,
Permit Shield, Revision History, Glossary, and Title IV Acid Rain Permit (if applicable).
15 See Finding 2.4 of this report for more discussion on the BAAQMD's statements of basis.
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During interviews, permit engineers noted that they reference several District resources
throughout permit development. The Engineering Division has a document titled "Permit
Handbook" on its website.16 Per the Permit Handbook, the purpose is to set forth the fixed
standards and objective measurements to be used by District engineers in determining whether
a particular permit may be issued to a particular project belonging to a given source category.
The Permit Handbook is intended for use by District staff as well as permit applicants. Among
other information, it includes template permit conditions and source-specific technical
information, such as emission calculation guidance. Additionally, the District's Manual of
Procedures, Volume II, Part 3 discusses title V permit processing.17 The District also maintains a
Best Available Control Technology and Best Available Control Technology for Toxics Workbook
on its website.18 Though intended as guidance during the NSR permitting process, this
workbook serves as a reference for permit engineers during the title V permitting process.
Recommendation: We commend the BAAQMD for promoting consistency between its permit
documents by using templates and for maintaining several technical guidance documents on its
public website for reference by District staff, permit applicants, and the public.
2.6 Finding: The District's statements of basis do not consistently include an analysis of potential
environmental justice issues, which could be used to inform outreach efforts.
Discussion: The EPA defines "Environmental Justice" to include the fair treatment and
meaningful involvement of all people regardless of race, color, national origin, or income with
respect to the development, implementation, and enforcement of environmental laws,
regulations, and polices. The EPA's goal is to provide an opportunity for overburdened
populations or communities to participate in the permitting process. "Overburdened" is used to
describe the minority, low-income, tribal and indigenous populations or communities in the
United States that potentially experience disproportionate environmental harms and risks due
to greater vulnerability to environmental hazards, lack of opportunity for public participation,
or other factors. The term describes situations where multiple factors, including both
environmental and socio-economic stressors, may act cumulatively to affect health and the
environment and contribute to persistent environmental health disparities.19
On December 15, 2021, in an attempt to better address air pollution in areas overburdened by
environmental health stressors, the BAAQMD adopted amendments to Regulation 2, Rules 1
and 5.20 These changes are implemented through the District's NSR permit program for the
construction of new sources and modification of existing sources of toxic air contaminants.
These rule amendments included: defining overburdened communities; setting a more
16 See https://www.baaqmd.gov/~/media/files/engineering/permit-handbook/baaqmd-permit-handbook.pdf?la=en.
17 See https://www.baaqmd.gov/~/media/files/records/mop/vol-
2/vol2 Pt3.pdf?la=en&rev=d70c27b6180444f7bb723847d0921c92.
18 See https://www.baaqmd.gov/permits/permitting-manuals/bact-tbact-workbook.
19 See https://www.epa.gov/environmentaliustice/ei-2020-glossary.
20 See https://www.baaqmd.gov/news-and-events/page-resources/2021-news/121521-permit-
rulehttps://www. baaqmd. gov/~/media/files/engineering/permit-handbook/baaqmd-perm it-hand book. pdf?la=en.
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stringent cancer risk limit in overburdened communities by lowering it from 10 in one million to
6 in one million; and enhancing the public notifications for projects within overburdened
communities. After reviewing the draft report, the District explained that any analyses
associated with environmental justice or overburdened communities and documented in an
Engineering Evaluation through the NSR process are attached to the associated title V
statement of basis. During our evaluation, the EPA did not have an opportunity to review a
statement of basis that included this information. However, we did note that no additional EJ-
related analyses are conducted during the title V permitting process. This issue is further
discussed in Finding 4.1. During our interviews, many District employees suggested that EPA
training on environmental justice would be appreciated.21
Recommendation: The EPA commends the District for attempting to mitigate environmental
impacts in overburdened communities. The EPA suggests that the District expand its
environmental justice efforts to its title V program. Specifically, the District should consider
working to enhance public involvement in the title V process for communities with
environmental justice concerns. Further, the EPA is available to provide trainings to California
Air Districts, when available and appropriate, on environmental justice.
2.7 Finding: While the BAAQMD generally references the underlying origin and authority for permit
conditions, the references to the underlying origin often lack specificity.
Discussion: Each title V permit is required to specify and reference the origin and authority for
each term or condition and identify any difference in form as compared to the applicable
requirement upon which the term or condition is based.22 In most cases, the origin and
authority for a permit condition can be referenced by citing to the particular rule or regulation.
The District consistently cites a basis for each permit condition; however, its practice of only
citing to "BACT" meaning Best Available Control Technology, "RACT" meaning Reasonably
Available Control Technology, or "Offsets" for NSR requirements is insufficient.
For NSR requirements, the authority for the permit condition stems from the SIP-approved NSR
rule. But, because NSR rules likely do not specify the emissions limits and associated
monitoring, recordkeeping, and reporting requirements to which the source is subject to under
the NSR determination, the origin of the title V permit condition is the actual NSR permit issued
to the source. Thus, requirements stemming from NSR rules, or the Prevention of Significant
Deterioration (PSD) program at 40 CFR 52.21, should generally cite the underlying rule or
regulation as the authority and the specific NSR permit action—not just "BACT"—as the origin.
21 In August 2022, the EPA issued Frequent Questions about Environmental Justice and Civil Right in Permitting (Interim) to
provide information to federal, state, and local permitting programs to help them meet their responsibilities to integrate
environmental justice and civil rights into relevant environmental permitting processes. See https://www.epa.gov/external-
civil-rights/ei-and-civil-rights-permitting-frequentlv-asked-questions. In December of 2022, the EPA's Office of Air and
Radiation also issued 8 principles to guide consideration of environmental justice in CAA permitting decisions. See
https://www.epa.gov/caa-permitting/ei-air-permitting-principles-addressing-environmental-iustice-concerns-
air. https://www. baaqmd. gov/~/media/files/engineering/permit-handbook/baaqmd-perm it-hand book. pdf?la=en
22 See 40 CFR 70.6(a)(l)(i).
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Otherwise, it is unclear how the EPA and public can verify BACT determinations have been
correctly incorporated into the title V permit.
Recommendation: To address this finding, the District should develop a plan to revise its title V
permits to assure that each permit cites the appropriate NSR/PSD permits and District NSR
rules as part of the origin and authority for a permit term or condition as required by 40 CFR
70.6(a)(l)(i).
2.8 Finding: The BAAQMD generally processes title V permit renewal applications in a consistent
and proper manner similar to its initial title V permit applications.
Discussion: Federal regulations require that title V operating permits expire at least every five
years and may be renewed before their expiration. 40 CFR 70.7(c)(l)(i) notes that permits being
renewed are subject to the same procedural requirements, including those for public
participation and affected State and EPA review, that apply to initial permit issuance. The
BAAQMD's Regulation 2, Rule 6 includes the same requirements.
In our file review, we found that the District usually treats applications for title V permit
renewal in a manner similar to applications for initial title V permits. When renewing a title V
permit, the District typically reassesses the applicability of requirements to the source,
highlighting any changes in applicability that may have occurred since the last permit issuance.
Applicability can evolve over time, whether due to changes in a source's method of operation
or changes to regulations, and it is important that all applicable requirements are included in
renewed title V permits.
Recommendation: The EPA commends the District for re-evaluating a source's applicable
requirements at the time of renewal and for documenting the permit changes in the statement
of basis and encourages the District to continue this practice.
2.9 Finding: Most title V permit conditions with District rule requirements are appropriately
marked as not federally enforceable. Additionally, most conditions appropriately reference the
current SIP rules most recently approved by EPA.
Discussion: Permit conditions based on state or local rules are only federal applicable
requirements if the rule has been approved by the EPA into the California SIP. Some state and
local rules are only adopted at the local level and have not been, or will not be, approved into
the SIP. State or local rules not approved into the SIP are not federal applicable requirements
under the title V program and are only enforceable at the State or District level. During the file
review, we found that Section VI, Permit Conditions, of the BAAQMD's title V permits clarifies
that "any condition that is preceded by an asterisk is not federally enforceable." In making this
statement and marking permit conditions with asterisks accordingly, the BAAQMD clearly
indicates the enforceability of all permit conditions.
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In our 2009 Evaluation,23 we reported that some SIP rules were incorrectly referenced in some
of BAAQMD's title V permits by being marked as not federally enforceable, because a SIP-
approved version of the rule had existed in addition to a more recently adopted local version,
or the cited version of a rule was in the SIP and was federally enforceable.
During our file review, we found that the BAAQMD has improved its title V templates by
including appropriate language in BAAQMD's title V permits that all emissions units at the
facility must comply with both the current local rules and the versions of the rules in the SIP
until the EPA has reviewed and approved the District's revision of the regulation. We generally
found that the District's title V permits contained accurate SIP rule citations. However, we
found some examples of incorrect references to SIP rules. These rules were identified as
federally enforceable, but the referenced versions of the SIP rule pre-dated more recent
versions.
Recommendation: The EPA commends the BAAQMD for identifying which conditions are
federally and locally enforceable in their title V permits. The District should continue this
labelling practice and ensure ATC and PTO requirements remain federal applicable
requirements. In addition, during the permit preparation process, the District should ensure
that they include all SIP-approved requirements, especially in instances where the EPA has
approved a more recent version of the District-adopted rule. Region 9 maintains a database of
federally enforceable SIP rules on its website, which permit engineers may find useful when
verifying the latest SIP-approved versions of rules.24
2.10 Finding: While District staff and management are generally satisfied with the District's title V
permit format, the District has made no decisions on template changes that were under
discussion during our 2009 Evaluation.
Discussion: In our 2009 Evaluation,25 we reported that the District was considering ways to
improve the readability of the permits, which could include merging permit Sections IV and VII
(Source-Specific Applicable Requirements and Applicable Limits & Compliance Monitoring
Requirements). During interviews for this evaluation, we heard that the District was still
considering this change.
For most of the District's title V permits, the applicable requirements and monitoring
requirements are listed in tabular format, with one table per emissions unit or group of
emissions units. During interviews, staff indicated that the tables make it easy to identify the
applicable requirements that apply to each emissions unit at a title V facility. Some staff and
management are generally satisfied with this format and believe that it promotes consistency,
accuracy, and comprehensiveness. However, some staff and management have acknowledged
that a disadvantage of this practice is that with complex sources such as refineries, it results in
23 See Finding 2.6 in the 2009 Evaluation.
24 See https://www.epa.gov/air-qualitv-implementation-plans/approved-air-quality-implementation-plans-epas-pacific-
southwest.
25 See Finding 2.3 in the 2009 Evaluation.
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voluminous permits with redundant text. Each applicable requirement, e.g., an applicable NSPS
or NESHAP provision, is listed in a row in Table IV (Source-Specific Applicable Requirements).
The applicable requirements are typically listed multiple times in Table IV because they apply to
more than one emissions unit or group of emissions units. Some of the same applicable
requirements are then repeated several more times in Table VII (Applicable Limits &
Compliance Monitoring Requirements).
The District combined the tables in approximately four permits, but reported that it would
significantly increase the permit processing time to combine the tables in permits for sources
with more emissions units during the next permit revision.
Recommendation: The EPA recommends prioritizing discussions on the improvement of
permits and implementing decisions in a timely manner.
2.11 Finding: The District routinely performs single stationary source determinations for CAA
permitting purposes and documents these decisions in the statement of basis, a necessary
practice in determining the applicable requirements.
Discussion: Large industrial complexes often have emissions units that are not directly
associated with the primary activity at the site (based on having a different two-digit Standard
Industrial Classification (SIC) code). When issuing title V and NSR permits to such facilities,
permitting authorities must determine whether such emissions units constitute part of the
major stationary source for CAA permitting purposes. In cases where an activity has a different
two-digit SIC code, permitting authorities must determine whether the emissions units
comprise a "support facility," defined in EPA guidance as "facilities that convey, store, or
otherwise assist in the production of the principal product."26
In our 2009 Evaluation,27 we found that the District had not consistently applied the support
facility test to determine whether two facilities, such as an oil refinery and its support facility,
constitute a single stationary source for CAA permitting purposes. During our file review for our
current evaluation, we found that the District has since improved its permit application review
process by identifying co-locating facilities at large industrial complexes, such as refineries and
landfills, and determining whether such facilities shall be considered the same stationary source
as the industrial complexes themselves.
Recommendation: The EPA commends the BAAQMD for applying a support facility analysis in
preparing title V permits, especially for large sources, such as refineries. The District should
continue to evaluate all facilities adjacent to the refineries and determine whether they are
support facilities that should be treated as part of the refinery.
26 See draft New Source Review Workshop Manual, October 1990, page A.4: https://www.epa.gov/nsr/nsr-workshop-
manual-draft-october-1990.
27 See Finding 2.8 in the 2009 Evaluation.
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2.12 Finding: The District has improved its streamlining practices in the rare scenarios where
streamlining occurs.
Discussion: Streamlining applicable requirements is an acceptable practice but must be
appropriately documented to assure compliance with all requirements. The EPA most recently
provided guidance on streamlining in 2014 in the EPA's April 30, 2014 memorandum,
"Implementation Guidance on Annual Compliance Certification Reporting and Statement of
Basis Requirements for Title V Operating Permits" (see Appendix D). The EPA initially provided
guidance in our March 5,1996 guidance document, "White Paper Number 2 for Improved
Implementation of The Part 70 Operating Permit Program."28 The BAAQMD's title V permits
sometimes contain streamlined requirements in which one or more applicable requirement are
subsumed under the most stringent requirement that applies to an emissions unit. For
example, emissions limits from the NSPS and the more stringent NSR requirements may be
streamlined into a single limit.
In our 2009 Evaluation,29 we found that the District's practice regarding streamlining of
multiple applicable requirements was unclear, as the corresponding statements of basis did not
document the streamlining process by explaining how the requirement included in the permit
ensures compliance with any subsumed requirements. During this evaluation, the District
reported that it has issued some permits with subsumed monitoring, recordkeeping, or
reporting requirements. However, streamlining is not common in title V permits and is only
conducted at the request of the applicant. Though very few instances of streamlining were
identified during our file review, it appeared to be sufficiently documented in the statement of
basis.
Recommendation: The EPA encourages the BAAQMD to continue its practice of streamlining
title V permit requirements, where applicable, and documenting the process appropriately
within the statement of basis.
28 See https://www.epa.gov/title-v-operating-permits/white-paper-number-2-improved-implementation-part-70-operating-
permits.
29 See Finding 2.9 in the 2009 Evaluation.
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3. Monitoring
The purpose of this section is to evaluate the permitting authority's procedures for meeting title V
monitoring requirements. Part 70 requires title V permits to include monitoring and related
recordkeeping and reporting requirements. See 40 CFR 70.6(a)(3). Each permit must contain
monitoring and analytical procedures or test methods as required by applicable monitoring and testing
requirements. Where the applicable requirement itself does not require periodic testing or monitoring,
the permitting authority must supplement the permit with periodic monitoring sufficient to yield
reliable data from the relevant time period that is representative of the source's compliance with the
permit. As necessary, permitting authorities must also include in title V permits requirements
concerning the use, maintenance, and, where appropriate, installation of monitoring equipment or
methods.
Title V permits must also contain recordkeeping for required monitoring and must require that each
title V source record all required monitoring data and supporting information and retain such records
for a period of at least five years from the date the monitoring sample, measurement, report, or
application was made. With respect to reporting, permits must include all applicable reporting
requirements and require (1) submittal of reports of any required monitoring at least every six months
and (2) prompt reporting of any deviations from permit requirements. All required reports must be
certified by a responsible official consistent with the requirements of 40 CFR 70.5(d).
In addition to periodic monitoring, permitting authorities are required to evaluate the applicability of
Compliance Assurance Monitoring (CAM), and include CAM provisions and a CAM plan into a title V
permit when applicable. CAM applicability determinations are required either at permit renewal, or
upon the submittal of an application for a significant title V permit modification. CAM regulations
require a source to develop parametric monitoring for certain emissions units with control devices,
which may be required in addition to any periodic monitoring, to assure compliance with applicable
requirements.
3.1 Finding: The BAAQMD usually includes a detailed CAM analysis in their statements of basis that
clearly documents the BAAQMD's determination and explains the applicable monitoring
requirements.
Discussion: CAM regulations, found at 40 CFR part 64, apply to title V sources with large
emissions units that rely on add-on control devices to comply with applicable requirements.
The underlying principle, as stated in the preamble to our 1997 rulemaking, is "to assure that
the control measures, once installed or otherwise employed, are properly operated and
maintained so that they do not deteriorate to the point where the owner or operator fails to
remain in compliance with applicable requirements."30 Per CAM regulations, sources are
responsible for proposing a CAM plan to the permitting authority that provides a reasonable
assurance of compliance with applicable requirements for pollutant-specific emissions units
with add-on control devices.
30 62 FR 54902, October 22, 1997.
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The District reported that there are fewer than five facilities in its jurisdiction that are subject to
the CAM rule. In the permits we reviewed, we found that the District generally explains CAM
applicability in its statement of basis and, for sources subject to CAM, includes the identified
monitoring conditions in the title V permit. Though the District has stated that it provides
training on CAM and monitoring, during our interviews, some Engineering Division staff
indicated that they would like additional training on the subject. Further, the District's current
statement of basis template indicates that CAM should be discussed if it applies, as opposed to
all the time. We found examples where CAM did not appear to be re-evaluated in permit
renewal actions. CAM applicability can evolve over time as a source makes changes, and thus its
applicability should be verified in each iteration of a title V permit, including in modification or
renewal actions where the District determined CAM did not apply in the initial title V action.
Recommendation: We commend the BAAQMD for including detailed CAM analyses in
statements of basis. The BAAQMD should continue to review and discuss CAM applicability as it
processes initial permits, permit renewals, and significant modifications. Additionally, CAM
training should continue to be made available for permitting staff.
3.2 Finding: The BAAQMD's title V permit conditions generally contain monitoring that is sufficient
to determine compliance with emissions limits, as required by the Part 70 regulations, except
for volatile organic compound (VOC)-emitting equipment and certain aspects of the
enforceability of monitoring requirements.
Discussion: Part 70 and the BAAQMD's EPA-approved title V rules have provisions that require
that permits contain monitoring that is sufficient to demonstrate compliance with all applicable
requirements. During our file review, we found that the BAAQMD's title V permits generally
contain sufficient monitoring requirements to assure compliance with applicable requirements
and permit conditions. Many of the applicable requirements incorporated into the District's
title V permits already contain sufficient monitoring (such as NSR permit conditions, SIP-
approved rules, NSPS/NESHAP proposed by the EPA after November 15,1990, and CEMS
required for large combustion sources). Source testing, parametric monitoring of control device
operation, and associated recordkeeping are used to assure compliance with emissions limits.
An exception where the BAAQMD's title V permits do not contain appropriate monitoring
provisions is related to monitoring requirements for VOC-emitting equipment. In our 2009
Evaluation,31 we believed that the Reasonably Available Control Technology (RACT) regulations,
developed by the BAAQMD and approved into the SIP as Regulation 8 (Organic Compounds),
were sufficient to meet the title V requirements. However, during our file review in this
program evaluation, we found that while most of the BAAQMD's title V permits contain
sufficient monitoring requirements, some lack appropriate monitoring requirements for certain
VOC-emitting equipment. Additionally, during interviews, it was suggested that fugitive
emissions of VOC were not sufficiently monitored.
31 See Finding 3.1 in the 2009 Evaluation.
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Another exception is related to the enforceability of monitoring requirements, specifically
Section VII and Table VII of the BAAQMD's title V permits. While Section VII of the BAAQMD's
title V permits summarizes applicable emissions limits and compliance monitoring requirements
from local rules, SIP-approved rules, NSR permit conditions, and NSPS/NESHAP provisions, it
can be superseded by Sections I through VI of the permits in the case of conflict with any
requirement in preceding sections. If a prior section contains requirements that differ from the
requirements identified in Section VII, the enforceability of the requirements in Section VII may
be compromised.
Recommendation: We commend the BAAQMD for generally including sufficient monitoring
requirements in title V permits. The BAAQMD should continue to ensure that all title V permits
have monitoring sufficient to determine compliance, including ensuring VOC emissions are
appropriately and periodically monitored. Additionally, the EPA recommends the District
incorporate all applicable monitoring requirements into permit conditions in Section VI of the
title V permit to ensure practical enforceability.
3.3 Finding: Emissions limitations used to avoid requirements like major NSR or title V are generally
enforceable.
Discussion: A source may accept a voluntary limit (also known as a "synthetic minor" limit when
the source is not a true minor source) to maintain its potential to emit (PTE) below an
applicable major source threshold and thereby avoid major NSR permit requirements and/or
the need for a title V permit. Sources establish such a limit by obtaining a synthetic minor
permit containing practically enforceable emissions limitations from the permitting authority.
According to the EPA's guidance, synthetic minor limits must be enforceable as a practical
matter, meaning they are both legally and practicably enforceable. Additionally, for emissions
limits in a permit to be practicably enforceable, the permit provisions must specify: 1)
technically-accurate limitations and the portions of the source subject to such limitations; 2)
the time period for the limitations (emissions limit averaging period); and 3) the method to
determine compliance, including appropriate and practically enforceable monitoring,
recordkeeping, and reporting requirements.32
In response to a petition regarding the Hu Honua Bioenergy Facility in Hawaii, the EPA stated
that synthetic minor permits must specify: 1) that all actual emissions at the source are
considered in determining compliance with its synthetic minor limits, including emissions
during startup, shutdown, malfunction or upset; 2) that emissions during startup and shutdown
(as well as emissions during other non-startup/shutdown operating conditions) must be
included in the semi-annual reports or in determining compliance with the emissions limits; and
32 Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under Section 112 and Title V of the Clean Air Act
(Act), John S. Seitz, Director, Office of Air Quality Planning and Standards (January 25,1995).
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3) how the source's emissions shall be determined or measured for assessing compliance with
the emissions limits.33
Though the District uses standard permit conditions and guidance documents, which are
further discussed in Finding 2.5, the District does not have a policy specifically for setting
synthetic minor limits. Local Regulation 2, Rule 6 allows sources seeking to avoid major source
status to do so through voluntarily limiting a source's PTE. During our file review, we found that
the emission limitations in the District's permits are generally enforceable as a practical matter.
However, as detailed in Finding 5.3 below, our interviews indicate that the District is not
consistently tracking the facility-wide PTE during each minor source modification action, which
could undermine the District's major and minor source permitting (including synthetic minor
permitting) programs. See Finding 5.3 for additional information.
Recommendation: We commend the BAAQMD in setting enforceable emission limits in most
cases. We recommend that permitting staff take the EPA's online training for Setting
Enforceable Potential to Emit Limits in NSR Permits and follow the criteria outlined in the Hu
Honua when establishing synthetic minor limits, as well as other EPA guidance.34
33 Order Responding to Petitioner's Request that the Administrator Object to Issuance of State Operating Permit Petition No.
IX-2011-1, Gina McCarthy, Administrator (February 7, 2014).
34 See https://airknowledge.gov/SI/PERM203-SI.html.
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4. Public Participation and Affected State Review
This section examines the BAAQMD rules and procedures used to meet public participation
requirements for title V permit issuance. The federal title V public participation requirements are
found in 40 CFR 70.7(h). Title V public participation procedures apply to initial permit issuance,
significant permit modifications, and permit renewals. The BAAQMD public participation rules and
procedures must provide for public notice, including an opportunity for public comment and public
hearing on the draft initial permit, permit modification, or permit renewal. Draft permit actions must
be noticed in a newspaper of general circulation or a state publication designed to give general public
notice; sent to affected states; sent to persons on a mailing list developed by the District; sent to those
persons that have requested in writing to be on the mailing list; and provided by other means as
necessary to assure adequate notice to the affected public.
The public notice must, at a minimum: identify the affected source; the name and address of the
permitting authority processing the permit; the activity or activities involved in the permit action; the
emissions change involved in any permit modification; the name, address, and telephone number of a
person from whom interested persons may obtain additional information, including copies of the draft
permit, the application, all relevant supporting materials, and all other materials available to the
permitting authority that are relevant to the permit decision; a brief description of the required
comment procedures; and the time and place of any hearing that may be held, including procedures to
request a hearing. See 40 CFR 70.7(h)(2).
The permitting authority must keep a record of the public comments and of the issues raised during
the public participation process so that the EPA may fulfill its obligation under section 505(b)(2) of the
Act to determine whether a citizen petition may be granted. The public petition process, 40 CFR
70.8(d), allows any person who has objected to permit issuance during the public comment period to
petition the EPA to object to a title V permit if the EPA does not object to the permit in writing as
provided under 40 CFR 70.8(c). Public petitions to object to a title V permit must be submitted to the
EPA within 60 days after the expiration of the EPA's 45-day review period. Any petition submitted to
the EPA must be based only on objections that were raised with reasonable specificity during the
public comment period, unless the petitioner demonstrates that it was impracticable to raise such
objections within such period, or unless the grounds for such objection arose after such period.
4.1 Finding: The District is generally transitioning toward a more proactive community engagement
approach but has not incorporated this approach into its title V program.
Discussion: The BAAQMD's jurisdiction includes sources located throughout the counties of
Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern
Solano, and southern Sonoma counties in the San Francisco Bay Area. In response to California
Assembly Bill (AB) 617 legislation and its own overburdened communities program, the District
has increased its use of translations and public outreach in certain communities.35 In addition,
the District's Community Engagement Director position, created in the time period after our
35 See https://www.baaqmd.gov/communitv-health.
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last evaluation, is designed to carry out the outreach effort to communities with Environmental
Justice concerns. In the past, the community engagement effort at the BAAQMD was more
reactive. The District is transitioning to a more proactive effort on community engagement as
evidenced by the increase in translations of public-facing documents and multi-lingual
workshops and meetings that are held in identified communities using CalEnviroScreen as part
of both the AB 617 program and the overburdened communities program. We understand that
the BAAQMD's implementation of the AB 617 legislation and the District's overburdened
communities program is currently done through the District's NSR program rather than through
its title V program.
EPA notes, however, that during our interviews with permitting staff and management, it
appears the District's efforts to improve outreach are not being applied to the title V program.
For example, the District does not translate notices of proposed title V permit actions in
languages other than English. We found that permitting staff and management do not routinely
use available community engagement tools like maps that can identify limited English-speaking
communities to inform permitting outreach activities such as public notification or workshops.
The use of these tools may require engagement with and work from other groups in the
BAAQMD outside of the Engineering Division.
The EPA prepared a map of linguistically isolated communities within the BAAQMD's
jurisdiction in which title V permits have been or may be issued (see Appendix E). The EPA's
map indicates that there are numerous populations that are linguistically isolated. These
linguistically isolated communities have a significant population density, and thus it may be
appropriate for the BAAQMD to provide translation services in those communities during the
title V permitting process. Section 502(b)(3)(C)(6) of the Act and 40 CFR 70.7(h) require a Part
70 program to have adequate procedures for public notice. Using a map like that found in
Appendix E may provide additional opportunities to direct the BAAQMD's translation efforts.36
Further, 40 CFR Part 7.35(a) provides additional detail regarding prohibitions for any program
or activity receiving EPA assistance concerning contractual, licensing, or other arrangements on
the basis of race, color, national origin or, if applicable, sex.37 In addition, 40 CFR 7.35(c) states
"[a] recipient shall not choose a site or location of a facility that has the purpose or effect of
excluding individuals from, denying them the benefits of, or subjecting them to discrimination
under any program or activity to which this part applies on the grounds of race, color, or
national origin or sex; or with the purpose or effect of defeating or substantially impairing the
accomplishment of the objectives of this subpart." Appendix E of this report also includes a
copy of a recent preliminary decision regarding this topic dated March 30, 2021 from the EPA's
External Civil Rights Compliance Office to Carol S. Cromer, Director, Missouri Department of
Natural Resources.
36 The use of the State of California's environmental justice tool CalEnviroScreen by Engineering Division staff may also
assist in learning where best to deploy translation resources.
37 40 CFR 7.35(a) details obligations for federal grantees in demonstrating compliance with title 6 of the Civil Rights Act of
1964.
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Recommendation: We commend the BAAQMD's transition to a more proactive approach for
community engagement and efforts to provide and improve translation services for
linguistically isolated communities within its jurisdiction as part of its NSR program. The EPA
encourages the District to also apply this approach in its title V permit program. The BAAQMD
should incorporate translation efforts into its title V program by using mapping tools as
appropriate to assure updated demographic information. The EPA recommends that
Engineering Division management and staff increase communication, coordination, and
collaboration with the District's community engagement efforts.
4.2 Finding: The BAAQMD maintains a detailed public website and uses e-noticing methods to
meet the public noticing requirements of title V.
Discussion: The BAAQMD uses its website to make information about title V and synthetic
minor permits available to the general public. This provides easy access to information that is
useful for the public review process, and can result in a more informed public, and,
consequently, the public may provide more constructive comments during title V permit public
comment periods. Currently, the BAAQMD posts relevant title V permit information on its
website, including, but not limited to, proposed and final title V permits, statements of basis,
public notices, permit appeal procedures, and general title V information and guidance. This
includes a list of active projects that are in the public comment period along with the
corresponding draft permit, statement of basis, and public notice that includes information on
how to comment electronically or by mail.38
The District's website also provides general information to the public and regulated community
regarding the BAAQMD's permitting program and archive folders that contain historical
permitting files.39The public can find information regarding the permitting process, whether a
permit is needed for an operation, how to obtain a permit, application forms, and information
about related programs that inform the District's permitting program.
The BAAQMD maintains electronic mailing lists for title V public notices. Members of the public
may sign up for the title V public notice mailing list on the District's website. However, as
discussed in Finding 4.1, the District does not currently translate notices of proposed title V
permit actions in languages other than English as required by 40 CFR Part 7.35(a). We
understand that the BAAQMD is developing strategies to enhance public engagement as part of
its commitment under California AB 423.
Recommendation: We encourage the BAAQMD to continue providing information related to
title V permits to the public via their website and to notify interested parties of relevant title V
permitting actions via District electronic mailing lists. In addition, the District should provide
38 See https://www.BAAQMD.org/content/BAAQMD/permits/public-notices.html
39 See https://www.BAAQMD.org/content/BAAQMD/permits.html and
https://www.BAAQMD.org/content/BAAQMD/permits/equipment-types/titlev.html
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translations of notices consistent with the discussion in Finding 4.1.
4.3 Finding: The District provides appropriate notification regarding the public's right to petition
the EPA Administrator to object to a title V permit but could improve the information provided
to the public by including links to the EPA's title V permit dashboard in all public notices.
Discussion: 40 CFR 70.8(d) provides that any person may petition the EPA Administrator, within
60 days of the expiration of the EPA's 45-day review period, to object to the issuance of a title V
permit. The petition must be based only on objections that were raised with reasonable
specificity during the public comment period.40
The District's Regulation 2, Rule 6 contains the required information about the public's right to
petition the EPA Administrator to object to a title V permit. During our file review, we found
that the District generally informed the public of the right to petition the EPA Administrator to
object to a title V permit in the public notice for title V permits. Some public notices included a
link to the EPA's title V permit dashboard, where the public can find the dates for the EPA's 45-
day review period.
Recommendation: The EPA commends the BAAQMD for informing the public of the right to
petition the EPA Administrator to object to the issuance of a title V permit. We recommend
including links to the EPA's title V permit dashboard in all public notices so the public can
conveniently navigate to the relevant 45-day review period dates.
4.4 Finding: The District's practices around concurrent public and EPA review of title V permits are
implemented consistent with current EPA regulations and guidance. However, the District has
not adopted the recently amended language from 40 CFR 70.8(a)(1) into its title V program
rules.
Discussion: Per section 505(b) of the CAA and 40 CFR 70.8, state and local permitting agencies
are required to provide proposed title V permits to the EPA for a 45-day period during which
the EPA may object to permit issuance. The EPA regulations under 40 CFR 70.8(a)(1) allow the
45-day EPA review period to occur either following the 30-day public comment period (i.e.,
sequentially), or at the same time as the local public comment period (i.e., concurrently).
The EPA amended 40 CFR 70.8(a)(1) on February 5, 2020, to allow either a sequential or
concurrent EPA review.41 This amendment was not in place at the time of the EPA's 2009
Evaluation for BAAQMD. Previously, the District allowed concurrent review through a
resolution in a February 9,1999 letter, from the EPA to David Dixon, clarifying the title V
permitting expectations between EPA Region 9 and the California Districts.42
40 An exception applies when the petitioner demonstrates that it was impracticable to raise those objections during the
public comment period or that the grounds for objection arose after that period.
41 See 85 FR 6431.
42 See https://www.epa.gov/sites/default/files/2015-08/documents/dixon.pdf.
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When the public comment and the EPA review periods occur sequentially, permitting agencies
will make the draft permit available for public comment, and following the close of public
comment, provide the proposed permit and supporting documents to the EPA, including the
statement of basis and any responses to comments if a significant comment is received.43
When the public and the EPA review periods occur concurrently, a state or local agency will
provide the EPA with the draft permit and supporting documents at the beginning of the public
comment period. Concurrent review generally occurs when significant comments are not
expected by the permitting authority.
The District's title V regulations in Regulation 2, Rule 6 are silent on allowing sequential or
concurrent review. As specified in 40 CFR 70.8 and based on the previously referenced February
9, 1999 letter, if the BAAQMD receives significant comments from the public during the 30-day
public review period,44 the 45-day EPA review period must be restarted to allow the BAAQMD
to prepare responses to the public comments, and an updated permit and statement of basis, if
applicable, for submittal to the EPA. Although the District rarely receives public comments on
its title V permits, the District has implemented this process for at least one title V permitting
action. In that action, the District proposed a permit for concurrent review. After receiving
public comments, the District held a second public comment period and, after considering all
public comments and making any necessary changes to the permit in response to those
comments, the District resubmitted the proposed permit and statement of basis (with changes,
as necessary) for the EPA's 45-day review period.
The District's public notices generally describe the EPA review process and refer the reader to
an EPA website that indicates when EPA's review period for a given permit action will end. We
note that the District utilizes sequential review (i.e., public comment period followed by EPA
review) for permits that are likely to receive numerous comments such as the title V permits for
petroleum refineries.
Recommendation: We commend the BAAQMD for implementing a concurrent review process
that is consistent with the requirements of the title V program and EPA guidance. We
recommend that the District adopt the February 5, 2020 amendments to 40 CFR 70.8(a)(1) into
the District's title V program rules.
43 Per 40 CFR 70.2, "draft permit" is the version of a permit for which the permitting authority offers public participation or
affected State review. Per 40 CFR 70.2, "proposed permit" is the version of a permit that the permitting authority proposes
to issue and forwards to the EPA for review. In many cases these versions will be identical; however, in instances where the
permitting agency makes edits or modifications as a result of public comments, there may be material differences between
the draft and proposed permit.
44 As stated in the preamble to our 2020 revisions to Part 70, "Significant comments in this context include, but are not
limited to, comments that concern whether the title V permit includes terms and conditions addressing federal applicable
requirements and requirements under part 70, including adequate monitoring and related recordkeeping and reporting
requirements." See 85 FR 6431. For example, any comments related to the contents in the permit and/or determinations in
the statement of basis would be considered significant comments. But, comments that are nongermane, such as comments
providing general support for a permit action would not be significant comments.
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4.5 Finding: The BAAQMD implements a business assistance program (BAP) to provide assistance
to small business owners.
Discussion: Under section 507 of the CAA, permitting authorities are required to implement a
small business assistance program to assist small businesses that need title V permits. During
this evaluation, we found that the District has a full BAP to provide assistance to business
owners and operators, small and large, in determining which requirements are applicable. The
assistance includes coverage of title V small businesses.
During the interviews, the BAP staff stated that they help small businesses draft permit
applications and review permits to ensure permit records adequately represent the source. This
helps the District's Engineering Division staff to process permits.
Additionally, the BAP staff helps small businesses with pollution prevention by providing
guidance on control technologies. For example, they help gas stations understand the benefits
of Stage II vapor controls. The District has several areas on their website to which a potential
permittee can access information about resources to assist them in both compliance with
requirements and the permitting process. This information includes forms, calculation sheets,
and other information to aid businesses developing permit applications.45
Discussions with the BAP staff also indicated that work related to title V sources is tracked so
that time spent working with these sources is appropriately accounted for in tracking title V
fees and revenue. This approach is primarily the result of having so few title V facilities that are
also defined as small businesses (the BAAQMD BAP is largely focused on non-title V facilities as
the title V applicability threshold for the Bay Area does not usually capture those facilities that
are traditionally defined as small businesses under the CAA).
Recommendation: The EPA commends the District for its efforts to provide assistance to small
businesses and recommends the District continue supporting small businesses by providing
these services through its BAP.
4.6 Finding: We did not find evidence that the BAAQMD notified nearby tribes of title V permitting
actions.
Discussion: During our 2009 Evaluation and current evaluation, we did not find evidence that
the District notified tribes in the Bay Area regarding title V permit actions.
40 CFR 70.8(b)(1) requires that a permitting authority shall give notice of each draft permit to
any affected State, which includes any state within 50 miles of the permitted source. While
there are five federally recognized tribes within the District's geographic boundaries, none have
been approved by the EPA to be treated in the same manner as a neighboring state for the
45 See https://www.baaqmd.gov/permits, https://www.baaqmd.gov/rules-and-compliance/compliance-
assistance/compliance-tips and https://www.baaqmd.gov/rules-and-compliance/compliance-assistance
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purpose of "affected state" notification under section 505(a)(2) of the CAA.46The Robinson
Rancheria in Nice, California in Lake County is the only tribe within 50 miles of the BAAQMD's
geographic boundaries that has been approved by the EPA to be treated in the same manner as
a neighboring state for the purpose of this notification.47 This requires the District to give notice
of draft title V permits for any source within 50 miles of the Robinson Rancheria. Regardless of
the affected state status, the EPA encourages state and local air agencies to notify tribal
governments when taking significant actions that may affect their air quality.48
Recommendation: The Robinson Rancheria in Lake County, California must be included in
public notifications as an "affected state" when a title V applicant is within 50 miles of the tribal
lands. More generally, we also encourage the District to notify tribal governments when taking
significant actions that may affect their air quality.
4.7 Finding: While the District rarely receives comments on title V actions, when comments are
received, the response to comments documents ("RTC") clearly address all issues raised by
commenters and explain if and why changes were or were not made.
Discussion: The EPA's title V regulations under 40 CFR 70.7(h) and the District's title V program
require notification of the public comment period for initial permits, significant modifications,
and renewals, and requires that the permitting authority keep a record of the commenters and
of the issues raised during the public participation process. The regulation also requires that the
District respond in writing to all significant comments raised during the public participation
process.
During our file review, we reviewed permits issued by the District within a five-year period. For
this period, the District did not receive any comments that resulted in a significant change to
the draft permit, which would have required the District to re-propose (and re-notice) a permit
for comment. We note that the District voluntarily extended the public comment period for at
least one permit action. After considering all public comments and making any necessary
changes to the permit in response to those comments, the District submitted the proposed
permit and statement of basis to the EPA for the EPA's 45-day review period.
The District has rarely received public comments on the title V permits proposed within the
past five years. The District estimates that approximately 15% of initial permits and less than
1% of permit revisions and renewals have garnered public comments. For draft permits that
have received comments, the District has rarely made significant changes to permit content.
46 The following five federally recognized Indian reservations are present in Southern Sonoma County: (1) Federated Indians
of Graton Rancheria in Rohnert Park, California; (2) Lytton Rancheria of California in Santa Rosa, California; (3) Dry Creek
Rancheria Band of Pomo Indians in Geyserville, California; (4) Kashia Band of Pomo Indians of the Stewarts Point Rancheria
in Santa Rosa, California; and (5) Koi Nation of Northern California in Santa Rosa, California. See
https://www.epa.gov/tribal-pacific-sw/map-federallv-recognized-tribes-epas-pacific-southwest-region-9.
47 The EPA maintains a map on its website of tribes in Region 9 that have received treatment as a state status for purposes
of section 505(a)(2) of the CAA: https://www.epa.gov/caa-permitting/affected-states-notifications-region-9.
48 A map of the tribal lands in California can be found at https://www3.epa.gov/region9/air/maps/ca tribe.html.
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More often, the statement of basis is revised in response to comments received to include
additional background and explanation.
Based on our review, the District responds to all significant comments received in the District's
RTCs. Additionally, the District notifies commenters of the District's responses. Public
comments and the District's RTCs are posted on the District's website. Typically, comments that
address non-substantive changes such as typographical errors or equipment clarifications do
not result in a separate RTC. Instead, they are documented in the statement of basis, and a
letter or email is sent to the commenter.
Recommendation: The EPA commends the District for its practices in responding to public
comments. We encourage the District to continue notifying commenters of the District's
response to public comments and posting the applicable RTC documents to the District's
website.
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5. Permit Issuance / Revision / Renewal
This section focuses on the permitting authority's progress in issuing initial title V permits and the
District's ability to issue timely permit renewals and revisions consistent with the regulatory
requirements for permit processing and issuance. Part 70 sets deadlines for permitting authorities to
issue each type of title V permit. The EPA, as an oversight agency, is charged with ensuring that these
deadlines are met as well as ensuring that permits are issued consistent with title V requirements. Part
70 describes the required title V program procedures for permit issuance, revision, and renewal of title
V permits. Specifically, 40 CFR 70.7 requires that a permitting authority take final action on each permit
application within 18 months after receipt of a complete permit application, except that action must
be taken on an application for a minor modification within 90 days after receipt of a complete permit
application or 15 days after the end of the Administrator's 45-day review period.49
5.1 Finding: The District does not process title V actions in a timely manner, impeding the public's
right to enforce all applicable requirements.
Discussion: As we found during our 2009 Evaluation,50 the District does not consistently
process permitting applications in a timely manner. This is mainly due to resource constraints
and competing priorities, but delays can also occur due to other reasons such as missing
information from the applicant. At the time we initiated our evaluation (October 2022), the
BAAQMD had 82 title V major sources and 27 synthetic minor sources. After our site visit, the
District provided a copy of the most recent title V permit application report (dated February 3,
2023) (see Appendix F). Of the 82 title V major sources, the report indicated that 55 had a
pending renewal application. During the interviews, many members of the Engineering Division
(both staff and management) expressed time constraints on permit issuance for title V permits.
Based on the documentation the District provided, there were numerous permit applications
that had not been processed before the 18-month deadline as required by 40 CFR 70.7. In
January 2023, there were 303 open title V applications (3 initials, 55 renewals, 207 minor
revisions, 21 significant revisions, and 17 administrative amendments). Of the 303 open
applications, 162 were marked as overdue.51 In addition to exceeding statutory permitting
deadlines, delays create issues for the Compliance and Enforcement Division. See Finding 7.3.
Further, these significant and consistent delays over the entire history of the District's title V
program impede the public's right to assess compliance with applicable requirements and/or
initiate enforcement action through civil court. One purpose of the title V program is to "enable
the source, States, EPA, and the public to understand better the requirements to which the
source is subject, and whether the source is meeting those requirements."52 Thus, the title V
operating permit program is a vehicle for compiling the air quality control requirements as they
49 See 40 CFR 70.7(a)(2) and 70.7(e)(2)(iv).
50 See Finding 5.1 in the 2009 Evaluation.
51 The report notes that minor revisions are considered overdue 180 days from receipt unless they are delayed by NSR
permitting, compliance, or source testing issues.
52 See 57 FR 32251.
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apply to the source's emissions units and for providing adequate monitoring, recordkeeping,
and reporting to assure compliance with such requirements. An outdated title V permit that is
missing applicable requirements or new emissions units may misinform the public as to the
facility's compliance status. For example, a facility may not report deviations from permit
requirements that have not been incorporated into the title V permit. This represents a
potential environmental justice concern for overburdened communities near facilities, such as
refineries, that may make numerous changes each year. The updated requirements may only
be incorporated into the permit at the time of renewal, which could be 7-8 years after the
permit was issued or last renewed by the District.
Recommendation: The District should conduct a review of its permit issuance process and then
develop a plan of action for issuing title V permit actions in a timely manner. The EPA will work
with the District on this finding and monitor whether the District is able to adequately
administer the title V program.
Finding: Though not always timely, the BAAQMD generally processes title V permit actions in
accordance with the District's EPA-approved title V program and the federal part 70
regulations.
Discussion: 40 CFR 70.8(a)(1) and the District's title V program require that proposed and final
permits be sent to the EPA. During our review of recent actions, the EPA found that the
BAAQMD routinely submits copies of both proposed and final title V permit actions to the EPA
via the EPA Central Data Exchange's Electronic Permit System (EPS). The EPA receives the
BAAQMD's permitting notices for initial and renewal permits, minor permit modifications and
significant modifications. These notices generally include the notice of proposed action, the
proposed permit, and the proposed statement of basis.
The District's title V program requires the development of a statement of basis, and the District
provides the statement of basis during the public comment period and the EPA's 45-day review
period. Section 2-6-427 of the District's Regulation 2, Rule 6, as amended on December 6, 2017,
requires that the District prepare a statement of basis, in conjunction with the permit, that sets
forth the legal and factual basis for the draft permit conditions. It also requires that the
statement of basis explain the basis for the decisions in the permit, including the reasoning for
additional monitoring requirements, and for the creation of any permit shield provisions. In
2020, the EPA revised the Part 70 program at 40 CFR 70.7 and 70.8 to make clear that the
statement of basis must be made available to the public and the EPA. The District's title V rules
were last amended in 2017, so they do not include these updated requirements.
Additionally, the District's statements of basis, as well as the permits, provide a permit history
for each title V permit and usually include the dates for the initial permit issuance, minor and
significant modifications, administrative amendments, and renewals for the stationary source.
The District sometimes processes minor and significant modifications and administrative
amendments at the same time of the renewal permit, to reduce administrative burdens. The
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District rarely reopens permits, but has done so for at least one permit action, due to a rule
change that was incorporated into the permit, in the last five years.
Recommendation: The EPA commends the District for submitting its proposed and final permit
actions to the EPA for review. As mentioned elsewhere in this report, we encourage the District
to update its title V rules so that they are consistent with the EPA's 2020 amendments to 40
CFR 70.7 and 70.8.
5.3 Finding: The District does not consistently evaluate the potential emissions from sources
without title V permits to determine if they are major sources, which could result in sources
improperly avoiding title V, major NSR, and other requirements.
Discussion: As discussed in Finding 3.3, a source may accept a voluntary limit (also known as a
"synthetic minor" limit, because the source is not a true minor source) to maintain its PTE
below an applicable major source threshold and thereby avoid major NSR permit requirements
and/or the need for a title V permit. Sources establish such a limit by obtaining a synthetic
minor permit containing practically enforceable emissions limitations from the permitting
authority.
However, based on several interview responses, the District does not consistently track the
facility-wide PTE of the sources it regulates. Instead, the District tracks annual emissions based
on actual throughput values. While using actual emissions was acceptable for avoiding title V
permitting as part of the EPA's 1995 transition policy, that policy expired in 2000.53
Determining whether a stationary source is a major source and subject to the title V program is
based on potential, not actual, emissions.54 We found during the evaluation that District
permitting staff are generally familiar with calculating the PTE for title V sources, but they do
not consistently calculate the PTE for minor sources. Instead, they generally rely on the actual
annual emissions of each facility, which is calculated using reported throughputs from
operating data. Therefore, the District calculates the actual emissions for the source rather than
the maximum potential emissions. Because major source status is based on facility-wide
potential emissions, it is untenable for the District to use their record of actual emissions to
accurately determine when an existing minor source's potential emissions require it to obtain a
title V or synthetic minor permit. Beyond title V applicability, this issue can also have
implications in determining NSR program requirements and requirements for major sources of
hazardous air pollutants (HAP). This also creates potential enforcement issues for the BAAQMD
and the EPA, as sources may be avoiding title V and major NSR requirements despite having the
potential to emit above major source thresholds.
53 See the EPA's December 20,1999 guidance memorandum "Third Extension of January 25,1995 Potential to Emit
Transition Policy." https://www.epa.gov/sites/default/files/2015-08/documents/4thext.pdf
54 See definition of "Potential to emit" at 40 CFR 70.2.
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After reviewing the draft report, the BAAQMD reported that the District will transition to a new
database in October 2023 to process permit applications and track permitted emissions. This
new database is expected to include tools for tracking facility-wide PTE.
Recommendation: The BAAQMD must develop a plan for ensuring the District can determine
title V applicability according to the definition for "major source" under 40 CFR 70.2 by
evaluating the facility-wide PTE when processing a permit application.
5.4 Finding: The District provides the EPA and the public with an opportunity to review and
comment on proposed initial synthetic minor permits but does not do so for proposed revisions
to synthetic minor operating permits.
Discussion: During our 2009 Evaluation,55 we found that the District did not provide the EPA
and the public an opportunity to review and comment on proposed synthetic minor operating
permits. The EPA's Part 70 regulations do not provide specific requirements for synthetic minor
permits. The EPA provides guidance for permitting authorities to develop such requirements for
synthetic minor permits as part of their permitting programs in the agency's Memorandum
entitled "Guidance an (sic) Enforceability Requirements for Limiting Potential to Emit through
SIP and §112 Rules and General Permits" (January 25, 1995).56 Section 2-6-423 of the District's
Regulation 2, Rule 6 requires that the District provide to the EPA "a copy of each proposed and
final synthetic minor operating permit." In practice, the District has provided opportunity for
review and comment only for initial synthetic minor permits. The District has submitted these
permits to the EPA and has made these permits available for public review and comment. It is
unclear to the EPA whether Section 2-6-423 requires the District to also provide the EPA a copy
of each synthetic minor permit revision for review.
Recommendation: The EPA commends the District for providing the EPA and the public with an
opportunity to review and comment on proposed initial synthetic minor permits. However, we
recommend updating Regulation 2, Rule 6 to require the District to also provide revisions to
synthetic minor permits for public and EPA review when the revision involves a substantial
change to a synthetic minor limit.
55 See Finding 5.2 in the 2009 Evaluation.
56 See https://www.epa.gov/sites/default/files/2015-08/documents/potoem.pdf.
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6. Compliance
This section addresses the BAAQMD practices and procedures for issuing title V permits that ensure
compliance with all applicable requirements. Title V permits must contain sufficient requirements to
allow the permitting authority, the EPA, and the general public to adequately determine whether the
permittee is in compliance with all applicable requirements.
Compliance is a central priority for the title V permit program. Compliance assures a level playing field
and prevents a permittee from gaining an unfair economic advantage over its competitors who comply
with the law. Adequate conditions in a title V permit that assure compliance with all applicable
requirements also result in greater confidence in the permitting authority's title V program within both
the general public and the regulated community.
6.1 Finding: The District's Compliance and Enforcement Division reviews nearly all title V deviation
reports, annual compliance certifications, and semiannual monitoring reports submitted by Part
70 sources and uses the deviation reports to identify compliance issues.
Discussion: During interviews, the District's Compliance and Enforcement Division staff
indicated that nearly all deviation reports, quarterly monitoring reports, and compliance
certifications that sources submit to the District are reviewed by inspectors. Supervisors may
also review reports as necessary.
In response to our initial questionnaire, the BAAQMD explained that all instances of
noncompliance with the permit must be reported in writing to the Compliance and
Enforcement Division within 10 calendar days of the discovery of the incident. Within 30
calendar days of the discovery of any incident of noncompliance, the facility must submit a
written report including the probable cause of noncompliance and any corrective or
preventative actions.
During our interviews, Compliance and Enforcement Division staff reported that most deviation
reports result in Notices of Violation (NOVs). When the District receives deviation reports,
inspectors generally conduct an investigation of the facility to determine compliance with
permit conditions. If the District determines that a violation has occurred, the District will issue
an NOV. Inspectors have found the deviation reports useful for this purpose.
Recommendation: The EPA commends the BAAQMD's efforts in reviewing deviation reports,
semiannual monitoring reports, and compliance certifications. We encourage the BAAQMD to
continue using title V deviation reports to prioritize and initiate inspections.
6.2 Finding: The District's Compliance and Enforcement Division is involved in title V permit review
for initial and renewal actions prior to public notice, which may improve the enforceability of
the District's permits.
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Discussion: During interviews, the BAAQMD Engineering Division reported that all initial and
renewal title V draft permits are routed to the Compliance and Enforcement Division. The
District further explained that a title V checklist is routed along with the draft permit package
during review (see Appendix B). This allows permit reviewers to see which parts of the permit
and statement of basis have been reviewed by other staff and allows the reviewer to track what
parts they have reviewed. During interviews, Compliance and Enforcement Division
management indicated that the Division reviews draft title V permits. However, Compliance
and Enforcement Division staff generally reported that they were not involved in the review of
draft title V permits. See Finding 7.3 for a discussion on the communication between the
BAAQMD's Engineering and Compliance and Enforcement Divisions.
Recommendation: The EPA commends the Compliance and Enforcement Division for reviewing
draft permits. The Engineering Division could further strengthen the collaboration with the
Compliance and Enforcement Division staff by updating the title V review checklist to
standardize the inclusion of the Compliance and Enforcement Division, specifically an inspector
assigned to the applicable source.
6.3 Finding: The District incorporates compliance schedules in permits when required, while the
practice to generally resolve compliance issues before permit issuance minimizes the need to
include them.
Discussion: The Part 70 program requires that each title V permit contain a schedule of
compliance, or compliance schedule, if necessary.57 Compliance schedules include enforceable
milestones leading to compliance for those requirements for which a source is not in
compliance. During interviews, the District provided examples of title V permits that included
compliance schedules. However, because the District's rules prevent them from issuing
preconstruction permits to sources that are out of compliance, the District usually addresses
compliance issues prior to title V permit issuance. As a result, compliance schedules are often
not needed.
After receiving a permit application, the permit engineer reviews the Source's compliance
history. If patterns of recurring violations or current violations are discovered, the Engineering
Division refers the compliance issue to the Compliance and Enforcement Division using the
Enforcement Referral Form (see Appendix G). Compliance issue resolution can be time
consuming, so this practice may delay the issuance of permits. However, the District has
experience incorporating compliance schedules into title V permits, so they do not have to wait
until the issue is resolved to issue a title V permit.
Recommendation: We commend the District for generally resolving compliance issues before
issuing permits and incorporating compliance schedules into permits when necessary.
57 See 40 CFR 70.6(c)(3) and 70.5(c)(8).
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Finding: Compliance and Enforcement Division staff have the necessary equipment to perform
their job duties.
Discussion: During interviews, members of the Compliance and Enforcement Division stated
that they have sufficient tools and safety equipment to perform inspections, including access to
an infrared camera. If an inspector determines they need equipment, they can submit a
purchase order to be approved. Staff also reported that the District is generally supportive of
expenses to purchase equipment, as needed.
Recommendation: The EPA commends the District for equipping Compliance and Enforcement
staff with the necessary equipment to perform their job duties.
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7. Resources and Internal Management
The purpose of this section is to evaluate how the permitting authority is administering its title V
program. With respect to title V administration, the EPA's program evaluation: (1) focused on the
permitting authority's progress toward issuing timely title V permit modifications and renewals; (2)
identified organizational issues and problems; (3) examined the permitting authority's fee structure,
how fees are tracked, and how fee revenue is used; and (4) looked at the permitting authority's
capability of having sufficient staff and resources to implement its title V program.
An important part of each permitting authority's title V program is to ensure that the permit program
has the resources necessary to develop and administer the program effectively. A key requirement of
the Part 70 program is that the permitting authority establish an adequate fee program to ensure that
title V fees (1) are adequate to cover title V permit program costs and (2) are used solely to cover the
permit program costs. Regulations concerning the fee program and the appropriate criteria for
determining the adequacy of such programs are set forth in 40 CFR 70.9.
7.1 Finding: Engineering and Compliance and Enforcement Division staff generally report that they
receive effective legal support from the District Counsel's office but would like more
information on the resolution of enforcement cases.
Discussion: In our 2009 Evaluation,58 we stated that the BAAQMD staff receive expert,
knowledgeable, and experienced legal support. Since then, the District Counsel retired and a
District Counsel with equally effective results was hired.
It is important to note that organizationally, while BAAQMD's Compliance and Enforcement
Division identifies noncompliance situations, a settlement group within the legal group resolves
noncompliance situations in terms of penalties following a penalty structure outlined in the
California Health and Safety Code.59
During interviews of those involved in the enforcement process at BAAQMD, it became clear
that communications between those who identify noncompliance and those who are involved
in enforcement outcomes associated with those noncompliance situations resulted in confusion
regarding compliance issue resolution. It appeared that once the compliance issues are
identified, Compliance and Enforcement Division staff do not receive regular updates on
enforcement cases, so they are generally unaware of the status of the case and associated
penalties. As appropriate, it would be helpful to share enforcement case outcomes with District
staff who work with the relevant source to ensure a common understanding of the source's
compliance history. In fact, during interviews of Compliance and Enforcement Division staff and
58 See Finding 7.8 in the 2009 Evaluation.
59 For further discussion, see "State Review Framework, Bay Area Air Quality Management District, California, Clean Air Act
Implementation in Federal Fiscal Year 2016, U.S. Environmental Protection Agency Region 9, San Francisco, Final Report
March 11, 2019" at pages 15 to 16. This report can be found at https://www.epa.gov/sites/default/files/2019-
06/documents/srf-rd3-rev-ca.pdf.
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management, only one interviewee was aware of the District's use of the California Health and
Safety Code in establishing penalties for noncompliance.
Recommendation: The EPA commends the BAAQMD on hiring a new District Counsel with
extensive experience in air quality programs. The BAAQMD should continue to ensure that it
receives effective legal support for the Part 70 program. The BAAQMD should improve
communication and coordination with respect to enforcement outcomes among those involved
in the resolution of noncompliance situations to ensure a common understanding of how
enforcement efforts are resolved.
7.2 Finding: While the District tracks title V program expenses and revenue and those funds are
spent solely to support the title V program, it is unclear whether these fees are sufficient to
fully administer a successful program given the large permitting backlog and resource issues.
Discussion: The Part 70 regulations require that permit programs ensure that the collected title
V fees are adequate to cover title V permit program costs and are used solely to cover the
permit program's costs.60
In response to our questionnaire, the BAAQMD provided accounting data for July 1, 2018 - June
30, 2021. As noted elsewhere in this report, prior to the title V program, the BAAQMD was
already implementing its own permitting program. When the Part 70 requirements took effect,
the BAAQMD treated the Part 70 requirements as an overlay to the existing BAAQMD
permitting program. As a result of this approach, the BAAQMD treated the revenue and
expenses associated with the Part 70 program as supplemental to the revenue and expenses
associated with the existing local permitting program. Thus, the combination of their base
permitting program and the additional Part 70 requirements that apply to title V sources result
in the full program as implemented by the BAAQMD. Using an approach based on full cost
recovery, the BAAQMD ensures that it collects fees for its base permitting program and the
supplemental title V costs (including overhead, compliance costs, etc.) that match the expenses
used for implementing the supplemental title V program requirements. See Appendix H for
details regarding their accounting approach.
As discussed in Findings 5.1 and 7.6, the District has a title V permitting backlog and is
experiencing difficulty retaining Engineering Division and Compliance and Enforcement Division
staff. Given the size of the District's title V permitting action backlog, it is not clear whether the
title V fees are sufficient going forward to fully administer the program. The EPA notes that the
District is in the process of improving the resources available to the title V program by hiring
additional staff to address the current backlog. In December 2022, the BAAQMD Board of
Directors authorized an additional 20 positions across the BAAQMD to address resource
demands including those of the permitting program.
60 See 40 CFR 70.9(a).
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Recommendation: During the evaluation, the EPA provided the BAAQMD with the most recent
EPA guidance on title V funding (see Appendix I). The BAAQMD should review the guidance to
ensure their fee program is consistent with the EPA's title V fee policy and that fees will be
sufficient going forward. The District should also continue its efforts to provide appropriate
resources to administer the title V program more effectively, especially in addressing the
existing permitting action backlog.
7.3 Finding: Communication between the Engineering Division and Compliance and Enforcement
Division is inconsistent, which may impede the resolution of complex compliance issues at
facilities.
Discussion: Based on staff interviews, we found there is a lack of communication and
coordination at the staff level. The BAAQMD's Compliance and Enforcement Division and
Engineering Division management continue to hold routine meetings to discuss permitting and
compliance issues; however, such meetings are not held regularly at the staff level. Although
the District's Engineering Division management and staff indicated that draft permits for unique
sources are sent to the Compliance and Enforcement Division for review, the District's
Compliance and Enforcement Division staff indicated that draft permits are rarely sent to the
Compliance and Enforcement Division for review prior to the public comment period.61
As an illustrative example, the Compliance and Enforcement Division staff identified a potential
noncompliance issue with a refinery permit involving the operation of an electrostatic
precipitator downstream of a fluid catalytic cracking unit.62 The BAAQMD issued multiple
notices of violation related to the operating permit condition, but personnel representing the
refinery said the condition could not be met as it would result in unsafe operating conditions.
The Compliance and Enforcement Division staff brought the concern to the attention of the
Engineering Division staff, but the issue remains unresolved. In reviewing the matter, the EPA
identified similar operating permit conditions in use at other agencies within California,
including a facility where a catastrophic explosion occurred in 2015.63 It is unclear whether
there is an ongoing discussion and/or plan to address the issue. The BAAQMD should
encourage meaningful communication between permitting and compliance staff and develop
processes for addressing title V permit implementation issues, such as practical enforceability,
applicability determinations, and compliance determinations.
After reviewing the draft report, the District reported that the Compliance and Enforcement
and Engineering Divisions are working together to improve information exchanges. For
example, the District plans to use an updated Enforcement Referral Process within a digital
program called AirTables. The District expects this tracking system to improve communications
61 As discussed in Findings 2.3 and 6.2, Compliance and Enforcement management reported that the Engineering Division
does send title V draft permits to the Compliance and Enforcement Division for review.
62 See BAAQMD Chevron Refinery permit at Condition 7A (page 615) and condition 83 (page 690).
63 See SCAQMD Torrance Refinery permit #181667, page 393, condition E193.19. For an example of the type of resource
that may be useful in this situation, see https://www.csb.gov/csb-releases-final-report-into-2015-explosion-at-exxonmobil-
refinerv-in-torrance-california/.
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and coordination when questions and concerns arise that pertain to permitting and
enforcement matters.
Recommendation: The EPA commends the BAAQMD's effort to maintain good communication
between Engineering Division and Compliance and Enforcement Division management.
However, the BAAQMD should promote increased communication and cooperation between
Engineering Division and Compliance and Enforcement Division staff through systemic norms
and processes, and explore ways to resolve permitting and enforcement issues among
BAAQMD's Engineering Division and Compliance and Enforcement Division staff.
Finding: While the BAAQMD uses the EPA, the California Air Resources Board (CARB), and in-
house courses to train permit staff, BAAQMD staff may benefit from additional training.
Discussion: During this evaluation, the District reported that there are 19 permit engineers that
participate in writing title V permits. Distributing the title V workload among multiple engineers
is an attempt to address the issue of a significant loss of institutional knowledge when a single
permitting engineer leaves. However, the District's title V permitting program is experiencing
staffing challenges associated with the varying levels of experience among the permitting staff
as they move to a more distributed workload approach to process permits. In addition, we
identified substantive issues related to permit preparation and content indicating a need for
further title V training to prepare more effective permits (See Section 2). In interviews, staff
identified title V training, primarily focusing on permit writing and inspections, as something
that would improve the District's title V program. District staff specifically stated that training
on federal regulations (NESHAPs and NSPS) would improve staff's familiarity with regulatory
requirements and help permit engineers identify how best to incorporate these requirements
into title V permits. Regulatory updates sent by EPA Region 9 may be shared with staff as they
contain relevant updates to NSPS and NESHAP requirements and can be used as reference
material for finding relevant information on the EPA's website. Additionally, the District should
encourage staff to network with staff from other agencies by participating in other learning
opportunities such as conferences, workshops and online trainings/webinars. The EPA has
separately identified training needs related to CAM and other critical program elements and
policies. See findings 2.6, 3.1, and 3.3.
The Compliance and Enforcement Division has an onboarding training program that includes
training on title V inspections, investigations and required reporting. During interviews, staff
and managers acknowledged that they would likely benefit from additional training.
Recommendation: The EPA commends the BAAQMD for distributing the title V workload to
support succession planning. The District should identify additional core training needs and
develop a curriculum that title V program staff in both the Engineering and Compliance and
Enforcement Divisions should complete to enhance title V program understanding and improve
permit writing and compliance determinations. This may include sharing Region 9's regulatory
updates with staff and setting aside time for staff to network with staff from other agencies.
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7.5 Finding: The BAAQMD's Engineering Division staff reported that supervisors are regularly
available for one-on-one consultation, providing an opportunity for staff to discuss permitting
issues.
Discussion: Throughout our interviews, Engineering Division staff usually reported meeting with
supervisors on a weekly basis. Generally, communication in the Engineering Division between
staff and supervisors is effective. Overall, staff seem to be very involved in permitting decisions.
Recommendation: The EPA commends the BAAQMD for empowering staff and in maintaining
effective communication between staff and supervisors in the Engineering Division.
7.6 Finding: The District's Engineering Division faces staffing challenges, resulting in several issues
including a permitting backlog of over 150 overdue open applications.
Discussion: The results of our interviews suggest that the District's Engineering and Compliance
and Enforcement Divisions should increase focus on succession planning to better prepare for
the event that staff leave the Divisions. In addition, the BAAQMD, like other agencies,
experienced high turnover as a result of the COVID-19 pandemic, increasing the number of
staffing vacancies. During our site visit, we also heard that the workload in the Engineering
Division is high when compared to other Divisions within the District. This discrepancy in
workload was cited as a reason for some of the Engineering Division's staffing challenges.
Impacts of high staff turnover rate include: (1) a workload situation in which certain key title V
program tasks are or may not be completed in the timeframe required by District rules and the
EPA's Part 70 program (see Finding 5.1 regarding the BAAQMD's permitting backlog), (2) a lack
of institutional knowledge at the staff level within the District's permitting and compliance
programs which can create delays in the issuance of title V permits and lead to inconsistent
permitting determinations, and (3) a lack of adequate resources necessary to complete both
existing and new workloads. After reviewing the draft report, the BAAQMD reported that the
District is recruiting for seven Engineering Division vacancies for permitting staff who will
conduct title V work. Additionally, the BAAQMD reported that the District is currently
undergoing a management audit and is embarking on a District-wide strategic planning process
to establish agency priorities and securing the necessary resources to meet the goals set over
the next five years, including addressing the title V permitting backlog.
Recommendation: Based on discussions with the District, a next step to address staffing
challenges should include a review of the present permitting program workload and an analysis
of any upcoming workload change associated with addressing the title V permitting backlog,
discussed in Section 5 of this report, to ensure that the permitting program can operate
effectively and efficiently with adequate staffing.
7.7 Finding: The BAAQMD Engineering Division is generally grouped by industry sector, which helps
the Engineering Division staff become experts on sector-specific issues.
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Discussion: The BAAQMD Engineering Division includes five managers of the following sections:
Organics Recovery and Title V, Refineries, Back-up Generators and Materials Handling, Toxics,
and Technology Integration and Operations. This structure allows permit engineers to focus on
specific industry sectors, such as refineries and landfills, which are generally subject to complex
regulations. This source-specific expertise is invaluable to the District in title V program
implementation.
Recommendation: The EPA commends the BAAQMD for designing the Engineering Division to
produce experts on sector-specific issues. The EPA recommends the District develop a
succession plan to ensure this sector-specific knowledge is retained.
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8. Records Management
This section examines the system that the BAAQMD has in place for storing, maintaining, and
managing title V permit files. The CAA provides that certain documents created pursuant to the title V
permitting program, including the permit application, be made available to the public but also allows
some protections for confidential information.64 The BAAQMD has a responsibility to the public in
ensuring that title V public records are complete and accessible.
In addition, the BAAQMD must keep title V records for the purposes of having the information
available upon the EPA's request. 40 CFR 70.4(j)(l) states that any information obtained or used in the
administration of a State program shall be available to the EPA upon request without restriction and in
a form specified by the Administrator.
The minimum Part 70 record retention period for permit applications, proposed permits, and final
permits is five years in accordance with 40 CFR 70.8(a)(1) and (a)(3). However, in practical application,
permitting authorities have often found that discarding title V files after five years is problematic in the
long term.
8.1 Finding: The District's permit record typically includes sufficient information used to inform
permitting decisions.
Discussion: According to the BAAQMD, the District has digitized nearly all their files and any
physical files are archived in a separate records center. During our site visit, most interviewees
stated that they do not normally use physical copies, and if they do, it is due to personal
preference. This conversion to digital files helped greatly during the COVID-19 pandemic.
We found during our evaluation that the District generally provides comprehensive information
on its webpage to inform permit decisions, including all the District generated documents for
the associated permit action; however, permit applications submitted by the applicants are not
posted online. While in most cases, the District was able to provide a copy of the application
when requested by the EPA, the District did have some trouble locating some of the
applications if they were paper records.
Recommendation: The EPA commends the BAAQMD on its conversion to electronic files. We
recommend the BAAQMD follow their file retention policy and make permit applications readily
available to the public when informing its permit decisions by posting the applications on the
64 This protection, however, is not absolute as the types of information that may be treated as confidential, and therefore
withheld from the public, is limited. Specifically, "[t]he contents of a permit shall not be entitled to [confidential] protection
under section 7414(c) of this title." CAA section 503(e), referring to section 114(c) of the CAA which provides protection of
certain confidential trade secret information - but not emissions data - from disclosure. In addition to the title V program
requirements, confidentiality is also addressed in the EPA's regulations governing the disclosure of records under the
Freedom of Information Act (FOIA). Pursuant to those requirements, information which is considered emissions data,
standards or limitations are also not entitled to confidential treatment. See In the Matter of ExxonMobil Corporation,
Baytown Refinery, Order on Petition No. VI-2016-14 (April 2, 2018) (Baytown Order).
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District's website.
8.2 Finding: The District has a written file retention policy. However, most staff interviewed were
not aware of the District's record retention schedules.
Discussion: The BAAQMD has a written file retention policy for retaining official records;
however, some staff are not aware of the District's record retention schedules. With the
current file retention policy (see Appendix J), permit documents are generally maintained for
the life of the facility and then an additional seven years. The title V compliance files are
generally retained for seven years.
Recommendation: The EPA commends the BAAQMD for having a written file retention policy
that complies with the federal regulation. We recommend that the District provide training to
staff on its records management policies.
8.3 Finding: The BAAQMD tracks title V permit data in a remotely hosted legacy system that is
being phased out, negatively affecting permit data retrievability and representing a risk to
retention of permitting data.
Discussion: During our 2009 Evaluation,65 the BAAQMD was working with a contractor to map
the interrelationships among existing permitting and enforcement databases and develop a
modern system to streamline the permitting process. During our site visit for this current
evaluation, we learned that the District did not continue with development of the system
referenced in our 2009 report to include title V permitting information.
During our evaluation we learned that the BAAQMD is using several databases to manage data
for the Engineering and Compliance and Enforcement Divisions. The Engineering Division
currently uses three relationship databases (Databank, IRIS, and Production System) that
manage permits and data from permitted and registered facilities. Databank and IRIS are legacy
systems that are being phased out in favor of Production System. During our site visit, the
District reported that Production System does not include title V permitting information.
Databank tracks statuses of permit applications and renewals while permit renewal fees
(including title V renewal fees) are tracked by IRIS. Databank is a remotely hosted system and is
increasingly difficult to find replacement parts for repairs. Additionally, Databank is driven by
BASIC commands, so it is unusable by those who are unfamiliar with the commands.
The Compliance and Enforcement Division uses Airtable, an online platform, to track
monitoring reports and NOV resolution, but it is not connected to the Engineering Division's
databases. When the Compliance and Enforcement Division receives a report, the technician
inputs the receipt data and assigns the report to an inspector, who adds review data to an input
form. Previously, the Compliance and Enforcement Division used Microsoft Excel to track this
65 See Finding 7.3 in the 2009 Evaluation.
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data, but they started using Airtable in 2020. The Division is also in the process of adding facility
data to the Production System.
As discussed elsewhere in this report, the BAAQMD reported that the District has identified a
modern database, which is scheduled to be in place by October 2023. The District expects the
new database to further improve title V permitting.
Recommendation: The EPA commends the BAAQMD for using an improved Compliance and
Enforcement tracking database. However, the BAAQMD should develop a long-term plan to
effectively manage and track its title V permitting data to ensure data is not lost.
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Appendix A. Air Pollution Control Agencies in California
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Map: California Map for Local Air District Websites
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CALIFORNIA MAP FOR LOCAL AIR DISTRICT WEBSITES
The State is divided into Air Pollution Control Districts (APCD) and Air Quality Management Districts (AQMD), which are also called air
districts. These agencies are county or regional governing authorities that have primary responsibility for controlling air pollution from
stationary sources. The following map is for informational purposes and shows the Air District Boundaries. This map can be used to
access local air district websites or an email address for that district if there is no website.
California Air Districts
Local Air District Resource Directory
California Air Pollution Control Officers Association (CAPCOA)
Other Maps on this Website
The Board is one of six boards, departments, and offices under
the umbrella of the California Environmental Protection Agency.
Cal/EPA I ABB I CIWMB | DPR | DTSC | OEHHA | SWRCB
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Appendix B. Title V Questionnaire and the BAAQMD Responses
Page 58 of 68
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United States Environmental Protection Agency
Region 9 - Pacific Southwest
https://www.epa.gov/caa-permitting/caa-permitting-epas-pacific-southwest-region-9
Title V Program Evaluation
Questionnaire
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Contents
A. Title V Permit Preparation and Content 3
B. General Permits (GP) 7
C. Monitoring 8
D. Public Participation and Affected State Review 10
Public Notification Process 10
Public Comments 11
EPA 45-day Review 12
Permittee Comments 13
Public Hearings 13
Availability of Public Information 14
Affected State Review and Review by Indian Tribes 16
E. Permit Issuance / Revision / Renewal 18
Permit Revisions 18
Permit Renewal or Reopening 20
F. Compliance 22
Deviations 22
Compliance Reports 23
Excess Emissions 24
G. Resources & Internal Management Support 26
Environmental Justice Resources 29
H. Title V Benefits 31
Good Practices not addressed elsewhere in this questionnaire 33
EPA assistance not addressed elsewhere in this questionnaire 34
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A. Title Ą Permit Preparation and Content
1. For those title V sources with an application on file, do you require the sources to update their applications
in a timely fashion if a significant amount of time has passed between application submittal and the time
you draft the permit? YEI ND
a. Do you require a new compliance certification? YlEI ND
The Air District requires a new compliance certification at the time of public notice if the current
certification is more than one year old.
2. Do you verify that the source is in compliance before a permit is issued? YD NISI If so, how?
We rely on the facility to certify compliance through a signed and dated certification statement form.
Please see form here: https://www.baaqmd.qov/~/media/files/engineerina/forms/title-
v/mfr cert state men t.pdf?la=en&rev=81135d 7a2c36440782ced718009c3383
a. In cases where a facility is either known to be out of compliance, or may be out of compliance (based
on pending NOVs, a history of multiple NOVs, or other evidence suggesting a possible compliance
issue), how do you evaluate and document whether the permit should contain a compliance schedule?
Please explain and refer to appropriate examples of statements of basis written in 2005 or later in
which the District has addressed the compliance schedule question.
In addition to instances of continuing non-compliance (which clearly merit a schedule of compliance),
the Air District reviews the compliance history looking for patterns of recurring similar violations, which
might indicate the need for a compliance schedule and/or other permit conditions. The evaluation and
documentation of the basis and circumstances of a compliance schedule are discussed in the Statement
of Basis document. Typically, permit conditions are imposed that specify the steps and timeline that the
source must follow to come into compliance. An example of a Title V permit with compliance schedules
that have been issued since 2005 is the renewal permit for Tesla Motors Inc.
TV permit with schedule of compliance:
https://www.baaqmd.gOv/~/media/files/engineering/title-v-permits/al438/al438 -
03 2017 renewal final permit 02-pdf.pdf?la=en&rev=6118edcle2984996a8779a91a883046d
Corresponding SOB:
https://www.baaq md.gov/~/media/f iles/engineering/title-v-
permits/a!438/al438e0459 12 2016 renewal proposed sob 03-
pdf.pdf?la=en&rev=e21d08654966489e8ccl6154b81da!86
3. What have you done over the years to improve your permit writing and processing time?
We have developed permit and statement of basis templates that are continually updated by the Senior
Engineer dedicated to the Title V program. This insures that permits contain current federal, state, and Air
District requirements. The templates decrease processing time by providing a standard, consistent format
for use by the permit engineers. We have also sought ways to coordinate enforcement efforts with Title V
permit activity, so that the Title Vpermit may better serve as a tool responsive to significant compliance
problems.
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We have also allocated a minimum number of hours per week to concentrate on Title V permits. NSR
permits are to include either language for the Statement of Basis and/or permit revisions in the appendices
to allow for faster incorporation into the Title V permits.
4. Do you have a process for quality assuring your permits before issuance? YlEI ND Please explain.
All draft permits are routed through the Senior Engineer dedicated to Title Vprogram to ensure
consistency. Draft initial and renewal Title Vpermits are circulated internally to the Air District Compliance
and Enforcement and Technical Services Divisions and the permitted facility for comment and review.
Proposed permits and permit revisions are circulated through the Engineering and Legal Divisions and
Executive Management prior to issuance. In addition, we utilize Title V checklists that allow permit
reviewers to see which parts of the permit and statement of basis have been reviewed by other staff and
allows the reviewer to track what parts they have reviewed.
5. Do you utilize any streamlining strategies in preparing the permit? Please explain.
We do not include equipment that is exempt from Air District permit requirements in the Title V permit,
unless it is significant (i.e., PTE greater than 2 tpyfor any regulated air pollutant, or 400 Ib./yr. for any
HAP). We also have identified generally applicable requirements in a single table, rather than listing them
for each piece of subject equipment. In addition, sources with common applicable requirements are
grouped together whenever possible. Finally, as part of the application process, the permittee can request
a permit shield from non-applicable requirements or from monitoring, recordkeeping, or reporting
requirements for less stringent requirements.
a. What types of applicable requirements does the District streamline, and how common is streamlining
in District permits?
We have issued some permits with subsumed monitoring, recordkeeping, or reporting requirements.
This is not commonly done and is only included at the request of the facility as described above.
Streamlining is not common in District Title Vpermits.
b. Do you have any comments on the pros and cons of streamlining multiple overlapping applicable
requirements? Describe.
Streamlining of multiple overlapping applicable requirements can simplify the permit and reduce the
burden of demonstrating and verifying compliance. Streamlining analyses are often difficult or
impractical to complete, however, due to differences in the form of the standards and/or differences in
monitoring, test methods, recordkeeping, and reporting requirements.
6. What do you believe are the strengths and weaknesses of the format of District permits (i.e., length,
readability, facilitates compliance certifications, etc.)? Why?
Strengths: Provides comprehensive listing of applicable requirements, monitoring, and source test methods.
The applicable requirements can be found directly for a given piece of equipment. The statement of basis is
comprehensive, and the format allows for a thorough explanation of the basis of applicability
determinations and any monitoring decisions. Weakness: Some permits for complex facilities are long and
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difficult to navigate. Occasionally, this has resulted in errors as permits are revised. Air District staff is
considering instituting format changes that would merge separate tables, thereby reducing permit length.
7. How have the District's statements of basis evolved over the years since the beginning of the Title V
program? Please explain what prompted changes, and comment on whether you believe the changes
have resulted in stronger statements of basis.
In the case of the initial Title V permits issued by the Air District, the Air District followed the letter of
February 19,1999, from Matt Haber of EPA Region IX to David Dixon of the California Air Pollution Control
Officers Association (CAPCOA) regarding the information required in the statement of basis. As a result of
an EPA order issued on May 24, 2004, regarding an appeal of the initial Los Medanos Energy Center permit
filed with EPA Region IX by Our Children's Earth (OCE) and Californians for Renewable Energy (CARE), the
Air District developed a statement of basis that addressed Title V issues more directly. For example, the
current statement of basis documents and explains changes to the permit so that the public can
understand those changes and their potential impacts. The current statement of basis also discusses
applicable requirements and their corresponding monitoring as well as complex applicability
determinations such as CAM. As a result of these changes, the current statement of basis is more robust
than earlier versions.
8. Does the statement of basis explain:
a. The rationale for monitoring (whether based on the underlying standard or monitoring added in the
permit)? YlSI N ~
Section C.VII of the statement of basis explains the rationale for monitoring.
b. Applicability and exemptions, if any? YlEI N ~
The Statement of Basis does not provide detailed explanations of simple applicability determinations
and exemptions where the determination can be made by inspection. However, the statement of basis
has detailed explanations of all complex applicability determinations.
c. Streamlining (if applicable)? YlEI N ~
The statement of basis does provide explanations of any streamlining. Any streamlining is normally
associated with use of the permit shield.
9. Do you provide training and/or guidance to your permit writers on the content of the statement of basis?
YlSI N ~
The Air District maintains detailed templates that contain standard language and content for the
statement of basis for initial, renewal and revised permits.
a. Do you have written policy or guidance on practical enforceability? YD N 13
10. Do any of the following affect your ability to issue timely initial title V permits:
(If yes to any of the items below, please explain.)
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a. SIP backlog (i.e., EPA approval still pending for proposed SIP revisions) YD N 13
b. Pending revisions to underlying NSR permits YlEI N ~
In some cases, pending NSR applications can be delayed significantly by CEQA issues under the control
of the local governmental entity that assumes lead agency responsibilities. Also, the pending NSR
applications may require source testing, subsequent review, and approval of the final source test report
prior to issuance of the NSR Permit to Operate.
c. Compliance/enforcement issues YlEI N ~
The negotiation of terms for compliance schedules has in some cases increased the processing time for
initial and renewal Title V permits.
d. EPA rule promulgation pending (MACT, NSPS, etc.) Yd N ISI
e. Permit renewals and permit modification (i.e., competing priorities) YlEI N ~
The competing priorities of renewing and revising existing Title V permits has created challenges in
terms of the timely issuance of initial permits for new Title V facilities.
f. Awaiting EPA guidance YlEI N ~
The reopening of the permits for the refineries was significantly delayed because EPA headquarters and
EPA Region IX did not agree on monitoring for applicability of H2S monitoring at the refinery flares.
11. Any additional comments on permit preparation or content? No
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B, General Permits (GP)
1. Do you issue general permits? YD N ISI
a. If no, go to next section
b. If yes, list the source categories and/or emission units covered by general permits.
2. In your agency, can a title V source be subject to multiple general permits and/or a general permit and a
standard "site-specific" title V permit? YD N ~
a. What percentage of your title V sources have more than one general permit?
3. Do the general permits receive public notice in accordance with 70.7(h)? YD N ~
a. How does the public or regulated community know what general permits have been written? (e.g., are
the general permits posted on a website, available upon request, published somewhere?)
4. Is the 5-year permit expiration date based on the date:
a. The general permit is issued? YD N ~
b. You issue the authorization for the source to operate under the general permit? YD N ~
5. Any additional comments on general permits?
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C. Monitoring
1. How do you ensure that your operating permits contain adequate monitoring (i.e., the monitoring
required in §§ 70.6(a)(3) and 70.6(c)(1)) if monitoring in the underlying standard is not specified or is not
sufficient to demonstrate compliance?
The Part VII tables of Air District Title V permits include a listing of each applicable limit and the
corresponding monitoring requirement and method. When there is no monitoring required for a given limit,
the statement of basis must include a justification for no monitoring. If monitoring is necessary to
demonstrate compliance, it is instituted under the Title V permitting process. The routing of all draft Title V
permits through the Senior Engineer dedicated to the Title Vprogram ensures that this requirement is met.
The Air District reviews all monitoring for sufficiency, even though our understanding of EPA policy is that
review of existing monitoring is not required under Title V. In all cases, the Air District balances the
emission reduction benefits of additional monitoring against the cost of that monitoring.
a. Have you developed criteria or guidance regarding how monitoring is selected for permits? If yes,
please provide the guidance. YD N 13
Guidance has not been developed for all types of monitoring, but the Air District does use the guidance
on periodic monitoring developed by the CAPCOA/ARB/EPA Region IX Title V Subcommittee for various
types of common sources.
2. Do you provide training to your permit writers on monitoring? (e.g., periodic and/or sufficiency
monitoring; CAM; monitoring QA/QC procedures including for CEMS; test methods; establishing
parameter ranges) YlSI N ~
3. How often do you "add" monitoring not required by underlying requirements? Have you seen any effects
of the monitoring in your permits such as better source compliance?
We have imposed monitoring when the underlying rule contains no monitoring of a periodic nature. This
does not occur often. An example would be the requirement for periodic visual inspection of particulate
sources for compliance with BAAQMD Regulation 6, Rule 1. We have also required periodic monitoring of
pressure drop for baghouses to ensure compliance with Regulation 6, Rule 1. We believe that in some cases
this monitoring may have resulted in better source compliance.
4. What is the approximate number of sources that now have CAM monitoring in their permits?
Less than 5.
Please list some specific sources.
TV permit with CAM plan:
https://www.baaqmd.qov/~/media/files/engineerina/title-v-
permits/a0017/a0017 05 05 2020 renewal final permit 02-
Pdf.pdf?la=en&rev=ac0602f735bb4fbd89ff945fle395d47
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Statement of basis:
https://www.bgggmd.gov/~/medig/files/engineering/title-v-
permits/a0017/a0017 05 05 2020 renewal final sob 03-
Pdf.pdf?la=en&rev=7ff022a887704478a09e5c760b6aaa7c
TV Permit with CAM Plan:
https://www.baaamd.aov/~/media/files/engineerina/title-v-
permits/a0062/a0062 04 25 2018 renewal final permit 02-
pdf.pdf?la=en&rev=28fb820bf6b841fa985215401fa80014
Statement of basis:
https://www.baaamd.aov/~/media/files/engineerina/title-v-
permits/a0062/a0062 1 26 2018 renewal proposed sob 04-
Pdf.pdf?la=en&rev=2d59f2al6b6e4ffla90679ec34329f43
5. Has the District ever disapproved a source's proposed CAM plan?
No, our experience with the development of a CAM plan is that it has been a collaborative process with a
shared goal of coming to an agreement.
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D, Public Participation and Affected State Review
Public Notification Process
1. Which newspapers does the District use to publish notices of proposed title V permits?
We utilize a variety of major newspapers of general circulation throughout the Air District, but we try to
use a newspaper that is circulated in the general vicinity of the Title V facility.
2. Do you use a state publication designed to give general public notice? YD N 13
3. Do you sometimes publish a notice for one permit in more than one paper? YlSI N ~
a. If so, how common is if for the District to publish multiple notices for one permit?
We have only done so once. It was for a controversial facility, Lehigh Southwest Cement Company,
facility A0017.
b. How do you determine which publications to use?
We select the largest newspaper in the general vicinity of the Title Vfacility.
c. What cost-effective approaches have you utilized for public publication?
We post all proposed and final Title V permits, statement of basis documents and public notices on the
Air District website. This is a very cost-effective approach to public notification. Notification of all Title V
actions are also sent to all persons subscribed on the Air District list server via email. We use the
California Newspaper Service Bureau to publish the notices in newspapers.
4. Have you developed mailing lists of people you think might be interested in title V permits you propose?
[e.g., public officials, environmentalists, concerned citizens] YlSI N ~
a. Does the District maintain more than one mailing list for title V purposes, e.g., a general title V list and
source-specific lists? YD N ISI
b. How does a person get on the list? (e.g., by calling, sending a written request, or filling out a form on
the District's website)
A request can be made by email or postal mail.
c. How does the list get updated?
An air quality technician maintains the list of interested parties for Title V permit actions.
d. How long is the list maintained for a particular source?
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We do not have lists dedicated to specific facilities. However, a name is not removed from our
interested parties list unless they request to be removed or the address is no longer valid.
e. What do you send to those on the mailing list?
Copies of the public notice for proposed Title V actions. For minor revisions or administrative
amendments, we send a copy of the transmittal letter that is sent to EPA. We only provide hard copies
of proposed permits and statement of basis documents upon request since we post all Title V
documents on the Air District website.
5. Do you reach out to specific communities (e.g., communities with environmental justice concerns) beyond
the standard public notification processes? YlEI N ~
On occasion, we have public meetings to discuss the proposed TV permits for high public interest facilities.
6. Do your public notices clearly state when the public comment period begins and ends? YlSI N ~
7. What is your opinion on the most effective methods for public notice?
In general, public notices in newspapers are not that effective since few people read the classified section of
the newspaper unless they are looking for a particular public notice. Posting the public notice on the Air
District website (per current practice) probably reaches more concerned members of the public and public
advocates. Although federal regulations now allow e-noticing, Air District Regulation 2, Rule 6 that
governs Air District Title Vpermitting still requires newspaper publishing. When Regulation 2, Rule 6 is
amended in the future, the e-noticing option will be added.
8. Do you provide notices in languages besides English? Please list the languages and briefly describe under
what circumstances the District translates public notice documents? YlSI N ~
Typically, the public notices have been published in English only. If we have a public meeting to discuss a
proposed permit, we provide translated documents as dictated by the demographics of the area.
Similar to our practice of providing translations for public notices in our Overburdened Communities in our
NSR program (see Environmental Justice Resource section), we are also working on policies and procedures
to provide similar translations for theTitle V public notices. Notices will be translated into Chinese, Spanish,
Tagalog, and Vietnamese. These languages were determined to be needed based on the population of
non-English speakers.
Public Comments
9. How common has it been for the public to request that the District extend a public comment period?
The public has requested an extension of the public comment period only a few times in the history of the
program. For example, during the proposal of the initial refinery Title V permits.
a. Has the District ever denied such a request? YD N ISI
b. If a request has been denied, what were the reason(s)?
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10. Has the public ever suggested improvements to the contents of your public notice, improvements to your
public participation process, or other ways to notify them of draft permits? If so, please describe.
YD N ISI
Improvements have not been suggested since the last audit.
11. Approximately what percentage of your proposed permits has the public commented on?
Approximately 15% of the initial permits. Less than 1% of subsequent permit revisions and renewals have
garnered public comments.
12. Over the years, has there been an increase in the number of public comments you receive on proposed
title V permits? YD N ISI
13. Have you noticed any trends in the type of comments you have received? YD N ISI
Please explain.
a. What percentage of your permits change due to public comments?
Less than 10% are changed. The content of the permit does not change significantly. However, the
statement of basis may be revised to include more background and explanation.
14. Have specific communities (e.g., communities with environmental justice concerns) been active in
commenting on permits? YD N ISI
15. Do your rules require that any change to the draft permit be re-proposed for public comment?
YD N ISI
a. If not, what type of changes would require you to re-propose (and re-notice) a permit for comment?
If the changes to the permit are substantive in nature or would be considered a significant revision to
the permit, then the proposed permit would require re-noticing.
EPA 45-day Review
16. What permit types do you send to the EPA for 45-day review?
Re-opening, minor revision, significant revision, initial, and renewal.
17. Do you have an arrangement with the EPA region for its 45-day review to start at the same time the 30-
day public review starts? (aka "concurrent review) YlSI N ~
a. What could cause the EPA 45-day review period to restart (i.e., if public comments received, etc)?
If substantive changes are made to the permit because of public comments, then the 45-day EPA review
period would be restarted to give EPA sufficient review time.
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b. How does the public know if the EPA's review is concurrent?
The public notice describes the EPA review process and refers the reader to an EPA website that
indicates when EPA's review period for a given permit action will end.
c. If the District does concurrent review, is this process a requirement in your title V regulations, or a
result of a MOA or some other arrangement?
Air District Regulation 2, Rule 6 is silent on sequential vs concurrent review. EPA has agreed to
concurrent review provided that the 45-day EPA review period ends after the 30-day public comment
period has ended, so that EPA has time to review any public comments. It should be noted that the Air
District utilizes sequential review (I.e., public comment followed by EPA review) for permits that are
likely to receive numerous comments such as refinery Title Vpermits.
Permittee Comments
18. Do you work with permittees prior to public notice? YlSI N ~
We send the draft initial or renewal permit and SOB to the facility for their review and comment prior to
formal proposal of the permit for public comment. This allows the facility to comment on any errors or
changes in permitted source status and minimizes the number of potential comments submitted by the
facility during the public notice period.
19. Do permittees provide comments/corrections on the permit during the public comment period? YlSI N ~
Permittees do not typically provide comments/corrections during the public comment period unless there
are issues that have not been resolved during the draft permit review period described above.
a. Any trends in the type of comments?
Comments are typically administrative in nature, or they relate to regulation applicability or monitoring
requirements.
b. How do these types of comments or other permittee requests, such as changes to underlying NSR
permits, affect your ability to issue a timely permit?
If the comments relate to contentious issues, such as applicability or monitoring, then they often delay
permit issuance.
Public Hearings
20. What criteria does the District use to decide whether to grant a request for a public hearing on a proposed
title V permit? Are the criteria described in writing (e.g.., in the public notice)?
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There must be enough people requesting a public hearing to justify the expenditure of the necessary Air
District time and resources. Some consideration is also given to the substance of the comments made on
the proposed permit.
a. Do you ever plan the public hearing yourself, in anticipation of public interest? YlEI N ~
When the community has expressed ongoing interest in the facility, then we have planned public
hearings prior to receiving a request for one. For example, we have done this in the case of the initial,
and some significant revisions, to refinery Title V permits and to the initial and renewal permits for
Lehigh Southwest Cement Company.
Availability of Public Information
21. Do you charge the public for copies of permit-related documents? YlEI N ~
In accordance with Air District Public Records Request policies, we charge for copies of permit-related
documents other than the proposed and final permits and statement of basis documents which are posted
on the District website.
a. If yes, what is the cost per page?
We charge $0.25 per page for hard copies of documents. However, this rarely occurs because most
record requestors are capable of receiving electronic copies of documents.
b. Are there exceptions to this cost (e.g., the draft permit requested during the public comment period,
or for non-profit organizations)? YlEI N ~
We provide copies of proposed permits and statement of basis documents to interested members of the
public via the Air District website of via e-mail at no cost. The Air District waives the copying fee for
non-profit organizations on a case-by-case basis.
c. Do your title V permit fees cover this cost? YD N IEI If not, why not?
22. What is your process for the public to obtain permit-related information (such as permit applications, draft
permits, deviation reports, 6-month monitoring reports, compliance certifications, statement of basis)
especially during the public comment period?
The Air District has a public records request process in place that allows third parties to request access to
public documents for a permitted facility. They must make a formal public records request through the Air
District website. See https://www.baaqmd.gov/contact-us/request-public-records.
Proposed permits and statement of basis documents for Title V actions are posted on the Air District
website. The semi-annual monitoring reports are also posted on the Air District website. The public can also
subscribe to a District e-mail notification list that summarizes all Air District Title V actions.
a. Are any of the documents available locally (e.g., public libraries, field offices) during the public
comment period? YD N ISI Please explain.
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We no longer provide paper copies at public libraries or field offices. The public must come to Air
District headquarters at 375 Beale Street to view and/or obtain paper copies of Title V documents.
Otherwise, they can obtain documents via email or download from the Air District website. As stated
earlier, all proposed TV permits and statement of basis documents are available on the Air District
website.
23. How long does it take to respond to requests for information for permits in the public comment period?
The response time depends upon the nature of the request. The Air District administrative code states that
the public records must be provided within a "reasonable period of time". When information is requested
to provide comments, the Air District makes every effort to provide the information as early as possible to
allow time for review during the comment period.
Requests may be fulfilled quickly provided that the facility has provided a redacted copy of the requested
documents in advance to protect trade secrets (this is required by Air District regulations for new permit
submittals). Requests for historical documents may take longer though the Air District, as previously
mentioned, makes every effort to respond quickly when the request is relevant to issues raised in the
comment period.
24. Have you ever extended your public comment period as a result of requests for permit-related
documents? YlSI N ~
25. Do information requests, either during or outside of the public comment period, affect your ability to issue
timely permits? YlSI N ~
It depends upon the nature and extent of the records request. If fulfilling the request involves extensive
research and/or archived records, then it may affect permit issuance.
26. What title V permit-related documents does the District post on its website (e.g., proposed and final
permits, statements of basis, public notice, public comments, responses to comments)?
AH proposed and final TV permits, statement of basis documents, transmittal letters, public notices,
EPA/public comments and Air District responses to comments are posted on the Air District Title V permit
page. Semi-annual monitoring reports for each Title V facility are also posted. Title V permit documents
are available here: https://www.baaqmd.qov/permits/maior-facility-review-title-v/title-v-permits
a. How often is the website updated? Is there information on how the public can be involved?
Documents are posted as soon as they are issued.
Yes, see Major Facility Review page:
https://www.baaqmd.gov/permits/maior-facility-review-title-v
b. Do you provide public commenters with final Title V permit documents? No, final documents are only
posted on the Air District website and on the EPA CDX.
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27. Have other ideas for improved public notification, process, and/or access to information been considered?
YD N M If yes, please describe.
28. Do you have a process for notifying the public as to when the 60-day citizen petition period starts?
YlEI N ~ If yes, please describe.
The public notice describes how the public can petition EPA during the 60-day period. See example here:
https://www.baaamd.aov/~/media/files/engineerina/title-v-
permits/a0901/a0901 2021 renewal proposed pn 02 signed-
pdf.pdf?la=en&rev=abebd4219d5146c2afa750118cefl 966
29. Do you have any resources available to the public on public participation (booklets, pamphlets,
webpages)? YlSI N ~
Please see the Title Vpamphlet posted to the Air District website:
https://www.baagmd.gOv/~/media/Files/Engineerina/Title%20V/in your community.ashx?la=en&la=en
30. Do you provide training to citizens on public participation or on title V? YlSI N ~
The Air District has a Public Participation Plan. See webpage here:
https://www.baaamd.aov/plans-and-climate/public-participation-plan
The plan is available here:
https://www.baaamd.aov/~/media/files/communications-and-outreach/community-outreach/public-
engagement/ppp final 121713.pdf?la=en
31. Do you have staff dedicated to public participation, relations, or liaison? YlSI N ~
a. Where are they in the organization?
The Air District has 10 positions in the Communications Division and 15 positions in the Community
Engagement Division.
b. What is their primary function?
These staff are dedicated to informing the public, public outreach and coordinating public meetings.
They educate the public on the goals, functions, and programs of the Air District.
Affected State Review and Review by Indian Tribes
32. How do you notify tribes of draft permits?
There are no affected states or Federally recognized Indian tribes within Air District boundaries that reguire
notification per Part 70.
33. Has the District ever received comments on proposed permits from Tribes? No
34. Please provide any suggestions for improving your notification process. No
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35. Any additional comments on public notification? No
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E. Permit Issuance / Revision / Renewal
Permit Revisions
1. For which types of permit modifications do you follow a list or description in your regulations to determine
the appropriate process to follow: (Check all that apply)
ISI Administrative amendment?
~ Section 502(b)(10) changes?
ISI Significant and/or minor permit modification?
ISI Group processing of minor modifications?
2. Approximately how many title V permit revisions have you processed for the last five years? 100
a. What percentage of the permit revisions were processed as:
Significant: 10%
Minor: 53%
Administrative: 37%
Off-permit: 0%
502(b)(10): 0%
3. For the last five years, how many days, on average, does it take to process (from application receipt to final
permit revision):
a. A significant permit revision? Average: 1227 days, Median: 56 days
b. A minor revision? Average: 1394 days, Median: 1,276 days
4. How common has it been for the District to take longer than 18 months to issue a significant revision, 90
days for minor permit revisions, and 60 days for administrative amendments? Please explain.
Over the last five years, 51% of Administrative amendments have been issued within 60 days, 30% of
Significant Revisions have been issued within 18 months, and 0% of minor revisions have been issued within
90 days.
However, the Air District requires the submittal of a Title V revision application at the same time as the
corresponding new source review (NSR) application. Therefore, if the processing of the NSR application is
delayed due to compliance issues or other reasons, the corresponding TV application will also be delayed.
Note that Air District regulations allow for a final decision on the NSR application 180 days after the
application is complete for major facilities.
Please also note that Air District Regulation 2, Rule 6 only requires that minor revisions be issued within 15
days of the end of the 45-day EPA review period. 40 CFR Part 70 requires that minor revisions be issued
within the later of 90 days from receipt date or 15 days of the end of the 45-day EPA review period.
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Many of the extended application processing times can be attributed to the petroleum refineries because
they submit numerous Title V revision applications. Rather than issue a revised permit for each revision
application, it is often a more efficient use of Air District resources to group several of the revision
applications together and issue them as one revised permit. Because Title V facilities include major facilities
with numerous new source review applications, these facilities often submit many revision applications. To
assist the Air District in prioritizing work, these facilities typically will identify higher priority Title V
applications. Facilities will normally give significant revisions higher priority since these applications
represent potential permit violations if these conditions/requirements are not changed in the Title V permit
prior to exceedances and only take effect after the EPA review period is over. Minor revisions take effect at
the beginning of the EPA review period, and the urgency to process the minor revisions is therefore less.
5. What have you done to streamline the issuance of revisions?
We utilize concurrent EPA and public review for most significant revisions. We have a standard template
statement of basis for permit revisions that contains standard language that has been previously reviewed
and approved by Air District Legal Division staff.
6. What process do you use to track permit revision applications moving through your system?
The Title V permit technician, a dedicated position for Title V, tracks the routing of revision applications
through the review and approval process using email.
7. Have you developed guidance to assist permit writers and sources in evaluating whether a proposed
revision qualifies as an administrative amendment, off-permit change, significant or minor revision, or
requires that the permit be reopened? YlEI N ~ If so, please provide a copy.
Volume II, Part 3 of the Air District Manual of Procedures (MOP) discusses Title Vpermit processing and
includes a discussion of permit revision types. Please see:
https://www.baaqmd.qov/~/media/files/records/mop/vol-
2/vol2 Pt3.pdf?la=en&rev=d70c27b6180444f7bb723847d0921c92
8. Do you require that applications for minor and significant permit modifications include the source's
proposed changes to the permit? YlEI N ~
a. For minor modifications, do you require sources to explain their change and how it affects their
applicable requirements? YlSI N ~
9. Do you require applications for minor permit modifications to contain a certification by a responsible
official that the proposed modification meets the criteria for use of minor permit modification procedures
and a request that such procedures be used? YlSI N ~
The 2-page TV application form entitled Stationary Source Summary is required for all Title V applications
and includes a section where the responsible official designates the type of permit action and describes the
proposed changes.
Page 1 of Stationary Source Summary form
https://www.baaq md.gov/~/media/f iles/engineering/forms/title-
v/stationary source summary Pl.pdf?la=en&rev=2895aeb925ba4c87a6c71f4d3d2ec9b7
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Page 2 of Stationary Source Summary form
https://www.baaq md.gov /~/med ia/files/engineering/forms/title-
v/stationary source summary P2.pdf?la=en&rev=d64b3a40a3d7479a952be932616e2a2c
10. When public noticing proposed permit revisions, how do you identify which portions of the permit are
being revised? (e.g., narrative description of change, highlighting, different fonts).
The public notice includes a short narrative description of the proposed revisions. The proposed changes to
the permit are shown in strikeout/underline format, and the statement of basis document describes the
proposed changes in detail.
11. When public noticing proposed permit revisions, how do you clarify that only the proposed permit
revisions are open to comment?
The public notice states that only the proposed permit revisions are open to comment.
Permit Renewal or Reopening
12. Do you have a different application form for a permit renewal compared to that for an initial permit
application? YD N ISI
a. If yes, what are the differences?
13. Has issuance of renewal permits been "easier" than the original permits?
YlEI N ~ Please explain.
Many of the applicability determinations are still valid for the renewal so they can be "re-used" in the
statement of basis. If a given applicable requirement has not been amended since the original permit was
issued and the subject equipment has not changed, then the citations in the permit are still valid and do not
need revision. Overall, if there has been little NSR permit activity at the Title V facility and few regulation
revisions since the initial permit issuance, the renewal will take less time than the processing of the initial
Title V permit.
14. How are you implementing the permit renewal process (i.e.., guidance, checklist to provide to permit
applicants)? YlEI N ~
We send a reminder email to the permit holder several months prior to the renewal application due date
with a copy of the current TV permit and the requisite TV application forms. An example email is attached
to this questionnaire as attachment 1.
15. What percentage of renewal applications have you found to be timely and complete for the last five
years?
Nearly 100% of renewal applications have been timely and complete. There have been 2 instances where
facilities submitted their Title V renewal application late.
16. How many complete applications for renewals do you presently have in-house ready to process? 53
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a. Have you been able to or plan to process these renewals within the part 70 timeframe of 18 months?
If not, what can EPA do to help? YlSI N ~
17. Have you ever determined that an issued permit must be revised or revoked to assure compliance with the
applicable requirements? YD N ISI
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F, Compliance
Deviations
1. Deviation reporting:
a. Please describe which deviations you require be reported prior to the semi-annual monitoring report?
All instances of non-compliance with the permit must be reported in writing to the Air District's
Compliance and Enforcement Division within 10 calendar days of the discovery of the incident. Within
30 calendar days of the discovery of any incident of non-compliance, the facility must submit a written
report including the probable cause of non-compliance and any corrective or preventative actions.
b. Do you require that some deviations be reported by telephone? YD N 13
Deviations are reported to the Air District via email or mail. We do not accept the reporting of
deviations by phone.
c. If yes, do you require a follow-up written report? YD N ~ If yes, within what timeframe? N/A
d. Do you require that all deviation reports be certified by a responsible official? (If no, describe which
deviation reports are not certified). YD N ISI
The Air District has not required certification of deviation reports by the responsible official to ensure
a prompt and timely 10-day report by the reporting facility. A facility contact who is responsible for
the operation of specific processes or most knowledgeable about the non-compliance issue, are
generally the ones submitting the signed, 10-day deviation reports on behalf of the facility.
i. Do you require certifications to be submitted with the deviation report? YD N ISI
ii. If not, do you allow the responsible official to "back certify" deviation reports? YD N ISI
iii. If you allow the responsible official to "back certify" deviation reports, what timeframe do you allow
for the follow-up certifications (e.g., within 30 days; at the time of the semi-annual deviation
reporting)? N/A
2. How does your program define deviation?
Deviations are defined as all instances of non-compliance with the Title V permit, state and federal
regulations. Deviations must be reported in writing to the Air District's Compliance and Enforcement
Division within 10 calendar days of the discovery of the incident. Within 30 calendar days of the discovery
of any incident of non-compliance, the facility shall submit a written report including the probable cause of
non-compliance and any corrective or preventative actions.
3. Do you require only violations of permit terms to be reported as deviations? YD N 13
Facilities are also required to report instances of non-compliance with state and federal regulations.
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4. Which of the following do you require to be reported as a deviation (Check all that apply):
3 Excess emissions excused due to emergencies (pursuant to 70.6(g))
~ Excess emissions excused due to SIP provisions (cite the specific state rule)
13 Excess emissions allowed under NSPS or MACT SSM provisions
13 Excursions from specified parameter ranges where such excursions are not a monitoring violation (as
defined in CAM)
13 Excursions from specified parameter ranges where such excursions are credible evidence of an emission
violation
Failure to collect data/conduct monitoring where such failure is "excused":
13 During scheduled routine maintenance or calibration checks
13 Where less than 100% data collection is allowed by the permit
13 Due to an emergency
~ Other? Describe.
5. Do your deviation reports include:
a. The probable cause of the deviation? YI3 N ~
b. Any corrective actions taken? Yl3 N ~
c. The magnitude and duration of the deviation? Yl3 N ~
Facilities will report the initial findings of violations in a deviation report, however these findings could
change following further investigations by staff and the facility.
6. Do you define "prompt" reporting of deviations as more frequent than semi-annual? YI3 N ~
7. Do you require a written report for deviations? Yl3 N ~
8. Do you require that a responsible official certify all deviation reports? YD N 3
A facility contact, responsible for operation of specific processes or most knowledgeable about the non-
compliance issue, may submit signed, 10-day deviation reports on behalf of the facility.
Compliance Reports
9. What is your procedure for reviewing and following up on:
a. Deviation reports? Y3 N ~
b. Semi-annual monitoring reports? Y3 N ~
c. Annual compliance certifications? Y3 N ~
Compliance reports, including deviations, semi-annual monitoring reports, and annual compliance
certifications are entered into a database, processed by assigned personnel for distribution and evaluation,
and tracked for timely investigations. Investigations are conducted by field inspectors with the assistance of
engineers when appropriate. Results of the compliance determinations are routed through the Compliance
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and Enforcement Operations Section and to the Air District's Legal Division to pursue appropriate legal
action/settlement.
10. Please identify the percentage of the following reports you review:
a. Deviation reports 100%
b. Semi-annual monitoring reports 100%
c. Annual compliance certification 100%
11. Compliance certifications
a. Have you developed a compliance certification form? YlEI N ~ If no, go to question 12.
i. Is the certification form consistent with your rules? YlEI N ~
ii. Is compliance based on whether compliance is continuous or intermittent or whether the
compliance monitoring method is continuous or intermittent?
Compliance is based on whether compliance is continuous or intermittent.
Hi. Do you require sources to use the form? YD N IEI If not, what percentage do? 100%
The Air District requires compliance certifications to include a list of each applicable requirement, the
compliance status, whether compliance was continuous or intermittent, the method used to
determine compliance, and any other specific information required by the Title V permit.
iv. Does the form account for the use of credible evidence? YlSI N ~
v. Does the form require the source to specify the monitoring method used to determine compliance
where there are options for monitoring, including which method was used where more than one
method exists? YD N ISI
12. Is your compliance certification rule based on:
a. The '97 revisions to part 70 - i.e., is the compliance certification rule based on whether the compliance
monitoring method was continuous or intermittent; ~
OR
b. The '92 part 70 rule - i.e., is the compliance certification rule based on whether compliance was
continuous or intermittent? 13
Excess Emissions
13. Does your program include an emergency defense provision as provided in 70.6(g)? YD N 13 If yes, does
it:
a. Provide relief from penalties? YD N ~
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b. Provide injunctive relief? YD N ~
c. Excuse non-compliance? YD N ~
14. Does your program include a SIP excess emissions provision? YD N IEI If no, go to 10.c. If yes does it:
a. Provide relief from penalties? YD N ~
b. Provide injunctive relief? YD N ~
c. Excuse noncompliance? YD N ~
15. Do you require the source to obtain a written concurrence from the District before the source can qualify
for:
a. The emergency defense provision? YD N IEI
b. The SIP excess emissions provision? YD N 13
c. NSPS/NESHAP SSM excess emissions provisions? YlSI N ~
16. Any additional comments on compliance?
The Compliance & Enforcement Division is in the process of streamlining and clarifying the required Title V
report submissions to the Air District and move towards an electronic reporting process. This includes
reporting Title V Annual Certification Reports, Semi-Annual Monitoring Reports, Title V Deviations and
Reporting Compliance Activities. We are approximately 80% complete with these efforts and plan to send out a
compliance advisory to Title Vfacilities to notify them of the changes and improvements. We are also taking
the opportunity to clarify reporting requirements.
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G. Resources & Internal Management Support
1. Are there any competing resource priorities for your "title V" staff in issuing title V permits? YlSI N ~
a. If so, what are they?
Title V applications are assigned to nearly all new source review permit engineers. Competing demands
include the following:
• Conducting health risk assessments pursuant to Air District Regulation 2, Rule 5 "New Source
Review of Toxic Air Contaminants" and Regulation 11, Rule 18 "Reduction of Risk from Air Toxic
Emissions at Existing Facilities"
• Processing New Source Review applications
• Help with annual permit renewal (update inventory data and invoices)
• Reviewing refinery emissions reporting submitted pursuant to District Regulation 12, Rule 15
"Refining Emissions Tracking"
• Processing permit renewals
• Database development and maintenance
• Rule Development
• Special projects
2. Are there any initiatives instituted by your management that recognize/reward your permit staff for
getting past barriers in implementing the title V program that you would care to share? YD N ISI
3. How is management kept up to date on permit issuance? YlSI N ~
Monthly Title V status reports for renewal applications, pending application actions, and significant
revisions are generated by the Title V team and sent to management.
4. Do you meet on a regular basis to address issues and problems related to permit writing? YlSI N ~
The Title V team (TVSenior engineer and TV technician) has monthly Title V status meetings with assigned
permit engineers and their supervisors to discuss renewal applications and any obstacles or issues related
to the proposed permit and statement of basis.
5. Do you charge title V fees based on emission rates? YlSI N ~
a. If not, what is the basis for your fees?
The annual fees charged to Title V facilities are based on facility emission rates, the number of
permitted sources, and the number ofCEMs. Application fees are fixed depending on the type of
application and the number of sources that are involved.
b. What is your title V fee?
See Regulation 3, Schedule P:
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https://www.baaamd.aov/~/media/dotgov/files/rules/rea-3-fees/2022-
amendment/documents/20220615 finalrule rg0300-
pdf.pdf?la=en&rev=6889edl40bbl4cldacee04a94e7652fc
c. Do you have sources that refuse to pay their title V fee? YD N ISI How do you approach these
situations?
6. For non-title V sources, how do you track when a non-title V source becomes a major source?
We do not actively monitor the potential to emit for non-Title V facilities with respect to the major source
thresholds. Typically, source testing results will lead to further investigation into the facility PTE.
7. How do you track title V expenses?
The Air District uses employee timesheets with accounting billing codes that specify Title V-related work to
track the amount of time that permit engineers and other staff spend on Title V program activities. The
Engineering Division also tracks the expenditures through Program 506, our Title Vprogram. Other
divisions use Bill Code 80 and their specific programs such as activity in Compliance and Enforcement and
Source Test.
8. How do you track title V fee revenue?
Title V revenues are tracked separately from all other revenues collected by the Air District. We have a
dedicated general ledger account for that purpose.
9. How many title V permit writers does the agency have on staff (number of FTE's, both budgeted and
actual)?
There are 19 engineers that participate in writing title V permits. There are 6 additional vacant FTE
positions that may write title V permits. All vacancies are in active recruitment at this time.
10. Do the permit writers work full time on title V? YD N ISI
a. If not, describe their main activities and percentage of time on title V permits.
Main activities include processing New Source Review applications, performing health risk assessments,
and processing permit renewals. Permit writers may spend up to approximately 10% of their time
processing Title V applications.
b. How do you track the time allocated to Title V activities versus other non-title V activities?
Air District staff track their time spent on Title V activities using program and bill codes on their
timesheets.
11. Are you currently fully staffed? No
12. What is the ratio of permits to Title V permit writers?
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There are currently 82 Title Vfacilities and 19 Title Vpermit writers. There are currently 297 open Title V
applications in house. This includes administrative amendments, minor revisions, significant revisions,
initial, and renewal applications.
13. Describe staff turnover.
The Engineering Division has 38 filled FTE positions in the engineer classification. 16 of those positions have
less than 5 years of experience. Another 8 to 10 positions have years of service that give a high likelihood
of retiring in the next 1 to 3 years.
a. How does this impact permit issuance?
Newer staff require additional training and mentoring. As they gain experience, they will be able handle
various permitting situations including Title V. More senior staff handle more complex permitting
assignments and work more efficiently.
b. How does the permitting authority minimize turnover?
The Air District offers competitive salaries and benefits, and by providing a quality work environment with
promotional opportunities.
14. Do you have a career ladder for permit writers? YlEI N ~ If so, please describe.
The career ladder for permit writers is as follows: Permit writers start out in the job classification Air
Quality Engineer I or II. Engineers may compete for position upgrades to Senior Air Quality Engineer and/or
Supervising Air Quality Engineer.
15. Do you have the flexibility to offer competitive salaries? YlEI N ~
16. Can you hire experienced people with commensurate salaries? YlEI N ~
17. Describe the type of training given to your new and existing permit writers.
Division-wide training on effective permit writing occurs on a periodic basis. Title V training is primarily
given by the permit writer's supervisor and the Title V Senior Engineer. It is not general but instead focuses
on the specific issues that arise during the processing of assigned applications. Staff meetings may also be
used to discuss Title V permit preparation.
18. Does your training cover:
a. How to develop periodic and/or sufficiency monitoring in permits? YlEI N ~
b. How to ensure that permit terms and conditions are enforceable as a practical matter? YlEI N ~
c. How to write a Statement of Basis? YlEI N ~
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19. Please describe anything that EPA can do to assist/improve your training.
20. How has the District organized itself to address title V permit issuance?
The Air District permit engineer that regularly handles NSR applications and other issues for a facility also
has the responsibility for writing the Title V permits for that facility. Due to the large number of permitted
facilities that the Air District handles, these permit engineers are members of three different Sections within
the Engineering Division. Facility assignments are generally organized so that similar facilities (e.g.,
refineries, landfills) are handled within a single Section. To promote consistency, the Air District has a
Senior Engineer that is dedicated 100% to the review, maintenance, and processing of all Title Vpermits. A
dedicated air quality technician, Supervising Engineer, and an Engineering Manager are also responsible for
the program. Other Divisions within the Air District, including Compliance and Enforcement, Technical
Services, and Legal, also provide input on Title Vpermits.
21. Overall, what is the biggest internal roadblock to permit issuance from the perspective of Resources and
Internal Management Support?
The biggest roadblock to Title V permit issuance is competing demands from new source review
applications and other new initiatives that are implemented by Engineering.
Environmental Justice Resources
22. Do you have Environmental Justice (EJ) legislation, policy or general guidance which helps to direct
permitting efforts? YD N IEI If so, may EPA obtain copies of this information?
We do not have any EJ guidance that directs permitting efforts. However, the Air District does provide
guidance to assist cities and counties with the implementation of EJ best practices.
https://www.baaqmd.gov/plans-and-climate/planning-for-environmental-iustice-sb-1000
23. Do you have an in-house EJ office or coordinator, charged with oversight of EJ related activities? YlSI N ~
Suma Peesapati, Environmental Justice and Community Engagement Officer
24. Have you provided EJ training / guidance to your permit writers? YD N ISI
25. Do the permit writers have access to demographic information necessary for EJ assessments? (e.g., socio-
economic status, minority populations, etc.) YD N 13
26. When reviewing an initial or renewal application, is any screening for potential EJ issues performed?
YlSI N ~ If so, please describe the process and/or attach guidance.
Screening for EJ issues is done on an ongoing basis through Air District Regulation 2, Rules 1 and 5,
Regulation 11, Rule 18, and implementation of the State Air Toxics "Hot Spots" (ATHS) program. Effective
July 1, 2022, facilities located in overburdened communities are identified as such pursuant to Regulation 2-
1-243. The Air District uses the California Communities Environmental Health Screening Tool
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(CalEnviroScreen), Version 4.0,1 and a buffer zone to identify overburden communities.2 Permit applications
for projects located in overburdened communities are subject to a more stringent project cancer risk limit
(6 in a million instead of 10 in a million) and projects located in overburdened communities that are subject
to risk assessment requirements must undergo a public notification process. The Air District considers all
comments on projects located in overburdened communities before making a final decision on the project.
Regulation 11, Rule 18 requires risk reductions at a facility if health impacts from all stationary sources at
the facility exceed this rule's stringent risk action levels: 10 in a million-cancer risk, 1.0 chronic hazard
index, or 1.0 acute hazard index. The Air District is conducting health risk assessments now for about 30
facilities with the highest potential for elevated health risks with scheduling priority given to facilities
located in overburdened or impacted communities. Many of these sites are also Title V facilities. Upon
finalization of the health risk assessment results, any facility that has a health risk above a risk action level
will be required to reduce health impacts. Both the health risk assessment process and the risk reduction
plan approval process include opportunities for public involvement. Regulation 11, Rule 18 works in concert
with the California Air Toxics Hot Spots (ATHS) program. Under the ATHS program, the public must be
notified of any health risks that exceed the Air District's public notification thresholds, which are the same
as the Regulation 11, Rule 18 risk action levels, and any significant health risks (10 times the risk action
levels), must be reduced to less than significant levels.
1 An overburdened community is defined as any census track scoring 70th percentile or higher per CalEnviroScreen 4.0 plus a 1000-
foot buffer zone around any high scoring census tracks. CalEnviroScreen uses 12 pollution burden indicators and 9 population
characteristic indicators to determine the percentile score for each census track. More information about CalEnviroScreen is
available here: https://oehha.ca.gov/calenviroscreen/report/calenviroscreen-40.
2 The Air District has developed an interactive map showing all of the overburdened communities in the Bay Area:
https://www.baaqmd.gov/about-air-quality/interactive-data-maps
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H, Title Ą Benefits
I. Does your staff implementing the title V program generally have a better understanding of:
a. NSPS requirements? YEI N ~
b. The stationary source requirements in the SIP? YlSI N ~
c. The minor NSR program? YlSI N ~
d. The major NSR/PSD program? YlSI N ~
e. How to design monitoring terms to assure compliance? YlSI N ~
f. How to write enforceable permit terms? YlSI N ~
2. In issuing initial title V permits:
a. Have you noted inconsistencies in how sources had previously been regulated (e.g., different emission
limits or frequency of testing for similar units)? YlSI ND If yes, describe.
Older grandfathered sources often have no monitoring requirements in place.
b. Have you taken (or are you taking) steps to assure better regulatory consistency within source
categories and/or between sources? YlSI N ~ If yes, describe.
The Air District has a permit processing handbook and a BACT Guideline that are regularly updated to
ensure consistent permitting within source categories. These documents are maintained on the Air
District website.
3. Based on your experience, estimate the frequency with which potential compliance problems are
identified through the permit issuance process:
Never Occasionally Frequently Often
a. Prior to submitting an application ~ X ~ ~
b. Prior to issuing a draft permit ~ X ~ ~
c. After issuing a final permit ~ X ~ ~
4. Based on your experience with sources addressing compliance problems identified through the title V
permitting process, estimate the general rate of compliance with the following requirements prior to
implementing title V:
Never Occasionally Frequently Often
a. NSPS requirements
(including failure to identify an NSPS as applicable) ~ X ~ ~
b. SIP requirements ~ X ~ ~
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c. Minor NSR requirements
(including the requirement to obtain a permit) ~ X ~ ~
d. Major NSR/PSD requirements
(including the requirement to obtain a permit) ~ X ~ ~
5. Do you see a difference in compliance behavior on the part of sources that have to comply with the title V
program? (Check all that apply.)
3 Increased use of self-audits?
13 Increased use of environmental management systems?
13 Increased staff devoted to environmental management?
13 Increased resources devoted to environmental control systems (e.g., maintenance of control
equipment; installation of improved control devices; etc.)?
13 Increased resources devoted to compliance monitoring?
13 Better awareness of compliance obligations?
~ Other? Describe.
6. Does implementation of the title V program improve other areas of your program? (Check all that apply.)
~ Netting actions
3 Emission inventories
~ Past records management (e.g., lost permits)
13 Enforceability of PTE limits (e.g., consistent with guidance on enforceability of PTE limits such as the
June 13,1989 guidance)
3 Identifying source categories or types of emission units with pervasive or persistent compliance
problems; etc.
3 Clarity and enforceability of NSR permit terms
3 Better documentation of the basis for applicable requirements (e.g., emission limit in NSR permit
taken to ~ avoid PSD; throughput limit taken to stay under MACT threshold)
~ Emissions trading programs
13 Emission caps
~ Other (describe)
7. If yes to any of the above, would you care to share how the title V program improves other aspects of your
air program? (e.g., increased training; outreach; targeted enforcement)?
The source testing of facilities to determine PTE for Title V applicability has led to a better understanding of
the facility's operations and emissions.
Determining the regulatory basis for each permit condition has resulted in a closer examination of the
necessity and/or enforceability of many permit conditions.
8. Are there aspects of the title V program that you have extended to other program areas (e.g., require
certification of accuracy and completeness for pre-construction permit applications and reports; increased
records retention; inspection entry requirement language in NSR permits). Y3 N ~ If yes, describe.
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All NSR permit conditions now include a citation of its regulatory basis. There has been an increased
emphasis on monitoring requirements for all facilities.
9. Have you made changes in how NSR permits are written and documented as a result of lessons learned in
title V (e.g., permit terms more clearly written; use of a statement of basis to document decision making)?
If yes, describe.
For Title V facilities, the NSR permit evaluations have a more extensive discussion of monitoring and
applicable federal requirements in anticipation of the drafting of the statement of basis for the associated
Title Vpermit revision.
10. Do you use information from title V to target inspections and/or enforcement? Yl3 N ~
11. Is title V fee money helpful in running the program? That is, does it help you to provide: (Check all that
apply.)
13 Better training?
13 More resources for your staff such as CFRs and computers?
13 Better funding for travel to sources?
13 Stable funding despite fluctuations in funding for other state programs?
13 Incentives to hire and retain good staff?
13 Are there other benefits of the fee program? Describe.
12. Have you received positive feedback from citizens? YI3 N ~
13. Has industry expressed a benefit of title V? Yl3 N ~ If so, describe.
The Air District Title V permit provides a comprehensive list of all applicable requirements and monitoring,
so it serves as a valuable resource to Air District enforcement personnel and the facility.
14. Do you perceive other benefits as a result of the title V program? Yl3 N ~ If so, describe.
The most obvious and tangible benefit has been the institution of enhanced monitoring for grandfathered
sources that had little or no monitoring in place prior to the implementation of the Title V permitting program.
15. Other comments on benefits of title V? YD N 13
Good Practices not addressed elsewhere in this questionnaire
16. Are any practices employed that improve the quality of the permits or other aspects of the title V program
that are not addressed elsewhere in this questionnaire?
The use of templates to improve consistency: When a new rule is promulgated or an existing rule is
amended, the initial integration of the rule into a Title V permit is used as a template for subsequent
permits that are revised to reflect the rule promulgation or revision.
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EPA assistance not addressed elsewhere in this questionnaire
17. Is there anything else EPA can do to help your title V program?
The Air District is always open to additional streamlining and reforms to improve the Title V program such
that resources are used more efficiently and effectively.
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Attachment 1
Title V Renewal Application Reminder Email
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Dear Ms. Azevedo:
Your current Title V permit will expire on April 24, 2023, and the Title V renewal permit application must be
received by the District no later than October 24, 2022. We are requesting that each Title V facility provide a draft
revised copy of their permit in electronic format as part of their Title V renewal application. This is in accordance with
District Regulation 2, Rule 6, Section 405 that specifies which information must be submitted by the applicant with a Title
V permit renewal application. This electronic copy of the draft revised permit will take the place of the Title V permit
application form entitled "Applicable Requirements & Compliance Summary Form" that was previously submitted in
paper form.
Attached to this email is an electronic copy (MS Word) of your current Title V permit with pending proposed minor
revisions shown in strikeout/underline format. The statement of basis for the proposed minor revision is also
attached. The requisite Title V application forms are attached. If necessary, contact your assigned permit engineer for
copies of the engineering evaluation reports for any new source review permit applications that have been processed since
the issuance of your current Title V permit.
We request that you revise the attached copy of the permit as necessary to reflect the addition/deletion of sources,
changes in permit conditions, new/revised applicable requirements, and new/revised monitoring requirements,
etc. Please submit an electronic copy of the revised permit with your renewal application and provide an
explanation for any changes made to the permit.
Please follow these guidelines throughout the renewal permit application process:
• Use the "track changes" feature of Microsoft word when revising the permit so that it is clear what you are
proposing to change in the permit
• Do not make any revisions to sections I "Standard Conditions", III "Generally Applicable Requirements", IX
"Permit Shield", and X "Glossary".
• You must still complete and submit the following Title V application forms as part of your renewal
application. Copies of the forms are attached to this e-mail in MS Word format.
Stationary Source Summary (pages 1 and 2)
Major Facility Review Certification Statement
Total Stationary Source Emissions
Major Facility Review Detailed Emissions Report (only for significant sources (per 2-6-239) that are
not currently listed in permit)
Major Facility Review Schedule of Compliance (only if applicable)
Major Facility Review Permit Shield (only if applicable)
Please submit your application by email to permits@baaqmd.gov on or before October 24, 2022.
If you have any questions regarding this e-mail, please contact me at diang@,baaqmd.gov. If you have any questions
regarding your Title V permit, please contact Loi Chau, your assigned permit engineer at lchau@baaqmd. gov.
Thank you for your assistance.
Dennis Jang
Supervising Air Quality Engineer
Bay Area Air Quality Management District
Engineering Division | Permitting, Organic Recovery, and Title V Section
Scale Street. Suite 600 ) San Francisco. CA 94105
(415) 749-4707 ) diang@baaqmd.gov
36
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Attachment 2
Example Title V Checklist
37
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Plant Wane: Title V Application Checklist AppScatcn
Date: Initial, Renewal, Signfleant Revision Fac 1 tyŁ_.
Application Type:
Ąeltow! Rniiv; Required
White! Review Optional
Check Bo» Upon Completion
Enter N/A if section doe = not s pply
Processor
Reviewer
TV Tech,
Permit
Eng.
Supv.
Eng.
TV
Senior
Eng.
TV Supv,
Eng.
Eng.
Mgr.
Title V
Eng.
Mgr.
Director
Employee Initials
Permit Application Fees
Cover Page
fte^tcmsible Official
Facility Contact
Part 1 Standard Ccnd t ens
Parti Equipment "abes
Abatement DeviceTabie
Sgn* cant Source "able
Exempt Source Table
Part III Generally Applicable Reqifrenents
Acicpton Dates
New/Amended Regu atbns
New S'F regu.attons
Part IV Applicable Requ reorients
Nev'./De eted requirements
Am e nde d reci uirem ents
New/De eted Source Tables
PartV Schedu e & Ccnp ance
Part Vi Pernt Ccndt ens
Part VII Compliance Mentenng' Requ'renents
New/Be eted requ rements
Anended requ.renents
Newy'De eted Source Tables
Part VIII T ea M ethods
Pat IX Ac d Ran Permit
Part IX Pernt 5 held
Part X Revjscn History
Part XI Glossary
SOB
Part A. Background
Included N5R Applications
Part B. Facility Description
Source/AD additions/deletions
Changes in Total FaciHty Emissions
PartC Perrit Content
Part I. Standard Ccndt ens
Part ill Equ.pment Tabes
5c ur ce/ A D ad d t c re' de et c ns
Part Hi. Genera yapp cab e requ Ten ents
adoption dates/new regulations
Part IV. Source specific app. requ rements
P. 1 of 3
38
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Plant Name: Title V Application Checklist Application#_.
Date: Initial, Renewal, Significant Revision Facility #_
Application ~ype:
Y«ltev.: Review Required'
Processor
Reviewer
White! Review Optional
TV
Title V
Check Bo* Upon Completion
Permit
Supv.
Senior
TV Supv,
Eng.
Eng.
Enter N/A if section does not apply
TV Tech,
Eng.
Eng.
Eng.
Eng.
Mgr.
Mgr.
Director
Employee Initials
New source tab 'es
Amended regu at'ons
New app. requTenents
Complex Applicabiiy Detern natens
1120; HiP P~E
CAM
NE5HAP
NSPS
Acid Ran
Other:
Part V.
Schedu e of Ccnp aice
Part VI.
Permit C end t ons
Part VII. A pp. L n -ts & C ompfisnce M on iter rig
Mcntcr.ng Discussion by pollutant
Part VII. I est M ethods ~
Part IX. Acid Rail Per ml:
Part IX. Permit Shield
Part X. Reviston History
Part XI. Glossary
Part D AlternateOperating Seenarlos
Part E Com pi ante Status
Cert''cat cn Statement Form
Part F Differences bet. A pp. & proposed permit
App, A G ossary
App. B NSR Eva uatfern Report(s)
AdmimstmUve Tasfa
Pub c Net ce pcut ng M emo
Pub c Not ce Transmittal Letters
Pub c Nctce
EPA Review Rcut.ng Memo
EPA Rev ew "rans'i tts Letters
Accept Changes to Pern t/Save
P erm ft Issuanc e D stes
Ac d Ran Pernt ssuance Dates
Update Paragraph .5. dates
Response to Pubic/EPA Comments
FinaJ Issuance routing memo
Final Issuance transmittal fetters
Update Pemit Conditionsh DB
Update F na Dsposittan
Pub c Comnent Fee Invoice
Copies cf SOB/Ffiai Permit for App. Folder
P. 2 of 3
39
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Piant Name: Title V Application Checklist Application#_.
Date: Initial, Renewal, Significant Revision Facility #_,
Application Type:
Yellow: Review Required
White; Review Optional
Check Bo*Upon Completion
Enter N/A if section does not apply
Processor
Reviewer
TV Tech,
Permit
Eng.
Sup*.
Eng.
TV
Senior
Eng.
TVSupv.
Eng.
Eng.
Mgr.
Title Ą
Eng.
Mgr.
Director
Employee Initials
Clean App. Folder Pr.ortc F.jig
40
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Appendix C. BAAQMD Title V Permitting Policies
Page 59 of 68
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Policy: Simultaneous Drafting of NSR Permit Evaluation and
Title Ą Statement of Basis
For each NSR application that will result in a Title V minor revision, the permit
engineer will include the Title V minor revision statement of basis (SOB) in the body
of the NSR permit evaluation or attached to the NSR evaluation report. Upon issuance
of the NSR permit, the corresponding Title V revision application will be placed on
"hold/fold" status in the data bank.
Who is affected Permit processing engineers
Rationale By drafting the Title V revision SOB with the corresponding NSR permit evaluation,
the proposed revisions to the Title V permit will be clearly identified. This will
expedite the subsequent issuance of the Title V permit revisions.
If a Title V facility has numerous outstanding Title V revision applications, these
applications can be processed under the April 23, 2015 Procedure "Grouping Title V
Revision Applications for Combined Issuance on an Annual Basis," For single
revision applications, the proposed revised Title V permit can be submitted to EPA
for its 45-day review period immediately following the issuance of the NSR permit
and the completion of any corresponding changes to the Title V permit.
Note: This policy and procedure will not delay the evaluation and issuance of any
NSR permit. The proposal and issuance of the revised Title V permit will occur
after the NSR permit has been issued.
The NSR application will be issued in accordance with current procedures and
statutory timelines.
Background Under the current procedure, the permit engineer drafts the Title V minor revision
SOB after the corresponding NSR application has been issued. Due to competing
workload obligations, the permit engineer may not be able to work on the Title Ą
minor revision immediately following the issuance of the NSR permit. This can result
in significant delays in the issuance of the Title V permit minor revision. This policy
will work well with the April 23, 2015 Procedure, "Grouping Title V Revision
Applications for Combined Issuance on an Annual Basis" since the TV SOB will
already be finished and clearly identify the changes that will be made to the TV
permit.
Contact Dennis Jang, ext. 4707
Page 1 of2
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Related
Procedure
Grouping Title V Revision Applications for Combined Issuance on an Annual Basis
(issued April 23,2015)
Approval ~i ^ • lof(
Jim Karas, P.E. Date
Director of Engineering
Page 2 of2
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Procedure: Grouping Title V Revision Applications for
Combined Issuance on an Annual Basis
Staff On September 1st of each year (or other date specified by management), the
Procedures permit engineer will combine all outstanding Title V revision applications for
their assigned facility that are ready for issuance and issue them under a single
Title V permit revision within six months.
Phase 1:
Review
Applications
and
Consolidate
(Complete by
September 15th)
Phase 2:
Revise Title V
Permit and
Draft SOB
(Complete and
circulate for
review by
Novemberlst)
Phase 3a:
If Significant
Revision:
Propose Permit
for EPA
Review and
Public
Comment
(Publish public
notice and send
to EPA by
December 1st)
Step
Action
1
Collect and review outstanding Title V revision applications
2
Identify applications that are ready for issuance
3
Identify most recently submitted application and designate it as
the annual combined Title V revision application
4
In form Title V technician of applications included in combined
issuance for databank status update, so he or she can update the
databank status to "fold/hold"
Step
Action
1
Review corresponding NSR applications and determine
necessary changes to Title V permit
2
Revise Title V permit using strikeout/underline
3
Describe changes to permit in SOB
Step
Action
1
Prepare proposed permit issuance letters and public notice
2
Circulate for signature
3
Post proposed permit, SOB, letters, and public notice on District
website
4
Review and address any comments received
1 of 2
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Phase 3b:
If Minor
Revision:
Propose Permit
for EPA
Review
(Send to EPA
by December
1st)
Step 1 Action
1
Prepare proposed issuance letters
>
Circulate for signature
3
Review and address any comments received
4
If necessary, revise permit in response to comments
Phase 4:
On or before
March 1st of
each year, issue
Final Revised
Permit
Step
Action
1
Prepare final issuance letters
2
Prepare final version of permit
3
Circulate for signature
4
Inform Title V technician to update the databank final disposition
of all included revisions applications to "Title V" with same
issuance date.
5
Notify EPA, ARB, and the facility of permit issuance.
6
Post, final letters and permit on website.
Rationale: By specifying an annual date for this "combined issuance" the revision applications that
are ready for issuance will not accumulate over several years. This policy applies to any
Title V facility that submits numerous Title V applications on a continual basis. For
example, petroleum refineries are the most active Title V facilities. It is not unusual for
a refinery to submit 30 or more NSR applications in a year. Because the refineries do
not coordinate the submittal of their NSR applications, the assigned permit engineer
often accumulates the associated Title V revision applications and issues these
applications together at some future date. Currently, the individual engineer decides
when he or she will issue the combined permit revision. Depending upon individual
workload demands, a given engineer could accumulate several years of open Title V
revision applications that are ready for issuance.
Contact
Greg Solomon, ext. 4715
Dennis Jang, ext. 4707
Approval
Name & Title
Signature
Date ]
Jim Karas, Director of Engineerings-
«rj
2 of 2
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Policy:
Designated Work Day for Title Ą and Synthetic
Minor Permit Applications ("Title Ą Tuesdays")
Objective To reduce the backlog of Title V anil synthetic minor applications,
Engineering Division staff will work on Title V/synthetic minor applications
for at leas! 4 hours on Tuesday of each week.
Policy On Tuesday of each week. Engineering division staff will work on open Title
V/synthetic minor applications for at least 4 hours even if staff has
outstanding or overdue New Source Review (NSR) applications or other
project demands.
This policy does not in any way restrict Title V/synthetie minor permit
application processing to Tuesdays. Staff is encouraged to work on Title
V/synthetie minor applications on any day of the week.
Title V staff will he available to answer questions and provide assistance as
needed. Title V staff will monitor the progress in the monthly Title V
meetings.
Sc ope This policy applies to all staff w ith assigned Title V/synthetie minor
applications.
This policy applies to all types of Title V applications including
administrative amendments, minor revisions, significant revisions, initials,
renewals, and reopenings. This policy also applies to synthetic minor initial,
cancellation, and revision applications.
This policy applies to all open Title V/synthetic minor applications, whether
the applications are overdue or not.
Applicability
Effective Date:
Upon Director approval
Linked Policies:
None
Linked Procedures:
None
Applicable Roles/Entities:
Engineering Permitting staff
Contact Dennis Jang, ext. 4707
Name & Title
Signature
Date
Jaime A. Williams, Director of
Engineering
' i
W;.
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Appendix D. U.S. EPA Statement of Basis Guidance
Page 60 of 68
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Table of SOB guidance
Elements
Region 9's Febuary 19,
1999 letter to SLOC
APCD
NOD to Texas' part 70
Program (January 7,
2002)
Region 5 letter to state of
Ohio (December 20, 2001)
Los Medanos
Petition Order
(May 24, 2004)
Bay Area Refinery
Petition Orders
(March 15, 2005)
EPA's August 1,
2005 letter regarding
Exxon Mobil
proposed permit
Petition No. V-2005-
1 (February 1,2006)
(Onyx Order)
EPA's April 30, 2014
Memorandum:
Implementation Guidance on
ACC Reporting and SOB
Requiremetns for Title V
Operating Permits
New Equipment
Additions of permitted
equipment which were not
includedin the annlicatirm
V
Insignificant
Activities and
portable equipment
Identification of any applicable
requirements for insignificant
activities or State-registered
portable equipment that have not
previously been identified at the
Title V facility
V
Streamlining
Multiple applicable requirements
streamlining demonstrations
Streamlining requirements
Streamlining analysis
V
Permit Shields
Permit shields
The basis for applying the
oermit shield
V
Discussion of permit
shields
Basis for permit shield
V
Alternative
Operating Scenarios
and Operational
Flexibility
Alternative operating scenarios
A discussion of any
operational flexibility that
will be utilized at the facility.
V
V
Compliance
Schedules
Compliance Schedules
Must discuss need for
compliance schedule for
multiple NOVs,
particularly any
unresolved/out standing
NOVs
Must discuss need for
compliance schedule for
any outstanding NOVs
CAM
CAM requirements
V
PALs
Plant wide allowable emission
limits (PAL) or other voluntary
V
Previous Permits
Any district permits to operate or
authority to construct permits
Explanation of any conditions from
previously issued permits that are
not being transferred to the title V
permit
A basis for the exclusion
of certain NSR and PSD
conditions contained in
underlying ATC permits
V
Periodic Monitoring
Decisions
Periodic monitoring decisions,
where the decisions deviate from
already agreed upon levels (eg.
Monitoring decisions agreed
upon by the district and EPA
either through: the Title V
periodic monitoring workgroup;
or another Title V permit for a
similar source). These decisions
could be part of the permit
package or reside in a publicly
available document.
The rationale for the
monitoring method selected
A description of the monitoring and
operational restrictions
requirements
1) recordkeeping and
period monitoring that is
required under 40 CFR
70.6(a)(3)(i)(B) or
district regulation
2) Ensure that the
rationale for the selected
monitoring method or
lack of monitoring is
clearly explained and
documented in the
permit record.
The SOB must include
a basis for its periodic
monitoring decisions
(adequacy of chosen
monitoring or
justification for not
requiring periodic
monitoring)
The SOB must include a
basis for its periodic
monitoring decisions.
Any emissions factors,
exhaust characteristics, or
other assumptions or
inputs used to justify no
periodic monitoring is
required, shouldbe
includedin SOB
V
Facility Description
A description of the facility
V
V
Applicability
Determinations and
Exemptions
Any federal regulatory
applicability determinations
Applicability and exemptions
1) Applicability
determinations for
source specific
applicable requirements
2) Origin or factual
basis for each permit
condition or exemption
SOB must discuss the
Applicability of various
NSPS, NESHAP and
local SIP requirements
and include the basis
for all exemptions
SOB must discuss the
Applicability of various
NSPS, NESHAP andlocal
SIP requirements and
include the basis for all
exemptions
V
General
Requirements
Certain factual information as
necessary
Generally the SOB
shouldprovide "a record
of the applicability and
technical issues
surrounding the issuance
of the permit."
V
V
V
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
REGION IX
75 Hawthorne Street
San Francisco, CA 94105-3901
February 19, 1999
Mr. David Dixon
Chairperson, Title V Subcommittee
San Luis Obispo County
Air Pollution Control District
3433 Roberto Court
San Luis Obispo, CA 93401
Dear Mr. Dixon:
I am writing to provide a final version of our response to your July 2, 1998 letter in which
you expressed concern about Region IX's understanding of the Subcommittee's tentative
resolution to the 45-day EPA review period issue. I have also included a summary of the
Subcommittee's agreement on two title V implementation issues originally raised by some
Siihr.nmmitt.efi members at our meeting on August 18, 1998. Our response reflects many
comments and suggestions we have received during the past several months from members of the
Title V Subcommittee and EPA's Office of General Counsel. In particular, previous drafts of
this letter and the enclosure have been discussed at Subcommittee meetings on October 1, 1998,
November 5, 1998, January 14, 1999, and February 17, 1999. Today's final version incorporates
suggested changes as discussed at these meetings and is separated into two parts: Part I is
"guidance" on what constitutes a complete Title V permit submittal; and Part II is a five-point
process on how to better coordinate information exchange during and after the 45-day EPA
review period.
We will address the letter to David Howekamp from Peter Venturini dated August 7,
1998 regarding permits issued pursuant to NSR rules that will not be SIP approved in the near
future. This issue was also discussed at the August 18 Title V Subcommittee meeting.
-------
I appreciate your raising the issues regarding the 45-day EPA review clock to my
attention. Your efforts, along with the efforts of other Title Y Subcommittee members, have
been invaluable towards resolving this and other Title V implementation issues addressed in this
letter. The information in the enclosure will clarify Title V permitting expectations between
Region IX and the California Districts and will improve coordination of Title V permit
information. It is important to implement this immediately, where necessary, so the benefits of
this important program can be fully realized as soon as possible in the state of California as well
as other states across the country.
If you have any questions please do not hesitate to call me at (415) 744-1254.
Enclosure
cc: California Title V Contacts
California Air Pollution Control Officers
Ray Menebroker, CARB
Peter Venturim, CARB
Sincerely,
Matt Haber
Chief, Permits Office
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Enclosure
Neither the guidance in Part I nor the process in Part II replace or alter any requirements
contained in Title V of the Clean Air Act or 40 CFR Part 70.
PART I. Guidance on Information Necessary to Begin 45-day EPA Review
A complete submittal to EPA for a proposed permit consists of the application (if one has not
already been sent to EPA), the proposed permit, and a statement of basis. If applicable to the
Title V facility (and not already included in the application or proposed permit) the statement of
basis should include the following:
• additions of permitted equipment which were not included in the application;
• identification of any applicable requirements for insignificant activities or State-registered portable
equipment that have not previously been identified at the Title V facility,
• outdated SIP requirement streamlining demonstrations,
• multiple applicable requirements streamlining demonstrations,
• permit shields,
• alternative operating scenarios,
• compliance schedules,
• CAM requirements,
• plant wide allowable emission limits (PAL) or other voluntary limits,
• any district permits to operate or authority to construct permits;
• periodic monitoring decisions, where the decisions deviate from already agreed-upon levels (e.g.,
monitoring decisions agreed upon by the district and EPA either through: the Title V periodic monitoring
workgroup; or another Title V permit for a similar source). These decisions could be part of the permit
package or could reside in a publicly available document.
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Part II - Title V Process
The following five-point process serves to clarify expectations for reviewing Title V permits and
coordinating information on Title V permits between EPA Region IX ("EPA") and Air Pollution
Districts in California ("District"). Districts electing to follow this process can expect the
following. Districts may, at their discretion, make separate arrangements with Region IX to
implement their specific Title V permit reviews differently.
Point 1: The 45-day clock will start one day after EPA receives all necessary information to
adequately review the title V permit to allow for internal distribution of the documents. Districts
may use return receipt mail, courier services, Lotus Notes, or any other means they wish to
transmit a package and obtain third party assurance that EPA received it. If a District would like
written notice from EPA of when EPA received the proposed title V permit, the District should
notify EPA of this desire in writing. After receiving the request, Region IX will provide written
response acknowledging receipt of permits as follows:
(Date)
Dear (APCO):
We have received your proposed Title V permit for ( Source Name) on (Date)
If, after 45-days from the date indicated above, you or anyone in your office has not heard from
us regarding this permit, you may assume our 45-day review period is over.
Sincerely,
MattHaber
Chief, Permits Office
Point 2: After EPA receives the proposed permit, the permit application, and all necessary
supporting information, the 45-day clock may not be stopped or paused by either a District or
EPA, except when EPA approves or objects to the issuance of a permit.
Point 3: The Districts recognize that EPA may need additional information to complete its title V
permit review. If a specific question arises, the District involved will respond as best it can by
providing additional background information, access to background records, or a copy of the
specific document.
The EPA will act expeditiously to identify, request and review additional information and the
districts will act expeditiously to provide additional information. If EPA determines there is a
-------
basis for objection, including the absence of information necessary to review adequately the
proposed permit, EPA may object to the issuance of the permit. If EPA determines that it needs
more information to reach a decision, it may allow the permit to issue and reopen the permit after
the information has been received and reviewed.
Point 4: When EPA objects to a permit, the Subcommittee requested that the objection letter
identify why we objected to a permit, the legal basis for the objection, and a proposal suggesting
how to correct the permit to resolve the objection.
It has always been our intent to meet this request. In the future, when commenting on, or
objecting to Title V permits, our letters will identify recommended improvements to correct the
permit. For objection letters, EPA will identify why we objected to a permit, the legal basis for
the objection, and details about how to correct the permit to resolve the objection. Part 70 states
that "Any EPA objection... shall include a statement of the Administrator's reasons for objection
and a description of the terms and conditions that the permit must include to respond to the
objections."
Point 5: When EPA objects to a permit, and a District has provided information with the intent to
correct the objection issues, the Subcommittee members requested a letter from EPA at the end
of the 90-day period stating whether the information provided by the District has satisfied the
objection.
While we agree with the Districts' desire for clear, written communication from EPA, a written
response will not always be possible by the 90th day because the regulations allow a District 90
days to provide information. To allow EPA ample time to evaluate submitted information to
determine whether the objection issues have been satisfied, we propose establishing a clear
protocol. The following protocol was agreed to by members of the Subcommittee:
1. within 60 days of an EPA objection, the District should revise and submit a
proposed permit in response to the objection;
2. within 30 days after receipt of revised permit, EPA should evaluate information
and provide written response to the District stating whether the information
provided by the District has satisfied the objection.
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December 20, 2001
CAR-18 J)
Robert F. Hodanbosi, Chief
Division of Air Pollution Control
Ohio Environmental Protection Agency
122 South Front Street
P. 0. Box 1049
Columbus, Ohio 43266-1049
Dear Mr. Hodanbosi:
I am writing this letter to provide guidelines on the content of an adequate
statement of basis (SB) as we committed to do in our November 21, 2001,
letter. The regulatory basis for a SB is found in 40 C.F.R. § 70.7(a)(5) and
Ohio Administrative Code (QAC) 3745-77-08 (A) (2) which requires that each draft
permit must be accompanied by "a statement that sets forth the legal and
factual basis for the draft permit conditions." The May 10, 1991, preamble
also suggests the importance of supplementary materials.
" [United States Environmental Protection Agency (USEPA)]...can obj ect to
the issuance of a permit where the materials submitted by the State
permitting authority to EPA do not provide enough information to allow a
meaningful EPA review of whether the proposed permit is in compliance
with the requirements of the Act." (56 FR 21750)
The regulatory language is clear in that a SB must include a discussion of
decision-making that went into the development of the Title V permit and to
provide the permitting authority, the public, and the USEPA a record of the
applicability and technical issues surrounding issuance of the permit. The SB
is part of the historical permitting record for the permittee. A SB generally
should include, but not be limited to, a description of the facility to be
permitted, a discussion of any operational flexibility that will be utilized,
the basis for applying a permit shield, any regulatory applicability
determinations, and the rationale for the monitoring methods selected. A SB
should specifically reference all supporting materials relied upon, including
the applicable statutory or regulatory provision.
While not an exhaustive list of what should be in a SB, below are several
important areas where the Ohio Environmental Protection Agency's (OEPA) SB
could be improved to better meet the intent of Part 70.
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- 2 -
Discussion of the Monitoring and Operational Requiranents
OEPA's SB must contain a discussion on the monitoring and operational
restriction provisions that are included for each emission unit. 40 C.F.R.
§70.6 (a) and QAC 3745-77-07 (A) require that monitoring and operational
requirements and limitations be included in the permit to assure compliance
with all applicable requirements at the time of permit issuance. OEPA's
selection of the specific monitoring, including parametric monitoring and
recordkeeping, and operational requirements must be explained in the SB. For
example, if the permitted compliance method for a grain-loading standard is
maintaining the baghouse pressure drop within a specific range, the SB must
contain sufficient information to support the conclusion that maintaining the
pressure drop within the permitted range demonstrates compliance with the
grain-loading standard.
The USEPA Administrator's decision in response to the Fort James Camas Mill
Title V petition further supports this position. The decision is available on
the web at
http://www.epa.gov/regionO7/programs/artd/air/title5/petitiondb/petitions/fort
_james_decisionl999.pdf. The Administrator stated that the rationale for the
selected monitoring method must be clear and documented in the permit record.
Discussion of Applicability and Exemptions
The SB should include a discussion of any complex applicability determinations
and address any non-applicability determinations. This discussion could
include a reference to a determination letter that is relevant or pertains to
the source. If no separate determination letter was issued, the SB should
include a detailed analysis of the relevant statutory and regulatory
provisions and why the requirement may or may not be applicable. At a
minimum, the SB should provide sufficient information for the reader to
understand OEPA's conclusion about the applicability of the source to a
specific rule. Similarly, the SB should discuss the purpose of any limits on
potential to emit that are created in the Title V permit and the basis for
exemptions from requirements, such as exemptions from the opacity standard
granted to emissions units under QAC rule 3745-17-07 (A) . If the permit shield
is granted for such an exemption or non-applicability determination, the
permit shield must also provide the determination or summary of the
determination. See CAA Section 504(f) (2) and 70.6(f) (1) (ii) .
Explanation of any conditions frcm previously issued permits that are not
being transferred to the Title V permit
In the course of developing a Title V permit, OEPA may decide that an
applicable requirement no longer applies to a facility or otherwise not
federally enforceable and, therefore, not necessary in the Title V permit in
accordance with USEPA's "White Paper for Streamlined Development of the Part
70 Permit Applications" (July 10, 1995). The SB should include the rationale
for such a determination and reference any supporting materials relied upon in
the determination.
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- 3 -
I will also note that for situations that not addressed in the July 10, 1995,
White Paper, applicable New Source Review requirements can not be dropped from
the Title V permit without first revising the permit to install.
Discussion of Streamlining Requiranents
The SB should include a discussion of streamlining determinations. When
applicable requirements overlap or conflict, the permitting authority may
choose to include in the permit the requirement that is determined to be most
stringent or protective as detailed in USEPA's "White Paper Number 2 for
Improved Implementation of the Part 70 Operating Permits Program" (March 5,
1996) . The SB should explain why OEPA concluded that compliance with the
streamlined permit condition assures compliance with all the overlapping
requirements.
Other factual information
The SB should also include factual information that is important for the
public to be aware of. Examples include:
1. A listing of any Title V permits issued to the same applicant at
the plant site, if any. In some cases it may be important to
include the rationale for determining that sources are support
facilities.
2. Attainment status.
3. Construction and permitting history of the source.
4. Compliance history including inspections, any violations noted, a
listing of consent decrees into which the permittee has entered
and corrective action(s) taken to address noncompliance.
I do understand the burden that the increased attention to the SB will cause
especially during this time when OEPA has been working so hard to complete the
first round of Title V permit issuance. I do hope that you will agree with me
that including the information listed above in OEPA's SB will only improve the
Title V process. If you would like examples of other permitting authorities'
SB, please contact us. We would be happy to provide you with some. I would
also mention here that this additional information should easily fit in the
format OEPA currently uses for its SB. We look forward to continued
cooperation between our offices on this issue. If you have any questions,
please contact Genevieve Damico, of my staff, at (312) 353-4761.
Sincerely yours,
/s/
Stephen Rothblatt, Chief
Air Programs Branch
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BEFORE THE ADMINISTRATOR
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
IN THE MATTER OF
LOS MEDANOS ENERGY
CENTER
PETITION NO.
ORDER RESPONDING TO
PETITIONERS REQUEST THAT THE
ADMINISTRATOR OBJECT TO
ISSUANCE OF A STATE OPERATING
PERMIT
MAJOR FACILITY REVIEW
PERMIT No. B1866,
Issued by the Bay Area Air
Quality Management District
ORDER DENYING IN PART AND GRANTING IN PART PETITION FOR OBJECTION
TO PERMIT
On September 6, 2001, the Bay Area Air Quality Management District, ("BAAQMD" or
"District") issued a Major Facility Review Permit to Los Medanos Energy Center, Pittsburg,
California ("Los Medanos Permit" or "Permit"), pursuant to title V of the Clean Air Act ("CAA"
or "the Act"), 42 U.S.C. §§ 7661-766If, CAA §§ 501-507. On October 12, 2001, the
Environmental Protection Agency ("EPA") received a petition from Our Children's Earth
Foundation ("OCE") and Californians for Renewable Energy, Inc., ("CARE") (collectively, the
"Petitioners") requesting that the EPA Administrator object to the issuance of the Los Medanos
Permit pursuant to Section 505(b)(2) of the Act, the federal implementing regulations found at 40
CFR Part 70.8, and the District's Regulation 2-6-411.3 ("Petition").
The Petitioners allege that the Los Medanos Permit (1) improperly includes an emergency
breakdown exemption condition that incorporates a broader definition of "emergency" than
allowed by 40 CFR § 70.6(g); (2) improperly includes a variance relief condition which is not
federally enforceable; (3) fails to include a statement of basis as required by 40 CFR § 70.7(a)(5);
(4) contains permit conditions that are inadequate under 40 CFR Part 70, namely that certain
provisions are unenforceable; and (5) fails to incorporate certain changes OCE requested during
the public comment period and agreed to by BAAQMD.
EPA has now fully reviewed the Petitioners' allegations. In considering the allegations,
EPA performed an independent and in-depth review of the Los Medanos Permit; the supporting
documentation for the Los Medanos Permit; information provided by the Petitioners in the
Petition and in a letter dated November 21, 2001; information gathered from the Petitioners in a
November 8, 2001 meeting; and information gathered from the District in meetings held on
October 31, 2001, December 5, 2001, and February 7, 2002. Based on this review, I grant in part
and deny in part the Petitioners' request that I "object to the issuance of the Title V Operating
Permit for the Los Medanos Energy Center," and hereby order the District to reopen the Permit
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for the reasons described below.
I. STATUTORY AND REGULATORY FRAMEWORK
Section 502(d)(1) of the Act calls upon each State to develop and submit to EPA an
operating permit program to meet the requirements of title V. In 1995, EPA granted interim
approval to the title V operating permit program submitted by BAAQMD. 60 Fed. Reg. 32606
(June 23, 1995); 40 CFR Part 70, Appendix A. Effective November 30, 2001, EPA granted full
approval to BAAQMD's title V operating permit program. 66 Fed. Reg. 63503 (December 7,
2001).
Major stationary sources of air pollution and other sources covered by title V are required
to apply for an operating permit that includes applicable emission limitations and such other
conditions as are necessary to assure compliance with applicable requirements of the Act. See
CAA §§ 502(a) and 504(a). The title V operating permit program does not generally impose new
substantive air quality control requirements (which are referred to as "applicable requirements"),
but does require permits to contain monitoring, recordkeeping, reporting, and other conditions to
assure compliance by sources with existing applicable requirements. 57 Fed. Reg. 32250, 32251
(July 21, 1992). One purpose of the title V program is to enable the source, EPA, permitting
authorities, and 1he public to better understand the applicable requirements to which the source is
subject and whether the source is meeting those requirements. Thus, the title V operating
permits program is a vehicle for ensuring that existing air quality control requirements are
appropriately applied to facility emission units and that compliance with these requirements is
assured.
Under § 505(a) of the Act and 40 CFR § 70.8(a), permitting authorities are required to
submit all operating permits proposed pursuant to title V to EPA for review. If EPA determines
that a permit is not in compliance with applicable requirements or the requirements of 40 CFR
Part 70, EPA will object to the permit. If EPA does not object to a permit on its own initiative,
section 505(b)(2) of the Act and 40 CFR § 70.8(d) provide that any person may petition the
Administrator, within 60 days of the expiration of EPA's 45-day review period, to object to the
permit. To justify the exercise of an objection by EPA to a title V permit pursuant to section
505(b)(2), a petitioner must demonstrate that the permit is not in compliance with the
requirements of the Act, including the requirements of Part 70. Part 70 requires that a petition
must be "based only on obj ections to the permit that were raised with reasonable specificity
during the public comment period. . ., unless the petitioner demonstrates that it was impracticable
to raise such objections within such period, or unless the grounds for such objection arose after
such period." 40 CFR § 70.8(d). A petition for administrative review does not stay the
effectiveness of the permit or its requirements if the permit was issued after the expiration of
EPA's 45-day review period and before receipt of the objection. If EPA objects to a permit in
response to a petition and the permit has been issued, the permitting authority or EPA will
modify, terminate, or revoke and reissue such a permit using the procedures in 40 CFR §§
70.7(g)(4) or (5)(i) and (ii) for reopening a permit for cause.
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II. BACKGROUND
The Los Medanos Energy Center facility ("Facility"), formerly owned by Enron
Corporation under the name Pittsburg District Energy Facility, is a natural gas-fired power plant
presently owned and operated by Calpine Corporation. The plant, with a nominal electrical
capacity of 555-megawatts ("MW"), is located in Pittsburg, California. The Facility received its
final determination of compliance ("FDOC")1 from the District in June, 1999, and its license to
construct and operate from the California Energy Commission ("CEC")2 on August 17, 1999.
The Facility operates two large natural gas combustion turbines with associated heat recovery
steam generators ("HRSG"), and one auxiliary boiler. The Facility obtained a revised authority
to construct ("ATC")3 permit from the District in March, 2001 to increase heat input ratings of
the two HRSGs and the auxiliary boiler,4 and to add a fire pump diesel engine and a natural gas-
fired emergency generator. The Facility began commercial operation in July, 2001. The Facility
emits nitrogen oxide ("NOx"), carbon monoxide ("CO"), and particulate matter ("PM"), all of
which are regulated under the District's federally approved or delegated nonattainment new
source review ("NSR") and prevention of significant deterioration ("PSD") programs5 or other
District Clean Air Act programs.
On June 28, 2001, the District completed its evaluation of the title V application for the
Facility and issued the draft title V Permit. Under the District's rules, this action started a
simultaneous 30-day public comment period and a 45-day EPA review period. On August 1,
2001, Mr. Kenneth Kloc of the Environmental Law and Justice Clinic submitted comments to the
'An FDOC describes how a proposed facility will comply with applicable federal, state, and BAAQMD
regulations, including control technology and emission offset requirements of New Source Review. Permit
conditions necessary to insure compliance with applicable regulations are also included.
The FDOC served as an evaluation report for both the CEC 's certificate and the District's authority to
construct ("ATC") permit. The initial ATC was issued by the District shortly after the FDOC under District
application #18595.
ATC permits are federally enforceable pre-construction permits tiat reflect the requirements of the
attainment area prevention of significant deterioration and nonattainment area new source review ("NSR") programs.
The District's NSR requirements are described in Regulation 2, Rule 2. New power plants locating in California
subject to the CEC certification requirements must also comply with Regulation 2, Rule 3, titled Power Plants.
Regulation 2-3-405 requires the District to issue an ATC for a subject facility only after the CEC issues its certificate
for the facility.
4The increased heat input allowed the facility to increase its electrical generating capacity from 520 MW to
555 MW.
5The District was implementing the federal PSD program under a delegation agreement with EPA dated
October 28, 1997. The non-attainment NSR program was most recently SIP-approved by EPA on January 26, 1999.
64 Fed. ReŁ. 3850.
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District on the draft Los Medanos Permit on behalf of OCE ("OCE's Comment Letter").6 The
District responded to OCE's Comment Letter by a letter dated September 4, 2001, from William
de Boisblanc ("Response to Comments"). EPA Region IX did not object to the proposed permit
during its 45-day review period. The Petition to Object to the Permit, filed by OCE and CARE
and dated October 9, 2001, was received by Region IX on October 12, 2001. EPA calculates the
period for the public to petition the Administrator to object to a permit as if the 30-day public
comment and 45-day EPA review periods run sequentially, accordingly petitioners have 135 days
after the issuance of a draft permit to submit a petition.7 Given that the Petition was filed with
EPA on October 12,2001,1 find that it was timely filed. I also find that the Petition is
appropriately based on objections that were raised with reasonable specificity during the
comment period or that arose after the public comment period expired.8
III. ISSUES RAISED BY I II I PETITIONERS
A. District Breakdown Relief Under Permit Condition I.H. 1
Petitioners' first allegation challenges the inclusion in the Los Medanos Permit of
Condition I.H.I, a provision which incorporates SIP rules allowing a permitted facility to seek
relief from enforcement by the District in the event of a breakdown. Petition at 3. Petitioners
assert that the definition of "breakdown" at Regulation 1-208 would allow relief in situations
beyond those allowed under the Clean Air Act. Specifically, Petitioners allege that the
"definition of 'breakdown' in Regulation 1-208 is much broader than the federal definition of
breakdown, which is provided in 40 CFR Part 70," or more precisely, at 40 CFR § 70.6(g).
Condition I.H.I incorporates District Regulations 1-208, 1-431, 1-432, and 1-433
(collectively the "Breakdown Relief Regulations") into the Permit. Regulation 1-208 defines
breakdown, and Regulations 1-431 through 1-433 describe how an applicant is to notify the
District of a breakdown, how the District is to determine whether the circumstances meet the
definition of a breakdown, and what sort of relief to grant the permittee. To start our analysis, it
6We note that OCE submitted its comments to the District days after the close of the public comment period
established pursuant to the District's Regulation 2-6-412 and 40 CFR § 70.7(h)(4). Though we are responding to the
Petition despite this possible procedural flaw, we reserve our right to raise this issue in any future proceeding.
This 135-day period to petition the Administrator is based on a 30-day District public notice and comment
period, a 45-day EPA review period and the 60-day period for a person to file apetition to objectwithEPA.
8In its Comment Letter, OCE generally raised concerns with the draft Major Facility Review Permit that are
the basis for the Petition. In regard to whether all issues were raised with 'reasonable specificity,'I find that claims
one through four of the Petition were raised adequately in OCE's Comment Letter. The fifth claim, that the District
did not live up to its commitment to make changes to the Permit, can be raised in the Petition since tie grounds for
the claim arose after the public comment period ended. See 40 CFR § 70.8(d). Finally, CARE's non-participation in
the District's notice-and-comment process does not prevent the organization from filing a title V petition because the
regulations allow "any person" to file a petition based on earlier objections raised during tie public comment period
regardless of who had filed those earlier comments. See CAA § 505(b)(2); 40 CFR § 70.8(d)
4
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is important to understand the impact of granting relief under the Breakdown Relief Regulations.
Neither Condition I.H.I, nor the SIP provisions it incorporates into the Permit, would allow for
an exemption from an applicable requirement for periods of excess emissions. An "exemption
from an applicable requirement" would mean that the permittee would be deemed not to be in
violation of the requirement during the period of excess emissions. Rather, these Breakdown
Relief Regulations allow an applicant to enter into a proceeding in front of the District that could
ultimately lead to the District employing its enforcement discretion not to seek penalties for
violations of an applicable requirement that occurred during breakdown periods.
Significantly, the Breakdown Relief Regulations have been approved by EPA as part of
the District's federally enforceable SP. 64 Fed. Reg. 34558 (June 28, 1999) (this is the most
recent approval of the District's Regulation 1). Part 70 requires all SIP provisions that apply to a
source to be included in title V permits as "applicable requirements." See In re Pacificorp's Jim
Bridger and Naughton Electric Utility Steam Generating Plants. Petition No. VIII-00-1, at 23-24
("Pacificorp"). On this basis alone, the inclusion of the Breakdown Relief Regulations in the
permit is not objectionable.9
Moreover, Petitioners' allegation that Condition 1.H.1 is inconsistent with 40 CFR §
70.6(g) does not provide a basis for an objection. 40 CFR § 70.6(g) allows a permitting authority
to incorporate into its title V permit program an affirmative defense provision for "emergency"
situations as long as the provision is consistent with the 40 CFR § 70.6(g)(3) elements. Such an
emergency defense then maybe incorporated into permits issued pursuant to that program. As
explained above, these regulations provide relief based on the District's enforcement discretion
and do not provide an affirmative defense to enforcement. Moreover, to the extent the
emergency defense is incorporated into a permit, 40 CFR § 70.6(g)(5) makes clear that the Part
70 affirmative defense type of relief for emergency situations "is in addition to any emergency or
upset provision contained in any applicable requirement." This language clarifies that the Part 70
regulations do not bar the inclusion of applicable SF requirements in title V permits, even if
those applicable requirements contain "emergency" or "upset" provisions such as Condition
l.H.l that may overlap with the emergency defense provision authorized by 40 CFR § 70.6(g).
Also, a review of the Breakdown Relief Regulations themselves demonstrates that they
are not inconsistent with the Clean Air Act, and therefore, not contrary to the Act. A September
28, 1982, EPA policy memorandum from Kathleen Bennet, titled Policy on Excess Emissions
During Startup. Shutdown. Maintenance, and Malfunctions ("1982 Excess Emission Policy"),
explains that "all periods of excess emissions [are] violations of the applicable standard."
Accordingly, the 1982 Excess Emission Policy provides that EPA will not approve automatic
exemptions in operating permits or SFs. However, the 1982 Excess Emission Policy also
9This holds true even if the Petitioner could support an allegation thatEPA had erroneously incorporated
the provisio ns into the SIP. See Pacificorp at 23 ("even if the provision were found not to satisfy the Ac t, EPA co uld
not properly objectto a permit term that is derived from a provision of the federally approved SIP"). However, as
explained below, EPA believes that these provisions were appropriately approved as part of the District's SIP.
5
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explains that EPA can approve, as part of a SIP, provisions that codify an "enforcement
discretion approach." The Agency further refined its position on this topic in a September 20,
1999 policy memorandum from Steven A. Herman and Robert Perciasepe, titled State
Implementation Plans: Policy Regarding Excess Emissions During Malfunctions. Startup, and
Shutdown ("1999 Excess Emission Policy").10 The 1999 Excess Emission Policy explained that
a permitting authority may express its enforcement discretion through appropriate affirmative
defense provisions approved into the SIP as long as the affirmative defense applies only to civil
penalties (and not injunctive relief) and meets certain criteria. As previously explained, the
Breakdown Relief Regulations approved into the District's SIP provide neither an affirmative
defense to an enforcement action nor an automatic exemption from applicable requirements, but
rather serve as a mechanism for the District to use its enforcement discretion. Therefore, I find
that the provision is not inconsistent with the Act.
Finally, Petitioners allege that the inclusion of Condition I.H.I "creates unnecessary
confusion and unwarranted potential defense to federal civil enforcement." Inclusion of
Condition I.H.3 in the Los Medanos Permit clarifies Condition I.H. 1 by stating that "[t]he
granting by the District of breakdown relief. . . will not provide relief from federal enforcement."
Contrary to Petitioners' allegation, we find that addition of this language successfully dispels any
ambiguity as to the impact of the provision, especially as it relates to federal enforceability, and
therefore clears up "confusion" and limits "unwarranted defenses." Forthe reasons stated above,
I deny the Petition as it relates to Condition I.H. 1 and the incorporation of the Breakdown Relief
Regulations into the Permit.
B. Hearing Board Variance Relief Under Permit Condition I.H.2
The Petitioners' second allegation challenges the inclusion in the Los Medanos Permit of
Condition I.H.2, which states that a "permit holder may seek relief from enforcement action for a
violation of any of the terms and conditions of this permit by applying to the District's Hearing
Board for a variance pursuant to Health and Safety Code Section 42350. . . ." Petition at 3.
Petitioners make a number of arguments in support of their claim that the reference to
California's Variance Law in the Los Medanos Permit serves as a basis for an objection; none of
these allegations, however, serves as an adequate basis for EPA to object to the Permit.
Health and Safety Code ("HSC") sections 42350 et seq. ("California's Variance Law")
allow a permittee to request an air district hearing board to issue a variance to allow the permittee
to operate in violation of an applicable district rule, or State rule or regulation for a limited time.
Section 42352(a) prohibits the issuance of a variance unless the hearing board makes specific
10 On December 5 , 2001, EPA issued a brief clarification of this policy. Re-Issuance of Clarification - State
Implementation Plans (SIPs); Policy Regarding Excess Emissions During Malfunction, Startup, and Shutdown.
6
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findings.11 Section 42352(a)(2) limits the availability of variances to situations involving non-
compliance with "any rule, regulation, or order of the district." As part of the variance process,
the hearing board may set a "schedule of increments of progress," to establish milestones and
final deadlines for achieving compliance. See, e.g.. HSC § 42358. EPA has not approved
California's Variance Law into the SIP or Title V program of any air district. See, e.g.. 59 Fed.
Reg. 60939 (Nov. 29, 1994) (proposing to approve BAAQMD's title V program without
California's Variance Law); 60 Fed. Reg. 32606 (June 23, 1995) (granting final interim approval
to BAAQMD's title V program).
Petitioners argue that the "variance relief issued by BAAQMD under state law does not
qualify as emergency breakdown relief authorized by the Title V provisions . . . ." Petition at 4.
As with the Breakdown Relief Regulations, Petitioners' true concern appears to be that Condition
I.H.2 and California's Variance Law are inconsistent with 40 CFR § 70.6(g), which allows for
the incorporation of an affirmative defense provision into a federally approved title V program,
and thus into title V permits. Condition I.H.2 and California's Variance Law, however, do not
need to be consistent with 40 CFR § 70.6(g) because these provisions merely express an aspect
of the District's discretionary enforcement authority under State law rather than incorporate a
Part 70 affirmative defense provision into the Permit.12 As described above, the discretionary
11 HSC section 423 52(a) provides as follows:
No variance shall be granted unless the hearing board makes all of the following findings:
(1) That the petitioner for a variance is, or will be, inviolation of Section 41701 or of any rule,
regulation, or order of the district.
(2) That, due to conditions beyond the reasonable control of the petitioner, requiring compliance
would result in either (A) an arbitrary or unreasonable taking of property, or (B) the practical
closing and elimination of a lawful business. In making tho se findings where the petitioner is a
public agency, the hearing board shall consider whether or not requiring immediate compliance
would impose an unreasonable burden upon an essential public service. For purposes of this
paragraph, "essential public service" means a prison, detention facility, police or firefighting
facility, school, health care facility, landfill gas control or processing facility, sewage treatment
works, or water delivery operation, if owned and operated by a public agency.
(3) That the closing or taking would be without a corresponding benefit in reducing air
contaminants.
(4) That the applicant for the variance has given consideration to curtailing operations of the
source in lieu of obtaining a variance.
(5) During the period the variance is in effect, that the applicant will reduce excess emissions to the
maximum extent feasible.
(6) During the period the variance is in effect, that the applicant will monitor or otherwise quantify
emission levels from the source, if requested to do so by the district, and report these
emission levels to the district pursuant to a schedule established by the district.
12
Government agencies have discretion to not seek penalties or injunctive relief against a noncomplying
source. California's Variance Law recognizes this inherent discretion by codifying the process by which a source
may seek relief through the issuance of a variance. The ultimate decision to grant a variance, however, is still wholly
discretionary, as evidenced by the findings the hearing board must make in order to issue a variance. See HSC
section 42352(a)(l)-(6).
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nature of California's Variance Law is evidenced by the findings set forth in HSC §42538(a) that
a hearing board must make before it can issue a variance.13 Inherent within the process of
making these findings is the hearing board's ability to exercise its discretion to evaluate and
consider the evidence and circumstances underlying the variance application and to reject or
grant, as appropriate, that application. Moreover, the District clearly states in Condition I.H.3.
that the granting by the District of a variance does not "provide relief from federal enforcement,"
which includes enforcement by both EPA and citizens.14 As Condition I.H.2. refers to a
discretionary authority under state law that does not affect the federal enforceability of any
applicable requirement, I do not find its inclusion in the Los Medanos Permit objectionable.
Petitioners also argue that the "variance program is a creature of state law," and therefore
should not be included in the Los Medanos Permit. Petitioners' complaint is obviously without
merit since Part 70 clearly allows for inclusion of state- and local-only requirements in title V
permits as long as they are adequately identified as having only state- or local-only significance.
40 CFR § 70.6(b)(2). For this reason, I find that Petitioners' allegation does not provide a basis
to object to the Los Medanos Permit.
Petitioners further argue that California's Variance Law allows a revision to the approved
SIP in violation of the Act. Petitioners misunderstand the provision. The SIP is comprised of the
State or di strict rules and regulations approved by EPA as meeting CAA requirements. SIP
requirements cannot be modified by an action of the State or District granting a temporary
variance. EPA has long held the view that a variance does not change the underlying SIP
requirements unless and until it is submitted to and approved by EPA for incorporation into the
SIP. For example, since 1976, EPA's regulations have specifically stated: "In order for a
variance to be considered for approval as a revision to the State implementation plan, the State
must submit it in accordance with the requirements of this section." 40 CFR §51.104(d); 41 Fed.
Reg. 18510, 18511 (May 5, 1976).
The fact that the California Variance Law does not allow a revision to the approved SIP is
further evidenced by the law itself. By its very terms, California's Variance Law is limited in
application to "any rule, regulation, or order of the district." HSC § 42352(a)(2) (emphasis
supplied); therefore, the law clearly does not purport to modify the federally approved SIP. In
addition, California's view of the law's effect is consistent with EPA's. For instance, guidance
13
Because of its discretionary nature, California's Variance Law does not impose a legal impediment to the
District's ability to enforce its SIP or title V program. EPA cannot prohibit the District's use of the variance process
as a means for sources to avoid enforcement of permit conditions by tie District unless the misuse of the variance
process results in the District's failure to adequately implement or enforce its title V program, or its other federally
delegated or approved CAA programs. Petitioners have made no such allegation.
14Other BAAQMD information resources on variances also clearly set forth the legal significance of
variances. For example, the application for a variance on BAAQMD's website stales that EPA "does not recognize
California's variance process" and that "EPA can independently pursue legal action based on federal law against the
facility continuing to be in violation."
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issued in 1989 by the California Air Resources Board ("CARB"), the State agency responsible
for preparation of California's SIP, titled Variances and Other Hearing Board Orders as SIP
Revisions or Delayed Compliance Orders Under Federal Law, demonstrates that the State's
position with respect to the federal enforceability and legal consequences of variances is
consistent with EPA's. For example, the guidance states:
State law authorizes hearing boards of air pollution control districts to issue
variances from district rules in appropriate instances. These variances insulate
sources from the imposed state law. However, where the rule in question is part
of the State Implementation Plan (SIP) as approved by the U.S. Environmental
Protection Agency (EPA), the variance does not by itself insulate the source from
penalties in actions brought by EPA to enforce the rule as part of the SIP. While
EPA can use enforcement discretion to informally insulate sources from federal
action, formal relief can only come through EPA approval of the local variance.
In 1993, the California Attorney General affirmed this position in a formal legal opinion
submitted to EPA as part of the title V program approval process, stating that "any variance
obtained by the source does not effect [sic] or modify permit terms or conditions . . . nor does it
preclude federal enforcement of permanent terms and conditions." In sum, both the federal and
State governments have long held the view that the issuance of a variance by a district hearing
board does not modify the SIP in any way. For this reason, I find that Petitioners' allegation does
not provide a basis to object to the Los Medanos Permit.
Finally, Petitioners raise concerns that the issuance of variances could "jeopardize
attainment and maintenance of ambient air quality standards" and that inclusion of the variance
provision in the Permit is highly confusing to the regulated community and public. As to the first
concern, Petitioners' allegation is too speculative to provide a basis for an objection to a title V
permit. Moreover, as previously stated, permittees that receive a variance remain subject to all
SIP and federal requirements, as well as federal enforcement for violation of those requirements.
As to Petitioners' final point, I find that including California's Variance Law in title V permits
may actually help clarify the regulatory scheme to the regulated community and the public.
California's Variance Law can be utilized by permittees seeking relief from District or State rules
regardless of whether the Variance Law is referenced in title V permits; therefore, reference to
the Variance Law with appropriate explanatory language as to its limited impact on federal
enforceability helps clarify the actual nature of the law to the regulated community. In short,
since title V permits are meant to contain all applicable federal, State, and local requirements,
with appropriate clarifying language explaining the function and applicability of each
requirement, the District may incorporate California's Variance Law into the Los Medanos
Permit and other title V permits. For reasons stated in this Section, I do not find grounds to
object to the Los Medanos Permit on this issue.
C. Statement of Basis
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Petitioners' third claim is that the Los Medanos Permit lacks a statement of basis, as
required by 40 CFR § 70.7(a)(5). Petition at 5. Petitioners assert that without a statement of
basis it is virtually impossible for the public to evaluate the periodic monitoring requirements (or
lack thereof). Id. They specifically identify the District's failure to include an explanation for its
deci sion not to require certain monitoring, including the lack of any monitoring for opacity,
filterable particulate, or PM limits. Petition at 6-7, n.2. Additionally, Petitioners contend that
BAAQMD fails to include any S02 monitoring for source S-2 (Heat Recovery Steam Generator).
Id.
Section 70.7(a)(5) of EPA's permit regulations states that "the permitting authority shall
provide a statement that sets forth the legal and factual basis for the draft permit conditions
(including references to the applicable statutory or regulatory provisions)." The statement of
basis is not part of the permit itself. It is a separate document which is to be sent to EPA and to
interested persons upon request.15 Id.
A statement of basis ought to contain a brief description of the origin or basis for each
permit condition or exemption. However, it is more than just a short form of the permit. It should
highlight elements that EPA and the public would find important to review. Rather than restating
the permit, it should list anything that deviates from a straight recitation of requirements. The
statement of basis should highlight items such as the permit shield, streamlined conditions, or
any monitoring that is required under 40 C.F.R. 70.6(a)(3)(i)(B) or District Regulation 2-6-503.
Thus, it should include a discussion of the decision-making that went into the development of the
title V permit and provide the permitting authority, the public, and EPA a record of the
applicability and technical issues surrounding the issuance of the permit.16 See e.g.. In Re Port
15Unlike permits, statements of basis are not enforceable, do not set limits and do not create obligations.
16EPA has provided guidance on the content of an adequate statement ofbasis in a letter dated December
20, 200 1, from Region V to the State of Ohio and in a N otice of Deficiency ("NOD") issued to the State of T exas.
(Region V letter to Ohio); 67 Fed.
Reg. 732 (January 7, 2002) (EPA NOD issued to Texas). These documents describe the following five key elements
of a statement ofbasis: (1) a description ofthe facility; (2) adiscussion of any operational flexibility that will be
utilized at the facility; (3 ) the basis for applying the permit shield; (4) any federal regulatory applicability
determinations; and (5) the rationale for the monitoring methods selected. Id. at 735. In addition, the Region V
letter further recommends the inclusion of the following topical discussions in a statement ofbasis: (1) monitoring
and operational restrictions requirements; (2) applicability and exemptions; (3) explanation of any conditions from
previously issued permits that are not being transferred to the title V permit; (4) streamlining requirements; and (5)
certain other factual information as necessary. In a letter dated February 19, 1999 to Mr. David Dixon, Chair of the
CAPCOA Title V Subcommittee, the EPA Region IX Air Division provided guidance to California permitting
authorities that should be considered when developing a statement ofbasis for purposes of EPA Region IX's review.
This guidance is consistent witi the other guidance cited above. Each of the various guidance documents, including
the Texas NOD and the Region V and IX letters, provide generalized recommendations for developing an adequate
statement ofbasis rather than "hard and fast" rules on what to include in any given statement ofbasis. Taken as a
whole, these recommendations provide a good road map as to what should be included in a statement ofbasis
considering, for example, the technical complexity of the permit, the history of the facility, and any new provisions,
such as periodic monitoring conditions, that the permitting authority has drafted in conjunction with issuing the title
10
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Hudson Operation Georgia Pacific. Petition No. 6-03-01, at pages 37-40 (May 9, 2003)
("Georgia Pacific"); In Re Doe Run Company Buick Mill and Mine. Petition No. VII-1999-001,
at pages 24-25 (July 31, 2002) ("Doe Run"). Finally, in responding to a petition filed in regard to
the Fort James Camas Mill title V permit, EPA interpreted 40 CFR § 70.7(a)(5) to require that
the rationale for selected monitoring method be documented in the permit record. See In Re
Fort James Camas Mill. Petition No. X-1999-1, at page 8 (December 22, 2000) ("Ft. James"!
EPA's regulations state that the permitting authority must provide EPA with a statement
of basis. 40 CFR § 70.7(a)(5). The failure of a permitting authority to meet this procedural
requirement, however, does not necessarily demonstrate that 1he title V permit is substantively
flawed. In reviewing a petition to object to a title V permit because of an alleged failure of the
permitting authority to meet all procedural requirements in issuing the permit, EPA considers
whether the petitioner has demonstrated that the permitting authority's failure resulted in, or may
have resulted in, a deficiency in the content of the permit. See CAA § 505(b)(2) (objection
required "if the petitioner demonstrates . . . that the permit is not in compliance with the
requirements of this Act, including the requirements of the applicable [SIP]"); see also. 40 CFR §
70.8(c)(1). Thus, where the record as a whole supports the terms and conditions of the permit,
flaws in the statement of basis generally will not result in an objection. See e.g.. Doe Run at 24-
25. In contrast, where flaws in the statement of basis resulted in, or may have resulted in,
deficiencies in the title V permit, EPA will object to the issuance of the permit. See e.g.. Ft.
James at 8; Georgia Pacific at 37-40.
In this case, as discussed below, the permitting authority's failure to adequately explain
its permitting decisions either in the statement of basis or elsewhere in the permit record is such a
serious flaw that the adequacy of the permit itself is in question. By reopening the permit, the
permitting authority is ensuring compliance with the fundamental title V procedural requirements
of adequate public notice and comment required by sections 502(b)(6) and 503(e) of the Clean
Air Act and 40 CFR § 70.7(h), as well as ensuring that the rationale for the selected monitoring
method, or lack of monitoring, is clearly explained and documented in the permit record. See 40
CFR §§ 70.7(a)(5) and 70.8(c); Ft. James at 8.
For the proposed Los Medanos Permit, the District did not provide EPA with a separate
statement of basis document. In a meeting with EPA representatives held on October 31, 2001,
at the Region 9 offices, the District claimed that it complied with the statement of basis
requirements for the Los Medanos Permit because it incorporated all of the necessary explanatory
information either directly into the Permit or it included such information in other supporting
documentation.17 As such, the District argues, at a minimum, it complied with the substantive
requirements of a statement of basis.
V permit.
17
This meeting along with the others held with the District were for fact-gathering purposes only. In a
November 8, 2001 meeting at the Region 9 offices, the Petitioners were likewise provided the opportunity to present
facts pertaining to the Petition to EPA representatives.
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In responding to the Petition, we reviewed the final Los Medanos Permit and all
supporting documentation, which included the proposed Permit, the FDOC drafted by the
District for purposes of licensing the power plant with the CEC, and the "Permit Evaluation and
Emission Calculations" ("Permit Evaluation") which was developed in March 2001 as part of the
modification to the previously issued ATC permit. Although the District provided some
explanation in this supporting documentation as to the factual and legal basis for certain terms
and conditions of the Permit, this documentation did not sufficiently set forth the basis or
rationale for many other terms and conditions. Generally speaking, the District's record for the
Permit does not adequately support: (1) the factual basis for certain standard title V conditions;
(2) applicability determinations for source-specific applicable requirements, such as the Acid
Rain requirements and New Source Performance Standards ("NSPS"); (3) exclusion of certain
NSR and PSD conditions contained in underlying ATC permits; (4) recordkeeping decisions and
periodic monitoring decisions under 70.6(a)(3)(i)(B) and District Regulation 2-6-503; and (5)
streamlining analyses, including a discussion of permit shields.
EPA Region 9 identified numerous specific deficiencies falling under each of these broad
categories.18 For example, the District's permit record does not adequately support the basis for
certain source-specific applicable requirements identified in Section IV of the Permit, especially
those regarding the applicability or non-applicability of subsections rules that apply to particular
types of units such the as NSPS for combustion turbines or SIP-approved District Regulations.
For instance, in table IV-B and D of the Permit, the District indicates that subsection 303 of
District Regulation 9-3, which sets forth NOx emission limitations, applies to certain emission
units. However, the permit record fails to describe why subsection 601 of the same District
Regulation, an otherwise seemingly applicable provision, is not included in the tables as an
applicable requirement. Subsection 601 establishes how exhaust gases should be sampled and
analyzed to determine NOx concentrations for purposes of compliance with subsection 303.
Similarly, in the same tables, the District lists certain applicable NSPS subsections, such as those
in 40 CFR Part 60 Subparts Da and GG, but does not explain why these subsections apply to
those specific emission units nor why other seemingly applicable subsections of the sameNSPS
regulations do not apply to those units.19
The permit recoid also fails to explain the District's streamlining decisions of certain
18 EPA Region 9 Permits Office described these areas of concern in greater detail in a memorandum dated
March 29, 2002, "Region 9 Review of Statement of Basis for Los Medanos title V Permit in Response to Petition to
Object." This memorandum is part of the administrative record for this Order and was reviewed in responding to
this Petition.
19 The tables in Section IV pertaining to certain gas turbines located at the Facility cite to 40 CFR
60.332(a)(1) as an applicable requirement. However, these same tables fail to cite to subsections 40 CFR
60.332(a)(2) through 60.332(1) of the same NSPS program even though these provisions also apply to gas turbines.
The District's feilure to provide any sort of discussion or explanation as to the applicability or non-applicability of
the subsections of 40 CFR 60.3 32 makes it impossible to review the District's applicability determinations for this
NSPS.
12
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underlying ATC permit conditions as set forth in Section VI of the Permit. The District
apparently modified or streamlined the ATC conditions in the context of the title V permitting
process but failed to provide an explanation in the permit record as to the basis for the change to
the conditions. For instance, Condition 53 of Section VI states that the condition was "[djeleted
[on] August, 2001," but the District fails to discuss or explain anywhere in the permit record the
basis for this deletion or the nature of the original condition that was deleted.
As a final example of the District's failure to provide a basis or rationale for permit terms,
in accordance with Petitioner's claim, the permit record is devoid of discussion pertaining to how
or why the selected monitoring is sufficient to assure compliance with the applicable
requirements. See 69 Fed. Reg. 3202, 3207 (Jan. 22, 2004). Most importantly, for those
applicable requirements which do not otherwise have monitoring requirements, the Permit fails
to require monitoring pursuant to 40 C.F.R. 70.6(a)(3)(i)(B), and the permit record fails to
discuss or explain why no monitoring should be required under this provision. As evidenced by
these specific examples, I find the District did not provide an adequate analysis or discussion of
the terms and conditions of the proposed Los Medanos Permit.
To conclude, by failing to draft a separate statement of basis document and by failing to
include appropriate discussion in the Permit or other supporting documentation, the District has
failed to provide an adequate explanation or rationale for many significant elements of the
Permit. As such, I find that the Petitioners' claim in regard to this issue is well founded, and by
this Order, I am requiring the District to reopen the Los Medanos Permit, and make available to
the public an adequate statement of basis that provides the public and EPA an opportunity to
comment on the title V permit and its terms and conditions as to the issues identified above.
D. Inadequate Permit Conditions
Petitioners' fourth claim is that Condition 22 in the Los Medanos Permit is
unenforceable. The Petitioners claim that this condition "appears to defer the development of a
number of permit conditions related to transient, non-steady state conditions to a time after
approval of the Title V permit." Petition at 7. The Petitioners recommend that "a reasonable set
of conditions should be defined" and amended through the permit modification process to
conform to new data in the future. I disagree with the Petitioners on this issue.
As Petitioners correctly note, Part 70 and the Act require that "conditions in a Title V
permit. . . be enforceable." However, they argue that "Condition 22 is presently unenforceable
and must be deleted from the permit." I find that the condition challenged by the Petitioners is
enforceable.
Conditions 21 and 22 establish NOx emissions levels for units P-l and P-2, including
limits for transient, non-steady state conditions. Condition 22(f) requires the permittee to gather
data and draft and submit an operation and maintenance plan to control transient, non-steady
13
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state emissions for units P-l and P-220 within 15 months of issuance of the permit. Condition
22(g) creates a process for the District, after consideration of continuous monitoring and source
test data, to fine-tune on a semi-annual basis the NOx emission limit for units P-l and P-2 during
transient, non-steady state conditions and to modify data collection and recordkeeping
requirements for the permittee.
These requirements are enforceable. EPA and the District can enforce both Condition
22(f)'s requirement to draft and submit an operation and maintenance plan for agency approval
and the control measures adopted under the plan after approval. Fcr Condition 22(g), the process
for the District to modify emission limits and/or data collection and recordkeeping requirements
is clearly set forth in the Permit and the modified terms will be federally enforceable. Moreover,
the circumstances that trigger application of Condition 22 are specifically defined since
Condition 22(c) precisely defines "transient, non-steady state condition" as when "one or more
equipment design features is unable to support rapid changes in operation and respond to and
adjust all operating parameters required to maintain the steady-state NOx emission limit
specified in Condition 21(b)." As such, I find that Condition 22 is federally and practically
enforceable. Therefore, Petitioners' claim on this count is not supported by the plain language of
the Permit itself.
Moreover, to the extent that Petitioners are concerned that Lowest Achievable Emission
Rate ("LAER")21 emission standards are being set Ihrough a process that does not incorporate
appropriate NSR, PSD, and title V public notice and comment processes, such concerns are not
well-founded. By its very terms, the Permit prohibits relaxation of the LAER emissions
standards set in the permitting process. Condition 21(b) of the Permit sets a LAER-level
emission standard of 2.5 ppmv NOx, averaged over any 1-hour period, forunits P-l and P-2 for
all operational conditions other than transient, non-steady state conditions. Condition 22(a) sets
the limit for transient, non-steady state conditions of 2.5 ppmv NOx, averaged over any rolling 3-
hour period.22 Implementation of Condition 22 cannot relax the LAER-level emission limits.
Condition 22(f) merely requires further data-collecting, planning, and implementation of control
20
Unit P-l is defined as "the combined exhaust point for the S-l Gas Turbine and the S-2 HRSG after
control by the A-l SCR System and A-2 Oxidation Catalyst" and unit P-2 is defined as "tie combined exhaust point
for the S-3 Gas Turbine and the S-4 HRSG after control by the A-3 SCR System and A-4 Oxidation Catalyst."
Permit, Condition 21 (a).
21
LAER is the level of emission control required for all new and modified major sources subject to tie NSR
requirements ofSection 173, Part D, ofthe CAA for non-attainment areas. 42 U.S.C. § 7501-15. Since the Bay
Area is non-attainment for ozone, the Facility must meet LAER-level emission controls for NOx emission since NOx
is a pre-cursor of ozone. California uses different terminology than the CAA when applying LAER, however. In
California, best available control technology ("BACT") is consistent with LAER-level controls, and California and
its local permitting authorities use this terminology when issuing permits.
22
The District determined this limit to be LAER for transient, non-steady state conditions because, as the
District stated in its Response to Comments, "the NOx emission limit (2.5 ppmv averaged over one hour) during load
changes .... ha[s] not yet been achieved in practice by any utility-scale power plant."
14
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measures for transient, non-steady state emissions that go beyond those already established to
comply with LAER requirements. While Condition 22(g) does allow the District to modify the
emission limit during transient, non-steady state conditions,23 this new limit cannot exceed the
"backstop" LAER-level limit set by Condition 22(a). As such, Condition 22(g) serves to only
make overall emission limits more stringent. The District itself recognized the "no backsliding"
nature of Conditions 22(f) and (g) on page 3 of its Response to Comments where it stated that the
Facility "must comply with 'backstop' NOx emission limit of 2.5 ppmv, averaged over 3 hours,
under all circumstances and comply with all hourly, daily and annual mass NOx emission
limits."24
Finally, for any control measures; further data collection, recordkeeping or monitoring
requirements; new definitions; or emission limits established pursuant to Conditions 22(f) or (g)
that are to be incorporated into the permit, the District must utilize the appropriate title V permit
modification procedures set forth in 40 CFR § 70.7(d) and the District's Regulation 2-6-415 to
modify the Permit. The District itself recognizes this in Condition 22(g) by stating that "the Title
V operating permit shall be amended as necessary to reflect the data collection and recordkeeping
requirements established under 22(g)(ii)." For the reasons described above, we do not find
Conditions 22(f) and (g) unenforceable or otherwise objectionable for inclusion in the Los
Medanos Permit.
E. Failure to Incorporate Agreed-to Changes
The final claim by the Petitioners is that the District agreed to incorporate certain changes
into the final Los Medanos Permit but failed to do so. Namely, Petitioners claim that the District
failed to keep its commitments to OCE to add language requiring recordkeeping for stipulated
abatement strategies under SIP-approved Regulation 4 and to add clarifying language about NOx
monitoring requirements. The District appeared to make these commitments in its Response to
Comment Letter. These allegations do not provide a basis for objecting to the Permit because
neither change is necessary to ensure that the District is properly including all applicable
requirements in the permit nor are they necessary to assure compliance with the underlying
applicable requirements. CAA § 504(a); 40 CFR § 70.6(a)(3).
The first change sought by OCE during the comment period was a requirement that the
23
The District may modify the emission limit during transient, non-steady state conditions every 6 months
for the first 24 months after the start of the Commissioning period. The Commissioning period commences "when
all mechanical, electrical, and control systems are installed and individual system start-up has been completed, or
when a gas turbine is first fired, whichever comes first. . . The Commissioning period terminates "when tie plant
has completed performance testing, is available for commercial operation, and has initiated sales to the power
exchange." Permit, at page 34.
24
The purpose of Condition 22, as stated by the District, is to allow for limited "excursions above the
emission limit that could potentially occur under unforeseen circumstances beyond [the Facility's] control." This is
the rationale for the three hour averaging period for transient, non-steady state conditions rather than the one hour
averaging period of Condition 21(b) for all other periods.
15
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Facility document response actions taken during periods of heightened air pollution. The
District's Regulation 4 establishes control and advisory procedures for large air emission sources
when specified levels of ambient air contamination have been reached and prescribes certain
abatement actions to be implemented by each air source when action alert levels of air pollution
are reached. OCE recommended that the District require recordkeeping in the title V permit to
"insure that the stipulated abatement strategies [of Regulation 4] are implemented during air
pollution events," and the District appeared to agree to such a recommendation in its Response to
Comments. Although the recordkeeping suggested by Petitioners would be helpful, Petitioners
have not shown that it is required by title V, the SIP, or any federal regulation, and therefore, this
failure to include it is not a basis for objecting to the permit.
The Part 70 regulations set the minimum standard for inclusion of monitoring and
recordkeeping requirements in title V permits. See 40 CFR § 70.6(a)(3). These provisions
require that each permit contain "periodic monitoring sufficient to yield reliable data from the
relevant time period that are representative of the source's compliance with the permit" where
the applicable requirement does not require periodic testing or instrumental or noninstrumental
monitoring (which may consist of recordkeeping designed to serve as monitoring). 40 CFR §
70.6(a)(3)(i)(B). There may be limited cases in which the establishment of a regular program of
monitoring and/or recordkeeping would not significantly enhance the ability of the permit to
reasonably assure compliance with the applicable requirement and where the status quo (i.e., no
monitoring or recordkeeping) could meet the requirements of 40 CFR § 70.6(a)(3). Such is the
case here.
Air pollution alert events occur infrequently, and therefore, compliance with Regulation 4
is a minimal part of the source's overall compliance with SIP requirements. More importantly,
Regulation 4-303 abatement requirements mostly impose a ban on direct burning or incineration
during air pollution alert events, activities which are unlikely to occur at a gas-fired power plant
such as the Facility and in any case are easy to monitor by District inspectors. The other
Regulation 4-303 requirements are mostly voluntary actions to be taken by the sources, such as
reduction in use of motor vehicles, and therefore do not require compliance monitoring or
recordkeeping to assure compliance. Since the activities regulated by Regulation 4 are unlikely
to occur at the Facility, and compliance is easily verified by District inspectors, recordkeeping is
not necessary to assure compliance with Regulation 4. Therefore, further recordkeeping
requirements sought by the Petitioners are not required by 40 CFR § 70.6(a)(3).
The second change sought by the Petitioners is to add language to Condition 36
clarifying why certain pollutants, such as NOx emissions, are exempt from mass emission
calculations. On page 3 of the District's Response to Comments, the District explained that the
NOx emissions are exempt from the mass emission calculations because they are measured
directly through CEMS monitoring, whereas the other pollutant emissions subject to the
calculations do not have equivalent CEMS monitoring. Though this clarification is helpful, it
does not need to be incorporated into the title V permit itself. Therefore, its non-inclusion in the
Permit does not provide a basis for an EPA objection to the Permit. To the extent that such
16
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clarifying language is important, it should be included in the statement of basis, however. Since
the District will be drafting a statement of basis for the Los Medanos Permit due to the partial
granting of the Petition, we recommend that the clarifying language for Condition 36 be included
in the newly drafted statement of basis.
Though we hope that permitting authorities would generally fulfill commitments made to
the public, we find that the Petitioners' fifth claim does not provide a basis for an objection to the
Los Medanos Permit for the reasons described above. The mere fact that the District committed
to make certain changes, yet did not follow through on those commitments, does not provide a
basis for an objection to a title V permit. Petitioners have provided no other reason why the
agreed upon changes must be made to the permit beyond the District's commitments. I
accordingly deny Petitioners' request to veto the permit on these grounds.
IV. CONCLUSION
For the reasons set forth above and pursuant to Section 505(b)(2) of the Clean Air Act, I
am granting the Petitioners' request that the Administrator object to the issuance of the Los
Medanos Permit with respect to the statement of basis issue and am denying the Petition with
respect to the other allegations.
Mav 24. 2004 /S/
Date Michael O. Leavitt
Administrator
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BEFORE THE ADMINISTRATOR
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
In the Matter of Valero Refining Co
Benieia, California Facility
Petition No- IX-2004-G7
Major Facility Review Permit
Facility No, B2626
Issued by the Bay Area Air Qua lity
Management District
ORDER RESPONDING TO
PETITIONER'S REQUEST THAT THE
ADMINISTRATOR OBJECT TO
ISSUANCE OF A STATE OPERATING
PERMIT
ORDER DENYING IN FACT AND GRANTING IN PART
A PETITION FOR OBJECTION TO PERMIT
On December 7,2004, the Environmental Protection Agency ("EPA") received a petition
("Petition") from Our Children's Earth Foundation ("OCE" or "Petitioner") requesting that the
EPA Administrator object to the issuance of a state operating permit from the Bay Area Air
Quality Management District ("BAAQMD" or "District") to Valero Refining Co. to operate its
petroleum refinery located in Bcnicia, California ("Permit"), pursuant to title V pf the Clean Air
Act ("CAA" or "the Act"), 42 U.S.C. §§ 7661-7661 Ł CAA §§ 501-507, EPA's implementing
regulations in 40 C.F.R. Part 70 ("Part 70"), and the District's approved Pan 70 program. See (>6
Fed, Reg. 63503 (Dec. 7,2001).
Petitioner requested EPA object to the Permit on several grounds. In particular,
Petitioner alleged that the Permit failed to properly require compliance with applicable
requirements pertaining to, inter aha, flares, cooling towers, process units, electrostatic
precipitators, and other waste streams and units. Petitioner identified several alleged flaws in the
Permit application and issuance, including a deficient Statement of Basis. Finally, Petitioners
alleged that the permit impermissibly lacked a compliance schedule and failed to include
monitoring for several applicable requirements,
EPA has now fully reviewed the Petitioner's allegations pursuant to the standard set forth
in section 505(b)(2) of the Act, which places the burden on the petitioner to "demonstrate^ lo the
Administrator that the permit is not in compliance" with the applicable requirements of the Act
or the requirements of part 70, see also 40 C.F.R, § 70.8(c)(1), and 1 hereby respond to them by
this Order. In considering the al legal ions, EPA reviewed the Permit and related materials and
information provided by ihe Petitioner in the Petition.1 Based on this review, I partially deny and
'On March 7, 2005 EPA received a lengthy (over 250 pages, including appendices), detailed submission
from Valero Refining Company regarding this Petition. Due lo lite fact thai Valero Refining Company mad? iis
submission very shortly before EPA's sclllcment agreement deadline for responding ro ihe Petition and (he size of the
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partially grant (he Petitioner's request that I object to issuance of the Permit for the reasons
described below.
I. STATUTORY AND REGULATORY FRAMEWORK.
Section 502(d)( I) of the Act calls upon each State to develop and submit to BP A an
operating permit program to meet the requirements of title V. fn 1995, EPA granted interim
approval to the title V operating permit program submitted by BAAQMD. 60 Fed. Reg, 32606
(June 23, 1995); 40 C.F.R. Part 70, Appendix A. Effective November 30, 2001, EPA granted
full approval to BAAQMD's title V operating permit program. 66 Fed. Reg. 63503 (Dec 7
2001.)- ' '
Major stationary sources of air pollution and other sources covered by title V are required
to apply for an operating pemiit lhat includes applicable emission limitations and such other
conditions as are necessary to assure compliance with applicable requirements of the Act See
CAA §§ 502(a) and 504(a). The title V operating permit program does not generally impose new
substantive air quality control requirements (which are referred to as "applicable requirements"),
but does require permits to contain monitoring, recordkeeping, reporting, and other compliance
requirements when not adequately required by existing applicable requirements to assure
compliance by sources with existing applicable emission control requirements. 57 Fed. Reg,
32250, 32251 (July 21, 1992). One purpose of the title V program is to enable the source, EPA,
permitting authorities, and the public to better understand the applicable requirements to which
the source is subject and whether the source is meeting those requirements. Thus, the title V
operating permits program is a vehicle for ensuring that existing air quality control requirements
are appropriately applied to facility emission units and that compliance with these requirements
is assured.
Under section 505(a) of the Act and 40 C.F.R. § 70.8(a), permitting authorities are
required to submit all operating permits proposed pursuant to title V io EPA for review. If EPA
determines that a permit is not in compliance with applicable requirements or the requirements of
40 CF.R. Pan 70, EPA will object to the permit If EPA does not object to a permit on its own
initiative, section 505(b)(2) of the Act and 40 C.F.R, § 70.8(d) provide that any person may
petition the Administrator, within 60 days of the expiration of EPA's 45-day review period, to
object to the permit. Section 505(b)(2) of the Act requires the Administrator to issue a pemiit
objection if a petitioner demonstrates lhat a permit is not in compliance with the requirements of
the Act, including the requirements of Part 70 and the applicable implementation plan. See, 40
C.F.R, § 70.8(e)(1); New York Public Interest Research Group, Inc. v. Whitman, 321 F.3d 316,
333 n. 11 (2d Cir. 2003). Part 70 requires that a petition must be "based only on objections to the
submission, HPA was not able to review (heSubmission itself, nor was i! able to provide ihe Peiitioner an opportunity
to respond to (he submission, AI [hough the Agency previously has considered submissions from permittees in some
instances where EPA wis able to fiilly review the submission and provide ihe petitioners wiih a chance lo review and
respond lo the submissions, time did not allow for eilher condition here. 'Hie re fore, EPA did not consider Valero
Re lining Company's submission when responding la ihe Petition via this Order.
2
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permit that were raised with reasonable specificity during the public; comment period. .., unless
the petitioner demonstrates that it was impracticable to raise such objections within such period,
or unless the grounds for such objection arose after such period." 40 C.F.R. § 70.8(d). A
petition for objection does not stay the effectiveness of the permit or its requirements if the
permit was issued after the expiration of CPA's 45-day review period and before receipt of an
objection, If EPA objects to a permit in response io a petition atid the permit has been issued, the
permitting authority or EPA will modify, terminate, or revoke and reissue such a permit using the
procedures in 40 C-FJR. §§ 70.7(g)(4) or (5)(i) and (ii) for reopening a permit for cause.
IL PROCEDURAL BACKGROUND
A Permitting Chronology
BAAQMD held its first public comment period for the Valero permit, as well as
BAAQMD *s other title V refinery permits from June through September 2002/ BAAQMD held
a public hearing regarding the refinery permits on July 29, 2002. From August 5 to September
22, 2003, BAAQMD held a second public comment period for the permits. EPA's 45-day
review of BAAQMD's initial proposed permits ran concurrently with this second public
comment period, from August 13 to September 26, 2003. EPA did not object to any of the
proposed permits under CAA section 505(b)(1). The deadline for submitting CAA section
505(b)(2) petitions was November 25, 2003, EPA received petitions regarding the Valero Permit
from Valero Refining Company and from Our Children's Earth Foundation. EPA also received
section 505(b)(2) petitions regarding three of DAAQMD's other refinery permits.
On December I, 2003, BAAQMD issued its initial title V permits for the Bay Area
refineries, including the Valero facility. On December 12, 2003, EPA informed the District of
EPA's finding that cause existed to reopen the refinery permits because the District had nut
submitted proposed permits to EPA as required by title V, Part 70 and BAAQMD's approved
title V program. See Letter from Deborah Jordan, Director, Air Division, EPA Region 9 w Jack
Broadbent, Air Pollution Control Officer, Bay Area Air Quality Management District, dated
December i 2, 2003. EPA's finding was based on the fact that the District had substantially
revised the permits in response to public comments without re-submitting proposed permits to
EPA for another 45-day review. As a result of the reopening, EPA required BAAQMD to submit
to EPA new proposed permits allowing EPA an additional 45-day review period and an
opportunity to object to a permit if it failed to meet the standards sel forth in section 505(b)(1).
On December 19, 2003, EPA dismissed all of the section 505(b)(2) petitions seeking
objections to the refinery permits as unripe because of Ihe just-initiated reopening process. See
e.g., Letters from Deborah Jordan, Director, Air Division, EPA Region 9, to John [\ Hansen,
?Tliere arc a total of live petroleum refineries in the Bay Area: Chevron Producls, Company's Richiifom!
refinery, ConocoPhillips Company's San Francisco Refinery in Rodeo, Shell Oil Company's Martinez Refinery,
Tesoro Refining and Marketing Company's Martinez refinery, and Valero Refining Company"5 Bcnicia facility.
3
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PiHsbury Winthrop, LLP (representing Valero) and to Marcel in E, Keever, Environmental Law
and Justice Clinic, Golden Gate University School of Law (representing Our Children's Earth
Foundation and other groups) dated December 19, 2003. EPA also stated that the reopening
process would allow the public an opportunity to submit new section 505(b)(2) petitions after the
reopening was completed. In February 2004, three groups (lied challenges in the United States
Court of Appeals for the Ninth Circuit regarding EPA's dismissal of their section 505(b)(2)
petitions. The parties resolved this litigation by a settlement agreement under which EPA agreed
to respond to new petitions (i.e., those submitted after EPA's receipt of BAAQMD *s re-proposed
permits, such as this Petition) from the litigants by March 15, 2005. See 69 Fed, Reg. 46536
(Aug. 3, 2004).
BAAQMD submitted, a new proposed permit for Valero to EPA on August 26, 2004;
EPA's 45-day review period ended on OctobeT 10,2004. EPA objected to the Valero Permit
under CAA section 505(b)(1) on one issue: the District's failure to require adequate monitoring,
or a design review, of thermal oxidizers subject to EPA's New Source Performance Standards
and National Emission Standards for Hajtardous Air Pollutants.
B Time I i ness o f Petition
The deadline for filing section 505(b)(2) petitions expired on December 9, 2004. EPA
finds that the Petition was submitted on December 7,2004, which is within the 60-day time
frame established by the Act and Part 70, EPA therefore finds that the Petition is timely.
HI. ISSUES RAISED BY PETITIONER
A Comp liance w ith App I i cab I e Req ui rem ent s
Petitioner alleges that EPA must object to the Permit on the basis of alleged deficiencies
Petitioner claims EPA identified in correspondence with the District dated July 28, August 2, and
October 8, 2004. Petitioner alleges that EPA and BAAQMD engaged in a procedure that
allowed issuance of a deficient Permit, Petition at 6-10, EPA disagrees with Petitioner that it
was required to object to the Permit under section 505(b)(1) or that it followed an inappropriate
procedure during its 45-day review period.
As a threshold matter, EPA notes that Petitioner's claims addressed in this section are
limited to a mere paraphrasing of comments EPA provided to the District in the above-referenced
correspondence. Petitioner did not include in the Petition any additional facts or legal analysis to
support its claims that EPA should object to the Permit. Section 505(b)(2) of the Act places the
burden on the petitioner to "demonstrate|J to the Administrator that the permit is not in
compliance" with the applicable requirements of the Act or the requirements of pari 70. See also
40 C.F.R. § 70.8(c)(1); NYPIRG, 321 F.3d at 333 nil. Furthermore, in reviewing a petition to
object to a title V permit because of an alleged failure of the permitting authority to meet all
procedural requirements in issuing the permit, EPA considen whether the petitioner has
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demonstrated thai the permitting authority's failure resulted in, or may have resulted in, a
deficiency in the content of the permit. See CAA § 505(bX2); see also 40 CF R. § 70.8(c)(1); hi
the Matter of Los Medanos Energy Center, at 11 (May 24, 2004) ("Los Medanos")i In the Matter
of Doe Run Company BuickMill and Mine7 Petition No. VII-1999-001, at 24-25 (July 31,2002)
("Doe Run"). Petitioner bears the burden of demonstrating a deficiency in the permit whether the
alleged flaw was first identified by Petitioner or by EPA. See 42 ILS.C. § 7661d(b}(2). Because
this section of the Petition is little more than a summary ofEPA's comments oil the Permit, with
no additional information or analysis, it does not demonstrate that there is a deficiency in the
Permit.
1. EPA's July 28 and August 2, 2004 Correspondence
Petitioner overstates the legaj significance ofEPA's correspondence to the Distric! dated
July 28 and August 2,2004. This correspondence, which took place between EPA and the
District during the permitting process but before BAAQMD submitted the proposed Permit to
EPA for review, was clearly identified as "issues for discussion" and did not have any formal or
legal effect Nonetheless, EPA is addressing the substantive aspects of Petitioner's allegation
regarding the applicability and enforceability of provisions relating to 40 C.F.R, § 60. l04(aX 1) in
Section IH.G,L
2 Attachment 2 of EPA's October 8, 2TO4 Letter
EPA's letter to the District dated October 8,2004 contained the Agency's formal position
with respect to the proposed Permit. See Letter from Deborah Jordan, Director, Air Division,
EPA Region 9 to Jack Broadbent, Air Pollution Control Officer, BAAQMD, dated October 8,
2004 ("EPA October 8, 2004 Letter"). Attachment 2 of the letter requested the District to review
whether the following regulations and requirements were appropriately handled in the Permit:
Applicability of 40 C.F.R. Part 63, Subpart CC to flares
Applicability of Regulation 8-2 to cooling to we re
• Applicability of NSPS Subpart QQQ to new process units
Applicability of NESHAP Subpart FF to benzene waste streams according to annual
average water content
Compliance with NESHAP Subpart FF for benzene waste streams
• Parametric monitoring for electrostatic precipitators
EPA and the District agreed that this review would be completed by February 15, 2005
and that the District would solicit public comment for any necessary changes by April 15,2005.
Contrary to Petitioner's allegation, EPA's approach to addressing these uncertainties was
appropriate. The Agency pressed the District to re-analyze these issues and obtained the
District's agreement to follow a schedule to bring these issues to closure. EPA notes again that
the Petition itself provides no additional factual or legal analysis that would resolve these
applicability issues and demonstrate that the Permit is indeed lacking an applicable requirement
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Progress in resotving these issues is attributable solely to the mechanism set in place by EPA and
the District
EPA has received the results of B AAQMD's review, see. Letter from Jack Broadbenl, Air
Pollution Control Officer, BAAQMD, to Deborah Jordan, Director, Air Division, EPA Region 9,
dated February 15, 2005 ("BAAQMD February 15,2005 Letter"), and is making the following
findings.
a. Applicability of 40 C.F.R. Pari 63, Subpart CC to Flares
This issue is addressed in Section DLH
b Cooling Tower Monitoring
This issue is addressed at Section DDLGJ
Applicability of NSPS Subpart QQQ to New Process Units
Petitioner claims EPA determined that the Statement of Basis failed to discuss the
applicability of NSPS Subpart QQQ for two new process units at the facility.
In an applicability determination for Valero's sewer collection system (S-161), the
District made a general reference to two new process units that had been constructed since 1987,
the date after which constructed, modified, or reconstructed sources became subject to New
Source Performance Standard ("NSPS") Subpart QQQ. The District further indicated thai
process wastewater rrom these units is hard-piped to an enclosed system. However, the District
did not discuss the applicability of Subpart QQQ for these units or the associated piping. As a
result, it was not clear whether applicable requirements were omitted from the proposed Permit.
In response to EPA's request for more in formal ion on this matter, the District stated in a
letter dated February 15, 2005' that the process units are each served by separate storm water and
sewer systems. The District has concluded that the storm water system is exempt from Subpart
QQQ pursuant to 40 C.F.R. 60.692-1(d)(1). However, with regard to 1hc sewer system, the
District stated the following;
The second sewer system is the process drain system that contains oily water waste
streams. This system is "hard-piped" to the slop oil system where Ihe wastewater is
separated and sent to the sour water stripper. From the sour water stripper, the
wastewater {is] sent directly to secondary treatment in the WWTP where it is processed in
the Bio* units.
!Stfi Letter from Jack Broadbent, Executive OfTke/APCQ, Bay Area Air Quality Management District to
Deborah Jordan, Director, Air Division, EPA Region 9,
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The District will review the details of the new process drain system and determine the
applicable standards. A preliminary review indicates that, since this system is hand-piped
with no emissions, the new process drain system may have been included in the slop oil
system, specifically S-Sl and/or S104. If this is the case, Table FV-J33 will be reviewed
and updated, a? necessary, to include the requirements of the new process drain system.
The District's response indicates that the Permit maybe deficient because it may lack
applicable requirements. Therefore, EPA is granting Petitioner's request tq object to the Pennit.
The District must determine what requirements apply to the new process drain system and add
any applicable requirements to the Permit as appropriate.
d. Management of Non-aqueous Benzene Waste Streams Pursuant to
40 C.F.R. Part 61, Subpart FF
Petitioner claims that EPA identified an incorrect applicability determination regarding
benzene waste streams and NESHAP Subpart FF. Referencing previous EPA comments,
Petitioner notes that the restriction contained in 40 C,F,R, § 61.342(e)(l) was ignored by the
District in the applicability determination it conducted for the facility.
The Statement of Basis for the proposed Permit included an applicability determination
for Valero's Sewer Pipeline and Process Drains, which stated the following;
Valero complies with FF through 61.342(e)(2Xi)» which allows the facility 6
Mg/yr of uncontrolled benzerte waste. Thus, facilities are allowed to choose
whether the benzene waste streams are controlled or uncontrolled as long as the
uncontrolled stream quantities total less than 6 Mg/yr„,Because the sewer and
process drains are uncontrolled, they are not subject to 61.346, the standards for
individual drain systems.
In its October 8, 2004 letter, EPA raised concerns over this applicability determination
due to the District's failure to discuss the control requirements in 40 C.F.R. § 61,342{cXt)
Urtder the chosen compliance option, oniy wastes that have an average water content of 10% or
greater may go uncontrolled (see 40 C.F.R. § 61.342(e)(2)) and it was not clear from the
applicability determination that the emission sources met this requirement In response to EPA's
request for more information on this matter, the BAAQMD stated in its February 15, 2005 Setter,
"In the Revision 2 process, the District will determine which waste streams at the refineries are
non-aqueous benzene waste streams. Section 61.342(e)(1) will be added to the source-specific
tables for any source handling such waste. The District has sent letters to the refineries
requesting the necessary information "
The District's response indicates that the Permit may be deficient because it may lack an
applicable requirement, specifically Section 61.342(e)(1). Therefore, EPA is granting
Petitioner's request to object to the Permit, The District must reopen the Permit to add Section
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61.342(e)(1) to the source-specific tables for all sources that handle non-aqueous benzene waste
streams or explain in the Statement of Basis why Section 61.342(c)(1) does not apply.
e. 40 C.F.R. Pad 61, Subpart FF - 6BQ Compliance Option
Referencing EPA's October 8,2004 letter. Petitioner claims that EPA identified an
incorrect applicability determination regarding the 6BQ compliance option for benzene waste
streams under 40 CJF.R. § 61.342(e), Petitioner claims thai this should have resulted in an
objection by EPA.
The BP A comment referenced by Petitioner is issue #12 in Attacliment 2 of the Agency's
October 8, 2004 letter to the B AAQMD, Ln that portion of its letter, EPA identified incorrect
statements regarding the wastes that are subject to the 6 Mg/yr limit under 40 C.F.R. §
6l.342(e)(2)(i). Specifically, the District stated that facilities are allowed to choose whether the
benzene waste streams are controlled or uncontrolled as long as the uncontrolled stream
quantities total less than 6 Mg/yn fn actuality, the 6 Mg/yr limit applies to all aqueous benzene
wastes (both controlled and uncontrolled).
The fundamental issues raised by the EPA October 8,2004 letter were I) whether or not
the refineries are in compliance with the requirements or the benzene waste operations NESHAJP,
and 2) the need to remove the incorrect language Irom the Statement of Basis. The first issue is a
matter of enforcement and does not necessarily reflect a flaw in the Permit, Absent information
indicating that the refinery is actually out of compliance with the NESHAP, there is no basis for
an objection by EPA- The second issue has already been corrected by the District. In response to
EPA's comment, the District revised the Statement of Basis to state that the 6 Mg/yr Simit applies
to the benzene quantity in the total aqueous waste stream. See December 16, 2004 Statement of
Basis at 26. Therefore, EPA is denying Petitioner's request to object to the Permit. However, in
responding to this Petition, EPA identified additional incouect language in the Permit,
Specifically, Table VU-Refmery states, "Uncontrolled benzene <6 megagrams/year." See Permit
at 476. As discussed above, this is clearly inconsistent with 40 C.F.R, § 61.342(eX2). in
addition, Table IV-Refinery contains a similar entTy that states, "Standards: General;
[Uncontrolled] 61.342(e)(2) Waste shall not contain more than 6,0 Mg/yr benzene." See Permit
at 51. As a result, under a separate process, EPA is reopening the Permit pursuant to its authority
under40 C.F.R, § 70.7(g) to require that the District fix this incorrect language,
f. Parametric Monitoring for Electrostatic Precipitators
Petitioner claims EPA found that the Permit contains deficient particulate monitoring for
sources that are abated by electrostatic precipitators (ESPs) and that are subject to limits under
SIP-approved District Regulations 6-310 and 6-311, Petitioner requests that EPA object to the
Permit to require appropriate monitoring,
BAAQMD Regulation 6-310 limits particulate matter emissions to 0.15 pains per dry
8
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standard cubic Foot, and Regulation 6-311 contains a variable limit based on a source's process
weight rate. Because Regulation 6 does not contain monitoring provisions, the District relied on
its periodic monitoring authority to impose monitoring requirements on sources S-5, S-6t and S-
10 to ensure compliance with these standards. See 40 C.F.R. | 70,6(a)(3)(i)(B); BAAQMD Reg.
6-503; BAAQMD Manual of Procedures, Vol. HI, Section 4,6- For sources S-5 and S-6, the
Permit requires annual source tests for both emission limits. For S-lGt the Permit requires an
annual source test to demonstrate compliance with Regulation 6-310 but no monitoring is
required for Regulation 6-311.
With regard to monitoring for Regulation 6-311 for source S-10, the Permit is
inconsistent with the Statement of Basis, The final Statement of Basis indicates that Condition
19466, Part 9 should read, "The Permit Holder shall perform an annual source test on Sources
S-5, S-6, S-8, S-10+ S-l 1, S-12, S-176, S-232, S-233 and S-237 to demonstrate compliance with
Regulation 6-311 (PM mass emissions rate not to exceed 4.1QP0.67 lb/hr)," See December 16,
2004 Statement of Basis at 84. However, Part 9 of Condition 19466 in the Permit states that the
monitoring requirement only applies to S-5 and S-6, December 16, 2004 Permit at 464. In
addition, Table Vtl-Bl states that monitoring is not required. Therefore, EPA is granting
Petitioner's request to object to the Permit as it pertains lo monitoring S-!0 for compliance with
Regulation 6-311. The District must reopen the Permit to add monitoring requirements adequate
to assure compliance with the emission limit or explain in the Statement of Basis why it is not
needed.
Regarding the annual source tests for sources S-5, S-6, and S-10, KPA believes that an
annual testing requirement is inadequate in the absence of additional parametric monitoring
because proper operation and maintenance of the ESPs is necessary in order to achieve
compliance with the emission limits- In the BAAQMD February 15,2005 Letter, the District
stated that it intends to "propose a permit condition requiring the operator to conduct an initial
compliance demonstration that will establish a correlation between opacity and particulate
emissions," Thus, EPA concludes the Permit docs not meet the Part 70 standard that it contain
periodic monitoring sufficient to yield reliable data from the relevant time period that are
representative of Ihe source's compliance. See 40CF.R. § 70,6(a)(3){j)(B), Therefore, EPA is
granting Petitioner's request to object to the Permit. At a minimum, the Permit must contain
monitoring which yields data that art representative of the source's compliance with its permit
terms and conditions.
3. Attachment 3 of EPA's October 8, 2004 Letter
Attachment 3 of EPA's October 8,2004 Letter memorialized the District's agreement to
address two issues related to the Valero Permit. One issue pertains to applicability
determinations for support facilities. EPA does not have adequate information demonstrating
that the Valero facility has support facilities, nor has Petitioner provided any such information.
EPA therefore finds no basis to object to the Permit and denies the Petition as to this issue.
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The second issue pertains to the removal of a permit shield from BAAQMD Regulation
8-2. EPA has reviewed the most recent version of the Permit and determined that the shield was
removed. Therefore, EPA is denying Petitioner's request to object to the permit as this issue is
moot.
R Permit Application
Applicable Requirements
Petitioner alleges that EPA must object to the Permit because it contains unresolved
applicability determ mat ions due to "deficiencies in the application and permit process" as
identified in Attachment 2 to EPA's October 8, 2004 letter lo the District,
During EPA's review of the Permit, BAAQMD asserted that, notwithstanding any alleged
deficiencies in the application and permit process, the Permit sufficiently addressed these items
or the requirements were not applicable. EPA requested that the District review some of the
determinations of adequacy and non-applicability that it had already made, EPA believes that
this process has resulted in improved applicability determinations. Petitioners have failed to
demonstrate that such a generalized allegation of "deficiencies in the application and permit
process" actually resulted in or may have resulted in a (law in the Pennit. "t herefore, EPA denies
the Petition on this basis.
2. Identification of Insignificant Sources
Petitioner contends that the permit application failed lo list insignificant sources, resulting
in a "lack of information ... [that] inhibits meaningful public review of the Title V permit."
Petitioner further contends that, contrary to District permit regulations, the application failed to
include a list of all emission units, including exempt and insignificant sources and activities, and
failed to include emissions calculations for each significant source or activity. Petitioner lastly
alleges that the application lacked an emissions inventory for sources not in operation durine
1993.
Under Part 70, applications may not omit information needed to determine the
applicability of, or to impose, any applicable requirement, or to evaluate a required fee amount.
40 C.F.R. f 70.5(c). Emission calculations in support of the above information are required. 40
C.F.R. § 70.5(c)(3J(viLi). An application must also include a list ofinsigni(leant activities that
are exempted because of size or production rate. 40 C.F.R. § 70.5(c).
District Regulation 2-6-405.4 requires applications for title V permits to identify and describe
"each permitted source at the facility" and "each source or other activity that is exempt from the
requirement to obtain a permit „.. EPA's Part 70 regulaiions* which prescribe the minimum
elements for appravable state title V programs, require that applications include a list of
insignificant sources that are exempted on the basis of size or production rate, 40 C.F.R.
10
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§ 70.5(c). EPA's regulations have no specific requirement for the submission of emission
calculations to demonstrate why an insignificant source was included in the list.
Petitioner makes no claim that the Permit inappropriately exempts insignificant sources
from any applicable requirements or that the Permit omits any applicable requirements.
Similarly, Petitioner makes no claim that the inclusion of emission calculations in ihc application
would have resulted in a different permit. Because Petitioner failed to demonstrate that the
alleged flaw in the permitting process resulted in, or may have resulted in, a deficiency in ifie
permit, EPA is denying the Petition on this ground.
EPA also denies Petitioner's claim because Petitioner fails to substantiate its generalized
contention that the Permit is flawed. The Statement of Basis unambiguously explains that
Section III of the Permit, Generally Applicable Requirements, applies to all sources at the
facility, including insignificant sources:
This section of the permit lists requirements that generally apply fo all sources at a facility
including insignificant sources and portable equipment that may not require a District
permit....[Standards that apply to insignificant or unpermitted sources at a facility (e.g.,
refrigeration units that use more than 50 pounds of an ozone-depleting compound), are
placed in this section.
Thus, all insignificant sources subject to applicable requirements are properly covered by ihe
Permit.
Petitioner also fails to explain how meaningful public review of the Permit was
"inhibited" by the alleged lack of a list of insignificant sources from the permit application/ We
find no permit deficiency otherwise related to missing insignificant source information in the
Permit application.
In addition, Petitioner fails to point to any defect in Ihe Permit as a consequence of any
missing significant emissions calculations in the permit application. The Statement of Basis for
Section IV of the Permit states, "This section of the Permit lists the applicable requirements thai
apply to permitted or significant sources." Therefore, all significant sources and activities are
properly covered by the Permit,
"With respect to a missing emissions inventory for sources not in operation during 1993*
Petitioner again fails lo point to any resultant flaw in the Permit. These sources are appropriately
addressed in the Permit.
For the foregoing reasons, EPA is denying the Petition on these issues
4 In another part of U« Petition, addressed below. Petitioner argues lit at the District's delay in providing
requested information v billed the District's public participation procedures approved to meet 40 C.F.R. § 70.7.
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3, Identification of Non-Compliance
Petitioner argues that the District should have compelled the refinery to identify non-
compliance in the application aod provide supplemental information regarding non-compliance
during the application process prior to issuance of ihe final permit on December 1, 2Q03. In
support, Petitioner cites the section of its Petition {IIl.D.) alleging that the refinery failed to
properly update its compliance certification.
Title V regulations do not require an applicant to supplement its application with
information regarding non-compliance,5 unless Lhe applicant has knowledge of an incorrect
application or of information missing from an application. Pursuant to 40 C.F.R. § 70.5(cX8)(i)
and (ni)(C), a standard application form for a title V permit must contain, inter aiia1 a
compliance plan that describes the compliance status of each source with respect to all applicable
requirements and a schedule of compliance for sources that are not in compliance with all
applicable requirements at the time the permit issues. Section 70.5(b), Duty io supplement or
correct application, provides that any applicant who fails to submit any relevant facts, or who
has submitted incorrect information, in a permit application, shall, upon becoming aware of such
failure or incorrect submission, promptly submit such supplemental or corrected information. !n
addition, Section 70.5(c)(5) requires the application to include "(ojther specific information that
may be necessary to implement and enforce other applicable requirements ... or to determine the
applicability of such requirements,"
Petitioner docs not show that the refinery Iiad failed to submit any relevant facts, or had
submitted incorrect information, in its 1996 initial permit application. Consequently, the duty to
supplement Or Correct the permit application described at 40 C.F.R. § 70. 5(b) has not been
triggered in this case-
Moreover, BP A disagrees that the requirement of 40 C.F.R. § 70.5(c)(5) requires the
refinery to update compliance information in this case. The District is apprised of all new
information arising after submittal of the initial application - such as NOVs, episodes and
complaints — that may bear on the implementation, enforcement and/or applicability of applicable
requirements. Jn fact, the District has an inspector assigned to the plant to assess compliance at
least on a weekly basis. Therefore, it is not necessary to update the application with such
information, as it is already in lhe possession of the District Petitioner has failed to demonstrate
that the alleged failure to update compliance information in the application resulted in, or may
have resulted in. a deficiency in the Permit. For the foregoing reasons, EPA denies the Petition
on this issue.
C. Assurance of Compliance with All Applicable Requirements Pursuant to the Act,
Pari 70 and BAAQMD Regulations
5 As discussed infra, title V regulations also do nol require permit applicant to update fheir compliance
certifications pending permit issuance.
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1 Compliance Schedule
In essence, Petitioner claims that the District's consideration of the facility's compliance
liistory during the title V permitting process was flawed because the District decided not to
include a compliance schedule in the Permit despite a number of NOVs and other indications, in
Petitioner's view, of compliance problems, and the District did not explain why a compliance
schedule is not necessary. Specifically, Petitioner alleges that EPA must object to the Permit
because the "District ignored evidence of recurring or ongoing compliance problems at the
facility, instead relying oil limited review of outdated records, to conclude that a compliance
schedule is unnecessary " Petition at 11-19. Petitioner further alleges that a compliance schedule
is necessary to address NOVs issued to the plant (including many that are still pending)15, one-
lime episodes7 reported by the plant, recurring violations and episodes at certain emission units,
complaints filed with the District, and the lack of evidence that the violations have been resolved.
The relief sought by Petitioner is for the District to include "a compliance schedule in the Permit,
or explain why one was not necessary." Id. Petitioner additionally charges that, due to the
facility's poor compliance history, additional monitoring, recordkeeping and reporting
requirements arc warranted to assure compliance with all applicable requirements. Id.
Section 70.6(c)(3) requires title V permits to include a schedule of compliance consistent
with Section 70.5(c)(8). Section 70.5(c)(8) prescribes the requirements for compliance schedules
to be submitted as part of a permit application. For sources that are not in compliance with
applicable requirements at the time of permit issuance, compliance schedules must include wa
schedule of remedial measures, including an enforceable sequence of actions with milestones,
leading to compliance " 40 C.F.R. § 70.5(c){8)(iii)(C). The compliance schedule should
"resemble and be at least as stringent as that contained in any judicial consent decree or
administrative order to which the source is subject." Id.
In determining whether an objection is warranted For alleged flaws in the procedures
leading up to permit issuance, such as Petitioner's claims thai the District improperly considered
the facility's compliance history, EPA considers whether a Petitioner has demonstrated that the
alleged flaws resulted in, or may Itave resulted in, a deficiency in the permit's content. See CAA
§ 505(b)(2) (requiring an objection "if the petitioner demonstrates... that the permit is not in
compliance with the requirements of this Act...."). In Petitioner's view, the deficiency that
resulted here is the lack of a compliance schedule. For the reasons explained below, EPA grants
4BaaQMD Regulation 1:401 provides for the issuance of NOVs; "Violation Notice: A not ice of violation
or citation skull be issued by the District for all violations of District refutations and shall be delivered to persons
alleged to be in violation of District regulations. The notice shall identify the nature of the violation, the rule or
regulation violated, and the dale or dates on which said violation occurred,"
7According to BAAQMD, "episodes" ire "reportable events, bul are not necessarily violations," Letter
from Adan Schwartz, Senior Assistant Counsel, RAAQMO to (jerardo Rio*, EPA Region IX, dated January 31,
2005.
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the Petition to require the District to address in the Permit's Statement of Basis the NOVs thai
the District has issued to the facility and, in particular, NOVs thai have not been resolved
because they may evidence noncompliance at the time of permit issuance, EPA denies the
Petition as to Petitioner's other compliance schedule issues.
a. Notices of Violation
fn connection with its claim that the Permit is deficient because it lacks a compliance
schedule, Petitioner states that the Dislrict issued 85 NOVs to Valero between 2001 and 2004
and 51 NOVs in 2003 and 2004. Petitioner highlights that, as of October 22, 2004, all 51 NOVs
issued in 2003 and 2004 were unresolved and still "pending." Petition at 14-15. To support ils
claims, Petitioner attached to the Petition various District compliance reports and summaries,
including a list of NOVs issued between January 1,2003 and October l» 2004. Thus, Petitioner
essentially claims that the District's consideration of these NOVs during the title V permitting
process was Hawed, because the District did not include a compliance schedule in the Permit and
did not explain why a compliance schedule is not necessary.
As noted above, EPA's Part 70 regulations require a compliance schedule for "applicable
requirements for sources that ate not in compliance with those requirements at the time of permit
issuance," 40 C.F.R, §§ 70.6(cX3}» 70.5(c)(8)(iii)(C). Consistent with these requirements, EPA
his slated that a compliance schedule is not necessary if a violation is intermittent, not on-going,
and has been corrected before the permit is issued. See In the Matter of New York Organic
Fertilizer Company, Petition Number 11-2002-12 at 47-49 (May 24, 2004). EPA has also stated
that the permitting authority has discretion not to include in the permit a compliance schedule
where there is a pending enforcement action that is expected to result in a compliance schedule
{i.e., through a consent order or court adjudication) for which the permit will be eventually
reopened. See in the Matter of Hunt ley Generating Station, Petition Number 11-2002-01, al 4-5
(July 31, 2003); see also In the Matter of Dunkirk Power, LLC, Petition Number [1-2002-02, at 4-
5 {July 31, 2003),8
Using the District's own enforcement records, Petitioner has demonstrated that
approximately 50 NOVs were pending before the District at the time it proposed the revised
Permit. The District's most recent statements, as of January 2005, do not dispute this fact.' The
"These orders considered whether a compliance schedule was necessary to address (i) opacity violations for
which the source had included a compliance schedule with its application; and (ii) PSD violations dial the source
contested and was litigating in federal district court. As to the uncontested opacity violations, EPA required ibe
permitting authority ir> reopen the permits to either incorporate a compliance schedule or explain that a compliance
schedule was not necessary because the facility was in compliance. As to the contested PSD violations, EPA found
that ""[lit is entirely appropriate fat the [state] enforcement process to lake its course" and For a compliance schedule
to be included only after the adjudication has been resolved.
*As stated in a tetter from Adati Schwartz, Senior Assistant Counsel, DAAQMD, toGerardo Rios. Air
Division, U.S, EPA Region 9, dated January J I, 2005, "The Dislrict is following upon each NOV to achieve an
appropriate resolution, which will likely entail payment of a civil penalty."1 EPA provided a copy of this letter to
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permitting record shows that the District issued the initial Permit on Dscembcr 1,2003 and the
revised Permit on December 16,2004, According to the District, the facility did not have
noncompliance issues at the lime it issued the initial and revised permits. Tlie permitting record
contains the following statements:
• July 2003 Statement of Basis "Compiiance Schedule" section: "The BAAQMD
Compliance and Enforcement Division has conducted a review of compliance over
the past year and has no records of compliance problems at this facility." July 2003
Statement of Basis at 12.
Ju5y 2003 Statement of Basis, "Compliance Status" section: 'The Compliance and
Enforcement Division has prepared an Annual Compliance Report for 2001... The
information contained in the compliance report has been evaluated during the
preparation of the Statement of Basis for the proposed major Facility Review permit.
The main purpose of this evaluation is to identify ongoing or recurring problems that
should be subject to a schedule of compliance. No such problems have been
identified," July 2003 Statement of Basis at 35. This section also noted that the
District issued eight NOVs to the refinery in 2001, but did not discuss any NOVs
issued to the refinery in 2002 or the first half of 2003. EPA notes that there appear to
have been approximately 36 NOVs issued during that time, each of which is
identified as pending in the documentation provided by Petitioner.
December 16, 2004 Statement of Basis: " The facility is not currently in violation of
any requirement. Moreover, the District has updated its review of recent violations
and has not found a pattern of violations that would warrant imposition of a
compliance schedule." December 2004 Statement of Basis at 34,
2003 Response to Comments ("RTC") {from Golden Gate University): 'The
District's review of recent NOVs failed to reveal any evidence of current ongoing or
recurring noncompliance that would warrant a compliance schedule." 2003 RTC
(GGU) at I.
EPA finds that the District's statements at the time it issued the initial and revised
Permits do not provide a meaningful explanation for the lack of a compliance schedule in the
Permit. Using the District's own enforcement records. Petitioner has demonstrated that there
were approximately 50 unresolved NOVs at the time the revised Permit was issued in December
2004. The District's statements in the permitting record, however, create the impression that no
NOVs were pending at that time. AI thou eh the District acknowledges that there have been
"recent violations," the District fails to address the fact that it had issued a significant number of
NOVs to the facility and that many of the issued NOVs were still pending. Moreover, the
District provides only a conclusory statement that there are no ongoing or recurring prohlems that
Petitioner on February 23, 2005
1 S
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could be addressed with a compliance schedule and offers no explanation for this determination.
The District's statements give no indication that it actually reviewed the circumstances
underlying recently issued NOVs to determine whether a compliance schedule was necessary.
The District's mostly generic statements as to the refinery's compliance status are not adequate to
support the District's decision that no compliance schedule was necessary in light of the NOVs.'®
Because the District failed to include an adequate discussion in the permitting record
regarding NOVs issued to the refinery, and, in particular, those that were pending at the time the
Permit was issued, and an explanation as to why a compliance schedule is not required, EPA
finds that Petitioner has demonstrated that the District's consideration of the NOVs during the
title V permitting process may have resulted in a deficiency in the Permit. Therefore, EPA is
granting the Petition to require the District to either incorporate a compliance schedule in the
Permit or to provide a more complete explanation for its decision not to do so.
When the District reopens the Permit, it may consider EFA's previous orders in the
Huntley, Dunkirk, and New York Organic Fertilizer matters to make a reasonable determination
that no compliance schedule is necessary because (i) the facility has returned to compliance; (ii)
the violations were intermittent, did not evidence on-going non-compliance, and the source was
in compliance at the time of permit issuance; or (iii) ihe District has opted to pursue the matter
through an enforcement mechanism and will reopen the permit upon a consent agreement or
court adjudication of the noncompliance issues. Consistent with previous EPA orders, the
District must also ensure that the permit shield will not serve as a bar or defense to any pending
enforcement action.1' See Huntley and Dunkirk Orders at 5.
b Episodes
Petitioner also cites the number of "episodes" at the plant in the years 2003 and 2004 as a
basis for requiring a compliance schedule- Episodes are events reported by the refinery of
equipment breakdown, emission excesses, inoperative monitors, pressure relief valve venting, or
other facility failures. Petition at 15, n, 21- According to the District, "[ejptsodes arc reportable
events, but arc not necessarily violations. The District reviews each reported episode. For those
that represent a violation, an NOV is issued,1* Letter from Adan Schwartz, Senior Assistant
Counsel, BAAQMD to Genrdo Rios, EPA Region DC, dated January 31, 2005. The summary
chart entitled 4'BAAQMD Episodes" attached to the Petition shows that the District specifically
l0Jn contrast, EPA notes that the slate permitting authority in the Huntley and Dunkirk Orders provided a
thorough record as To the existence and circumstances regarding the pending NOVs by describing them in detail trt
the permits and acknowledging (he enforceti^nt issues in (hi public notices for the permit!. Huntley ai 6, Dunkirk at
6. In addition, EPA found that tl« permits contained "sufficient safeguards" to ciisuic thai ihc permit shields would
not preclude appropriate enforcement actions. Id.
11 After reviewing (he permit shield in (he Permit, EPA finds nothing in it [hat could serve as a defense to
enforcement oTthe pending NOVs, The District, howevui, should stiil independently perform this review wln-n it
reopens the Permit.
16
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records for each episode, under the heading "Status " iis determination for each episode; (i) no
action; (ii) NOV issued; (iii) pending; and (iv) void. This document supports the District's
statement that it reviews each episode to see whether it warrants an NOV. Because not every
episode is evidence of noncompliance, the number of episodes is not a competing basis for
determining whether a compliance schedule is necessary. Moreover, Petitioner did not provide
additional (acts, other than the summary chart, to demonstrate that any reported episodes are
violations. EPA therefore finds that Petitioner has not demonstrated that the District's
consideration of the various episodes may have resulted in a deficiency in the Permit, and EPA
denies the Petition as to this issue.
c. Repeat Violations and Episodes at Particular Units
Petitioner claims that certain units at the plant are responsible for multiple episodes and
violations, "possibly revealing serious ongoing or recurring compliance issues." Petition at 16.
The Petition then cites, as evidence, the existence of 16 episodes and 8 NOVs for the FCCU
Catalytic Regenerator (S-S), 9 episodes and 4 NOVs for a hot furnace (S-22G), 9 episodes and 2
NOVs for the Heat Recovery Steam Generator (S-103I), and 3 episodes and 2 NOVs for the
South Flare (S-18).
A close examination of the BAAQMD Episodes chart relied upon by Petitioner, however,
reveals that the failures identified for these episodes and NOVs are actually quite distinct from
one another, often covering different components and regulatory requirements. This fact makes
sense as emission and process units at refineries tend lo be very complex wilb multiple
components and multiple applicable requirements. When determining whether a compliance
schedule is necessary for ongoing violations at a particular emission unit based on multiplfe
NOVs issued for that unit, it would be reasonable for a permitting authority to consider whether
the violations pertain to the same component of the emission unit, the cause of the violations is
the same, and the cause has not been remedied through the District's enforcement actions.
Again, Petitioner has failed to demonstrate that the District's consideration of the various repeat
episodes and alleged violations may have resulted in a deficiency in ihe Permit, EPA therefore
denies the Petition as to this issue,
d. Complaints
Petitioner contends that the "numerous complaints" received by the District between 2001
and 2004 also lay a basis for the need for a compliance schedule. These complaints were
generally for odor, smoke or other concerns. As with the episodes discussed above, the mere
existence of a complaint does not evidence a regulatory violation. Moreover, where the District
has verified certain complaints, it has issued an NOV to address public nuisance issues. As such,
even though complaints may indicate problems that need additional investigation, they do not
necessarily lay the basis for a compliance schedule. Because Petitioner has not demonstrated that
the complaints received by the District may have resulted in a deficiency in the Permit, EPA
denies the Petition as to this issue.
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e. Allegation that Problems are not Resolved
Petitioner proposes three "potential solutions to ensure compliance:" (I) the District
should address recumng compliance at specific emission units, namely S-5, S-220 and S-1030,
(2) the District should impose additional maintenance or installation of monitoring equipment, or
new monitoring methods to address the 30 episodes involving inoperative monitors; and (3) the
District should impose additional operational and maintenance requirements to address recurring
problems since the source is not operating in compliance with the NSPS requirement to maintain
and operate the facility in a manner consistent with good air pollution control practice for
minimizing emissions. Petition at 18-19.
In regard to Petitioner's first claim for relief, EPA has already explained that Petitioner
has not demonstrated that the District's consideration of the various 'recurring' violations for
particular emission units may have resulted in a deficient permit or justifies the imposition of a
compliance schedule. In regard to the second claim for relief, the 30 episodes cited by Petitioner
are for different monitors, and spread over a multi-year period. As long as the District seeks
prompt coirective action upon becoming aware of inoperative monitors, EPA does not sec this as
a basis for additional maintenance and monitoring requirements for the monitors. Moreover,
Ep A could only require additional monitoring requirements to the extent that the underlying SIP
or some other applicable requirement does not already require monitoring. See 40 C.F.R,
§ 70.6(a)(3)(i)(B), Lastly, in response lo Petitioner's third claim for relief seeking imposition of
additional operation and maintenance requirements due to an alleged violation of the "good air
pollution, control practice" requirements of the NSPS, EPA believes that such an allegation of
noncompliance is too speculative to warrant a compliance schedule without further investigation.
As such, EPA finds thai Petitioner has not demonstrated that the District's failure to include any
of the permit requirements Petitioner requests here resulted in, or may have resulted in, a
deficient permit, and EPA denies the Petition on this ground.
2, Non-Compliance Issues Raised by Public Comments
Petitioner claims that since the District failed to resolve New Source Review (i!NSR"),J
compliance issues, EPA should object to the issuance of the Permit and require either a
compliance schedule or an explanation that one is not necessary. Petition at 21. Petitioner
claims to have identified four potential NSR violations at the refinery, as follows: (i) an apparent
Substantial rebuild of the fluid catalytic cracking unit ("FCCU") regenerator (S-5) without NSR
review,'3 based on information that large, heavy components of the FCCU were recently
12 "NSR" is used in this section lo include both the nonattaiiunentarea New Source Review permit
program and the attainment area Prevention of Significant Deterioration ("PSD") permit program.
13 Petitioner also alleges thai S-5 wen I through a rebuild without imposition of emission
limitations and other require raents of 40 C.F.R. § 63 Subpart UUU. EPa notes that the requirements of Subpart
UUU are included in the Permit with ? future effective rfate of April 11,2005. Permit at SO,
18
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replaced; (ii) apparent emissions increases at two boiler units (S-3 and S-4) beyond the NSR
significance level for modified sources of NOx, based on the District's emissions inventory
indicating dramatic increases in NOx emissions between 1993 and 2001; and (iii) an apparent
significant increase in S02 emissions at a ooker burner (S-6)t based on the District's emissions
inventory indicating a dramatic increase in S02 emissions in 2001 over the highest emission rate
during 1993 to 2000,14 Petition at 20.
All sources subject to title V must have a permit to operate that assures compliance by the
source with all applicable requirements. See 40 C,F,R. § 70.1(b); CAA §§ 502(a), 504(a). Such
applicable requirements include the requirement to obtain NSR penults that comply with
applicable NSR. requirements under the Act, EPA regulations, and state implementation plans.
See generally CAA §§ i 10(a)(2)(C), 160-69, 172(c)(5), and 173; 40CF.R. §§ 51,160-66 and
52.21. NSR requirements include the application of the best available control technology
{"BACT") to a new or modified source that results in emissions of a regulated pollutant above
certain legally-specified amounts,13
Based on the information provided by Petitioner, Petitioner has failed to demonstrate that
NSR permitting and BACT requirements have been triggered at the FCCU catalytic regenerator
S-5, boilers S-3 or S-4, or coke burner S-6. With regard to the FCCU catalytic regenerator,
Petitioner's only evidence in support of its claim is (i) an April 8, 1999, Energy Information
Administration press release that states that the refinery announced the shutdown of its FCCU on
March 19, 1999, and announced the restarting of the FCCU on April I, I999;l6and
(ii) information posted at the Web site of Surface Consultants, Inc., stating that "several large,
heavy components on [the FCCU] needed replacement " See Petition, Exhibit A. Petitioner
oilers no evidence regarding the nature of these activities, whether the activities constituted new
or modified source under the NSR rules, or whether refinery emissions were in any way affected
Petitioner also lakes issue wiih the District's position lhat "the [NSR] p reconstruct ion review rules
themselves are rot applicable requiienienls, for purposes ofTitlc V." (Petition, « 21; December 2003 Consolidated
Response to Comments ("CRTC") at 6-7). Applicable requirements are defined in the District's Regulation 2-6-202
as **{a Jir quality requirements villi which a facility must comply pursuant to the District's regulations, codes of
California stMUtory law, and (lie federal Ciean Air Act, including all applicable requirements as defined in 4ft C.H.R.
§ 70.2." Applicable requirements arc defined in 40 C.F.K. § 70.2 to include "any standard Of other requirement
provided for in the applicable implementation plan approved or promulgated by BPA through rulemaking under title
I of the Act that injplcmenis the relevant requirements of the Act...." Since the District's NSR rales arc pad of its
implementation plan, (lie NSR rules themselves are applicable requirements for purposes of title V. Since ihis point
has little relevance to the matter at hand (i.e., whether in this case the NSR rules apply to a particular new or
modified source at the refinery), CPA views the DtstricTs position as other dictum.
15 The Act distinguishes between the requirement to apply UACl, which is part ofthe PSD permit program
for attainment areas, and the requirement to apply the lowest achievable emkiion rate ("LAEI")„ which is part of (lie
NSR permit program tot nonstl ailment areas, In Ihis case, however, the District's NSR rules use the term "BACT"
to signify "LAER."
14 This press release is available on the Internet at hltpwww.eia.doc.go1v/ncic/press/press 123.html (last
viewed on February I, 2005).
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by these activifies
With regard to the two boilers and the coke burner, Petitioner s only evidence in support
of its claims are apparent "dramatic" increases in each of these unit's emissions inventory.
However, as the District correctly notes:
"...the principal purpose of the inventory is planning; the precision needed for this
purpose is fairly coarse. The inventory emissions are based, in almost all cases,
on assumed emission factors, and reported throughputs. An increase in emissions
from one year to the next as reflected in the inventory may be an indication that
reported throughput has increased, however it does not automatically follow that
the source has been modified. Unless the throughput exceeds perniit limits, the
increase usually represents use of previously unused, but authorized, capacity. An
increase in reported throughput amount could be taken as an indication that
further investigation is appropriate to determine whether a modification has
occurred. However, the District would not conclude that a modification has
occurred simply because reported throughput has increased,"
December 1, 200J Consolidated Response to Comments ("2003 CRTC'*), at 22- Moreover,
Petitioner does not claim to have sufficient evidence to establish that these units are subject to
NSR permitting and the application of BACT. The essence of Petitioner's objection is the need
for the District to "determine whether the sources underwent a physical change or change in the
method of operation that increased emissions, which would trigger NSR." Petition at 20. Not
only is Petitioner unable to establish thai these units triggered NSR requirements, Petitioner is
not even, alleging that NSR requirements have in fact been triggered. Petitioner is merely
requesting that the District make an NSR applicability determination based on Petitioner's "well-
documented concerns regarding potential non-compliance." Petition at 20 (emphasis added).
During the title V permitting process, EPA has also been pursuing similar types of claims
in another forum. As part of its National Petroleum Refinery Initiative, EPA identified four of
the Act's programs where non-compliance appeared widespread among petroleum refiners,
including apparent major modifications to FCC Us and refinery heaters and boilers that resulted
in significant increases in NOx and S03 emissions without complying with NSR requirements.
However, based on the information provided by Petitioner, EPA is not prepared to conclude at
this time that these units at the Valero refinery are out of compliance with NSR requirements. Tf
EPA later determines that these units are in violation of NSR requirements, EPA may object to or
reopen the title V permit to incorporate the applicable NSR requirements.17
Since Petitioner has failed to show that NSR requirements apply to these units, EPA finds
17 EPA rotes Uiat with respect lo (he specific claims of NSR violations raised ty Petitioner in ils comments,
the District "intends to follow up with further investigation." December t, 2003 CRTC, at 22. EPA encourages ihe
District to do so, especially where, as in this case, the apparent changes in the emissions inventories are substantial.
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that Petitioner has not met its burden of demonstrating a deficiency in the Permit. Therefore, the
Petition is denied on this issue.
3. biterniitlent and Continuous Compliance
Petitioner contends that EPA must object to the Permit because the District has
interpreted the Act to require only intermittent raLher than continuous compliance. Petition at 21-
22. Petitioner contends that the District has a "fundamentally flawed philosophy." Petitioner
points to a statement made by the District in its Response to Public Comments, dated December
1, 2003, that "[compliance by the refineries with all District and federal air regulations will not
be continuous." Petitioner contends that the District "expects only intermittent compliance" and
that the District's belief "that it need only assure 'reasonable intermittent' compliance" means
that it failed to see the need for a compliance plan in the Permit.
EPA disagrees with Petitioner's suggestion that the District's view of intermittent
compliance has impaired its ability to properly implement the title V program. As slated above,
EPA has not concluded that a compliance plan is necessary to address the instances of non-
compliance at this Facility. Moreover, the Agency disagrees with Petitioner's interpretations of
the District's comments on the issue. For instance, EPA finds nothing in the record slating lhat
(he District's view of the Permit, as a legal matter, is lhat it need assure only intermittent
compliance. Rather, a fairer reading of the District's view is that, realistically, intermittent non-
compliance can be expected. As the District stated:
The District cannot rule out that instances of non-compliance will occur. Indeed at a
refinery, at least occasions! events of non-compliance can be predicted with a high degree
of certainty,, ., Compliance by the refineries with all District and federal air regulations
will not be continuous. However, the District believes the compliance record at this
[Shell] and other refineries is well within a range to predict reasonable intermittent
compliance, December 1,2003 RTC at 15.
The District's view appears to he based on experience and the practical reality that
complex sources with thousands of emission points which are subject to hundreds of local and
federal requirements will find themselves out of compliance, not necessarily because their
permits are inadequate but because of the limits of technology and other factors. Even a source
with a perfectly-drafted permit - one that requires state of the art monitoring, scrupulous
recordkeeping, and regular reporting to regulatory agencies - may find itself out of compliance,
rot because the permit is deficient, but because of the limitations of technology and other factors.
EPA also believes that, far from sanctioning intermittent compliance, as Petitioner
suggests, see Petition at 22, n. 36, the District appears committed to address it through
enforcement of the Permit, when appropriate: "when non-compliance occurs, the Title V permit
will enhance the ability to delect and enforce against iho&e occurrences." Id. Although the
District may realistically expect instances of non-compliancc, it docs not necessarily excuse
21
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them. Non-compliance may still constitute a violation and may be subject to enforcement action
For the reasons stated above, EPA denies the Petition on this ground
4. Compliance Certifications
Diitial compliance certifications must be made by all sources that apply for a title V
permit at the time of the permit application. See 40 C.RR. § 70.5(c)(9). The Part 70 regulations
do not require applicants to update their compliance certification pending issuance of the permit.
Petitioner correctly points out that the District's Regulation 2-6-426 requires annual compliance
certifications on "every anniversary of the application date" until the permit is issued. Petitioner
claims that, other than a truncated update in 2003, the plant has failed to provide annua]
certifications between the initial permit application submittal in 1996 and issuance of the permit
in December 2004. Petitioner believes that "defects in the compliance certification procedure
have resulted in deficiencies in the Permit." Petition at 24,
In determining whether ait objection is warranted for alleged flaws in the procedures
leading up to permit issuance, including compliance certifications, EPA considers whether the
petitioner has demonstrated that the alleged flaws resulted in> or may have resulted in, a
deficiency in the permit's content- See CAA Section 505(b)(2) (objection required "if the
petitioner demonstrates ... that the permit is not incompliance with the requirements of this Act,
including the requirements of the applicable [SEP]"); 40 C.FR. § 70.8(c)(1); See also In the
Matter of New York Organic Fertilizer Company, Petition No. 0-2002-12 (May 24, 2004), at 9.
Petitioner assumes, in making its argument, that the District needs these compliance
certifications to adequately review compliance for the facility. This is riot necessarily true,
Sources often certify complimce based upon information that has already been presented to a
permitting authority or based upon NOVs or other compliance documents received from a
permitting authority. The requirement for the plant to submit episode and other reports means
that the District should be privy to all of the information available to the source pertaining to
compliance, regardless of whether compliance certifications have been submitted annually
Finally, the District has a dedicated employee assigned as an inspector to the plant who visits the
plant weekly and sometimes daily. In this particular instance, the compliance certi fication would
likely not add much to the District's knowledge about the compliance status oft he plant EPA
believes that in this case, Petitioner has failed to demonstrate that the lack of a proper initial
compliance certification, or the alleged failure to properly update that initial compliance
certification, resulted in, or may have resulted in, a deficiency in the permit.
D. Statement of Basis
Petitioner alleges that the Statements of Basis for the Permit issued in December 2003
and for the revised Permit, as proposed in August 2004, are inadequate. Specifically, Petitioner
alleges the following deficiencies:
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Neither Statement of Basis contains detailed facility descriptions, including
comprehensive process How information;
• Neither Statement of Basis contains sufficient information to determine applicabi lily
of "certain requirements to specific sources," Petitioner specifically identifies
exemptions fit)in permitting requirements that BAAQMD allowed for tanks.
Petitioner also references Attachments 2 and 3 to EPA's October 8, 2004 letter as
support for its allegation that the Statements of Basis were deficient because they did
not address applicability of 40 C.F.R, Part 63, Subpart CC to flares and BAAQMD
Regulation 8-2 to hydrogen plant vents.
• Neither Statement of Basis addresses BAAQMD's compliance determinations
• The 2003 Statement of Basis was not made available on the District's Web site during
the April 2004 public comment period and does not include information about permit
revisions in March and August 2004
The 2004 Statement of Basis does not discuss changes BAAQMD made to the Permit
between the public comment period in August 2003 and the final version issued in
December 2003, despite the District's request for public comment on such changes.
EPA's Part 70 regulations require permitting authorities, in connection with initiating a
public comment period prior to issuance of a title V permit, to "provide a statement that sets
forth the legal and factual basis for the draft permit conditions " 40 C.F.R. § 70.7(a)(5), EPA's
regulations do not require thai a statement of basis contain any specific elements; rather,
permitting authorities have discretion regarding the contents of a statement of basis. EPA has
recommended that statements of basis contain the following elements: (I) a description of the
facility; (2) a discussion of any operational flexibility that will be utilized at the facility; (J ) the
basis for applying the permit shield; (4) any federal regulatory applicability determinations; and
(5 ) the rationale for the monitoring methods selected, EPA Region V has also recommended the
inclusion of the following; (1) monitoring and operational restrictions requirements; (2)
applicability and exemptions; (3) explanation of any conditions from previously issued permits
that arc not being transferred lo the title V permit; (4) streamlining requirements; and (5) certain
other factual information as necessary. Sec, Los Mcdanosy at 10, n.16.
There is no legal requirement that a permitting authority include information such as a
specific facility description and process (low diagrams in the Statement of Basis, and Petitioner
has not shown how the lack of this information resulted in, or m^y have resulted in, a deficiency
in the Pennit, Thus, while a facility description and process How diagrams might provide useful
information, their absence from the Statement of Basis does not constitute grounds for objecting
to (he Permit.
EPA agrees, in part, that Petitioner has demonstrated the Permit is deficient because the
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Statement of Basis does not explain exemptions for certain tanks. This issue is addressed more
specifically in Section II1H.3.
EPA agrees with Petitioner's allegation thai the Statement of Basis should have included
a discussion regarding applicability of 40 C-P-R. Part 63, Subpart CC to flares and BAAQMD
Regulation 8-2 to hydrogen plant vents. Applicability determinations are precisely the t>pe of
information that should be included in a Statement of Basis. This issue is addressed more
specifically in Section IILHJ,
EPA addressed Petitioner's allegations relating to the sufficiency of the discussion in (he
Statement of Basis on the necessity of a compliance schedule in Section IILC.
EPA does not agree with Petitioner's allegations that the 2003 Statement of Basis was
deficient because it was not available on the District's Web site during the 2004 public comment
period or because it did not provide information about the 2004 reopening. First, EPA notes that
the 2003 Statement of Basis has been available to the public on its own Web site since the initial
permit was issued in December, 2003J* [n addition, Petitioner has not established a legrf basis
to support its claim that this information is a required element for a Statement of Basis,
Petitioner also concedes that the District provided a different Statement of Basis in connection
with the 2004 reopening. Petitioner does not claim that the Permit is deficient as a result of any
of these alleged issues regarding the Statement of Basis, therefore, EPA denies the Petition on
this ground..
EPA does not agree with Petitioner s allegations that the 20W Statement of Basis was
deficient because it did not discuss any changes made between the draft permit available in
August 2003 and the final Permit issued in December 2003, Petitioner has not established a legal
basis to support its claim that this information is a required element Tor a Statement of Basis.
Petitioner has not demonstrated that the Permit is deficient because the District did not provide
this discussion m the 2004 Statement of Basis. Moreover, Petitioner could have obtained much
of this information by reviewing the District's response to comments received during the 2003
public comment period, which was dated December 1, 2003, Therefore, EPA denies the Petition
on this ground.
E Permit Shields
The District rules allow two types of permit shields. The permit shield types are defined
as follows; (1) A provision in a title V permit explaining that specific federally enforceable
regulations and standards do not apply lo a source or group of sources, or (2) A provision in a
title V permit explaining that specific federally enforceable applicable requirements for
monitoring, recordkeeping and/or reporting are subsumed because other applicable requirements
18
Title V permit* and related documents are available ihrough Region IX's Electronic Permit Submittal
System at htl-p :ffwww.epa .gov/repiouW/a Ir/ne nnit/i nde x hrml.
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for monitoring, recordkeeping, and reporting in (he permit will assure compliance with all
emission limits. The District uses the second type of pemiit shield for all streamlining of
monitoring, recordkeeping, and reporting requirements in title V permits, The District's
Statement of Basis explains: "Compliance with the applicable requirement contained in ibe
permit automatically results in compliance with any subsumed {= less stringent) requirement,"
See December 2003 Statement of Basis at 27.
40 C,F.R. §§ 60.7(c) and (d)
Petitioner alleges that the permit shield in Tabic fX B of the Permit (p669-670)
improperly subsumes 40 C.F.R. §§ 60.7(c) and (d) under SIP-approved BAAQMD Regulation
1-522.8, and that the Slalement of Basis does not sufficiently explain the basis for the shield.
Petition at 28.
BAAQMD Regulation 1-522.8 requires that
Monitoring data shall be submitted on a monthly basis in a format specified by the
APCO, Reports shall be submitted within 30 days of the close of the month
reported on.
Sections 60.7(c) and (d) require very specific reporting requirements that are not required
by BAAQMD Regulation I-522 J. For instance, § 60.7(c)(1) requires that excess emissions
reports include the magnitude of excess emissions computed in accordance with § CO. 13(h) and
any conversion factors used. Section 60.7(d)(1) requires, that the report form contain, among
other things, the duration of excess emissions due to startup/shutdown, control equipment
problems, process problems, other known causes, and uiitotown causei and total duration of
excess emissions.
The Statement of Basis for Valero contains the following justification for the shield
40 C.F.R, Part, 60 Subpart A CMS reporting requirements are satisfied by
BAAQMD 1-522,8 CEMS reporting requirements. See December 2003 Statement
of Basis at 31.
EPA agrees with Petitioner that the requirements of 40 C-F,R- §§ 60.7(c) and (d) are not
satisfied by BAAQMD Regulation 1-522.8, and that the Statement of Basis does not provide
adequate justification for subsuming §§ 60.7(c) and (d). An adequate justification should address
Aowthe requirements of a subsumed regulation are satisfied by another regulation, not simply
that the requirements are satisfied by another regulation,.
For the reasons set forth above, EPA is granting the Petition on these grounds. The
District must reopen the Permit to include the reporting requirements of §§ 60.7(c) atid (d) or
adequately explain how they are appropriately subsumed.
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2. BAAQMD Regulation i-7
Petitioner also alleges that the District incorrectly attempted to subsume the State-only
requirements of BAAQMD Regulation 11-7 for valves under the requirements of SIP approved
BAAQMD Regulation 8-11-404, and states that only a federal requirement miy be subsumed in
the permit pursuant to BAAQMD Regulation 2-6-233.2, Petition at 29.
Including a permit shield for a subsumed no n-federally enforceable regulation has no
regulatory significance from a federal perspective because it is not related to whether the permit
assures compliance with all Clean Air Act requirements. See 40 C.F.R. 70.2 (defining
"applicable requirement"); 70.1(b) (requiring that title V sources have operating permits that
assure compliance with all applicable requirements). Stale only requirements are not subject to
the requirements of title V and, therefore, are not evaluated by EPA unless their terms may either
impair the effectiveness of the title V permit or hinder a permitting authority's ability to
implement or enforce the title V permit. In the Matter of Eastman Kodak Company, Petition
No.: H-2003-02, at 37 (Feb, 18,2005). Therefore, EPA is denying the Petition on this issue.
3. 40 C.F.R. § 60.482-7(g)
Petitioner alleges that a permit shield should not be allowed for federal regulation NSPS
Subpart VV, § 60.482-7(g) based upon its being subsumed by SIP-approved BAAQMD
Regulation 8-18-404 because the NSPS defines monitoring protocols for valves that are
demonstrated to be unsafe to monitor, whereas Regulation 8'18-404 refers to an alternative
inspection scheme for leak-free valves. Petitioner slates "Because the BAAQMD regulation does
not address the same issue as 40 C.F.R. § 60.482-7(g), it cannot subsume the federal
requirement." Petition at 29,
EPA disagrees wilh Petitioner that the two regulations address different issues. Both
regulations address alternative inspection time lines for valves. Regulation 8-18-404 specifically
states:
Alternative Inspection Schedule; The inspection frequency for valves may change
from, quarterly to annually provided all of the conditions in Subsection 404,1 and
404.2 are satisfied.
404.1 The valve has been operated leak free for five consecutive quarters;
404.2 Records are submitted and approval from the APCO is obtained.
404.3 The valve remains leak free. If a leak is discovered, the inspection
frequency will reverl back to quarterly.
NSPS Subpart VV requires valves to be monitored monthly except, pursuant to f 60.482-7(g),
any valve that is designated as unsafe to monitor must only be monitored as frequently as
practicable during safe-to-monitor times. In explaining the basis for the shield, the Permit states:
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[60.482-7(g)] Allows relief from monthly monitoring if designated as
unsafe-to-monitor. BAAQMD Regulation 8-18-404 does not allow this relief.
Permit at 644.
BAAQMD is correct that the Regulation 8-18-404 is more stringent than 40 C.F.R
§ 6Q.482-7(g). Therefore, EPA is denying the Petition on this issue.
F. Throughput Limits for Grandfathered Sources
Petitioner alleges that EPA should object to the Permit to the extent that throughput limits
for grind fathered sources set thresholds below which sources are not required to submit all
information necessary to determine whether "new or modi lied construction may have occurred."
Petitioner also alleges that the thresholds are not "legally correct" and therefore are not
reasonably accurate surrogates for a proper NSR baseline determination. Petitioner also argues
that EPA should object to the Permit because the existence of the throughput limits, even as
reporting thresholds, may create "an improper presumption of the correctness of the threshold"
and discourage the District from investigating events that do riot trigger the threshold or reduce
penalties for NSR violations. Finally, Petitioner also requests that EPA object to the Permit
because the District's reliance on non-SIP Regulation 2-1-234.1 "in deriving these throughput
limits" is improper.
The District has established throughput limits on sources that have never gone through
new source review ("grandfathered sources"). The Clean Air Act docs not require permitting
authorities to impose such requirements. Therefore, to understand the purpose of these limits,
EPA is relying on the District's statements characterizing the reasons for, and legal implications
of, these throughput limits. The District's December 2003 CRTC makes the following points
regarding throughput limits:
• The tliroughput limits being established for grandfathered sources will he a useful tool
that enhances compliance with NSR... .Requiring facilities to report when
throughput limits are exceeded should alert the District in a timely way to the
possibility of a modification occurring.
The limits now function merely as reporting thresholds rather than as presumptive
NSR triggers.
They do not create a baseline against which future increases might be measured
("NSR baseline"). Instead, they act as a presumptive indicator that the equipment has
undergone an operational change (even in the absence of a physical change), because
the equipment has been operated beyond designed or as-built capacity.
The throughput limits do not establish baselines; furthermore, they do not contravene
NSR requirements. The baseline for a modification is determined at the time of
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permit review. The proposed limits do not preclude review of a physical modification
for NSR. implications.
• Throughput limils on grandfathered sources are not Federally enforceable.
• The [permits] have been modified to clearly distinguish between limits imposed
through NSR and limits imposed on grandfathered sources.
December 1,2003 ETC at 31-33.
EPA believes the public comments and the District's responses have done much Id
describe and explain, in the public recoid, the purpose and legal significance of the District's
throughput limits for grandfathered solutes. Based on these interactions, EPA has the following
responses lo Petitioner's allegations.
First, EPA denies the Petition as to the allegation that the thresholds set levels below
which the facility need not apply for NSR permits. A3 the District states, the thresholds do riot
preclude the imposition of federal NSR requirements. EPA does not see that the tluoughput
limits would shield the source from any requirements to provide a timely and complete
application if a construction project will trigger federal NSR requirements.
Second, the Permit itself makes clear that the throughput limits are not to be used for the
purpose of establishing an NSR baseline; "Bxceedance of this limit does not establish a
presumption that a modification has occurred, nor does compliance with the limit establish a
presumption that a modification has not occurred." Permit at 4, Therefore, EPA finds no basis to
object to the Permit on the ground that the thresholds are not "reasonably accurate surrogates" for
an actual NSR baseline, as they clearly and expressly have no legal significance for that purpose.
Third, while EPA shares Petitioner's interest in compliance with NSR requirement.
Petitioner's concern that the thresholds might discourage reliance on appropriate NSR baselines
to investigate and enforce possible NSR violations is speculative and cannot be the basis of an
objection to the Permit-
Fourth, EPA finds that the District's reliance on BAAQMD Regulation 2-1-234.1, which
is not SCP-approved, to impose these limits is appropriate, EPA's review of the Permit, however,
found a statement suggesting that the District will rely 011 this non-SEP approved rule to
determine whether an NSR modification has occurred, EPA takes this opportunity to remind the
District that its NSR. permits must meet the requirements of the federally-applicable SIP. See
CAA 172, 173; 40 C.F.R. § 51 - EPA finds no basis, however, lo conclude that the Permit is
deficient.
G. Monitoring
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The lack of monitoring raises an issue as to consistency with ihe requirement that each
permit contain monitoring sufficient to yield reliable data from the relevant lime period that are
representative of the source's compliance with the permit where the applicable requirement does
not require periodic monitoring or testing. See 40 CJF.R. § 70 6(a)(3Xi)(B). EPA has
recognized, however, that there may be limited cases in which the establishment of a regular
program of monitoring or recordkeeping would not significantly enhance the ability of the permit
to assure compliance with an applicable requirement and where the status quo (i.e., no
monitoring or recordkeeping) could meet the requirements of 40 C.F.R. § 70.6(a)(3). See,Las
Medanos, at 16. EPA's consideration of these issues and deteiminations as to ihe adequacy of
monitoring follow.
1 40 C.F.R. Part 60, Subpart J (NSPS for Petroleum Refineries)
Petitioner makes the following allegations with regard to the treatment of flares under
NSPS Subpart 1: (i) BAAQMD has not made a determination as to the applicability of NSPS
Subpart I to three of the four Hares at Valero; (ii) there is no way to tell whether flares qualify for
the exemption in NSPS Subpart J because there are no requirements in the Permit to ensure tliat
the flares are operated only in "emergencies;" (iii) the Permit must contain a federally
enforceable reporting requirement to verify that each flaring event would qualify for an
exemption from the H2S limit; (iv) the Permit fails to ensure that all other NSPS Subpart J
requirements arc practically enforceable; and (v) federally enforceable monitoring must be
imposed pursuant to 40 C.F.R. §§ 70.6(a)(3)(i)(B) and 70.6(c) and Section 504(c) of the Act to
verify compliance with all applicable requirements of Subpart I. Petition at 33.
The New Source Performance Standard (NSPS) for Petroleum Refineries, 40 C.F.R, Pan
60, Subpart J, prohibits the combustion of fuel gas containing H2S in excess of 0.10 gr/dscf at
any flare built or modified after June 11, 1973. This prohibition is codified in 40 C.F.R.
§ 60.104(a)(1). Additionally, 40 C.F.R. §§ 60.105(a){3-4) requires the use of continuous
monitors for flares subject lo § 60.104(a)(1). However, the combustion of gases released as a
result of emergency malfunctions, process upsets, and relief valve leakage is exempt from the
HjS limit. The draft refinery permits proposed by BAAQMD in February 2004 applied a blanket
exemption from the E^S standard and associated monitoring for about half of the Bay Area
refinery flares on the basis that the flares are "not designed" to combust routine releases. The
statements of basis for the refinery permits state, however, that at least some of these flares arc
"physically capable" of combusting routine releases. To help assure that this subset of flares
would not trigger the H2S standard, BAAQMD included a condition in the permits prohibiting
the combustion of routine releases at these flares.
Following EPA comments submitted to BAAQMD in April of 2004, BAAQMD revised
its approach to the NSPS Subpart I exemption. The permits proposed lo EPA in August of2004
indicate that all flares that are affected units under 60,100 are subject to the H2S standard, except
when they are used lo combust process upset gases, and gases released to the flares as a result of
relief valve leakages or other malfunctions. However, the permits were not revised to include the
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continuous monitors required under §§ 60.105(a)(3) and (4) on the basis that the flams will
always be used to combust non-routine releases and thus will never actually trigger the iI2S
standard or the requirement to install monitors.
With respect to Petitioner's first allegation, BAAQMD has clearly considered
applicability of NSPS Subpart J to flares, and has indicated that NSPS Subpart J applies to one,
S-19, Page 16 of the December 2004 Statement of Basis stales:
The Benicia Refinery has three separate flare header systems: I) the main flare gas
recovery header with flares S-18 and S-19,2) the acid gas flare header with flare S-16,
and 3) the butane flare header with flare S-17. Flares S-16 and S-18 were placed in
service during the original refinery startup in 1968, Flare S-17 was placed in service with
the butane tank: TK-1726 in 1972. Flare S-19 was added to the main gas recovery header
in 1974 to ensure adequate relief capacity for the refinery. S-19 is subject to NSPS
Subpart I, because it was a fuel gas combustion device installed after June 11, 1973, the
effective date of 60,100(b),
The table on page 18 of the Statement of Basis also directly states thai flares S-16, S-17
and S-l 8 are not subject to NSPS Subpart J. While the Permit would be clearer if BAAQMD
included a statement that the flares have not been modified so as to trigger the requirements of
NSPS Subpart J, such a statement is not required by title V. Therefore, EPA is denying the
Petition on this issue.
However, EPA agrees with Petitioner that the Permit is flawed with respect to issues (ii)
and (iii) above. First, the continuous monitoring of f § 60.105(a)(3) and (4) is not included in the
Permit because, BAAQMD claims, flare S-19 is never used in a manner that would trigger the
H2S standard and the requirement to install a continuous monitor. While the Permit does contain
District enforceable only monitoring to show compliance with a federally enforceable condition
prohibiting the combustion of routinely-released gases in a flare (20806, #7), there is currently no
federally enforceable monitoring requirement in the Permit to demonstrate compliance with this
condition or with NSPS Subpart J, both federally enforceable applicable requirements. Because
NSPS Subpart J is ail applicable requirement, the Permit must contain periodic monitoring
pursuant to 40 C.F.R, § 7Q,6(a)(3)(i)(B) and BAAQMD Reg. 6-503 (BAAQMD Manual of
"Procedures, Vol, 111, Section 4,6) to show compliance with the regulation.
Therefore, EPA is granting the Petition on the basis thai the Permit does not assun:
compliance with NSPS Subpart I, or with federally enforceable permit condition 20S06, #7.
BAAQMD must reopen the Permit to either include ihe monitoring under sections 60.105(a)(3)
or (4), or, for example, to include adequate federally enforceable monitoring to show compliance
with condition 20806, #7.
With respect to issues (iv) atid (v), it is unclear what other requirements Petitioner is
referring to, or what monitoring Petitioner is requesting. For these reasons, OP A is denying the
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Petition on these grounds.
2 Flare Opacity Monitoring
Petitioner notes that flares are subject to SiP-approved BAaQMD Regulation 6-301,
which prohibits visible emissions from exceeding defined opacity limits for a period or periods
aggregating more than three minutes in any hour. Petitioner alleges that the opacity limit set
forth irj Regulation 6-301 is not practically enforceable during short-duration flaring events
because no monitoring is required for flaring evenls that last less than fifteen minutes and only
limited monitoring is required for events lasting less than thirty minutes. Petitioner alleges that
repeated violations of BAAQMD Regulation 6-301 due to short-term flaring could be an ongoing
problem that evades detection.
The opacity limit in Regulation 6-301 does not contain periodic monitoring Because the
underlying applicable requirement imposes no monitoring of a periodic nature, the Permit must
contain "periodic monitoring sufficient to yield reliable data from the relevant time period that
are representative of the source's compliance with the permit ..." 40 C.F.R, § 70.6(a)(3)(i)(B).
Thus, the issue before EPA is whether the monitoring imposed in the Permit will result in
reliable and representative data from the relevant time period such that compliance with the
Permit can be determined,
hi this case, the District has imposed certain monitoring conditions to determine
compliance with the opacity standard during daring events. The Permit defines a "Oaring event"
as a fiow rate of vent gas dared in any consecutive 15 minute period that continuously exceeds
330 standard cubic feet per minute (scfrn). Within 15 minutes of detecting a flaring event, the
facility must conduct a visible emissions check. The visible emissions check may be done by
video monitoring. If the operator can determine there are no visible emissions using video
monitoring, no further monitoring is required until another 30 minutes has expired. If the
operator cannot determine there are no visible emissions using video monitoring, the facility
must conduct either an EPA Reference Method 9 test or survey the flare according to specified
criteria. If the operator conducts Method 9 testing, the facility must monitor the flare for at least
3 minutes, or until there are no visible emissions. If the operator conducts the non-Method 9
survey, the facility must cease operation of the ftare if visible emissions continue for three
consecutive minutes.
Although EPA agrees with Petitioner thai the Permit does not require monitoring during
short-duration flaring events, EPA does not believe Petitioner has demonstrated that the periodic
monitoring is inadequate. For instance, Petitioner has not shown that short-duration flaring
events arc likely to be in violation of the opacity standard, nor has Petitioner made a showing that
short-duration daring events occur frequently or at all. Thus, Petitioner has not demonstrated
that the periodic monitoring in the Permit is insufficient to detect violations of the opacity
standard.
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Additionally, in June 1999, a workgroup comprised of EPA, CAPCOA and CARD staff
completed a set of periodic monitoring recommendations for generally applicable SIP
requirements such as Regulation 6-301, The workgroup's relevant recommendation for refinery
flares was a visible emissions check "as soon as in intentional or unintentional release of vent
gas to a gas flare but no later than one hour from the flaring event" See CAPCOA/CARB/EP A
Region [X Periodic Monitoring Memo, June 24, 1999, at 2. In comparison, the periodic
monitoring contained in the Permit would appear to be both less stringent, by not requiring
monitoring for up to thirty minutes of a release of gas to a flare, and more stringent, by requiring
monitoring within 30 minutes rather than one hour. Therefore, EPA encourages the Dislrict to
amend the Permit to require monitoring upon the release to the flare, rather than delaying
monitoring as currently set forth in the Permit,
Finally, EPA notes that the Permit does not prevent the use of credible evidence to
demonstrate violations of permit terms and conditions. Even if the Permit does not require
visible emissions checks for short-duration daring events, EPA, the District, and the public may
use any credible evidence to bring an enforcement ease against the source. 62 Fed. Reg. 8314
(Feb. 24, 1997).
For the reasons cited above, EPA is denying the Petition on this issue.
3 Cooling Tower Monitoring
Petitioner claims that the Permit lacks monitoring conditions adequate to assure that the
cooling tower complies with SIP-approved District Regulations 8-2 and 6. Petitioner further
alleges that the District's decisions to not require monitoring for the cooling towers is flawed due
to its use of AP-42 emission factor, which may not be representative of the actual cooling tower
emissions.
a. Regulation 8-2
District Regulation 8-2-301 prohibits miscellaneous operations from discharging into the
atmosphere any emission that contains 15 lb per day and a concentration of more than 300 ppm
total carbon. Although the underlying applicable requirement does not contain periodic
monitoring requirements, the District declined to impose monitoring on source S-29 to assure
compliance with the emission limit.11
The December I, 2003 Statement of Basis sets forth the grounds Tor the District's
decision that monitoring is not necessary to assure compliance with this applicable requirement.
First, the District stated that its monitoring decisions were made by balancing a variety of factors
including I) the likelihood of a violation given the characteristics of normal operation, 2} the
degree of variability in the operation and in the control device, if there is one, 3) the potential
Permit, Table VII - C5 Cooling Tower, pp. S4I
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severity of impact of an undetected violation, 4} the technical feasibility and probative value of
indicator monitoring, 5) the economic feasibility of indicator monitoring, and 6) whether there is
some other factor, such as a different regulatory restriction applicable to Hie same operation, that
also provides some assurance of compliance with the limit in question- In addition, the District
provided calculations that purported to quantify the emissions from the facility's cooling tower.
The calculations relied upon water circulation and exhaust airflow rates supplied by the refinery
m addition to two AP-42 emission factors. The District found that the calculated emissions were
much lower than the regulatory limit and concluded that monitoring was not necessary.
Although it is true that the results suggest there may he a large margin of compliance, the nature
of the emissions and the unreliability of the data used in the calculations renders them inadequate
to support a decision that no monitoring is needed over the entire life of the permit.
An AP-42 emission factor is a value that roughly correlates the quantity of a pollutant
released to the atmosphere with an activity associated with the release of that pollutant. The use
of these emission factors may be appropriate in some permitting applications, such as
establishing operating permit fees. However, EPA has stated that AP-42 factors do not yield
accurate emissions estimates for individual sources, See In the Matter ofCargitt, Inc., Petition
IV-2003-7 (Amended Order) at 7, nJ (Oct. 19, 2004); In re: Peabody Western Coal Co., CAA
Appeal No. 04-01, at 22-26 (EAB Feb. J 8, 2005), Because emission factors essentially represent
an average of a range of facilities and emission rates, they are not necessarily indicative of the
emissions from a given source at all times, with a few exceptions, use of these factors to develop
source-specific permit limits or to determine compliance with permit requirements is generally
not recommended. The District's reliance on the emission factors in making its monitoring
decision is therefore problematic.
Atmospheric emissions from the cooling towers include fugitive VOCs and gases that are
stripped from the cooling water as the air and water conic into contact. In an attempt to develop
a conservative estimate of the emissions, (he District used the emission factor for "uncontrolled
sources." For these sources, AP-42 Table 5.1.2 estimates the release of 6 lb of VOCs per million
gallons of circulated water. This emission factor carries a "D" rating, which means that it was
developed from a small number of facilities, and there may be reason to suspect that the facilities
do not represent a random or representative sample of the industry. In addition, this rating means
that there may be evidence of variability within the source population. In this case the variability
stems from the fact that I) contaminants enter the cooling water system from leaks in heat
exchangers and condensers, which are not predictable, and 2) the effectiveness of cooling lower
controls is itself highly variable, depending on refinery configuration and existing maintenance
practices.M It is this variability that renders the emission factor incapable of assuring continued
compliance with the applicable standard over the lifetime of the permit For all practical
purposes, a single emission factor that was developed to represent long-term average emissions
can not forecast the occurrence and size of leaks in a collection of heat exchangers and is
therefore not predictive of compliance at any specific time.
20AP 42, Fifth Edition, Volume I, Chapter 5
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EPA has previously stated that annual reporting of NQx emissions using an equation lhat
uses current production information, along with emission factors based on prior source tests, was
insufficient to assuie compliance with an emission unit's annual NOx standard. Even when
presented with CEMs data which showed that actual NOx emissions for each of five years were
consistently well below the standard, EPA found that a large margin of compliance alone was
insufficient to demonstrate that the NOx emissions would not change over the life of the permit-
See In the Matter of Fort James Camas Mill, Petition No. X-1999-1, at 17-18, (December 22,
2000).
Consistent with its findings in regard to the Fort James Camas Mill permit, EPA finds in
this instance that the District failed to demonstrate lhat a one-time calculation is representative of
ongoing compliance with the applicable requirement, especially considering the unpredictable
nature of the emissions and the unreliability of the data used in the calculations. Therefore,
under the authority of 40 C.F.R. § 70.6(aX3KO(D), EPA is granting Petitioner's,request to object
to the Permit as the request pertains to cooling tower monitoring for District Regulation 8-2-301.
As an alternative to meeting the emission limitation cited in Section 8-2-301, facilities
may operate in accordance with an exemption under Section 8-2-114, which slates, "emissions
from cooling towers.,.are exempt from this Rule, provided best modern practices are used." As a
result, in lieu of adding periodic monitoring requirements adequate to assure compliance with the
emission limit in Section 8-2-301, the District may require the Statement of Basis to include an
applicability determination with respect to Section 8-2-U 4 and revise the Permit to reflect the
use of best modern practices.
b. Regulation 6
BAAQMD SIP-approved Regulation 6 contains four particulate matter emissions
standards for which Petitioner objects to the absence of monitoring. The District's decision for
each standard is discussed separately below,
(1) Regulation 6-310
BAAQMD Regulation 6-310 limits the emissions from the cooling tower to 0. IS grains
per dry standard cubic foot. Appendix G of the December 1,2003 Statement of Basis sets forth
the grounds for the District's decision that monitoring is not necessary to assure compliance with
this requirement- Specifically, Appendix G provides calculations for the particulate matter
emissions from the cooling tower and compares the expected emission rate to the regulatory
limit. In calculating the emissions, the District used the PM-10 emission factor of 0.019 lb per
1000 gal circulating water from Table 13.4-1 of AP-42. The calculations show that the
emissions are expected to be approximately ISO times lower than the emission limit, As a result,
the District concluded that periodic monitoring is not necessary to assure compliance with the
standard.
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Petitioner alleges that these calculations do riot adequately justify the District's decision
because the AJM2 emission factor used carries an E rating, which means that it is of poor
quality. As a result, Petitioner claims it is unlikely that the calculated emissions based on this
factor are representative of the actual cooling tower emissions.
Petitioner is correct that the emission factor used by the District has an B rating.
However, EPA disagrees ihai this rating alone is sufficient to conclude that the emission factor is
not representative of Lhe emissions from the cooling towers at the refinery. PM-10 emissions
from cooling towers are generated when drifl droplets evaporate and leave fine particulate matter
formed by crystallizalion of dissolved solids. Particulate matter emission estimates can be
obtained by multiplying the total liquid drift factor by the total dissolved solids (TDS) fraction in
the circulating water- The AP-42 emission factor used by the District is based on a drift rate of
0 .02% of the circulating water flow and a TDS content of approximately 12,000 ppm. Willi
regard to both parameters, the District indicated in the December 1,2003 Statement of Basis that
the emission factor yielded a higher estimate of the emissions than the actual drift and TDS data
that was supplied by the refineries. Therefore, EPA believes thai the District's reliance on this
emission factor does not demonstrate a deficiency in the Permit.21
EPA notes that the emission factor's poor rating is due in part to the variability associated
with cooling tower drift and TDS data, As discussed in the Statement of Basis, the degree to
which the emissions may vary was taken into account when considering the ability of the
emission factor to demonstrate compliance with the emission limit. With respect to the drift,
EPA believes that the emission factor is conservatively high compared to the 0.0005% drill rale
that cooling towers are capable of achieving. Where TDS are concerned, AP-42 indicates that
the dissolved solids content may range from 380 ppm to 91,000 ppm. While the emission factor
represents a TDS concentration at the lower end of this spectrum, increases in the TDS content
do not significantly increase the grain loading due to the large exhaust air flow rates exiting the
cooling towers. Even assuming that the TDS concentration reached 91,000 ppm, the calculated
emissions arc still approximately 22 limes lower than the regulatory limit."
The District has provided sufficient evidence to demonstrate that the emissions will not
vary by a degree that would cause an exceedance of the standard. Given the representative air
flow and water circulation rates supplied by the refinery, compliance with the applicable
requirement is expected under conditions (i.e., maximum TDS content) that represent a
reasonable upper bound of the emissions. Therefore, EPA is denying Petitioner's request lo
object to the Permit as it pertains to periodic monitoring for Regulation 6-310.
¦"Although EPA staled above in tlie discussion for Regulation 8-2 that AP-42 emission factors are generally
not recommended for use in determining compliance with emission limits, there are exceptions. Data supplied by die
refineries indicates (hit the AP^fZ emission factor for PM-10 const rvalively estimates the actual cooling lower
emissions; as discussed further below, compliance with the limit is expected under conditions that represent a
reasonable upper bflund on the emissions,
54Again, this is assuming a drift rate of 0,02%.
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(2) Regulation 6-31
BAAQMD Regulation 6-311 states that no peraon shall discharge particulate matter into
the atmosphere at a rate in excess of that specified in Table I of the Rule for the corresponding
process weight rate- Assuming the process weight rate for the cooling tower remains at or above
the maximum level specified in Table I, the rule establishes a maximum emission rate of40
Ib/hr. Unlike for Regulation 6-310, the District provided no justification for its decision to not
require monitoring to assure compliance with this limit.
Using the PM-10 emission factor cited by the District in its calculations for Regulation 6-
310, EPA estimates the emissions from S-29 to be in excess of 40 Ib/hr. While the District stated
that the emission factor represents a more conservative estimate of the emissions than the actual
data provided by the refineries, it did not say how conservative the factor is. As a result, the
District's monitoring decision is unsupported by the record and EPA finds that the Permit fails to
meet the Part 70 standard that it contain periodic monitoring sufficient to yield reliable data that
are representative of the source's compliance with its terms. See 40 C.F.R. § 70.6{a)(3)(i)(B).
Therefore, EPA is granting Petitioner's request to object to the Permit. The Permit must include
periodic monitoring adequate to assure compliance with BAAQMD Regulation 6-31L See 40
C.F.R, § 70,6(a)(3)(i){B).
(3) Regulation 6-305
BAAQMD Regulation 6-305 slates that, "a person shall not emit particles from any
operation in sufficient number to cause annoyance to any other person . This Section 6-305 shall
only apply if such particles fall on real property other than that of the person responsible for the
emission." Nuisance requirements such as this may be enforced by EPA and the District at any
time and there is no practical monitoring program that would enhance the ability of the permit to
assure compliance with Ihe applicable requirement. Therefore, EPA is denying Petitioner's
request to object lo the Permit as it pertains to monitoring for BAAQMD Regulation 6-305,
{4) Regul alion 6- 3 0 i
BAAQMD Regulation 6-301 slates that a person shall not emit from any source for a
period or periods aggregating more than three minutes in any hourf a visible emission which is as
dark or darker than No. I on the Rmgelmann Chart- While the Statement of Basis does not
contain a justification for the District's decision that monitoring is not required for this standard,
the District stated the following in response to public comments; "The District has prepared an
analysis based on the AP-42 factors for particulate, which are very conservative, and has indeed
determined that 'it is virtually impossible for cooling towers to exceed visible or grain loading
limitations.' The calculations show thai the particulate grain loading is a hundredth or less than
the 0.15 gr/dscf standard due to the large airflows. When the grain loading is so low, visible
emissions are not expected," 2003 CRTC at 59, EPA finds the District's assessment of the
visible emissions to be reasonable and that Petitioner has not demonstrated otherwise. Therefore,
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EPA is denying Petitioner's request lo object to the Permit as ii pertains to monitoring for
BAAQMD Regulation 6-301.
4. Monitoring of Pressure Relief Valves
Petitioner alleges that the Permit must include additional monitoring to assure thai all
pressure relief valves at the facility are in compliance with the requirements of SlP-approved
District Regulation 8-28 (Episodic Releases from Pressure Relief Valves), Petition at 36,
Regulation 3-28 requires that within 120 days of the first "release event" at a facility, the
facility shall equip each pressure relief device of that source with a lamperproof tell-tale indicator
that will show thai a release his occurred since the last inspection, Regulation 8-28 also requires
that a release event from a pressure relief device be reported lo the APCO on the next working
day following the venting. Petitioner stales that neither the regulation nor the Permit includes
any monitoring requirements to ensure thai the first release event of a relief valve would ever be
recorded, and that available tell-tale indicators or another objective monitoring method should be
required for all pressure relief valves at the refinery, regardless of a valve's release event status.
First, EPA believes thai the requirement that a facility report all release events to the
District is adequate to ensure that the first release event would be recorded- EPA also notes that
the refinery is subject to the title V requirement to certify compliance with all applicable
requirements, including Regulation 8-2S, See 40 C,F,R, § 70.6(c)(5). Thus, EPA does not have
a basis to determine that the reporting requirement would not assure compliance with the
applicable requirement at issue.
For the reasons stated above, EPA is denying the Petition on this issue
5, Additional Monitoring Problems Identified by Petitioner
Petitioner claims that several sources with federally enforceable limits under BAAQMD
Regulation 6 do not have monitoring adequate to assure compliance. The sources and limits at
issue are discussed separately below.
Sulfur Storage Pit ($-157)/ BAAQMD Regulations 6-301 and 6
310
BAAQMD Regulation 6 contains two particulate matter emissions standards for which
Petitioner objects to the absence of monitoring. Specifically, BAAQMD Regulation 6-301 limits
visible emissions to less than Ringclmann No, 1 and Regulation 6-310 limits the emissions to
0.15 gr. perdscf. Although Regulation 6 does not contain periodic monitoring requirements for
either of the standards, the District declined to impose monitoring on this source.
The December 1,2003 Statement of Basis provides the District's justification for not
37
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requiring monitoring. Specifically, the District stated, "Source is capable of exceeding visible
emissions or grain loading standard only during process upset. Under such circumstances, other
indicators will alerl the operator that something is wrong." See December I, 2003 Statement of
Basis, ii- 4, at 23. If the source is not capable of exceeding the emission standards at times other
than process upsets, it is reasonable that the District would not require regularly scheduled
monitoring during normal operations. However, if, as stated by the District, S-157 is capable of
exceeding the emission standards during process upsets, monitoring during those periods may be
necessary. While the District stated that indicators would alert the operator that something is
wrong in the event of a process upset, the District failed to demonstrate how the indicator or the
operator's response would assure compliance with the applicable limits.
EPA Ends in this case that the District's decision to not require monitoring is not
adequately supported by the record. Therefore, EPA is granting Petitioner's request to object to
the Permit as it pertains to monitoring for S-157. The District must re-open the Permit to include
periodic monitoring that yields reliable data that are representative of the source's compliance
with the permit or further explain in the Statement of Basis why monitoring is not needed,
b. Lime Slurry Tanks (S-l74 and S-175) / BAAQMD Regulations 6
301,6-310, and 6-311
BAAQMD Regulation 6 contains three standards for which Petitioner objects to the
absence of monitoring. Regulation 6-311 sets a variable emission limit depending on the process
weight rate and the requirements of 6-301 and 6-310 are described above, Regulation 6 does not
contain periodic monitoring requirements for any of the standards and the District did not impose
monitoring on these sources.
As in the previous case for source S-157, the Statement of Basis states thai the District
did not require monitoring to assure compliance with Regulations 6-101 and 6-310 because the
"source is capable of exceeding visible emissions or grain loading standard only during process
upset Under such circumstances, other indicators will alert the operator that something is
wrong," See December 1, 2003 Statement of Basis, n. 4, at 23. The Statement of Basis is silent
on the District's monitoring decision for Regulation 6-311 - Therefore, for the reasons staled
above, EPA is granting Petitioner's request to object to the Permit as it pertains to monitoring for
sources S-l74 and S-l75 to assure compliance with Regulations 6-301,6-310, and 6-311, The
District must reopen the Permit to include periodic monitoring or further explain in the Statement
of Basis why monitoring is not needed.
c Diesel Backup Generators (S-24G, S-241, and S-242) / BAAQMD
Regulations 6-303.1 and 6-310
BAAQMD Regulation 6 contains two particulate matter emissions standards for which
Petitioner objects to the absence of monitoring- The requirement of Regulation 6-310 is
described above and Regulation 6-303.1 limits visible emissions to Rjngelmann No, 2.
38
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Regulation 6 does not contain periodic monitoring requirements for My of the standards and the
District did not impose monitoring on these sources.
As a preliminary matter, EPA notes that opacity monitoring is generally not necessary for
California sources firing on dieseJ fuel, based on the consideration that sources in California
usuaily combust low-sulfur fuel." Therefore, EPA is denying Petitioner's request to object to the
Permit as it pertains to monitoring for Regulation 6-303.1.
With regard to Regulation 6-310, the December 1,20G3 Statement of Basis sets forth the
basis for the District's decision that monitoring is not necessary. Specifically, the District states,
"No monitoring [is] required because tills source will be used for emergencies and reliability
testing only." While it is true that Condition 1874S states these engines may only be operated to
mitigate emergency conditions or for reliability-related activities (not to exceed 100 hours per
year per engine), this condition is not federally enforceable. Absent federally enforceable
restrictions on the hours of operation, the District's decision not to require monitoring is not
adequately supported. Therefore, EPA is granting Petitioner's request to object to the Permit as
it pertains to Regulation 6-310. The District must reopen the Permit to add periodic monitoring
to assure compliance with the applicable requirement or further explain in the statement ofbasis
why it is not necessary.
d. FCCU Catalyst Regenerator (S-5) and Fluid Coker (S-6) f
BAAQMD Regulation 6-305
BAAQMD Regulation 6 contains one particulate mailer emission standard for which
Petitioner objects to the absence of monitoring. Regulation 6 does not contain periodic
monitoring requirements for any of the standards and I he District did not impose monitoring on
these sources.
BAAQMD Regulation 6-305 states that, "a person shall not emit particles from any
operation in sufficient number to cause annoyance to any other person.. .This Section 6-305 shall
only apply if such particles fall on real property other than that of the person responsible for the
emission," Petitioner has failed to establish that there is any practical monitoring program that
would enhance the ability of the permit to assure compliance with the applicable requirement
Therefore, EPA is denying Petitioner's request to object to the Permit as it pertains to monitoring
for BAAQMD Regulation 6-305,
e. Coke Transport, Catalyst Unloading, Carbon Black Storage, and
Lime Silo (S-8, 3-10,3-11, and S-12) / BAAQMD Regulation 6-
311,
~ JPcr CAPCOaCARB'E^A Region IK agreement. See Approval of Title V Feriodic Monitoring
Recommendations, Juiw 24, 1M9.
39
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BAAQMD Regulation 6 contains one particulate matter emission standard for which
Petitioner objects to the absence of monitoring. Specifically, BAAQMD Regulation 6-311 sets a
vtriable emission limit depending on the process weight rate. Regulation 6 does not contain
periodic monitoring requirements for any of the standards and the District did not impose
room taring on these sources.
For ali four emission sources, the Permit requires monitoring with respect to Regulations
6-301 and 6-310 but not 6-3IS, Given this apparent conflict and the failure of the Statement of
Basis to discuss the absence of monitoring, EPA finds that the District's decision in this case is
riot adequately supported by the record. Therefore, EPA is granting Petitioner's request as it
pertains to monitoring for sources S-8, S-10, S-l 1, and S-12. The District must reopen the
Permit to include periodic monitoring for Regulation 6-311 that yields reliable data that are
representative of the source's compliance with the permit or explain in the Statement of Basis
why monitoring is not needed.
H. Miscellaneous Permit Deficiencies
1 Missing Federal Requirements for Flares (Subpart CC)
Petitioner states that the District incorrectly determined that Valero flares are
categorically exempt from 40 C.F.R, § 63 Subpart CC (NESH AP for Petroleum Refineries),
Petitioner further states that "EPA disagreed with the District's claim that the flares qualify for a
categorical exemption from Subpart CC when used as an alternative to the fuel gas system," and
that the Valero Permit and Statement of Basis contain incorrect applicability determinations for
flares S-l8andS-I9, and that there is not enough information to determine applicability for
flares S-16 and S-17. Petitioner stales thai for all flares subject to Subpart CC, the Permit must
include all applicable requirements, including 40 C.FJR. § 63 Subpart A, by reference from 40
C.F.R. | 63 Subpart CC. Petitioner goes on to note that Petitioner has requested in past
comments thai the District determine the potential applicability of a number of federal
regulations to the Valero flares, including 40 C.F.R. § 63 Subpart A, 40 C.F.R, § 63 Subpart CC,
and 40 C.F.R. § 60 Subpart A, but that the District did not do so. Petitioner notes that given a
lack of relevant information, Petitioner was unable to make an independent evaluation of
applicability. Petitioner also alleges that EPA agreed with Petitioner that the District failed to
provide sufficient information for the applicability determinations for flares S-16 and S-70 via
Attachment 2 of EPA's October 8 comment letter. Finally, Petitioner states that EPA must
object to the Permit until the District provides a sufficient analysis regarding the applicability of
these federal rules to the Valero Hares, and until the Permit contains all applicable requirements.
a. 40 C.F.R, Part 60, Subpart A
EPA finds that the applicability of 40 C.F.R. § 60 Subpart A is adequately addressed in
the December 16,2004 Statement of Basis for Valero. See Statement of Basis at 18 (Dec. 16,
2004). The District has included a table on page 18 of the December 16,2004 Statement of Basis
40
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indicating applicability of NSPS Subpart A to each ofValero's llarcs. Therefore, EPA is denying
the Petition on this issue.
b. 40 C.F.R. Part 63, Subparts A and CC
40 C.F.R, Pan 63, Subpart CC contains the Maximum Achievable Control Technology
("MACF') requirements for petroteum refineries. Under Subpart CC, the owner or operator of a
Group 1 miscellaneous process vent, as defined in § 63.641, must reduce emissions of Hazardous
Atr Pollutants either by using a flare that meets the requirements of section 63.11 or by using
another control device to reduce emissions by 98% or to a concent ration of 20 ppmv. 40 C.F.R,
§ 63.643(aX I )¦ If a flare is used, a device capable of detecting the presence of a pilot flame is
required, 40 C-F.R. § 63,644(a)(2).
The applicability provisions of Subpart CC arc set forth in section 63.640, "Applicability
and designation of affected source." Section 63.640(a) provides that Subpart CC applies lo
petroleum refining process units and related emissions points. The Applicability section further
provides that affected sources subject to Subpart CC include emission points that arc
"miscellaneous process vents." 40 C.F.R. § 63.640(c)(1) The Applicability section also
provides that affected sources do not include emission points that are routed to a fuel gas system.
40 C.F.R. § 63.640(d)(5). Gaseous streams routed to a fuel gas system are specifically excluded
from the definition of "miscellaneous process vent," as are "episodic or nonroutine releases such
as those associated with startup, shutdown, malfunction, maintenance, depressuring, and catalyst
transfer operations." 40 C.F.R. § 63,641,
The District's Statement of Basis indicates that flares S-IS and S-19 are not subject lo
MACT Subpart CC pursuant to the exemption set forth in 40 C.F.R- § (53.640(d)(5). See
December 16, 2004 Statement of Basis at 18. In the BAAQMD February 15, 2005 Letter,
BAAQMD again asserted section 63.640(d)(5) as a basis for finding that the refinery's flares are
not required to meet the standards in Subpart CC. EPA continues to believe that a detailed
analysis of the configuration of the flare and compressor is required to exempt a flare on the basis
that it is part of the fuel gas system.
BAAQMD's February 15, 2005 letter also provides an alternative rationale that gases
vented to the refinery's flares are not within the definition of "miscellaneous process vents."
Specifically, BAAQMD asserts that the flares are not miscellaneous process vents because they
are used only to control "episodic and nonroutine" releases. As BAAQMD states:
At all of the affected refineries, process gas collected by the gas recovery system are
routed to flares only under two circumstances: (I) situations in which, due lo process
upset or equipment malfunctions, the gas pressure in (he flare header rises to a level that
breaks the water seal leading to the flares; or (2) situations in which, during process
startups, shutdown, malfunction, maintenance, depressuring [sic], and catalyst transfer
operations are, by definition, not miscellaneous process vents, and are not subject lo
41
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Subpart CC
EPA agrees that a Hare used only under the two circumstances described by the District
would not be subject to Subpart CC because such Hares are not used to control miscellaneous
process vents as that term is defined in § 63.641. According to the BAAQMD February 15, 2005
Letter, BAAQMD intends to revise the Statement of Basis Lo further explain its rationale that
Subpart CC does not apply to the Bay Area refinery flares, and intends to solicit public comment
on its rationale.
Because the Permit and the Statement of Basis for Valero's flares S-18 and S-19 contain
contradictory information with regard to the use of these flares, EPA agrees with. Petitioner that
the Statement of Basis is lacking a sufficient analysis regarding the applicability of MACT CC to
these flares. Therefore, EPA is granting the Petition on this issue. BAAQMD must reopen the
Permit to address applicability in the Statement of Basis, and, if necessary, to include the flare
requirements of MACT Subpart CC in the Permit.
2 Basis for Tank Exemptions
Petitioner claims that the statement of basis and the Permit lack adequate bformalton to
support the proposed exempt status for numerous tanks identified in Table IIB of the Permit.
Table IIB of the Permit contains a list of 43 emission sources that have applicable
requirements in Section IV of the Permit but that were determined by the District lo be exempt
from BAAQMD Regulation 2, which specifies the requirements for Authorities to Construct and
Permits to Operate. Rule 1 of the regulation contains numerous exemptions that are based on a
variety of physical and circumstantial grounds. EPA agrees with Petitioner that the Permit itself
contains insufficient information lo determine the basis for the exempt status of the equipment
with respect to the exemptions in the rule, However, for most of the sources in Table IIB,
Petitioner's claim that the Statement of Basis lacks the information is factually incorrect.
Petitioner is referred to pages 94-99 of the Statement of Basis that accompanied the Permit
issued by the District on December I, 2003. Nonetheless, EPA is granting Petitioner's request on
a limited basis for the reasons set forth below.
EPA's regulations stale that the permitting authority must provide the Agency with a
statement of basis that sets forth the legal and factual basis for the permit conditions 40 C.P.R.
§ 70.7(a)(5). EPA has provided guidance on the content of an adequate statement of basis in a
letter dated December 20,2001, from Region V to the State of Ohio14 and in a Notice of
Deficiency (NOD) issued to the State of Texas," These documents describe several key
elements of a statement of basis, specifically noting that a statement of basis should address any
'4The Idler is available at: littp tVwww.cpa goy/ >1 gmj/progra ms-'a rtd'a ir,'[ tile5t5 nit mos/sbgy itk p J I-
"67 Fed. Reg, 732 {January 7.2002)
42
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federal regulatory applicability determinations. The Region Ą letter also recommends the
inclusion of topical discussions on issues including but not limited to the basis for exemptions.
Further, in response to a petition filed in regard to the title Ą permit for the Los Medanos Energy
Center, EPA concluded thai a statement of basis should document the decision-making that went
into the development of the title Ą permit and provide the permitting authority, the public, and
EPA with a record of the applicability and technical issues surrounding the issuance of the
perm it. Such a record ought to contain a description of the origin or basis for each permit
condition or exemption. See, Los Medanos, at 10.
As stated in Los Medanos, the failure of a permitting authority to meet the procedural
requirement to provide a statement of basis does not necessarily demonstrate that the title V
permit is substantively flawed. In reviewing a petition to object to a title V permit because of an
alleged failure of the permitting authority to meet all procedural requirements in issuing the
permit, EPA considers whether the petitioner has demonstrated that the permitting authority's
failure resulted in, or may have resulted in, a deficiency in the content of the permit See CAA
§ 505(b)(2) (objection required "if the petitioner demonstrates .,. that the permit is not in
compliance with the requirements of this Act, including the requirements of the applicable
[SIP]"); see also 40 C.F.R. § 70.8(c)(1). Thus, where the record as a whole supports the terms
and conditions of the permit, flaws in the statement of basis generally will not result in an
objection. See e.g.. Doe Runi at 24-25. In contrast, where flaws in the statement of basis resulted
in, or may have resulted in, deficiencies in the title V permit, EPA will object to the issuance of
the permit.
With regard to the Valero Permit, the majority of the sources listed in Table 11B are
identified in the December !, 2003 Statement of Basis along with a citation from Regulation 2
describing the basis of the exemption. For the sources that fall within this category, EPA finds
that the permit record supports the District's determination for the exempt status of the
equipment. However, in reviewing the December 16, 2004 Statement of Basis, EPA noted that
three of the sources listed in Table HB of the Permit are not included in (he statement of basis
with the corresponding citations for the exemptions." For these sources, the failure of the record
to support the terms of ibe Permit is adequate grounds for objecting to the Permit. Therefore,
EPA is granting Petitioner's request to object to the Permit with respect to the listing of exempt
sources in Table HB but only as the request pertains to the three sources identified herein.
Although EPA is not aware of other errors, the District should review the circumstances for all of
the sources in Table f[B and the corresponding table in the statement of basis to further ensure
that the Permit is accurate and that the record adequately supports the Permit, EPA also
encourages the District Jo odd the citation for each exemption to Table [IB as was done for the
Conoco Phil lips, Chevron, and Shell permits.
3 Public Participation
"Compare Table IIB of the Permit wilh llie December I, 2003 statement of basis for the LPG Trtick
Leading Rack, the TK-27IO Fresh Acid Tank, and (he Co|enetaticm Plant Cooling Tower,
41
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Petitioner argues that the District did not, in a timely fashion, make readily available to
the public, compliance information that is relevant to evaluating whether a schedule of
compliance is necessary. Specifically, Petitioner asserts that it had to make several requests
under the California Public Records Act to obtain "relevant information concerning NOVs issued
to the facility between 2001 arid 2004" and the "2003 Annual Report and other compliance
information, which is not readily available " Petitioner slates that it took three weeks for the
District to produce the information requested in Petitioner's "2003 PRA request." Petitioner
contends that it expended significant resources to obtain the data and received the data so late in
the process that they could not be sufficiently analyzed.
[n determining whether an objection is warranted for alleged flaws in the procedures
leading up to permit issuance, such as Petitioner's claims here that the District failed to comply
with public participation requirements, EPA considers whether the petitioner has demonstrated
that the alleged flaws resulted in, or may have resulted in, a deficiency in the permit's content.
SeeCAA, Section 505{b)(2)(objection required "if the petitioner demonstrates ... that the permit
is not in compliance with the requirements of [the Act], including the requirements of the
applicable [SEP].") EPA's title V regulations specifically identify the failure of a permitting
authority to process a permit in accordance with procedures approved to meet the public
participation provisions of 40 C.F.R. § 70.7(h) as grounds for an objection, 40 C.F.R.
§ 70.8(c)(3)(iii). District Regulations 2-6-412 and 2-6-419 implement the public participation
requirements of 40 C.F.R. § 70.7(h). District Regulation 2-6-412, Public Participation, Major
Facility Review Permit Issuance, approved by EPA as meeting the public participation provisions
of 40 C.F.R, § 70.7(h), provides for notice and comment procedures that the District must follow
when proposing to issue any major facility review permit. The public notice, which shall be
published in a major newspaper in the area where the facility is located, shall identify, inter alia,
information regarding the operation to be permitted, any proposed change in emissions, and a
District source for further information. District Regulation 2-6-419, Availability of Information*
requires the contents of the permit applications, compliance plans, emissions or compliance
monitoring reports, and compliance certification reports to he available to the public, except for
information entitled to confidential treatment.
Petitioner fails to demonstrate that the District did not process the permit in accordance
with public participation requirements. The District duly published a notice regarding the
proposed initial issuance of the permit The notice, inter alia, referenced a contact for further
information. The permit application, compliance plan, emissions or compliance monitoring
reports, and compliance certification reports are available to th« public through the District's
Web site or in the District's files, which are open to the public during business hours. Petitioner
admits that it ultimately obtained the compliance information it sought, albeit later than it
wished. Petitioner fails to show that the perceived delay in receiving requested documents
resulted in, or may have resulted in, a deficiency in the Permit, Therefore, EPA denies the
Petition on this issue.
44
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IV TREATMENT,, IN THE ALTERNATIVE, AS A PETITION TO REOPEN
As explained in the Procedural Background section of this Order, EPA received and
dismissed a prior petition ("2003 OCE Petition") from this Petitioner on a previous version of the
Permit al issue in this Petition. EPA's response in this Order to issues raised in this Petition that
were also included in the 2003 OCE Petition also constitutes the Agency's response lo the 2003
Petition. Furthermore, EPA considers the Petition validly submitted under CAA section
505(b)(2). However, if the Petition should be deemed to be invalid under that provision, EPA
also considers, in the alternative, (he Petition and Order lo be a Petition to Reopen the Permit and
a response to a Petition to Reopen the Permit, respectively.
V CONCLUSION
For the reasons set forth above, and pursuant to section 505(b)(2) of the Clean Air Act, I
deny in part and grant in part OCE's Petition requesting that the Administrator object to the
Valero Permit. This decision is based on a thorough review of the draft permit, the final Permit
issued December 16,2004, and other docur
Date
MAft 1 5 2005
Sleph
Act in;
AS
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BEFORE THE ADMINISTRATOR
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
IN 11 IF MATTER OP >
ONYX ENVIRONMENTAL SERVICES )
) ORDER RESPONDING ID
) PETITIONERS' REQUEST THAT
Petition number V-2005-1 ) THE ADMINISTRATOR OBJECT
C'AAPI* No. 163121AAP i TO ISSUANCE OF A S fATE
Proposed by the Illinois ) OPERATING PERMIT
hnvironmental Protection Agency )
)
PARTIALLY GRANTING PETITION FOR OBJECTION TO PERMIT
EPA has become aware of a factual error in the Eobruaiy 1, 2006 Order Responding io
Petitioners1 Request that the Administrator Object to Issuance of a proposed State Operating
IVnmt for Onyx Environmental Services. To correct that emir, 1 am amending the February I
20(16 Order hy striking out the section entitled "VI Monitoring" and replacing it with the
language appearing below. As a result of the correeliore ! am hereby granting the petition on
that issue.
The amended language for seetion VI ts as follows;
VI, Monitoring
The Petitioners argue that the Administrator must object to the proposed
Onyx permit because it fails to include conditions that meet the legal requirements
for monitoring. The Petitioners cite condition 7.1 .H.b.ii. on page 56 of the
proposed Onyx permit, which provides that Onyx must install, calibrate, maintain,
and operate Particulate Matter Continuous Emission Monitors (PM OHMs) to
demonstrate compliance Petitioners note that the next clause provides that the
permittee need not comply with the requirement to "install, calibrate, maintain,
and operate the PM CEMs until such tune that ES S. EPA promulgates all
performance specifications and operational requirements for PM CEMs."
Petitioners argue that there are no PM monitoring requirements established in the
permit without the obligation to install and operate the PM CEMs, which is
contingent on future U.S. EPA action Petition at 18.
U.S. EPA promulgated the performance specification for PM CEMs
(Performance Standard 1 1} on January 12. 2(504, However, ELS. EPA has not yet
promulgated the operational requirements for PM CEMs. Accordingly, the
requirement to install and operate PVl CEMs does not currently apply to Onyx,
although the permit properly requires PM CEMs once U.S. EPA promulgates
such operational requirements. However, subpart EEE contains other
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requirements intended to help assure compliance with the PM limits, including a
requirement for bag leak detection monitoring." The Onyx facility is equipped
with baghouses, and therefore C)n\-x is required to operate and maintain a system
to detect leaks from the baghouses, but the permit currently lacks provisions
requiring a leak detection system. Accordingly, the lack of a currently applicable
requirement to operate and maintain PM CF.Ms does not make the permit
deficient under 40 C.F.R. 70.6{a)(3)(i)(B), but Petitioners are correct that the
permit lacks monitoring required under other provisions of 40 C.F.R. §70.6, and
therefore 1 am granting the petition on this issue and directing I EPA to revise the
permit to incorporate all PM monitoring required tor the facility under subpart
FEE, including a leak detection system
I am not revising the Order issued February 1 in any other way and its provisions, other
than section VI, remain undisturbed and in effect.
AUG -9 2006
Dated:
tephen L. Johnson
Administrator
See Final Technical Support Document for HWC MACT Standards, Vol.. IV; Compliance with
the HWC MACT Standards {July IWl
Subpart EbE has been amended since the permit was proposed by IEPA. although the
requirement for bag leak detection applied to fhc Onyx facility at the time the permit was proposed, hi re
proposing the permit, IEPA should ensure that the permit properly reflects all of the current MACT
requirements
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jjpljl
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
RESEARCH TRIANGLE. f ARK, NC 27711
API 31114 AiH OS (At 11 v f t AlsiNIM,
,.»Ni' STAU'IAHC'N
MEMORANDUM
SUBJECT: Implementation Guidance on Annual Compliance Certification Reporting and Statement
of Basis Requirements for Title V t)pt;ratingpermits
FROM: Stephen D. P;
Director
TO: Regional Air Division Directors. Regions I-10
This memorandum and attachments provide guidance on satisfying the Clean Air Act title V annual
compliance certification reporting and statement of basis requirements. It addresses two outstanding
recommendations made by the Office of Inspector General (OIG) in the report titled, "Substantial
Changes Needed in Implementation and Oversight of Title V Permits if Program Goals are to he Fully
Realized," (OIG Report No. 200S-P-00010):
Recommendation 2-1: Develop and issue guidance or rulemaking on annual compliance
certification content, which requires responsible officials to certify' compliance with all
applicable terms and conditions of the permit, as appropriate.
Recommendation 2-3; Develop nationwide guidance on the contents of the statement of basis
which includes discussions of monitoring, operational requirements, regulatory applicability
determinations, explanation of any conditions from previously issued permits that are not being
transferred to the title I' permit. discussion of streamlining requirements, and other factual
information, where advisable, including a list of prior title I' permits issued to the same
applicant at the plant, attainment status, and construction, permitting, and compliance history of
the plant.
In a February 8,2013, memorandum to the OIG, the EPA stated its intent to address these two
recommendations, as well as similar recommendations from the Clean Air Act Advisory Committee's
Title V Task Force (see ''Final Report to the Clean Air Act Advisory Committee: Title V
Implementation Experience," April 2006).
The attachments below provide non-binding guidance that responds to OIG recommendations regarding
annual compliance certification and statement of basis. The attachments highlight existing statutory and
regulatory requirements and guidance issued by the HP A, and state and local permitting authorities. In
addition, the attachments highlight key components of the applicable legal requirements and
clarifications responsive to certain OIG recommendations. As you are aware, this information was
developed in collaboration with EPA regional offices. Note that state and local permitting authorities
Internet Address (URL) • http:<7www.epa.gov
R*cyci«ct/H*cyclabl« • Printed Willi VugetJibte OH Based lute on Recycled Papor {Minimum 25% Postetinsumaf)
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also provide guidance on title Ą requirements; the EPA encourages sources to consult with their state
and local permitting authorities to obtain additional information or to obtain specific guidance.
If you have any questions, please contact Juan Santiago, Associate Director, Air Quality Policy
Division/OAQPS, at (919) 541-1084, saniiago.juan@epa.gov.
Attachments
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Disclaimer
These documents explain the requirements of the EPA regulations, describes ihe EPA policies, and
recommends procedures for sources and permitting authorities to use to ensure that the annual
compliance certification and ihe statement of basis are consistent with applicable regulations. These
documents are not a rule or regulation, and the guidance I hey contain may not apply to a particular
situation based upon the individual facts and circumstances. The guidance does not change or substitute
for any law, regulation, or any other legally binding requirement and is not legally enforceable. The use
oj non-mandatory language such as "guidance. " "recommend, " "may, " "should,and "can, " is
intended to describe the EPA policies and recommendations Mandatory terminology: such as "must"
and "required" is intended to describe controlling requirements under the terms of the Clean Air Act
and the EPA regulations, but the documents do not establish legally binding requirements in and of
themselves.
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Attachment 1
Implementation Guidance on Annual Compliance Certification Requirements Under the
Clean Air Act Title Ą Operating Permits Program
!, Overview of Title V and Annual Compliance Certification Requirements
Title V of the Clean Air Act (CAA or Act) establishes an operating permits program for major
sources of air pollutants, as well as other sources. CAA sections 501-507; 42 U.S.C. Sections
7661 -7661 f. A detailed history and description of title V of the CAA is available in the preamble
discussions of both the proposed and final original regulations implementing title V - the first
promulgation of 40 CFR Part 70. See 57 FR 32250 (July 21, 1992) (Final Rule); 56 FR 21712
(May 10, 1991) (Proposed Rule). The EPA reeently provided further information regarding
compliance certification history in a proposed rulemaking titled, "Amendments to Compliance
Certification Content Requirements for State and Federal Operating Permits Programs,"
published on March 29, 2013. 78 FR 19164. Under title V, states are required to develop and
implement title V permitting programs in conformance with program requirements promulgated
by the EPA in 40 CFR Part 70. Title V requires that every major stationary source (and certain
other sources) apply for and operate pursuant to an operating permit. CAA section 502(a) and
503. The operating permit must contain conditions that assure compliance with ail of the
sources' applicable requirements under the CAA. CAA section 504(a). Title Y also states, among
other requirements, that sources certify compliance with the applicable requirements of their
permits no less frequently than annually (CAA section 503(b)(2)). provides authority to the EPA
to prescribe procedures for determining compliance and for monitoring and analysis of pollutants
regulated under the CAA (CAA section 504(b)), and requires each permit to "set forth
inspection, entry, monitoring, compliance certification, and reporting requirements to assure
compliance with the permit terms and conditions.'* (CAA section 504(e).)
This guidance document focuses on the annual compliance certification, which applies to the
terms and conditions of issued operating permits. CAA section 503(b)(2) states that the EPA's
regulations implementing title V "shall further require the permittee to periodically (but no less
frequently than annually) certify that the facility is in compliance with any applicable
requirements of the permit, and to promptly report any deviations from permit requirements to
the permitting authority." CAA section 504(c) states that each title V permit issued "shall set
forth inspection, entry, monitoring, compliance certification, and reporting requirements to
assure compliance with the permit terms and conditions. . . Any report required to be submitted
by a permit issued to a corporation under this subchapter shall be signed by a responsible
corporate official, who shall certify its accuracy." Additional requirements of compliance
certification are described in section 114(a)(3) of the CAA as follows:
The Administrator shall in the case of any person which is the owner or operator
of a major stationary source, and may, in the case of any other person, require
enhanced monitoring and submission of compliance certifications. Compliance
certifications shall include (A) identification of the applicable requirement that is
the basis of the certification, (B) the method used for determining the compliance
1
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status of the source, (C) the compliance status, (D) whether compliance is
continuous or intermittent, (E) such other facts as the Administrator may1 require.
Compliance certifications and monitoring data shall be subject to subsection (c) of
this section [availability of information to the public].
CAA section 114(a)(3), 42 U.S.C, section 7414(a)(3). The EPA promulgated regulations
implementing these provisions for title Ą operating permits purposes. Key regulatory provisions
regarding compliance certifications are found in 40 CFR section 70.6(c). "Compliance
requirements,"
II. Overview of Annual Compliance Certification Requirements
The EPA's regulations at 40 CFR section 70.6(c) describe the required elements of annual
compliance certifications. Specifically, 40 CFR section 70,6(c)(5)(iii)-(iv) provides that all
permits must include the following annual compliance certification requirements:
(iii) A requirement that the compliance certification include all of the following
(provided that the identification of applicable information may cross-reference the
permit or previous reports, as applicable):
(A) The identification of each term or condition of the permit that is the basis of
the certification;
(B) The identification of the method(s) or other means used by the owner or
operator for determining the compliance status with each term and condition
during the certification period. Such methods and other means shall include, at a
minimum, the methods and means required under paragraph (a)(3) of this section;
(C) The status of compliance with the terms and conditions of the permit for the
period covered by the certification, including whether compliance during the
period was continuous or intermittent. The certification shall be based on the
method or means designated in paragraph (c)(5)(iii)(B) of this section. The
certification shall identify each deviation and take it into account in the
compliance certification. The certification shall also identify as possible
exceptions to compliance any periods during which compliance is required and in
which an excursion or exceedance as defined under part 64 of this chapter
occurred; and
(D) Such other facts as the permitting authority may require to determine the
compliance status of the source.
(iv) A requirement that all compliance certifications be submitted to the
Administrator as well as to the permitting authority.
(6) Such other provisions as the permitting authority may require.
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Further information surrounding compliance certification is described in the regulatory provision
addressing the criteria for a permit application, 40 CFR section 70.5(d), There have been
revisions to Part 70 since its original promulgation in 1992,
One rulemaking action relevant to compliance certifications was in response to an October 29,
1999, remand from the United States Court of Appeals for the District of Columbia Circuit in
Natural Resources Defense Council (NRDC) v. EPA, 194 F,3d 130 (D.C, Cir. 1999). In that case,
the Court upheld a portion of the EPA's compliance assurance monitoring rule, but remanded
back to the EPA the need to ensure 40 CFR sections 70.6(c)(5)(iii) and 71,6(e)(5)(iii) were
consistent with language in CAA section 114(a)(3) which slates that compliance certifications
shall include, among other requirements, " 'whether compliance is continuous or intermittent.' "
NRDC at 135 (internal citations omitted). Accordingly, the EPA proposed to add appropriate
language to paragraph (c)(5)(iii )(C) of both 40 CFR sections 70.6 and 71.6. However, the final
rule on June 27, 2003 (68 FR 38518) inadvertently deleted an existing sentence from the
regulations (which was not related to the addition which resulted from the D.C. Circuit decision).
The OIG Report referenced this issue and in response to the OIG, as agreed, the KPA has
proposed to restore the inadvertently deleted sentence back into the rule. See, e.g., 78 FR 19164
(March 29, 2013), This proposed rule would reinstate the inadvertently removed sentence -
which, consistent with the Credible Evidence rule, requires owners and operators of sources to
'identity' any other material information that must be included in the certification to comply with
section 113(c)(2) of the Act. which prohibits knowingly making a false certification or omitting
material information" - in its original place before the semicolon at the end of 40 CFR sections
70.6(c)(5)(iii)(B) and 71.6(c)(5)(iii)(B). The EPA is still reviewing comments received on this
proposal: however, today's guidance document is based on statutory and long-standing
regulatory requirements regarding compliance certifications, obligations for "reasonable inquiry'"
and consideration of credible evidence, many of which were also relied upon in the EPA's
proposal.
Ill, Implementation of the Annual Compliance Certification Requirements
The statutory and regulatory provisions regarding compliance certification provide direction to
sources and permitting authorities regarding implementation of these provisions. Nonetheless,
questions arise periodically and, as a general matter, responding to those questions typically
occurs on a ease-by-ease basis, consistent with the statutory and regulatory requirements, as well
as applicable state or local regulations. Questions may be posed to authorized permitting
authorities, EPA Regional Offices, or EPA Headquarters offices. As a general matter, where
formal responses are provided by EPA, such responses may be searched and viewed on various
websites. These include, among others:
• http;< ' vto'H', epa.gov 'JUv'oarpg^Spgm.hfml
• Environmental Appeals Board (EAB) decisions on PSD permitting
hllpy'/yosemite. epa.gov/oa EAB Weh_Docket nsf PSD ¦ Permit ¦ Appeals ¦ (CA/l)? Open View
Environmental Appeals Board (EAB) decisions on title V permitting
http://yosemite.epa.gov. oa EAB IVeh Docka.mfiTitle ¦< FVPermit-Appeals?Open f lew
3
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• The EPA's online searchable database of many PSD and title Ą guidance documents
issued by EPA headquarters offices and EPA Regions (operated by Region 7)
http.Yfwww. epa.go v/regionO 7/air/policy /search, him.
• The EPA's online searchable database of CAA title V petitions and issued orders
(operated by Region 7) http://\vww. epa,gov/region7/air/tille5/petitiondb/petiiiondb.him.1
A review of these databases indicates that there are a number of issues that arise with some
regularity and those general questions and responses are addressed below. In addition, the EPA
notes that state and local permitting authorities are also a source of guidance on compliance
certification form, instructions, and content. In some circumstances, state and local permitting
authorities may require additional content for the annual compliance certification. See, e.g., 40
CFR sections 70.6(c)(5)(iii)(D) and (c)(6). As a result, sources should review such requirements
prior to completing the annual compliance certification.
A. Level of Specificity in Describing the Permit Term or Condition
The CAA and the EPA's regulations require that the annual compliance certification identify the
terms and conditions that are the subject of the certification. As a general matter, specificity
ensures that the responsible official has in fact reviewed each term and condition, as well as
considered all appropriate information as part of the certification.2 This does not mean, however,
that each and every permit term and condition needs to be spelled out in its entirety in the annual
compliance certification or that the certification needs to resemble a checklist of each permit
term and condition. While some sources (and states) use what is informally referred to as a "long
form" for certifications (where each term or condition is typically individually identified), such
forms are not expressly required by either the CAA or the EPA's regulations, even though it may
be advisable to use such a form.
The certification should include sufficient specificity and must identify the terms and conditions
that are being covered by the certification. 40 CFR section 70.6(c)(5)(iii)(A)-(D). As a '"best
practice," sources may include additional information where there are unique or complex permit
conditions such that "compliance'' with a particular term and condition is predicated on several
elements. In that case, additional information in the annual compliance certification may be
advisable to explain how compliance with a particular condition was determined and, thus, the
basis for the certification of compliance.
Consistent with the EPA's regulations, the annual compliance certification must include "ftjhe
identification of the method(s) or other means used by the owner or operator for determining the
compliance status with each term and condition during the certification period." 40 CFR section
70.6(c)(5)(iii)(B). For example, there may be situations where certification is based on electronic
1 The EPA's practice is to publish a notice in the Pedes al Register announcing that a petition order was signed, Once
signed, the EPA's practice is to place a copy of that final order on the title V petition order database, which is
searchable online.
2 The EPA's regulations require that a '"responsible official" sign the compliance certification. The term "responsible
official" is defined in 40 CFR section 70.2.
4
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data from continuous emissions monitoring devices, which may result in a fairly straightforward
annual compliance certification. Alternatively, there may be situations where compliance during
the reporting period was determined through parametric monitoring, which requires the source to
consider various data and perform a mathematical calculation, to determine the compliance
status. In that latter situation when various data from parametric monitoring are combined via
calculation, the annual compliance certification may contain more detail regarding that term or
condition which relies on parametric monitoring in the permit.-'
Regardless of the level of specificity provided for the particular terms and conditions in the
annual certification itself, the minimum regulatory requirements include '*[t]he identification of
each term or condition of the permit that is the basis of the certification.'" 40 CFK Section
70.6(c)(5)(iii)(A). As noted above, there may be different ways to meet this requirement, For
example, when referencing a permit term or condition in the certification, if the permit
incorporates by reference a citation without explaining the particular term or condition, the
source may choose to provide additional clarity in the compliance certification to support the
certification. .Another situation where additional specificity may be advisable is where a source
has an alternative operating scenario where the source may be best served by providing
additional compliance related information in support of the certification. As another example, the
part 71 federal operating permits program administered by the EPA includes a form, and
instructions, for sources to use for their annual compliance certifications. Annual Compliance
Certification (A-COMP), EPA Form 5900-04, at page 4, available at:
htlp .//www.epa.gov/ciirqual it}'perm its ¦pdfs/a-cowp.pdf This form is not express!}' required for
non-EPA permitting authorities; however, this form and the instructions provide feedback
regarding what to include in an annual compliance certification.
Importantly, permitting authorities have additional compliance certification requirements and/or
recommendations that sources should consult before finalizing a compliance certification in
order to ensure compliance with the applicable requirements. See, e.g., 40 CFR section
70.6(c)(6).
B, Form of the Certification
As a general matter, there is no requirement in the Act or in Part 70 that a source use a specific
form for the compliance certification (although some states have adopted specific forms and
instructions). The most relevant consideration in certifications is not the form, but the content
and clarity of the terms and conditions with which the compliance status is being certified. Some
state permitting authorities have developed template forms and instructions to assist sources in
ensuring compliance with applicable requirements. The EPA has not provided such templates,
except as noted above where a form is provided for the EPA's part 71 permit program. While
templates are not required by the statute or the regulations, they can be useful tools (e.g., to
facilitate electronic reporting and consistency) so long as sources consider whether the form
adequately covers their permitting and certification situation, and the sources arc able to make
adjustments where appropriate to ensure compliance. The type of form used should be
3 The CAA and the EPA's regulations require other more frequent compliance reports in addition to the annual
compliance certification. In some circumstances, it may be helpful for a source to reference another compliance
report in the annual compliance certification, as appropriate.
5
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considered in light of the regulatory requirement to certify compliance with the specific terms
and conditions of the permit. 40 CFR section 70.6(c)(5)(iu)(C). Additionally, as was noted
earlier, because approved state and local areas may require additional elements in the annual
compliance certifications, sources should confirm that their form is consistent with applicable
state and local permitting requirements,
C. Certification Language
The EPA's regulations at 40 CFR section 70.5(d) require that the annual compliance certification
include the following language: "Based on information and belief formed after reasonable
inquiry. I certify that the statements and information in this certification are true, accurate, and
complete " (Emphasis added.) While the EPA appreciates that each permit includes specific
monitoring requirements, additional data may be available that indicate compliance (or
noncompliance). The EPA recently proposed to provide additional clarity on this issue by
proposing to restore a sentence to 40 CFR section 70.6(c)(5)(iii)(B) that had been inadvertently
deleted, as discussed above.
IV, Discussion of Compliance Certification Content in Clean Air Act Advisory
Committee Final Report on the Title V Implementation Experience
In the KPA's February 8, 2013, memorandum to the GIG, stated its intent to address the OIG's
recommendation concerning the annual compliance certification, as well as similar
recommendations from the Clean Air Act Advisory Committee's Title V Task Force.4 While this
guidance document responds to the 2005 OIG Report, information provided above overlaps with
recommendations from the Title V Task Force. This guidance document does not adopt the Task
Force recommendations: however, to the extent that they overlap with the discussion above, the
EPA provides some observations regarding those recommendations.
Section 4.7 of the Task Force Report discusses compliance certification forms. This section
includes, among other items, comments from stakeholders, a summary of the Task Force
discussions, and Task Force recommendations. Of the five recommendations included in this
section of the Report, three were unanimously supported by the Task Force members
(Recommendations 3, 4, and 5). Task Force Final Report at 119-120. EPA's discussion above
regarding the level of specificity and the form of the annual compliance certification generally
addresses the two recommendations for which there was not consensus within the Task Force
(Recommendations 1 and 2).
The five recommendations, directly quoted from the 1 ask Force Report, are as follows:
4 In April 2006, the Title V Task Force finalized a document titled, "Final Report to the Clean Air Act Advisory
Committee: Title V Implementation Experience." This document was the result of the Task Force's efforts to review
the implementation and performance of the operating permit program under title V of the 1990 Clean Air Act
Amendments. Included in the report are a number of recommendations, including some specific recommendations
regarding compliance certifications that are consistent with existing regulations and information provided in this
guidance document.
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Recommendation #1, Most of the Task Force endorsed an approach akin to the "short
form" certification, believing that a line-by-line listing of permit requirements is not
required and imposes burdens without additional compliance benefit. Under this
approach, the compliance certification form would include a statement that the source
was in continuous compliance with permit terms and conditions with the exception of
noted deviations and periods of intermittent compliance. Although the permittee
would cross-reference the permit for methods of compliance, in situations where the
permit specifies a particular monitoring method but the permittee is relying on
different monitoring, testing or other evidence to support its certification of
compliance, that reliance should be specifically identified in the certification and
briefly explained. An example of such a case would be where the permit requires
continuous temperature records to verify compliance with a minimum temperature
requirement. If the chart recorder data was not recorded for one hour during the
reporting period because it rati out of ink, and the source relies on the facts that the
data before and after the hour shows temperature above the requirement minimum
and that the alarm system which sounds if temperature fails below setpoint was
functioning and did not alarm during the hour, these two items would he noted as the
data upon which the source relies for certifying continuous compliance with the
minimum temperature requirement.
Recommendation #2. Others on the Task Force believed that more detail than is
included in the short form is needed in the compliance certification to assure source
accountability and the en force-ability of the certification. These members viewed at
least one of the following options as acceptable (some members accepting any, while
others accepting only one or two):
1. The use of a form that allows sources to use some cross-referencing to iden-
tify the permit term or condition to which compliance was certified. Cross-
referencing would only be allowed where the permit itself clearly numbers
or letters each specific permit term or condition, clearly identifies required
monitoring, and does not itself include cross-referencing beyond detailed
citations to publicly accessible regulations. The compliance certification
could then cite to the number of a permit condition, or possibly the numbers
for a group of conditions, and note the compliance status for that permit
condition and 'the method used for determining compliance. In the ease of
permit conditions that are not specifically numbered or lettered, the form
would use text to identify the requirement for which the permittee is
certifying,
2. Use of the long form,
3. Use of the permit itself as the compliance certification form with spaces in-
cluded to identify whether compliance with each condition was continuous
or intermittent and information regarding deviations attached.
Recommendation # 3. Where the permit specifies a particular monitoring or
compliance method and the source is relying on other information, that information
should be separately specified on the certification form.
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Recommendation # 4. Where a permit term does not impose an affirmative obligation
on the source, the form should not require a compliance certification; e.g., where the
permit states that it does not convey property rights or that the permitting authority is
to undertake some activity such as provide public notice of a revision.
Recommendation # 5. All forms should provide space for the permittee to provide
additional explanation regarding its compliance status and any deviations identified
during the reporting period.
Task Force Final Report at 118-120/ With regard to these recommendations, the EPA offers
several observations. First, there is nothing in the CAA or Part 70 that prohibits
Recommendation 3, 4, and 5, which had unanimous support from the Task Force. See 40 CPR
section 70.6(c)(5)(iii)~(iv). Second, with regard to Recommendations 3 and 5, these should be
considered "best practices" to ensure that the annual certification provides adequate information.
Third, Recommendations 1 and 2 outline different ideas surrounding the level of specificity and
the form of the annual compliance certification. This guidance document does address those
issues and recommends activities consistent with the regulatory requirements while also
providing some flexibility on the level of specificity depending on the complexity of the permit
conditions being certified.
* With regard to the first recommendation, the EPA observes that the example provided in the Task force Report
identifies a scenario in which additional narrative on lhc annual compliance certification form would be useful to
explain the determination that the sources was (or was not) in compliance with a permit term or condition.
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Attachment 2
Implementation Guidance on Statement of Basis Requirements Under the Clean Air Act
Title V Operating Permits Program
I, Overv iew of Legal Requirements for Statement of Basis
Section 502 of the CAA addresses title V permit programs generally. Among other required
elements of the EPA's rules implementing title V. Congress stated that the regulations shall
include:
Adequate, stream lined, and reasonable procedures for expeditiously determining
when applications are complete, for processing such applications, for public
notice, including offering an opportunity for public comment and a hearing, and
for expeditious review of permit actions, including applications, renewals, or
revisions....
CAA section 502(b)(6). The EPA's regulations implementing title V require that a permitting
authority provide "a statement that sets forth the legal and factual basis for the draft permit
conditions (including references to the applicable statutory or regulatory provisions). The
permitting authority shall send this statement to the EPA and to any other person who requests
it," 40 CFR section 70.7(a)(5). As will be discussed below, among other purposes, the statement
of basis is intended to support the requirements of CAA section 502(b)(6) by providing
information to allow for "expeditious'' evaluation of the permit terms and conditions, and by
providing information that supports public participation in the permitting process, considering
other information in the record.
Since the EPA promulgated its Part 70 regulations, the IP A has provided additional guidance
and information surrounding the statement of basis. This information is available on EPA's
searchable online database of Title V guidance
(htlp.'/At'wm'.epa.gov/regiant)^'air/polkyisearch, htm). A search of that database reveals
numerous documents dating back to 1996 that provide feedback regarding the content of the
statement of basis.1 Because the specific content of the statement of basis depends in part on the
terms and conditions of the individual permit at issue, the EPA's regulations are intended to
provide flexibility to the state and local permitting authorities regarding content of the statement
of basis. The statement of basis is required to contain, as the regulation states, sufficient
information to explain the 'legal and factual basis for the draft permit conditions." 40 CFR
section 70.7(a)(5),
II. Guidance on the Content of Statement of Basis
Since promulgation of the Part 70 regulations, the EPA has provided guidance on recommended
contents of the statement of basis. Taken as a whole, various title V petition orders and other
documents, particularly those cited in those orders, provide a good roadmap as to what should be
' See, e.g.. Region 10 Questions & Answers No. 2: Title V Permit Development (March 1^, 19%) (available online
at htfp://'www,epa,gcfv,iregio>}(17/airt'ntle$>'t5memo.s rl0qa2.pdf).
1
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included in a statement of basis on a permit-by-permit basis, considering, among other factors,
the technical complexity of a permit, history of the facility, and the number of new provisions
being added at the title Ą permitting stage. This guidance document identifies a few such
documents for example purposes and provides references for locating such materials on the
Internet.
The EPA provided an overview of this guidance in a 2006 title V petition order. In the Matter of
Onyx Environmental Services, Order on Petition No. V-2005-1 (February 1, 2006] (Onyx Order)
at 13-14. In the Onyx Order, in the context of a general overview statement on the statement of
basis, the EPA explained,
A statement of basis must describe the origin or basis of each permit condition or
exemption. However, it is more than just a short form of the permit. It should
highlight elements that U.S. EPA and the public would find important to review.
Rather than restating the permit, it should list anything that deviates from simply a
straight recitation of applicable requirements. The statement of basis should
highlight items such as the permit shield, streamlined conditions, or any
monitoring that is required under 40 C.l'.R. § 70.6(a)(3)(i)(B). Thus, it should
include a discussion of the decision-making that went into the development of the
title V permit and provide the permitting authority, the public, and U.S. EPA a
record of the applicability and technical issues surrounding the issuance of the
permit. (Footnotes omitted.) See, e.g., In Re Port Hudson Operations, Georgia
Pacific. Petition No. 6-03-01, at pages 37-40 (May 9. 2003) (''Georgia Pacific ");
In Re Doe Run Company Buick MiH and Mine, Petition No. VII-1999-001, at
pages 24-25 (July 31, 2002) ("Doe Run"); In Re Fori James Camas Mill, Petition
No. X-1999-1. at page 8 (December 22, 2000) ("Ft. James"),
Onyx Order at 13-14. In the Onyx Order, there is a reference to a February 19, 1999, letter that
identified elements which, if applicable, should be included in the statement of basis. In that
letter to Mr. David Dixon, Chair of the California Air Pollution Control Officers Association
(CAPCOA) Title V Subcommittee, the EPA Region 9 Air Division provided a list of air quality
factors to serve as guidance to California permitting authorities that should be considered when
developing a statement of basis for purposes of EPA Region 9's review. Specifically, this letter
identified the following elements which, if applicable, should be included in the statement of
basis;
*
additions of permitted equipment which were not included In the application,
identification of any applicable requirements for insignificant activities or State-
registered portable equipment that have not previously been Identified at the Title
V facility,
outdated SIP requirement streamlining demonstrations,
multiple applicable requirements streamlining demonstrations.
permit shields,
alternative operating scenarios,
compliance schedules,
CAM requirements.
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• plant wide allowable emission limits (PAI.) or other voluntary limits,
• any district permits to operate or authority to construct permits,
• periodic monitoring decisions, where the decisions deviate from already agreed-
upon levels. These decisions could be part of the permit package or could reside
in a publicly available document. (Parenthetical omitted)
Enclosure to February 19, 1999, letter from Region 9 to Mr. David Dixon.
In 2001, in a letter from the EPA to the Ohio Environmental Protection Agency, which is also
cited to in the Onyx Order, the EPA explained that:
The [statement of basis) should also include factual information that is important
for the public to be aware of. Examples include:
1. A listing of any Title V permits issued to the same applicant at the
plant site, if any. In some cases it may be important to include the
rationale for determining that sources are support facilities.
2. Attainment status.
3. Construction and permitting history of the source.
4. Compliance history including inspections, any violations noticed, a
listing of consent decrees into which the permittee has entered and
corrective action(s) taken to address noncompliance.
Letter from Stephen Rothblatt, EPA Region 5 to Robert Hodanbosi, Ohio EPA, December 20,
2001 (available online at hup:.'/www.ep€i,gov/regionQ~/air;title5:'t 5memosfshguide.pdf). In 2002.
in the context of finding deficiencies with the State of Texas operating permits program, the EPA
explained that, "a statement of basis should include, but is not limited to, a description of the
facility, a discussion of any operational flexibility that will be utilized at the facility, the basis for
applying the permit shield, any federal regulatory applicability determinations, and the rationale
forthe monitoring methods selected." 67 I R 732, 735
(January 7. 2002).
The EPA has also addressed statement of basis contents in additional title V petition orders
(available in an online searchable database at
http://www.epa.gov,regionT-'air/titleS-'petitiondh•'petitiomih.htm). In some cases, title V petition
orders provide information even where a statement of basis is not directly at issue. For example,
the EPA has interpreted 40 CFR section 70.7(a)(5) to require that the rationale for selected
monitoring methods be clear and documented in the permit record. In the Matter qfCITGO
Refining and Chemicals Company LP (CITGO), Order on Petition No. Vl-2007-01 (May 28,
2009) at 7; see also In the Matter of Fort James ('amas Mill (Fori James), Order on Petition No.
X-1999-1 (December 22, 2000) at page 8. This type of information could be included in the
statement of basis. The EPA observes that where such information is included in the statement of
basis, this can facilitate a better understanding of the rationale for monitoring. Such information
could also be included in other parts of the permit record. In addition, it is particularly helpful
when the statement of basis identifies key issues that the permitting authority anticipates would
be a priority for EPA or public review (for example, if such issues represent new conditions or
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interpretations of applicable requirements that are not explicit on their face). See. e.g., In the
Matter of Consolidated Edison Co. Of NY, Inc. Ravens',•rood Steam Plan!, Order on Petition No.
11-2001-08 (Sept. 30, 2003) at page 11; In the Mailer of Port Hudson Operation Georgia Pacific,
Order on Petition No. 6-03-01 (May 9. 2003) at pages 37-40: In the Matter of Doe Run Company
Bitick Mill and Mine {Doe Run), Order on Petition No. Ą11-1999-001 (July 31, 2002) at pages
24-26; In the Matter of Los Medanos Energy Center (Order on Petition) (May 24, 2004) at pages
14-17.
Each of the various documents referenced above provide generalized recommendations for
developing an adequate statement of basis rather than "hard and fast" rules on what to include.
Taken as a whole, they provide a good roadmap as to what should be included in a statement of
basis on a pemiit-b)-permit basis, considering, among other factors, the technical complexity of
the permit, history of the facility, and the number of new provisions being added at the title V
permitting stage.2
HI. Discussion of Statement of Basis Content in Clean Air Act Advisory Committee
Final Report on the Title Ą Implementation Experience
In the EPA's February 8, 2013, memorandum to the OKI. the EPA stated its intent to address the
OICTs recommendation concerning the statement of basis, as well as similar recommendations
from the Clean Air Act Advisory Committee's Title Ą Task Force.3 While this guidance
document responds to the 2005 OIG Report, information provided above overlaps with
recommendations from the Title Ą Task Force. This guidance document does not adopt the Task
Force recommendations; however, to the extent that they overlap with the discussion above, the
EPA provides some observations regarding those recommendations.
Section 5.5 of the Task Force Final Report addresses the statement of basis. This section includes
a regulatory background piece, comments from stakeholders, a summary of the Task Force
discussions, and Task Force recommendations. The recommendations section includes a list of
items considered appropriate for inclusion into a statement of basis. Final Report at 231.
Members of the Task Force unanimously supported the recommendations regarding the
statement of basis. Because these recommendations overlaps substantially, if not wholly, with
guidance previously provided by EPA, it is appropriate to include these recommendations within
this guidance document as an additional guideline for developing an adequate statement of basis.
The Task Force recommended that the following items are appropriate for inclusion in a
statement of basis document:
2 With regard to the title V permitting stage, a best practice includes making previous statements of basis accessible
to give background on provisions thai already exist in the permit and may not be a part of the permit action at issue,
and provide context for die permit as a whole and the particular revisions at issue in that permit action or permit
stage.
' In April 2006, the Title V Task Force finalized a document titled, "Final Report to the Clean Air Act Advisory
Committee: Title V Implementation Experience." This document was the result of the Task Force's efforts to review
the implementation and performance of the operating permit program under title V of the 1990 Clean Air Act
Amendments. Included in the report are a number of recommendations, including specific recommendations
regarding statement of basis contents that overlap with or are informative to this guidance document.
4
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1. A description and explanation of any federally enforceable conditions from
previously issued permits that are not being incorporated into the Title V
permit.
2. A description and explanation of any streamlining of applicable requirements
pursuant to EPA White Paper No. 2,
3. A description and explanation of any complex non-applicability determination
(including any request for a permit shield under section 70.6(f)(l)(ii)) or any
determination that a requirement applies that the source does not agree is
applicable, including reference to any relevant materials used to make these
determinations (e.g., source tests, state guidance documents),
4. A description and explanation of any difference in form of permit terms and
conditions, as compared to the applicable requirement upon which the
condition was based,
5. A discussion of terms and conditions included to provide operational
flexibility under section 70.4(b)(12).
6. The rationale, including the identification of authority, for any Title V
monitoring decision.
Task Force Final Report at 231. With regard to these recommendations, the EPA offers several
observations. First, there is nothing in the CAA or Part 70 that precludes a permitting authority
from including the items listed above in a statement of basis. Not all of those items will apply to
every permit action (as is the case with the lists provided by the EPA in the previously-cited
guidance documents). Second, concerning item #1, we note that there are very limited
circumstances in which a condition from a previously issued permit would not need to be
incorporated into the title V permit. Third, concerning item #2, the "White Paper" refers to
"White Paper Number 2 for Improved Implementation of the Part 70 Operating Permits
Program", dated March 5,1996 (available online at
http://www.epa.gov/regi
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Appendix E. Maps of Linguistically Isolated Households in the BAAQMD
Figures 1-9 show maps generated using EJScreen of the nine counties within the San Francisco Bay Area for which the District
regulates air pollution - Alameda, Contra Costa, Marin, Napa, San Francisco, San Mateo, Santa Clara, southwestern Solano, and
southern Sonoma counties.1"2
1 EPA's Environmental Justice Screening and Mapping Tool (version 2.11). httpsi//ejscreen.epa.gov/mapper/
2 EJScreen Technical Documentation, October 2022. https://www.epa.gov/sites/default/files/2021-04/documents/eiscreen technical document.pdf
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Figure 1: Alameda County, California - Percentage of Limited English Speaking Population and Permitted Title V Facilities.
i Socioeconomic Indicators KX
Limited English Speaking (National
Percentiles)
BfrrKeJ
Canyon
9 Title V facility
+ 1-mile buffer around Title V facility
• County line boundary
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Figure 2: Contra Costa County, California - Percentage of Limited English Speaking Population and Permitted Title V Facilities.
-------
Figure 3: Marin County, California - Percentage of Limited English Speaking Population and Permitted Title V Facilities.
-------
Hap Contents
^ i j Socioeconomic Indicators [BEE
Limited English Speaking (National
Percentiles)
95 -100 percentile
90 - 95 percentile
30-90 pe'centile
'ij 70-80 percentile
60 - 70 pe'centiie
50 - 60 pe*cent!'e
Less then 50 percentile
Data net avai ase
Figure 4: Napa County, California - Percentage of Limited English Speaking Population and No Permitted Title V Facilities.
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Figure 5: San Francisco County, California - Percentage of Limited English Speaking Population and Permitted Title V Facility.
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Figure 6: San Mateo County, California - Percentage of Limited English Speaking Population and Permitted Title V Facilities.
Boole-" Cr*tk
S
-------
Figure 7: Santa Clara County, California - Percentage of Limited English Speaking Population and Permitted Title V Facilities.
-------
Figure 8: Solano County, California - Percentage of Limited English Speaking Population and Permitted Title V Facilities.
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Figure 9: Sonoma County, California - Percentage of Limited English Speaking Population and Permitted Title V Facilities.
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UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
WASHINGTON, D.C. 20460
EXTERNAL CIVIL RIGHT COMPLIANCE OFFICE
OFFICE OF GENERAL COUNSEL
March 30, 2021
In Reply Refer to:
EPA Complaint No. 01RNO-20-R7
Carol S. Comer, Director
Missouri Department of Natural Resources
P.O. Box 176
Jefferson City, MO 65102
Carol. Com er@dnr. m o. gov
Re: Partial Preliminary Findings for EPA Complaint No. 01RNQ-20-R7: Non-Compliance
Dear Director Comer:
This letter conveys partial preliminary findings of the U.S. Environmental Protection Agency's
(EPA) External Civil Rights Compliance Office (ECRCO) in the administrative complaint
(Complaint) filed with EPA on September 4, 2020, by the Great Rivers Environmental Law
Center on behalf of the National Association for the Advancement of Colored People, Missouri
State Conference ("Missouri NAACP"), the NAACP St. Louis City Branch ("St. Louis City
NAACP"), and the Dutchtown South Community Corporation (DSCC) against the Missouri
Department of Natural Resources (MoDNR). The Complaint alleges that MoDNR discriminated
on the basis of race, color and/or national origin in violation of Title VI of the Civil Rights Act of
1964, and EPA's nondiscrimination regulation, 40 C.F.R. Part 7, when on March 10, 2020,
MoDNR issued Part 70 Intermediate Operating Permit OP2020-008 to Kinder Morgan Transmix
Company, LLC ("Kinder Morgan").
Consistent with the requirement in 40 C.F.R. § 7.115(c)(1), ECRCO herein sets forth preliminary
findings.1 As described below, ECRCO has not concluded its investigation of EPA complaint
number 01RNO-20-R7 or reached final conclusions of fact or law about MoDNR's alleged
discrimination on the basis of race, color and/or national origin related specifically to MoDNR's
issuance of the air quality permit. We continue to look into the possibility that MoDNR may
have discriminated on the basis of race, color and/or national origin as the result of MoDNR's air
quality permitting program.
1 See Case Resolution Manual provision Section 5.1 (Jan. 2021) (https://www.epa.gov/sites/production/files/2021-
0 l/documents/2021.1.5_final_case_resolution_manual_.pdf).
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Director Carol S. Comer
Page 2
ECRCO Authority, Complaint Background and Summary of Conclusions
ECRCO is responsible for enforcing several federal civil rights laws that prohibit discrimination
on the bases of race, color, national origin (including limited-English proficiency), disability,
sex, and age in programs or activities that receive federal financial assistance from the EPA.
Pursuant to EPA's nondiscrimination regulation, ECRCO conducted a preliminary review of the
Complaint to determine acceptance, rejection, or referral to the appropriate Federal agency. See
40 C.F.R. § 7.120(d)(1). The Complaint alleges that MoDNR issued a permit to Kinder Morgan
regarding its emission of various pollutants that are harmful to human health in violation of Title
VI and that results in a disproportionate impact on the basis of race, color and/or national origin.
The Complaint further alleges that MoDNR has engaged in a pattern and practice of
discrimination by ignoring concerns raised over the years about its failure to have in place a
"nondiscrimination program," including procedural safeguards as required by the EPA's
nondiscrimination regulation. In addition, the Complaint alleges MoDNR did not provide
meaningful access for individuals with limited English proficiency (LEP) during its public
solicitation for comments related to the pending permitting actions. On September 29, 2020,
ECRCO determined that the Complaint met the jurisdictional requirements and identified the
following issues for investigation:
1. Whether MoDNR discriminated against a community of color, collectively hereinafter
referred to as "Dutchtown," located in St. Louis, MO, on the basis of race, color and/or
national origin in violation of Title VI of the Civil Rights Act of 1964, and EPA's
implementing regulation, 40 C.F.R. Part 7, by issuing Part 70 Intermediate Operating
Permit Number OP2020-008 to the Kinder Morgan Transmix Company, LLC
operations;2 and
2. Whether MoDNR has and is implementing the procedural safeguards required under 40
C.F.R. Parts 5 and 7 that all recipients of federal assistance must have in place to comply
with their general nondiscrimination obligations, including specific policies and
procedures to ensure meaningful access to MoDNR's services, programs, and activities
for individuals with LEP and individuals with disabilities, and whether the MoDNR has a
public participation policy and process that is consistent with Title VI and the other
federal civil rights laws, and EPA's implementing regulation at 40 C.F.R. Parts 5 and 7.3
2 Title VI of the Civil Rights Act, 42 U.S.C. 2000(d) el seq. (prohibiting discrimination on the basis of race, color or
national origin); 40 C.F.R. Parts 5 and 7. See also U.S. EPA, Chapter 1 of the U.S. EPA's External Civil Rights
Compliance Office Compliance Toolkit: Chapter 1, transmittal letter, and FAQs
(https://www.epa.gov/sites/production/files/2020-02/documents/toolkit_ecrco_chapter_l-letter-
faqs_2017.01.18.pdf). (2017).
3 See Title VI, 42 U.S.C. 2000(d) el seq.; Section 504 of the Rehabilitation Act of 1973, as amended, 29 U.S.C. §
794; Lau v. Nichols, 414 U.S. 563, 568-69 (1974) (finding that the government properly required language services
to be provided under a recipient's Title VI obligations not to discriminate based on national origin); 40 C.F.R. §
7.35(a). See also U.S. EPA, Guidance to Environmental Protection Agency Financial Assistance Recipients
Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient
Persons. 69 FR 35602 (June 25, 2004) (https://www.epa.gov/sites/production/files/2020-
02/documents/title_vi_lep_guidance_for_epa_recipients_2004.06.25.pdf);_U.S. EPA, Title VI Public Involvement
Guidance for EPA Assistance Recipients Administering Environmental Permitting Programs, 71 FR 14207 (March
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Director Carol S. Comer
Page 3
ECRCO has concluded its investigation with respect to most of the second issue.4 The first issue
remains under investigation.5 With respect to the second issue, ECRCO has determined that the
preponderance of the evidence supports a conclusion that MoDNR failed to comply with its
longstanding obligations under the federal nondiscrimination laws and EPA's nondiscrimination
regulation to have and implement a nondiscrimination program, including: procedural
safeguards required under 40 C.F.R. Parts 5 and 7; and policies and procedures for ensuring
meaningful access to MoDNR's services, programs, and activities for individuals with LEP and
individuals with disabilities. In addition, ECRCO has determined that MoDNR did not provide
meaningful access for individuals with LEP specifically during its public solicitation for
comments related to Kinder Morgan permitting actions.
ECRCO's investigation included interviews with the complainants' representative to learn more
about their interactions with MoDNR and their documented allegations and to provide
information on the investigation process and options for resolution such as a willingness of the
complainants to pursue alternative dispute resolution (ADR).6 On October 19, 2020, the
complainants' representatives affirmed to ECRCO that all complainants were interested in
pursuing ADR to resolve the Complaint. ECRCO met with MoDNR on October 28, 2020 and
again on November 2, 2020, to provide information about the investigation, the complaint
resolution processes, and a copy of the Procedural Safeguards Checklist.7'8 During the November
2, 2020, meeting MoDNR stated it was not interested in pursuing either ADR with the
complainants or informal resolution with ECRCO. MoDNR indicated it would provide a
response to the Complaint and ECRCO should proceed with the investigation. Accordingly,
MoDNR provided its response to the Complaint to ECRCO on November 12, 2020. On
21, 2006) (https://www.epa.gov/sites/production/files/2020-
02/documents/title_vi_public_involvement_guidance_for_epa_recipients_2006.03.21 .pdf); U.S. EPA, Procedural
Safeguards Checklist for Recipients,(https://www.epa.gov/sites/production/files/2020-
02/documents/procedural_safeguards_checklist_for_recipients_2020.01.pdf); U.S. EPA, Disability
Nondiscrimination Plan Sample (https://www.epa.gov/sites/production/files/2020-
02/documents/disability _nondiscrimination_plan_sample_for_recipients_2020.01.pdf). (2017).
4 At this time, ECRCO is not able to make preliminary findings related to whether MoDNR has in place a public
participation policy and process that is consistent with Title VI and the other federal civil rights laws, based on the
limited information provided by MoDNR, except as to the failure to provide language access to individuals with
LEP. A fuller examination of public participation is required and, thus, it remains under investigation.
5 The Complaint alleges that Dutchtown disproportionately suffers health risks from these and other regulated
sources of pollution located within its community. The Complaint further states that the City of St. Louis' port
system is the second-largest inland port system in the United States and that this industrialized riverfront corridor is
located adjacent to Dutchtown and is only separated from the community's residential area by Interstate Highway
55. The Complaint further alleges that this highway system increases the exposure to lead due to the proximity to
vehicle pollution and subjects Dutchtown "to frequent illegal trash and hazardous waste dumping in their
neighborhoods, and the increased incidence of building demolition, leading to the further spread of harmful dust,
lead and asbestos into the air."
6 Case Resolution Manual, Section 3.3: "Alternative Dispute Resolution." ECRCO considers the ADR process to be
a viable option for recipients and complainants to address some, if not all, of the discrimination issues in a
complaint. ECRCO has discretion to determine, on a case by case basis, whether to offer ADR as a possible
resolution path.
7 ECRCO originally scheduled a meeting with the recipient on October 19, 2020. Due to conflicts, the meeting was
rescheduled to November 2, 2021.
8 Procedural Safeguards Checklist for Recipients, Federal Non-Discrimination Obligations and Best Practices
(Revised January 2020). (https://www.epa.gov/sites/production/files/2020-
02/documents/procedural_safeguards_checklist_for_recipients_2020.01 .pdf).
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Director Carol S. Comer
Page 4
November 24, 2020, ECRCO met again with MoDNR to discuss further the investigation and
MoDNR's participation in an informal resolution process. MoDNR stated that it was not
interested in pursuing informal resolution at that time. Accordingly, ECRCO informed MoDNR
that it would proceed with its investigation and issue Preliminary Findings.
Legal Standards
EPA's investigation was conducted under the authority of the federal civil rights laws, including
Title VI of the Civil Rights Act of 1964, and EPA's nondiscrimination regulation (40 C.F.R.
Parts 5 and 7) and consistent with EPA's Case Resolution Manual.9
I. Background on Dutchtown Community
The Dutchtown Community is located within zip codes 63111, 63116 and 63118, and within the
9th, 11th, 13th, 20th and 25th wards of the City of St. Louis. The Dutchtown Community is an
agglomerate of four (4) neighborhoods located on the southside of the City of St. Louis that
include Dutchtown, Gravois Park, Mount Pleasant, and Marine Villa. The Dutchtown
Community area includes a mixture of residential, retail, commercial and industrial land uses
bound by "Cherokee Street or Chippewa Street to the north, Bates Street to the south, the
Mississippi River to the east, and the Missouri Pacific railroad tracks to the west."10
As part of its investigation, ECRCO reviewed demographic information for the Dutchtown
Community. The Dutchtown Community in zip codes 63111, 63116 and 63118 has a total
population of approximately 93,865. In zip code 63111, the population is approximately: 46%
Black; 9% Hispanic; and 1% Asian. In zip code 63116, the population is approximately: 20%
Black; 8% Hispanic; and 7% Asian. In zip code 63118, the population is approximately: 51%
Black; 7% Hispanic; and 2% Asian. With respect to persons with limited English proficiency,
the Dutchtown Community in zip codes 63111, 63116 and 63118, has a total for all three zip
codes of 4%, lP/o, and 5%, persons 5 years or older who speak English less than very well,
respectively.11
Currently there are seven (7) Part 70 major source air permits, five (5) intermediate synthetic
minor source air permits, and 18 permitted construction air emission sources located within the
Dutchtown Community.12
II. Preliminary Findings for Issue Number Two
Whether MoDNR has and is implementing the procedural safeguards required
under 40 C.F.R. Parts 5 and 7 that all recipients of federal assistance must have in
place to comply with their general nondiscrimination obligations, including specific
policies and procedures to ensure meaningful access to the MoDNR's services,
programs, and activities, for individuals with limited English proficiency (LEP) and
9 Case Resolution Manual (Jan. 2021) (https://www.epa.gov/sites/production/files/2021-
0 l/documents/2021.1.5_final_case_resolution_manual_.pdf).
10 About Dutchtown (https://www.dutchtownstl.org/).
11 U.S. Census Bureau, American Community Survey data (2014-2018 estimates).
12 Permit Compliance System (PCS) and Integrated Compliance Information System (ICIS) databases in Envirofacts
regarding facilities registered with the federal enforcement and compliance (FE&C). See
https://www.epa.gov/enviro/pcs-icis-search
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Director Carol S. Comer
Page 5
individuals with disabilities, and whether the MoDNR has a public participation
policy and process that is consistent with Title VI and the other federal civil rights
laws, and EPA's implementing regulation at 40 C.F.R. Parts 5 and 7.
ECRCO assessed MoDNR's nondiscrimination program relative to the requirements of federal
nondiscrimination laws and regulation. Specifically, ECRCO investigated whether MoDNR is in
compliance with the requirements of EPA's nondiscrimination regulation, which sets forth the
foundational elements of a recipient's nondiscrimination program. 13 ECRCO has determined
that MoDNR failed to comply with its obligations under the federal nondiscrimination laws and
EPA's nondiscrimination regulation to have and implement a nondiscrimination program.
Further, based on ECRCO's review of the record, it appears that MoDNR ignored concerns
raised over the years about its failure to have in place a nondiscrimination program consistent
with its longstanding legal obligations.14
Notice of Nondiscrimination
EPA's nondiscrimination regulation requires MoDNR have a notice of non-discrimination
(Notice) stating that the recipient does not discriminate on the basis of race, color, national
origin, age, or disability in a program or activity receiving EPA assistance or, in programs
covered by Section 13 of the Education Amendments, on the basis of sex.15 The Notice must be
posted in a prominent place including in the recipient's offices or facilities, on the recipient's
website homepage, and in general publications distributed to the public. The Notice must also be
accessible to individuals with limited English Proficiency (LEP) and individuals with
disabilities.16 The Notice must also clearly identify the nondiscrimination coordinator, including
name and contact information.
Preliminary Findings
ECRCO has determined that at the time of ECRCO's acceptance of the Complaint for
investigation, MoDNR did not have a notice of nondiscrimination consistent with EPA's
nondiscrimination regulation. ECRCO found that, at the time the Complaint was accepted for
investigation, a search of MoDNR's website produced a notice of employment nondiscrimination
that did not include the necessary information as required by EPA's nondiscrimination
regulation, that is, to provide notice of nondiscrimination as to beneficiaries of its programs and
activities. Based on ECRCO's review of MoDNR's February 5, 2021, responses to ECRCO's
Request for Information #1 (RFI #1), and a search of MoDNR's website, ECRCO has
determined that, at some point during the investigation, MoDNR modified its existing notice of
13 40 C.F.R. Parts 5 and 7.
14 See, for example, Comments submitted by Mr. Menees on various occasions and with respects to several permits,
including, Mallinckrodt, LLC Part 70 Operating Permit, Installation ID: 510-0017 Project No. 1997-05-009, RPC-6;
MSD - Bissell Point Wastewater Treatment Plant Installation ID: 510-0053
Part 70 Operating Permit Project No. 2007-06-088, April 16, 2018; and Kinder Morgan Transmix Company, LLC,
Installation ID: 510-2939, Intermediate State Operating Permit, Project No. 2015-04-028, RPC-1. [A copy of the
original comments was not provided. The comments for Mallinckrodt and Bissell WWTP address North St. Louis
(communities of Hyde Park, College Hill, and Old North.)]
15 40 C.F.R. § 7.95(a); 40 C.F.R § 5.140.
1640 C.F.R. § 7.95(a); 40 C.F.R § 5.140.
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Director Carol S. Comer
Page 6
employment discrimination and now its "Nondiscrimination Notice" also includes a reference to
"the public" and the federal civil rights laws addressed in EPA's nondiscrimination regulation.
However, based on ECRCO's March 2021, evaluation of MoDNR's website, ECRCO has
determined the following deficiencies remain:
• MDNR's Nondiscrimination Notice does not include a statement addressing retaliation
discrimination, that is, that MoDNR does not intimidate or retaliate against any individual
or group because they have exercised their rights to participate in or oppose actions
protected/prohibited by 40 C.F.R. Parts 5 and 7, or for the purpose of interfering with
such rights.
• MoDNR's Nondiscrimination Notice does not identify its designated Nondiscrimination
Coordinator with enough specificity, including the name, to enable a member of the
public to contact that Coordinator.
• MoDNR does not ensure that its Nondiscrimination Notice is accessible to individuals
with limited-English proficiency.
Therefore, ECRCO has determined that MoDNR is not in compliance with EPA's
nondiscrimination regulation with respect to Notice of Nondiscrimination.17
Nondiscrimination Coordinator
EPA's nondiscrimination regulation requires that EPA recipients with fifteen or more employees
must designate a nondiscrimination coordinator to oversee their nondiscrimination program.18 In
addition, under the "Notice of Nondiscrimination," the regulation requires that the Notice
"identify the responsible employee" designated as the recipient's Nondiscrimination
Coordinator.19
Preliminary Findings
ECRCO has determined that at the time of the Complaint's acceptance, MoDNR had not
designated or identified a nondiscrimination coordinator as required by EPA's nondiscrimination
regulation.20 Based on ECRCO's review of MoDNR's February 5, 2021, responses to
ECRCO's RFI #1, and of MoDNR's website, ECRCO has determined that, when MoDNR
subsequently modified its existing notice of employment discrimination to include a reference to
"the public" and amended its Complaint Procedures to include that "[a]ny person who believes
they have been subjected to unequal treatment or discrimination . . "21 as well as it External
Complaint of Discrimination Form,22 it continues to direct the public to contact MoDNR's
17 40 C.F.R. § 7.95(a); 40 C.F.R § 5.140.
18 40 C.F.R. § 7.85(g) (if a recipient employs 15 or more employees, it shall designate at least one person to
coordinate its efforts to comply with its obligations under this part); 40 C.F.R § 5.135(a) requiring the designation of
a responsible employee with respect to Title IX of the Education Amendments of 1972, as amended.
19 See 40 C.F.R. § 7.95; 40 C.F.R § 5.135(a) requiring the designation of a responsible employee with respect to
Title IX of the Education Amendments of 1972, as amended.
20 MoDNR has over 1300 employees, and as such, this requirement applies to MoDNR
(https ://dnr. mo .gov/hr/dnij obinfo .htm).
21 See MoDNR's Complaint Procedures at https://dnr.mo.gov/non-discrimination-notice.htm
22 See MoDNR's External Complaint of Discrimination Form at: https://dnr.mo.gov/forms/780-2926-f.pdf
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Director Carol S. Comer
Page 7
"Office of Employee Relations." In addition, none of MoDNR's required statements or
procedures identify its designated Nondiscrimination Coordinator with enough specificity,
including the name, to enable a member of the public to contact that Coordinator. Therefore,
ECRCO has determined that MoDNR is not in compliance with EPA's nondiscrimination
regulation with respect to designation of a nondiscrimination coordinator.23
Grievance Procedures
EPA's nondiscrimination regulation requires that each recipient with fifteen or more employees
adopt and publish grievance procedures that ensure the prompt and fair resolution of
complaints.24 Additionally, the U.S. Department of Justice's regulation on "Coordination of
Enforcement of Non-discrimination in Federally Assisted Programs," requires recipients to
display prominently information regarding the nondiscrimination requirements of Title VI,
including the procedures for filing complaints.25
Preliminary Findings
At the time of ECRCO's acceptance of this Complaint for investigation, MoDNR had not
adopted and published grievance procedures that assure the prompt and fair resolution of
complaints as required by EPA's nondiscrimination regulation.26 In its February 5, 2021,
response to ECRCO's RFI #1, MoDNR submitted a copy of its "External Complaint Response
Policy," effective date, January 4, 2021.27 ECRCO reviewed this policy and determined that it
does not assure the prompt and fair resolution of complaints. Specifically:
• MoDNR's External Complaint Response Policy does not describe elements of the
recipient's investigation process or provide timelines for: the submission of a
discrimination complaint; the investigation's review, conclusion, or resolution process; or
making an appeal of any final decision(s).
• Neither MoDNR's External Complaint Response Policy nor its External Complaint of
Discrimination Form include retaliation as one of the bases for filing a complaint under
23 See 40 C.F.R. § 7.85(g), § 7.95; 40 C.F.R § 5.135(a).
24 40 C.F.R. § 7.90 (each recipient with 15 or more employees shall adopt grievance procedures that assure the
prompt and fair resolution of complaints). See also 40 C.F.R. §5.135(b) ("Complaint procedure of recipient. A
recipient shall adopt and publish grievance procedures providing for prompt and equitable resolution of student and
employee complaints alleging any action that would be prohibited by these Title IX regulations.).
25 28 C.F.R. §42.405(c) ("Federal agencies shall require recipients, where feasible, to display prominently in
reasonable numbers and places posters which state that the recipients operate programs subject to the
nondiscrimination requirements of title VI, summarize those requirements, note the availability of title VI
information form recipients and the federal agencies, and explain briefly the procedures for filing complaints.
Federal agencies and recipients shall also include information on title VI requirements, complaint procedures and
the rights of beneficiaries in handbooks, manuals, pamphlets and other material which are ordinarily distributed to
the public to describe the federally assisted programs and the requirements for participation by recipients and
beneficiaries. To the extent that recipients are required by law or regulation to publish or broadcast program
information in the news media, federal agencies and recipients shall insure that such publications and broadcasts
state that the program in question is an equal opportunity program or otherwise indicate that discrimination in the
program is prohibited by federal law.").
26 MoDNR has over 1300 employees, and as such, this requirement applies to MoDNR,
(https ://dnr. mo .gov/hr/dnij obinfo .htm).
27 See at https://dnr.mo.gov/policies/Lll.pdf
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Director Carol S. Comer
Page 8
these procedures.
• Neither MoDNR's External Complaint Response Policy nor its External Complaint of
Discrimination Form are accessible to persons with limited English proficiency, in the
appropriate languages other than English used by limited English proficient individuals in
MoDNR's service area.
Therefore, ECRCO has determined that MoDNR is not in compliance with EPA's
nondiscrimination regulation with respect to the adoption and publication of grievance
procedures.
Meaningful Access for Persons with Limited English Proficiency (LEP)
Title VI and EPA's nondiscrimination regulation prohibit discrimination on the basis of national
origin. The Supreme Court has interpreted this prohibition to include discrimination on the basis
of English proficiency, that is, a person's inability to speak, read, write, or understand English.28
As a recipient of EPA financial assistance MoDNR is required to provide meaningful access to
its services, programs and activities for persons with limited English proficiency. 29 To ensure
MoDNR is providing meaningful access, MoDNR should conduct appropriate analyses to
determine what languages other than English are used by persons with LEP in MoDNR's service
area and to determine what language services or mix of language services it needs to provide to
ensure that persons with LEP can meaningfully access and participate in its programs, activities
and services. This includes, for example, development of a language access plan; translation of
vital documents into prominent languages; and provision of simultaneous interpretation of public
proceedings and meetings in prominent languages for persons with LEP so they may effectively
participate.
It is important to note that as part of requesting and receiving EPA financial assistance, MoDNR
agreed by signing Form 4700-4 to comply with their federal non-discrimination obligations,
including affirming that MoDNR had "a policy/procedure for providing access to services for
persons with limited English proficiency... (40 C.F.R. Part 7, E.O. 13166)." MoDNR also
agreed based on Paragraph 39 of EPA's general terms and conditions31, to more specific
obligations, including that: "As a recipient of EPA financial assistance, you are required by Title
VI of the Civil Rights Act to provide meaningful access to LEP individuals. In implementing that
requirement, the recipient agrees to use as a guide the Office of Civil Rights (OCR) document
entitled "Guidance to Environmental Protection Agency Financial Assistance Recipients
28 See Title VI, 42 U.S.C. 2000(d) et seq.; Lau v. Nichols, 414 U.S. 563, 568-69 (1974) (finding that the government
properly required language services to be provided under a recipient's Title VI obligations not to discriminate based
on national origin); 40 C.F.R. § 7.35(a).
29 See also U.S. EPA, Guidance to Environmental Protection Agency Financial Assistance Recipients Regarding
Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons. 69 FR
35602 (June 25, 2004) (https://www.epa.gov/sites/production/files/2020-
02/documents/title_vi_lep_guidance_for_epa_recipients_2004.06.25.pdf).
30 See Title VI, 42 U.S.C. 2000(d) et seq:, Lau v. Nichols, 414 U.S. 563, 568-69 (1974) (finding that the government
properly required language services to be provided under a recipient's Title VI obligations not to discriminate based
on national origin); 40 C.F.R. § 7.35(a). See also U.S. EPA, Guidance to Environmental Protection Agency
Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting
Limited English Proficient Persons. 69 FR 35602 (June 25, 2004) (https://www.epa.gov/sites/production/files/2020-
02/documents/title_vi_lep_guidance_for_epa_recipients_2004.06.25.pdf).
31 https://www.epa.gov/sites/production/files/2020-
11/documents/fy _2021_epa_general_terms_and_conditions_effective_november_12_2020.pdf
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Director Carol S. Comer
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Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited
English Proficient Persons." The guidance can be found at:
https://www.federalregister.gov/documents/2004/06/25/04-14464/guidance-toenvironmental-
protection-agency-financial-assistance-recipients-regarding-title-vi ii."
Preliminary Findings
Based on a review of all available information, including a review of MoDNR's website, and of
the information provided to ECRCO by MoDNR, (MoDNR's November 12, 2020, response to
ECRCO's Complaint acceptance and MoDNR's February 5, 2021, responses to ECRCO's RFI
#1), MoDNR does not have in place specific policies and procedures to ensure meaningful
access to its services, programs, and activities, for individuals with limited English proficiency
as required by Title VI.32
In fact, this conclusion is affirmed by MoDNR in its February 5, 2021 responses to ECRCO's
RFI #1, where it states: "The Department reviews and updates its policies and practices, as
needed, including those related to nondiscrimination"33 but also that "The Department's website
is over 20 years old. Our current redesign project will make our website more compatible for
individuals with limited English proficiency (LEP) and individuals with disabilities and
impairments."34 MoDNR further stated, "Upon request, . . . services are provided by
International Language Center and Languages Translation Services."35 MoDNR finally states
that "documents can be translated upon request."36 However, ECRCO found no such services
offered on MoDNR's website, either in English or in any other language. As such, members of
the public are not informed that they may request language services free of charge and how they
may access those services. These practices are not consistent with Title VI and MoDNR's
commitment to use EPA's LEP Guidance as a guide to provide meaningful language access.37
Further, in response to ECRCO's January 6, 2021, Request for Information #1, and in particular,
questions 9 and 10 under the Procedural Safeguards section, MoDNR failed to provide copies of
any policies or procedures to ensure meaningful access to persons with LEP or even a
32 Id.
33 February 5, 2020 correspondence from the Missouri Department of Natural Resources' (Department) in response
to the U.S. Environmental Protection Agency, External Civil Rights Compliance Office's January 6, 2021 RFI #1,
Response to Question 2.g.
34 February 5, 2020 correspondence from the Missouri Department of Natural Resources' (Department) in response
to the U.S. Environmental Protection Agency, External Civil Rights Compliance Office's January 6, 2021 RFI #1,
Response to Question 3.
35 February 5, 2020 correspondence from the Missouri Department of Natural Resources' (Department) in response
to the U.S. Environmental Protection Agency, External Civil Rights Compliance Office's January 6, 2021 RFI #1,
Response to Question 8.c.
36 February 5, 2020 correspondence from the Missouri Department of Natural Resources' (Department) in response
to the U.S. Environmental Protection Agency, External Civil Rights Compliance Office's January 6, 2021 RFI #1,
Response to Question lO.b.
37 See Title VI, 42 U.S.C. 2000(d) el seq.; Lau v. Nichols, 414 U.S. 563, 568-69 (1974) (finding that the government
properly required language services to be provided under a recipient's Title VI obligations not to discriminate based
on national origin); 40 C.F.R. § 7.35(a). See also U.S. EPA, Guidance to Environmental Protection Agency
Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting
Limited English Proficient Persons. 69 FR 35602 (June 25, 2004) (https://www.epa.gov/sites/production/files/2020-
02/documents/title_vi_lep_guidance_for_epa_recipients_2004.06.25 .pdf).
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Director Carol S. Comer
Page 10
description of any decision-making process utilized for providing such language services.38
MoDNR failed to provide a single example of a translated document or instance when a
language interpreter was provided for any community within its state service area including
during its review of this permit. Furthermore, MoDNR did not provide any evidence that it
offered or provided meaningful access to individuals with LEP during its public solicitation for
comments related to the Intermediate Operating Permit OP2020-008 to Kinder Morgan Transmix
Company, LLC. Accordingly, MoDNR is not in compliance with its obligation under Title VI
and the general terms and conditions of EPA financial assistance to ensure meaningful access to
its services, programs or activities for persons with limited English proficiency.
Individuals with Disabilities
EPA's nondiscrimination regulation provides that no individual with a disability "shall solely on
the basis of [disability] be excluded from participation in, be denied the benefits of, or otherwise
be subjected to discrimination under any program or activity receiving EPA assistance."39
Recipients also must make sure that interested persons, including those with impaired vision or
hearing, can find out about the existence and location of the assisted program services, activities,
and facilities that are accessible to and usable by persons with disabilities and that recipients
must give priority to methods of providing accessibility that offer program benefits to persons
with disabilities in the most integrated setting appropriate. 40 To ensure nondiscrimination for
persons with disabilities, MDNR should develop, publicize and implement written procedures to
ensure meaningful access to its programs, services and activities for individuals with disabilities
that clearly and consistently provide a recipient's "plan" for how it will provide, at no cost,
appropriate auxiliary aids and services, including but not limited to, qualified interpreters to
individuals who are deaf or hard of hearing, and to other individuals as necessary to ensure
effective communication and an equal opportunity to participate fully in the benefits, activities,
programs and services provided by the recipient, in a timely manner and in such a way as to
protect the privacy and independence of the individual. To assist recipients with its
nondiscrimination requirements, EPA has published a sample disability nondiscrimination plan,
which provides technical assistance guidance with respect to the nondiscrimination coordinator's
role, grievance procedures, facility accessibility, and accommodations.41 ECRCO has
responsibility for enforcing Section 504 of the Rehabilitation Act of 1973, but does not have
responsibility for enforcing compliance with the Americans with Disabilities Act (ADA).
However, the Sample Plan addresses both statutes, in recognition that most recipients have
obligations under both laws.
Preliminary Findings
MoDNR has a Notice and Grievance Procedures specifically addressing the Americans with
Disabilities Act posted on its website. Although the documents generally address the necessary
38 According to the U.S. Census Bureau's American Community Survey, 2018, there are over 124,000 persons with
LEP in the state of Missouri, including over 52,000 persons with LEP whose prominent language is Spanish. See at:
https://data.census.gov/cedsci/table?g=0400000US29&y=2018&d=ACS%205-
Y ear%20Estimates%20Data%20Profiles&tid=ACSDP5 Y 2018 .DP02.
39 40 C.F.R. § 7.45.
40 40 C.F.R. § 7.65 (b) and (d).
41 https://www.epa.gov/sites/production/files/2020-
02/documents/disability _nondiscrimination_plan_sample_for_recipients_2020.01.pdf
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Director Carol S. Comer
Page 11
components of a "disability plan," meaningful access to individuals with disabilities to
MoDNR's programs, services, and activities, the Notice and Grievance Procedures appear to be
duplicative of MoDNR's other Grievance Procedures and Complaint Form for filing complaints
of discrimination, including disability discrimination. Neither set of documents provides clear
and consistent instructions or direction for persons with disabilities about which process to
follow in order to either file a grievance for discrimination on the basis of disability or seek
reasonable accommodations in order to participate in MoDNR's programs, services and
activities. Further, the MoDNR's ADA grievance procedures identifies timelines for requesting
accommodations to access services, programs and activities that are different from those
timelines referenced in the ADA Notice.42 Under these circumstances, ECRCO has determined
that MoDNR is not in compliance with this requirement of EPA's nondiscrimination regulation.
Public Participation
As to whether MoDNR has public participation policies and processes that are consistent with
Title VI and the other federal civil rights laws, EPA's implementing regulation at 40 C.F.R. Parts
5 and 7, and EPA's guidance on this issue,43 based on the limited information provided thus far
by MoDNR, a fuller examination of this sub-issue is required. Thus, this remains under
investigation. However, the public participation process carried out by MoDNR relative to the
Intermediate Operating Permit OP2020-008 to Kinder Morgan Transmix Company, LLC., was
not implemented consistent with Title VI, as meaningful access to those proceedings was not
provided to persons with limited-English proficiency.
III. Summary of Preliminary Findings
As discussed above, ECRCO has concluded its investigation of the second issue.44 The first
issue remains under investigation. With respect to the second issue, ECRCO has determined that
the preponderance of the evidence supports a conclusion that MoDNR failed to comply with
federal nondiscrimination laws and EPA's nondiscrimination regulation with respect to MoDNR
not having in place nor implementing a nondiscrimination program, including: procedural
safeguards required under 40 C.F.R. Parts 5 and 7; policies and procedures for ensuring
meaningful access to MoDNR's services, programs, and activities for individuals with LEP and
42 MoDNR's Notice Under the Americans with Disabilities Act states, "Anyone who requires an auxiliary aid or
service for effective communication, or a modification of policies or procedures to participate in a program, service,
or activity of the Missouri Department of Natural Resources, should contact the office of either Misty Hill or Mike
Sutherland as soon as possible but no later than 48 hours before the scheduled event." See
https://dnr.mo.gov/docs/notice-under-the-americans-with-disabilities-act.pdf. MoDNR's website states,
"Individuals who require special services or accommodations to participate in the Department program, service, or
activity should make arrangements by contacting the Department as soon as possible, but no later than 72 hours
before the scheduled event if reasonable." See https://dnr.mo.gov/non-discrimination-notice.htm.
43 See U.S. EPA, Title VI Public Involvement Guidance for EPA Assistance Recipients Administering
Environmental Permitting Programs, 71 FR 14207 (March 21, 2006)
(https://www.epa.gov/sites/production/files/2020-
02/documents/title_vi_public_involvement_guidance_for_epa_recipients_2006.03.21 .pdf).
44 At this time, ECRCO is not able to make preliminary findings related to whether MoDNR has in place a public
participation policy and process that is consistent with Title VI and the other federal civil rights laws, based on the
limited information provided by MoDNR, except as to the failure to provide language access to individuals with
LEP. A fuller examination of this sub-issue is required and, thus, it remains under investigation.
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Director Carol S. Comer
Page 12
individuals with disabilities; and a public participation program that ensures meaningful access
to those proceedings to persons with limited-English proficiency.45 Further, based on ECRCO's
review of available evidence, it appears that MoDNR ignored concerns raised over the years
about its failure to have in place a nondiscrimination program consistent with its longstanding
legal obligations.46
IV. Steps for Resolving Preliminary Findings of Noncompliance and Achieving
Compliance
After ECRCO makes a partial preliminary finding of noncompliance, the administrative process
for resolving the finding is set forth in 40 C.F.R. Part 7.115(d). The regulation provides that
"(a)fter receiving the notice of the preliminary finding of noncompliance in paragraph (c) of this
section, the recipient may: (1) Agree to the OCR's recommendations, or (2) Submit a written
response sufficient to demonstrate that the preliminary findings are incorrect, or that compliance
may be achieved through steps other than those recommended by OCR." If MoDNR does not
take one of these actions within fifty (50) calendar days after receiving this preliminary notice,
ECRCO will, within fourteen (14) calendar days, send a formal written determination of
noncompliance to the recipient and copies to the Award Official and Assistant Attorney General.
ECRCO proposes to resolve these preliminary findings through a Voluntary Compliance
Agreement47 to address the deficiencies discussed in this letter. Following this letter, ECRCO
will contact MoDNR to discuss a Voluntary Compliance Agreement. In addition, ECRCO offers
MoDNR the opportunity to enter into an Informal Resolution Agreement that would allow
ECRCO and MoDNR to address collaboratively the remaining issue accepted for investigation,
without findings of compliance or noncompliance.48
V. Recommendations for Achieving Voluntary Compliance
Pursuant to 40 C.F.R. § 7.115(c)(l)(ii), ECRCO makes the following recommendations to
address the compliance deficiencies identified in this letter:
A. Notice of Non-Discrimination under the Federal Non-Discrimination Laws
1. The MoDNR will post a notice of non-Discrimination (Notice) on the
MoDNR's website homepage, in all MoDNR's offices and facilities, and in
its general publications that are distributed to the public (e.g., public outreach
materials, such as brochures, notices, fact sheets or other information on
rights and services; applications or forms to participate in or access MoDNR
programs, processes or activities). The MoDNR will ensure that its Notice is
accessible to individuals with limited-English proficiency (LEP) in the
45 At this time, ECRCO is not able to make preliminary findings related to whether MoDNR has in place a public
participation policy and process that is consistent with Title VI and the other federal civil rights laws, based on the
limited information provided by MoDNR, except as to the failure to provide language access to individuals with
LEP. A fuller examination of public participation is required and, thus, it remains under investigation.
46 See EPA's implementing regulation at 40 C.F.R. Parts 5 and 7.
47 Case Resolution Manual (Jan. 2021) at Section 5.1 (https://www.epa.gov/sites/production/files/2021-
0 l/documents/2021.1.5_final_case_resolution_manual_.pdf
48 Case Resolution Manual (Jan. 2021) at Section 3.1 (https://www.epa.gov/sites/production/files/2021-
0 l/documents/2021.1.5_final_case_resolution_manual_.pdf
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Director Carol S. Comer
Page 13
appropriate language(s)49 and individuals with disabilities, including
ensuring that the Notice posted on the MoDNR's Website Homepage is
accessible to persons who are blind or have low vision, and for individuals
with color vision impairment or color blindness.
The Notice will contain, at a minimum, the following recommended text:
a. The MoDNR does not discriminate on the basis of race, color, national
origin, disability, age, or sex in administration of its programs or
activities, and the MoDNR does not intimidate or retaliate against any
individual or group because they have exercised their rights to
participate in or oppose actions protected/prohibited by 40 C.F.R. Parts
5 and 7, or for the purpose of interfering with such rights.
b. [Insert name and title of non-discrimination coordinator] is responsible
for coordination of compliance efforts and receipt of inquiries
concerning non-discrimination requirements implemented by 40
C.F.R. Parts 5 and 7 (Non-Discrimination in Programs or Activities
Receiving Federal Assistance from the Environmental Protection
Agency), including Title VI of the Civil Rights Act of 1964, as
amended; Section 504 of the Rehabilitation Act of 1973; the Age
Discrimination Act of 1975; Title IX of the Education Amendments of
1972; and Section 13 of the Federal Water Pollution Control Act
Amendments of 1972 (hereinafter referred to collectively as the
federal non-discrimination laws).
c. If you have any questions about this notice or any of the MoDNR's
non-discrimination programs, policies or procedures, you may contact:
(Name)
(Position)
(Organization/Department)
Missouri Department of Natural Resources
PO Box 176; 1101 Riverside Drive
Jefferson City, MO 65102-0176 (Phone Number)
(Email)
If you believe that you have been discriminated against with respect to
a [Recipient Name] program or activity, you may contact the [insert
title of non-discrimination coordinator] identified above or visit our
website at [insert Recipient website address] to learn how and where to
file a complaint of discrimination.
49 U.S. EPA, Guidance to Environmental Protection Agency Financial Assistance Recipients Regarding Title VI
Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons. 69 FR 35602
(June 25, 2004) (https://www.epa.gov/sites/production/files/2020-
02/documents/title_vi_lep_guidance_for_epa_recipients_2004.06.25.pdf) (Providing guidance in Section V(l): "the
number or proportion of LEP persons from a particular language group served or encountered in the eligible service
population."
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Director Carol S. Comer
Page 14
2. If the identity of the Non-Discrimination Coordinator changes, then the
MoDNR will promptly update materials as appropriate.
B. Grievance Procedures to Process Discrimination Complaints filed under the Federal
Non-Discrimination Laws
1. The MoDNR will post Grievance Procedures to promptly and fairly process
and resolve discrimination complaints filed under federal non-discrimination
statutes and the EPA's implementing regulations at 40 C.F.R. Parts 5 and 7
on the MoDNR's website homepage, in all MoDNR's offices and facilities,
and in its general publications as appropriate that are distributed to the
public. The MoDNR will ensure that its Grievance Procedures are accessible
to individuals with LEP in the appropriate language(s) and individuals with
disabilities, including ensuring that the Notice as posted on its Website
Homepage is accessible to individuals who are blind or have low vision, and
for individuals with color vision impairment or color blindness.
2. The Grievance Procedures will:
a. Clearly identify the Non-Discrimination Coordinator, including name
and contact information;
b. Explain the role of the Non-Discrimination Coordinator relative to the
coordination and oversight of the Grievance Procedures;
c. State who may file a complaint under the Grievance Procedures and
describe the appropriate bases for filing a complaint;
d. Describe which processes are available, and the options for
complainants in pursuing either;
e. Describe elements of the recipient's investigation process and provide
timelines for: the submission of a discrimination complaint; the
investigation's review, conclusion, or resolution process; or making an
appeal of any final decision;
f. State that the preponderance of the evidence standard will be applied
during the analysis of the complaint;
g. Contain assurances that intimidation and retaliation are prohibited and
that claims of intimidation and retaliation will be handled promptly
and fairly pursuant to your Grievance Procedures in the same manner
as other claims of discrimination;
h. Assure the prompt and fair resolution of complaints which allege
violation of federal non-discrimination laws;
i. State that written notice will be promptly provided about the outcome
of the investigation, including whether discrimination is found and the
description of the investigation process.
j. Be reviewed on an annual basis (for both in-print and online
materials), and revised as necessary, to ensure prompt and fair
resolution of discrimination complaints.
3. The MoDNR will review and revise as necessary the Grievance Procedures
on an annual basis to ensure prompt and fair resolution of discrimination
complaints.
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Director Carol S. Comer
Page 15
C. Designation of Non-Discrimination Coordinator
1. The MoDNR will designate at least one Non-Discrimination Coordinator to
ensure compliance with the federal non-discrimination laws, who will:
a. Provide information to individuals internally and externally that the
MoDNR does not discriminate on the basis of race, color, national
origin, disability, age, or sex in the administration of the MoDNR's
programs or activities, and that the MoDNR does not intimidate or
retaliate against any individual or group because they have exercised
their rights to participate in or oppose actions protected/prohibited by
40 C.F.R. Parts 5 and 7, or for the purpose of interfering with such
rights;
b. Provide notice of the MoDNR's grievance processes and the ability to
file a discrimination complaint;
c. Establish a mechanism (e.g., an investigation manual) for
implementation of the MoDNR's Grievance Procedures to ensure that
all discrimination complaints filed with the MoDNR under federal
non-discrimination laws and the EPA implementing regulations 40
C.F.R. Parts 5 and 7 are processed promptly and fairly. One element of
any policy and procedure or mechanism must include providing
meaningful access for individuals with limited English proficiency and
individuals with disabilities to the MoDNR's services, programs and
activities;
d. Track all complaints filed with the MoDNR under federal non-
discrimination laws, in order to identify any patterns or systemic
problems;
e. Conduct semiannual reviews/analysis of all complaints filed with the
MoDNR under the federal non-discrimination laws identified within
this Agreement, and/or any other discrimination complaints
independently investigated by the MoDNR covering these laws, to
identify and address any patterns, systematic problems or any trends
identified;
f. Ensure that appropriate training is provided for MoDNR staff in the
processes available to resolve complaints filed with the MoDNR under
federal non-discrimination laws;
g. Ensure that appropriate training is provided for MoDNR staff on the
MoDNR's non-discrimination policies and procedures, as well as the
nature of the MoDNR's obligation to comply with federal non-
discrimination laws;
h. Ensure that complainants are updated on the progress of their
complaints filed with the MoDNR under federal non-discrimination
laws and are promptly informed as to any determinations the MoDNR
has made;
i. Undertake periodic evaluations of the efficacy of the MoDNR's efforts
to provide services, aids, benefits, and participation in any of the
MoDNR's programs or activities without regard to race, color,
national origin, disability, age, sex or prior exercise of rights or
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Director Carol S. Comer
Page 16
opposition to actions protected under federal non-discrimination laws.
2. The Non-Discrimination Coordinator will not have other responsibilities that
create a conflict of interest (e.g., serving as the MoDNR's Non-
Discrimination Coordinator as well as its legal advisor or representative on
civil rights issues).
3. The MoDNR will identify, by name and position, at least one individual who
will serve as Non-Discrimination Coordinator(s) consistent with the
regulatory requirements of 40 C.F.R. §5.135, §7.85(g), and §7.95(a).
D. MoDNR Plan to Ensure Meaningful Access to Programs and Activities for Persons
with Limited English Proficiency (LEP)
1. The MoDNR will conduct an appropriate analysis as described in EPA's LEP
Guidance found at 69 F.R. 35602 (June 25, 2004)50, to identify the
appropriate language groups and determine what language services or mix of
language services the MoDNR needs to provide (e.g., interpreters and
translators), to ensure that limited-English proficient individuals can
meaningfully participate in the MoDNR's services, programs and activities.
2. The MoDNR will develop, publicize, and implement written procedures (a
Language Access Plan) to ensure meaningful access to all MoDNR services,
programs and activities for individuals with LEP, at no cost to those
individuals.
E. MoDNR Plan to Ensure Meaningful Access to Programs and Activities for Persons
with Disabilities
1. The MoDNR will develop, publicize and implement a Disability Access Plan
to ensure meaningful access to all MoDNR programs, services and activities
for individuals with disabilities.51
2. The MoDNR will provide, at no cost, auxiliary aids and services to
individuals with disabilities, (including, but not limited to, for example,
qualified interpreters to individuals who are deaf or hard of hearing, and to
other individuals, as necessary), to ensure effective communication and an
equal opportunity to participate fully in benefits, activities, programs, and
services provided by the MoDNR in a timely manner in such a way as to
protect the privacy and independence of the individual.
3. The MoDNR will ensure that its facilities and other facilities utilized by the
MoDNR (e.g. if the MoDNR holds a public hearing at a school or
recreational center) are physically accessible to, individuals with disabilities.
50 https://www.govinfo.gov/content/pkg/FR-2004-06-25/pdf/04-14464.pdf
51 See Disability Nondiscrimination Plan Sample, at https://www.epa.gov/sites/production/files/2020-
02/documents/disability _nondiscrimination_plan_sample_for_recipients_2020.01.pdf
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Director Carol S. Comer
Page 17
F. Training
1. The MoDNR will ensure that all its employees and contractors have been
appropriately trained on federal non-discrimination obligations and all plans,
policies and procedures created and implemented as part of this letter.
MoDNR may request assistance from EPA for any of the training required in
this letter.
2. The MoDNR will forward to EPA for review a draft plan for ensuring that
such training is a routine part of the on-boarding process for new employees
and contractors and is given regularly as refresher training to all employees
and contractors.
This letter sets forth ECRCO's partial preliminary findings in EPA Complaint No. 01RNO-20-
R7. This letter is not a formal statement of ECRCO policy and should not be relied upon, cited,
or construed as such. This letter and any findings herein do not affect MoDNR's continuing
responsibility to comply with Title VI or other federal non-discrimination laws and EPA's
regulations at 40 CFR Parts 5 and 7, nor do they affect EPA's investigation of any Title VI or
other federal civil rights complaints or address any other matter not addressed in this letter.
If you have questions about this letter please feel free to contact me at (202)564-9649, by email
at dorka.lilian@epa.gov, or Jeryl Covington, Case Manager, at (202)564-7713, by email at
covington.jeryl@epa.gov; or Mahri Monson, Case Manager, at (202)564-2468, by email at
monson.mahri@epa.gov.
Sincerely,
. ^ -'I
yr ^ ...
v >-• - , y t ^
/
Lilian S. Dorka, Director
External Civil Rights Compliance Office
Office of General Counsel
cc: Jacob Westen
Acting General Counsel
Missouri Department of Natural Resources
Angelia Talbert-Duarte
Associate General Counsel
Civil Rights & Finance Law Office
Edward H. Chu
Deputy Regional Administrator
Deputy Civil Rights Official
EPA Region 7
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Director Carol S. Comer
Page 18
Leslie Humphrey
Regional Counsel
EPA Region 7
Michael Osinski
Director, Office of Grants and Debarment
EPA Headquarters
Pamela S. Karlan
Principal Deputy Assistant Attorney General
Department of Justice
Office of the Assistant Attorney General
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Appendix F. BAAQMD Title V Permit Application Report, February 3, 2023
Page 62 of 68
-------
Engineering Division: Title V Program
Title V Permit Application Metrics
2/3/23
Title V Permit Applications: Open, New, Pending*, or Issued
Application
Type
2022
2023
August
September
October
November
December
January
Op.
New
Pnd.
Iss.
Op.
New
Pnd.
Iss.
Op.
New
Pnd.
Iss.
Op.
New
Pnd.
Iss.
Op.
New
Pnd.
Iss.
Op.
New
Pnd.
Iss.
Initial
3
0
0
0
3
0
0
0
3
0
0
0
3
0
0
0
3
0
0
0
3
0
0
0
Renewal
53
0
8
1
53
1
8
0
54
1
9
0
56
2
9
0
56
0
8
0
55
0
9
*
Minor
Revision
204
4
24
2
203
1
24
0
205
3
23
1
208
3
23
0
207
0
23
0
207
2
23
2* *
Significant
Revision
21
0
4
0
21
0
3
0
20
0
3
1
20
0
3
0
21
1
3
0
21
1
3
*
Administrative
Amendment
16
1
5
0
16
1
5
1
16
0
6
0
18
3
6
1
17
0
6
2
17
0
6
0
Reopening
1
0
1
0
1
0
1
0
0
0
0
1
0
0
0
0
0
0
0
0
0
0
0
0
Total
298
5
42
3
297
3
41
1
298
4
41
3
305
8
41
1
304
1
40
2
303
3
41
4
"applications currently proposed for public and/or EPA comment, on internal review, or routing for final issuance
""Cancellation
1 of 4
-------
Title V Permit Applications: Open, New, Pending, or Issued
2/3/23
• Total Number of Open TV Applications: 303
• Total Number of Overdue TV Applications: 162
2 of 4
-------
200
180
160 -
100
140 -
c
o
Q.
Q.
<
Ł 100
Q.
O
80
60
40
20
103
17
4
Open Title V Application Status by Category
MR = Mjnnr R^yjcjnn 5P. — SiCTnifiCc!nt RPx/'Q'nn ! — Initial R — Rsnswa! AA — Arlmjnjctrgtj\/0 AmpnHmpnt
99
34
19 14
2
106
36
17
18 16
MR SR I R AA
September 2022
MR SR I R AA
October 2022
99
109
35
17
3 3
21 15
3
94
113
36
17
4
20 14
3
MR SR I R AA
November 2022
Overdue Applications in yellow
MR SR I R AA
December 2022
92
115
16
5
35
20 16
1
MR SR I R AA
January 2023
3 of 4
-------
Open Title V Application Status by Category
Application Type
September 2022
October 2022
November 2022
December 2022
January 2023
Okay
Overdue
Total
Okay
Overdue
Total
Okay
Overdue
Total
Okay
Overdue
Total
Okay
Overdue
Total
Initial (1)
1
2
3
0
3
3
0
3
3
0
3
3
0
3
3
Renewal (R)
19
34
53
18
36
54
21
35
56
20
36
56
20
35
55
Minor Revision (MR)
103
100*
203
106
99*
205
109
99*
208
113
94*
207
115
92*
207
Significant Revision (SR)
4
17
21
3
17
20
3
17
20
4
17
21
5
16
21
Administrative Amendment (AA)
2
14
16
0
16
16
3
15
18
3
14
17
1
16
17
Reopening (RE)
0
1
1
0
0
0
0
0
0
0
0
0
0
0
0
Total:
129
168
297
127
171
298
136
169
305
140
164
304
141
162
303
*excludes applications that are delayed because of NSR permitting, compliance, CEQA, or source testing issues; Includes applications that will be
folded into pending renewal applications
Title V Permit Application Issuance Timelines
Application Type
Issuance Deadline
Administrative Amendment
60 days from receipt of application
Minor Revision
The later of the following: 90 days of receipt of application
or 15 days after end of 45-day EPA review period
Chart data based upon overdue trigger of 180 days from
receipt unless delayed by NSR permitting, compliance, or
source testing issues
Initial, Renewal, and Significant Revision
18 months after an application has been deemed complete
Reopening
Within 12 months of reopening
4 of 4
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Appendix G. BAAQMD Enforcement Referral Form
Page 63 of 68
-------
ENFORCEMENT REFERRAL
Enf Referral ER
DATE:
TO: ENFORCEMENT MANAGER Compliance & Enforcement Division
REFERRED BY: Engineering Division, Ext.
SITE #: NAME: ADDRESS:
1. Subject facility has submitted a Permit Application (PIA) # which indicates the following violation:
~ Reg. 2-1-301 and/or ~ Reg. 2-1-302 Original Installation Date:
~ Cancelled - Date: Q Denied - Date:
2. Subject plant has submitted other documents or informed staff that there may be a violation of air pollution
emission regulations regarding the following:
~ Reg ~ Reg. 2-1-307: Condition #
Supporting documentation to be attached
Comment:
3. Engineering staff is referring this matter to the Enforcement Division because:
~ A violation may have occurred, investigate and take appropriate enforcement action.
Supporting documentation to be attached.
Comments:
4. Engineer requests that the Inspector call after investigation: Ł3 Yes Q No
Compliance & Enforcement Division
Referral assigned to:
Supervisor: D#.
Inspector: I#.
Enforcement Division actions:
~ No; Enforcement action was not taken (violation not documented)
~ Yes,
NOV # was issued on
NTC # was issued on
Comments:
G This referral is being sent back to Engineering:
Comments:
(White - Field Inspector Yellow - Enforcement Pink-P/A File)
H:\ENGINEERING\PERMITSYSTEMS\FORMS & TEMPLATES\ENFORCEMENT REFERRAL 5 6 13.DOCX
-------
Appendix H. BAAQMD Fee Information
Page 64 of 68
-------
Bay Area
AirQuality
Management
District
2020 COST RECOVERY STUDY
Prepared by the staff of the
Bay Area Air Quality Management District
375 Beale Street, Suite 600
San Francisco, CA
January 2020
-------
Table of Contents
1. Executive Summary 1
2. Background 1
3. Legal Authority 3
4. Study Methodology 4
5. Study Results 5
6. Discussion of Results 5
7. Conclusions 6
Figures
1. Total Fee Revenue and Program Costs, FYE 2019 8
2. Fee Revenue and Program Costs by Fee Schedule, FYE 2019 9
3. Fee Revenue and Program Costs by Fee Schedule, FYE 2017-2019,
3-yr Average 10
-------
Executive Summary
The 2020 Cost Recovery Study includes the latest fee-related cost and revenue data
gathered for FYE 2019 (i.e., July 1, 2018 - June 30, 2019). The results of this 2020 Cost
Recovery Study will be used as a tool in the preparation of the FYE 2021 budget, and
for evaluating potential amendments to the Air District's Regulation 3: Fees.
The completed cost recovery analysis indicates that in FYE 2019 there continued to be
a revenue shortfall, as overall direct and indirect costs of regulatory programs exceeded
fee revenue (see Figure 2). For FYE 2017 to 2019, the Air District is recovering
approximately 84 percent of its fee-related activity costs (see Figure 3). The overall
magnitude of this cost recovery gap was determined to be approximately $8.4 million.
This cost recovery gap was filled using General Fund revenue received by the Air District
from the counties' property tax revenue.
The 2020 Cost Recovery Study also addressed fee-equity issues by analyzing whether
there is a revenue shortfall at the individual Fee Schedule level. It was noted that of the
twenty-three Fee Schedules for which cost recovery could be analyzed, seven of the
component Fee Schedules had fee revenue contributions exceeding total cost.
Background
The Air District is responsible for protecting public health and the environment by
achieving and maintaining health-based national and state ambient air quality standards,
and reducing public exposure to toxic air contaminants, in the nine-county Bay Area
region. Fulfilling this task involves reducing air pollutant emissions from sources of
regulated air pollutants and maintaining these emission reductions over time. In
accordance with State law, the Air District's primary regulatory focus is on stationary
sources of air pollution.
The Air District has defined units for organizational purposes (known as "Programs") to
encompass activities which are either dedicated to mission-critical "direct" functions,
such as permitting, rule-making, compliance assurance, sampling and testing, grant
distribution, etc., or are primarily dedicated to support and administrative "indirect"
functions. The Air District has also defined revenue source categories (known as "Billing
Codes") for the permit fee schedules, grant revenue sources, and general support
activities.
The Air District's air quality regulatory activities are primarily funded by revenue from
regulatory fees, government grants and subventions, and county property taxes.
Between 1955 and 1970, the Air District was funded entirely through property taxes. In
1970, the California Air Resources Board (CARB) and U.S. Environmental Protection
Agency began providing grant funding to the Air District. After the passage of
Proposition 13, the Air District qualified as a "special district" and became eligible for AB-
8 funds, which currently make up the county revenue portion of the budget.
State law authorizes the Air District to impose a schedule of fees to generate revenue to
recover the costs of activities related to implementing and enforcing air quality programs.
1
-------
On a regular basis, the Air District has considered whether these fees result in the
collection of a sufficient and appropriate amount of revenue in comparison to the cost of
related program activities.
In 1999, a comprehensive review of the Air District's fee structure and revenue was
completed by the firm KPMG Peat Marwick LLP (Bay Area Air Quality Management
District Cost Recovery Study, Final Report: Phase One - Evaluation of Fee Revenues
and Activity Costs; February 16, 1999). The Study recommended an activity-based
costing model, which has been implemented. Also, as a result of that Study, the Air
District implemented a time-keeping system. These changes improved the Air District's
ability to track costs by program activities. The 1999 Cost Recovery Study indicated that
fee revenue did not offset the full costs of program activities associated with sources
subject to fees as authorized by State law. Property tax revenue (and in some years,
fund balances) have been used to close this gap.
In 2004, the Air District's Board of Directors approved funding for an updated Cost
Recovery Study that was conducted by the accounting/consulting firm Stonefield
Josephson, Inc. {Bay Area Air Quality Management District Cost Recovery Study, Final
Report; March 30, 2005). This Cost Recovery Study analyzed data collected during the
three-year period FYE 2002 through FYE 2004. It compared the Air District's costs of
program activities to the associated fee revenues and analyzed how these costs are
apportioned amongst the fee-payers. The Study indicated that a significant cost
recovery gap existed. The results of this 2005 report and subsequent internal cost
recovery studies have been used by the Air District in its budgeting process, and to set
various fee schedules.
In March 2011, another study was completed by the Matrix Consulting Group (Cost
Recovery and Containment Study, Bay Area Air Quality Management District, Final
Report; March 9, 2011). The purpose of this Cost Recovery and Containment Study
was to provide the Air District with guidance and opportunities for improvement regarding
its organization, operation, and cost recovery/allocation practices. A Cost Allocation
Plan was developed and implemented utilizing FYE 2010 expenditures. This Study
indicated that overall, the Air District continued to under-recover the costs associated
with its fee-related services. In order to reduce the cost recovery gap, further fee
increases were recommended for adoption over a period of time in accordance with a
Cost Recovery Policy to be adopted by the Air District's Board of Directors. Also, Matrix
Consulting Group reviewed and discussed the design and implementation of the new
Production System which the Air District is developing in order to facilitate cost
containment through increased efficiency and effectiveness.
Air District staff initiated a process to develop a Cost Recovery Policy in May 2011, and
a Stakeholder Advisory Group was convened to provide input in this regard. A Cost
Recovery Policy was adopted by the Air District's Board of Directors on March 7, 2012.
This policy specifies that the Air District should amend its fee regulation, in conjunction
with the adoption of budgets for Fiscal Year Ending (FYE) 2014 through FYE 2018, in a
manner sufficient to increase overall recovery of regulatory program activity costs to
85%. The policy also indicates that amendments to specific fee schedules should
continue to be made in consideration of cost recovery analyses conducted at the fee
2
-------
schedule-level, with larger increases being adopted for the schedules that have the
larger cost recovery gaps.
In February 2018, the Matrix Consulting Group completed an update of the 2011 cost
recovery and containment study for the fiscal year that ended June 30, 2017. The
primary purpose of this Study was to evaluate the indirect overhead costs associated
with the Air District and the cost recovery associated with the fees charged, by the Air
District. The project team evaluated the Air District's FYE 2017 Programs to assess their
classification as "direct" or "indirect". In addition, they audited the time tracking data
associated with each of the different fee schedules. The Study provided specific
recommendations related to direct and indirect cost recovery for the Air District, as well
as potential cost efficiencies.
This 2018 Cost Recovery Study incorporated the accounting methodologies developed
by KPMG in 1999, Stonefield Josephson, Inc. in 2005 and Matrix Consulting Group in
2011. The Study included the latest cost and revenue data gathered for FYE 2017 (i.e.,
July 1, 2016 - June 30, 2017). The results of the 2018 Cost Recovery Study were used
as a tool in the preparation of the budgets for FYE 2019 and FYE 2020, and for
evaluating potential amendments to the Air District's Regulation 3: Fees.
Legal Authority
In the post-Prop 13 era, the State Legislature determined that the cost of programs to
address air pollution should be borne by the individuals and businesses that cause air
pollution through regulatory and service fees. The primary authority for recovering the
cost of Air District programs and activities related to stationary sources is given in Section
42311 of the Health and Safety Code (HSC), under which the Air District is authorized
to:
• Recover the costs of programs related to permitted stationary sources
• Recover the costs of programs related to area-wide and indirect sources of
emissions which are regulated, but for which permits are not issued
• Recover the costs of certain hearing board proceedings
• Recover the costs related to programs that regulate toxic air contaminants
The measure of the revenue that may be recovered through stationary source fees is
the full cost of all activities related to these sources, including all direct Program costs
and a commensurate share of indirect Program costs. Such fees are valid so long as
they do not exceed the reasonable cost of the service or regulatory program for which
the fee is charged, and are apportioned amongst fee payers such that the costs allocated
to each fee-payer bears a fair or reasonable relationship to its burden on, and benefits
from, the regulatory system.
Air districts have restrictions in terms of the rate at which permit fees may be increased.
Under HSC Section 41512.7, permit fees may not be increased by more than 15 percent
on a facility in any calendar year.
3
-------
Study Methodology
The methodology for determining regulatory program revenue and costs is summarized
as follows:
Revenue
Revenue from all permit renewals and applications during the FYE 2019 was assigned
to the appropriate Permit Fee Schedules. This is a continued improvement over prior
years' process due to the more detailed data available in the New Production System.
Costs
Costs are expenditures that can be characterized as being either direct or indirect. Direct
costs can be identified specifically with a particular program activity. Direct costs include
wages and benefits, operating expenses, and capital expenditures used in direct support
of the particular activities of the Air District (e.g., permit-related activities, grant
distribution, etc.).
Indirect costs are those necessary for the general operation of the Air District as a whole.
Often referred to as "overhead", these costs include accounting, finance, human
resources, facility costs, information technology, executive management, etc. Indirect
costs are allocated to other indirect Programs, using the reciprocal (double-step down)
method, before being allocated to direct Programs.
Employee work time is tracked by the hour, or fraction thereof, using both Program and
Billing Code detail. This time-keeping system allows for the capture of all costs
allocatable to a revenue source on a level-of-effort basis.
Employee work time is allocated to activities within Programs by billing codes (BC1-
BC99), only two of which indicate general support. One of these two general support
codes (BC8) is identified with permitting activities of a general nature, not specifically
related to a particular Fee Schedule.
Operating and capital expenses are charged through the year to each Program, as
incurred. In cost recovery, these expenses, through the Program's Billing Code profile,
are allocated on a pro-rata basis to each Program's revenue-related activity. For
example, employees working in grant Programs (i.e., Smoking Vehicle, Mobile Source
Incentive Fund, etc.) use specific billing codes (i.e., BC3, BC17, etc.), and all
operating/capital expense charges are allocated pro-rata to those grant activities.
Employees working in permit-related Programs (i.e., Air Toxics, Compliance Assurance,
Source Testing, etc.) also use specific billing codes (i.e., BC8, BC21, BC29, etc.) and all
operating/capital expense charges incurred by those Programs are allocated pro-rata to
those Program's activity profiles as defined by the associated billing codes.
Direct costs for permit activities include personnel, operating and capital costs based on
employee work time allocated to direct permit-related activities, and to general permit-
related support and administrative activities (allocated on pro-rata basis). Indirect costs
4
-------
for permit activities include that portion of general support personnel, operating and
capital costs allocated pro-rata to permit fee revenue-related program activities.
Study Results
Figure 1 shows a summary of overall regulatory program costs and revenue for FYE
2019. Figure 2 shows the details of costs and revenue on a fee schedule basis for FYE
2019 by schedule. Figure 3 shows the details of average schedule costs and revenue
for the three-year period FYE 2017 through FYE 2019 by schedule.
Discussion of Results
Figure 1 indicates that in FYE 2019 there continued to be a revenue shortfall, as the
direct and indirect costs of regulatory programs exceeded fee revenue. The overall
magnitude of the cost recovery gap was determined to be $7.9 million for FYE 2019.
This cost recovery gap was filled by General Fund revenue received by the Air District
from the counties.
Figure 2 shows that in FYE 2019 there were revenue shortfalls for most of the twenty-
three fee schedules for which cost recovery can be analyzed. For FYE 2019, the Air
District is recovering approximately 86% of its fee-related activity costs. The revenue
collected exceeded Program costs for seven fee schedules. These are Schedule B
(Combustion of Fuels), Schedule C (Stationary Containers for the Storage of Organic
Liquids), Schedule D (Gasoline Transfer at Gasoline Dispensing Facilities, Bulk Plants
and Terminals), Schedule G-5 (Miscellaneous Sources), Schedule L (Asbestos
Operations), Schedule R (Equipment Registration Fees), and Schedule X (Community
Air Monitoring). The revenue collected was less than program costs for 16 fee
schedules. These are Schedule A (Hearing Board), Schedule E (Solvent Evaporating
Sources), Schedule F (Miscellaneous Sources), Schedule G-1 (Miscellaneous Sources),
Schedule G-2 (Miscellaneous Sources), Schedule G-3 (Miscellaneous Sources),
Schedule G-4 (Miscellaneous Sources), Schedule H (Semiconductor and Related
Operations), Schedule I (Dry Cleaners), Schedule K (Solid Waste Disposal Sites),
Schedule N (Toxic Inventory Fees), Schedule P (Major Facility Review Fees), Schedule
S (Naturally Occurring Asbestos Operations), Schedule T (Greenhouse Gas Fees),
Schedule V (Open Burning), and Schedule W (Refinery Emissions Tracking),.
Figure 3 shows that over a three-year period (FYE 2017 through FYE 2019) there were
revenue shortfalls for most of the twenty-three fee schedules for which cost recovery can
be analyzed. For this three-year period, the Air District is recovering approximately 84%
of its fee-related activity costs. The revenue collected exceeded costs for five fee
schedules. These are Schedule B (Combustion of Fuel), Schedule C (Stationary
Containers for the Storage of Organic Liquids), Schedule G-5 (Miscellaneous Sources),
Schedule L (Asbestos Operations), and Schedule X (Community Air Monitoring). The
revenue collected was lower than costs for 18 fee schedules. These are Schedule A
(Hearing Board), Schedule D (Gasoline Transfer at Gasoline Dispensing Facilities, Bulk
Plants and Terminals), Schedule E (Solvent Evaporating Sources), Schedule F
(Miscellaneous Sources), Schedule G-1 (Miscellaneous Sources), Schedule G-2
(Miscellaneous Sources), Schedule G-3 (Miscellaneous Sources), Schedule G-4
(Miscellaneous Sources), Schedule H (Semiconductor and Related Operations),
5
-------
Schedule I (Dry Cleaners), Schedule K (Solid Waste Disposal Sites), Schedule N (Toxic
Inventory Fees), Schedule P (Major Facility Review Fees), Schedule R (Equipment
Registration Fees), Schedule S (Naturally Occurring Asbestos Operations), Schedule T
(Greenhouse Gas Fees), Schedule V (Open Burning), and Schedule W (Refinery
Emissions Tracking).
The Air District uses the three-year averages shown in Figure 3 in evaluating proposed
amendments to Regulation 3, Fees at the fee schedule level because longer averaging
periods are less sensitive to year-to-year variations in activity levels that occur due to
economic or market variations and regulatory program changes affecting various source
categories.
Conclusions
Air District staff has updated the analysis of cost recovery of its regulatory programs
based on the methodology established by the accounting firms KPMG in 1999 and
Stonefield Josephson, Inc. in 2005 and updated by Matrix Consulting Group in 2011 and
in 2018. The analysis shows that fee revenue continues to fall short of recovering activity
costs. For FYE 2017 to 2019, the Air District is recovering approximately 84% of its fee-
related activity costs. The overall magnitude of this cost recovery gap was determined
to be approximately $8.4 million.
To reduce or stabilize expenditures, the Air District has implemented various types of
cost containment strategies, including developing an online permitting system for high-
volume source categories, maintaining unfilled positions when feasible, and reducing
service and supply budgets. In order to reduce the cost recovery gap, further fee
increases will need to be evaluated in accordance with the Cost Recovery Policy
adopted by the Air District's Board of Directors.
6
-------
Bay Area
AirQuality
Management
District
2020 Cost Recovery Study
FIGURES
-------
Figure 1: Total Permit Fee Revenue, Costs and Gap for FYE 2019
Revenue
Costs
Gap
$48.1
$56.2
($8.1)
8
-------
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Revenues
Schedule M
Reg 3- 312 - Bubble
Reg 3- 327 - Renewal Processing
Reg 3- 311 - Banking
Total Revenue
Direct Costs
Direct Labor
Services and Supplies
Capital Outlay
Indirect Costs
Total Costs
Net Surplus/fDeficit)
Cost Recovery
47,628
7,679,636
880,691
197,342
459,251
I":':
2,233,077
109,905
302,807
47,484
6,249,199
12,636
15,038
227,953
3,200,202
39,061
19,286
202,246
2,102,701
267,090
101,639
140,586
2,637,196
60,344
96,373
45,833
761,955
17,111
36,772
8,221
656,420
6,668
28,545
1,149
1,527,227
755,273
22,542
544
647,983
14,796
23,063
806
184,622
6,265
4,498
2,195
177,413
123,213
329
4,153
5,057,006
263,358
5,638,883
336,060
592
1,547
13,064
100,513
2,963,989
211,132
139,905
933,739
43,754,341
2,287,380
845,282
1,159,751
I":':
47,628
9,244,239
2,693,273
6,504,826
3,460,795
2,612,016
2,839,747
824,058
692,782
2,305,587
686,648
190,887
6,693
305,109
5,057,006
263,358
5,638,883
351,262
100,513
2,963,989
211,132
139,905
933,739
48,074,073
30,355,293
67,327
4,951,822
447,138
3,423,477
2,725,197
1,782,297
3,621,802
1,033,054
467,078
1,778,054
215,908
161,040
4,238
1,753,926
1,410,266
491,786
3,369,463
146,277
383,252
1,290,338
390,970
328,888
111,697
3,848
379,147
28,953
279,042
182,076
120,927
293,144
92,450
38,213
183,018
14,853
10,362
275
127,296
58,859
26,394
284,528
4,805
28,943
1,272,092
18,527
27,000
21,914
3,496,666
0
579,062
53,363
399,066
326,431
212,485
415,586
117,470
55,410
207,326
25,134
19,387
501
209,089
8,198
55,698
392,886
701
45,591
148,906
638
41,542
16,806
3,331,277
::T:-
:
275.540
2.061.635
. ¦:
1.072.870
2.218.968
: ::
1.105.686
:
100.276
1.949
1.114.653
964.944
270.820
:::
98.405
251.662
752.107
272.501
201.766
72.791
18.672.787
107,708
8,939,955
804,994
6,163,220
4,941,239
3,188,579
6,549,500
1,881,266
857,029
3,274,084
394,172
291,065
6,962
3,204,965
2,442,267
844,698
6,036,202
250,189
709,447
3,463,443
682,636
599,195
223,207
55,856,023
(60,081)
304,283
1,888,278
341,606
(1,480,444)
(576,563)
(3,709,753)
(1,057,208)
(164,247)
(968,497)
292,477
(100,178)
(269)
(2,899,856)
2,614,739
(581,340)
(397,319)
101,073
(608,934)
(499,454)
(471,504)
(459,290)
710,532
(7,781,950)
44.2%
103.4%
334.6%
105.5%
70.0%
81.9%
43.4%
43.8%
80.8%
70.4%
174.2%
65.6%
96.1%
9.5%
207.1%
31.2%
93.4%
140.4%
14.2%
85.6%
30.9%
23.3%
418.3%
86.07%
9
-------
Figure 3: Fee Revenue and Program Costs by Fee Schedule, FYE 2017-2019, 3-Year Average
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Schedule M
Reg 3- 312 - Bubble
Reg 3- 327 - Renewal Processing
Reg 3- 311 - Banking
Total Revenue
Direct Costs
Direct Labor
Services and Supplies
Capital Outlay
Indirect Costs
Total Costs
Total Surplus/fDeticit)
Cost Recovery
22,923
0
0
0
0
7,920,402
676,296
382,759
318,734
13,312
2,189,106
205,639
182,101
44,762
0
5,736,757
32,594
21,304
219,539
0
2,823,092
31,872
12,701
211,637
0
1,982,551
753,812
43,794
145,415
0
2,481,798
84,019
45,413
46,920
0
650,061
13,837
18,158
7,895
0
635,241
4,129
13,141
1,006
0
1,210,547
258,966
64,204
1,022
0
718,798
120,150
13,078
1,056
0
168,356
0
201
5,885
0
4,454
0
4,537
1,806
0
159,372
112,147
110
4,228
0
4,387,279
0
0
0
0
268,240
0
0
0
0
5,397,772
0
0
0
0
278,599
1,441
558
8,559
0
91,026
0
0
0
0
2,629,967
0
0
0
0
177,519
0
0
0
0
201,285
0
0
0
0
1,038,541
0
0
0
0
41,173,687
2,294,901
802,058
1,018,464
13,312
22.923
9.311.503
2.621.608
6.010.195
3.079.302
2.925.573
2.658.149
689.950
653.516
1.534.739
853.082
174.442
10.798
275.857
4.387.279
268.240
5.397.772
289.158
91.026
2.629.967
177.519
201.285
1,038.541
45.302.422
87,863
3,222
0
5,207,508
394,927
482,898
:¦ -r :;6
408,889
22,228
32,210
258,496
3,776,161
332,682
346,812
2,296,770
2,392,210
149,335
204,803
1,513,246
1,693,044
145,450
146,233
998,097
3,366,754
262,324
394,677
2,057,059
752,538
65,327
70,623
450,666
413,754
29,638
38,133
267,299
1,795,291
216,275
220,071
1,056,336
205,756
12,012
15,075
134,506
175,929
8,826
12,722
110,872
8,628
394
2,510
5,265
1,253,014
88,231
135,886
802,166
1,386,782
109,172
153,306
1,098,563
288,379
17,486
23,994
164,659
3,518,663
340,749
318,018
2,072,453
199,071
10,928
1,347
163,066
275,024
20,491
29,922
180,016
1,577,642
582,878
178,994
924,193
334,785
32,483
3,779
279,575
276,526
23,761
41,803
165,118
197,033
24,181
24,878
121,449
29,591,245
2,893,001
2,878,694
18,333,302
143.428 9.246.418
721.823 6.752.424
4.259.595 2.982.824
6.080.815 1.339.155
748.824 3.287.973
367.350 308.350
16.798
2.279.298
2.747.823 494.517
6.249.883
374.413 505.453 3.263.707
650.623
507.208 367.541
53.696.241
(120.505) 65.084
1.899.786 (742.229)
(1.180.293) (57.252)
(3.422.665) (649.205)
(95.308) (1.753.234)
485.732 (133.907)
(6.000)
(2.003.441)
1.639.456 (226.278)
(852.111)
(85.255) (414.427) (633.740)
(473.104)
(305.923) 671.001
(8.393.819)
16".;, 101%
363".;, 89%
72% 98%
44% 52%
87% 47%
232% 57%
64%
12%
160".;, 54%
86%
77% 18% 81%
27%
40".;, 283".;,
84.37".;,
10
-------
Bay Area
AirQuality
Management
District
2021 COST RECOVERY STUDY
Prepared by the staff of the
Bay Area Air Quality Management District
375 Beale Street, Suite 600
San Francisco, CA
January 2021
-------
Table of Contents
1. Executive Summary 1
2. Background 1
3. Legal Authority 3
4. Study Methodology 4
5. Study Results 5
6. Discussion of Results 5
7. Conclusions 6
Figures
1. Total Fee Revenue and Program Costs, FYE 2020 8
2. Fee Revenue and Program Costs by Fee Schedule, FYE 2020 9
3. Fee Revenue and Program Costs by Fee Schedule, FYE 2018-2020,
3-yr Average 10
-------
Executive Summary
The 2021 Cost Recovery Study includes the latest fee-related cost and revenue data
gathered for FYE 2020 (i.e., July 1, 2019 - June 30, 2020). The results of this 2021 Cost
Recovery Study will be used as a tool in the preparation of the FYE 2022 budget, and
for evaluating potential amendments to the Air District's Regulation 3: Fees.
The completed cost recovery analysis indicates that in FYE 2020 there continued to be
a revenue shortfall, as overall direct and indirect costs of regulatory programs exceeded
fee revenue (see Figure 2).
For the 3-year period 2018 to 2020, the Air District is recovering approximately 85
percent of its fee-related activity costs (see Figure 3). The overall magnitude of this cost
recovery gap was determined to be approximately $8.5 million. This cost recovery gap
was filled using General Fund revenue received by the Air District from the counties'
property tax revenue.
The 2021 Cost Recovery Study also addressed fee-equity issues by analyzing whether
there is a revenue shortfall at the individual Fee Schedule level. For the 3-year period,
it was noted that of the twenty-three Fee Schedules for which cost recovery could be
analyzed, six of the component Fee Schedules had fee revenue contributions exceeding
total cost.
Background
The Air District is responsible for protecting public health and the environment by
achieving and maintaining health-based national and state ambient air quality standards,
and reducing public exposure to toxic air contaminants, in the nine-county Bay Area
region. Fulfilling this task involves reducing air pollutant emissions from sources of
regulated air pollutants and maintaining these emission reductions over time. In
accordance with State law, the Air District's primary regulatory focus is on stationary
sources of air pollution.
The Air District has defined units for organizational purposes (known as "Programs") to
encompass activities which are either dedicated to mission-critical "direct" functions,
such as permitting, rule-making, compliance assurance, sampling and testing, grant
distribution, etc., or are primarily dedicated to support and administrative "indirect"
functions. The Air District has also defined revenue source categories for time billing
purposes (known as "Billing Codes") for all activities, i.e., the permit fee schedules, grant
revenue sources, and general support activities.
The Air District's air quality regulatory activities are primarily funded by revenue from
regulatory fees, government grants and subventions, and county property taxes.
Between 1955 and 1970, the Air District was funded entirely through property taxes. In
1970, the California Air Resources Board (CARB) and U.S. Environmental Protection
Agency began providing grant funding to the Air District. After the passage of
Proposition 13, the Air District qualified as a "special district" and became eligible for
AB-8 funds, which currently make up the county revenue portion of the budget.
1
-------
State law authorizes the Air District to impose a schedule of fees to generate revenue to
recover the costs of activities related to implementing and enforcing air quality programs.
On a regular basis, the Air District has considered whether these fees result in the
collection of a sufficient and appropriate amount of revenue in comparison to the cost of
related program activities.
In 1999, a comprehensive review of the Air District's fee structure and revenue was
completed by the firm KPMG Peat Marwick LLP (Bay Area Air Quality Management
District Cost Recovery Study, Final Report: Phase One - Evaluation of Fee Revenues
and Activity Costs; February 16, 1999). The Study recommended an activity-based
costing model, which has been implemented. Also, as a result of that Study, the Air
District implemented a time-keeping system. These changes improved the Air District's
ability to track costs by program activities. The 1999 Cost Recovery Study indicated that
fee revenue did not offset the full costs of program activities associated with sources
subject to fees as authorized by State law. Property tax revenue (and in some years,
fund balances) have been used to close this gap.
In 2004, the Air District's Board of Directors approved funding for an updated Cost
Recovery Study that was conducted by the accounting/consulting firm Stonefield
Josephson, Inc. {Bay Area Air Quality Management District Cost Recovery Study, Final
Report; March 30, 2005). This Cost Recovery Study analyzed data collected during the
three-year period FYE 2002 through FYE 2004. It compared the Air District's costs of
program activities to the associated fee revenues and analyzed how these costs are
apportioned amongst the fee-payers. The Study indicated that a significant cost
recovery gap existed. The results of this 2005 report and subsequent internal cost
recovery studies have been used by the Air District in its budgeting process, and to set
various fee schedules.
In March 2011, another study was completed by Matrix Consulting Group (Cost
Recovery and Containment Study, Bay Area Air Quality Management District, Final
Report; March 9, 2011). The purpose of this Cost Recovery and Containment Study
was to provide the Air District with guidance and opportunities for improvement regarding
its organization, operation, and cost recovery/allocation practices. A Cost Allocation
Plan was developed and implemented utilizing FYE 2010 expenditures. This Study
indicated that overall, the Air District continued to under-recover the costs associated
with its fee-related services. In order to reduce the cost recovery gap, further fee
increases were recommended for adoption over a period of time in accordance with a
Cost Recovery Policy to be adopted by the Air District's Board of Directors. Also, Matrix
Consulting Group reviewed and discussed the design and implementation of the new
Production System which the Air District is developing in order to facilitate cost
containment through increased efficiency and effectiveness.
Air District staff initiated a process to develop a Cost Recovery Policy in May 2011, and
a Stakeholder Advisory Group was convened to provide input in this regard. A Cost
Recovery Policy was adopted by the Air District's Board of Directors on March 7, 2012.
This policy specifies that the Air District should amend its fee regulation, in conjunction
with the adoption of budgets for Fiscal Year Ending (FYE) 2014 through FYE 2018, in a
manner sufficient to increase overall recovery of regulatory program activity costs to
2
-------
85%. The policy also indicates that amendments to specific fee schedules should
continue to be made in consideration of cost recovery analyses conducted at the fee
schedule-level, with larger increases being adopted for the schedules that have the
larger cost recovery gaps.
In February 2018, Matrix Consulting Group completed an update of the 2011 cost
recovery and containment study for the fiscal year that ended June 30, 2017. The
primary purpose of this Study was to evaluate the indirect overhead costs associated
with the Air District and the cost recovery associated with the fees charged, by the Air
District. The project team evaluated the Air District's FYE 2017 Programs to assess their
classification as "direct" or "indirect". In addition, they audited the time tracking data
associated with each of the different fee schedules. The Study provided specific
recommendations related to direct and indirect cost recovery for the Air District, as well
as potential cost efficiencies.
This 2021 Cost Recovery Study incorporated the accounting methodologies developed
by KPMG in 1999, Stonefield Josephson, Inc. in 2005 and Matrix Consulting Group in
2011. The Study included the latest cost and revenue data gathered for FYE 2020 (i.e.,
July 1, 2018 - June 30, 2020). The results of the 2021 Cost Recovery Study will be used
as a tool in the preparation of the budget for FYE 2022, and for evaluating potential
amendments to the Air District's Regulation 3: Fees.
Legal Authority
In the post-Prop 13 era, the State Legislature determined that the cost of programs to
address air pollution should be borne by the individuals and businesses that cause air
pollution through regulatory and service fees. The primary authority for recovering the
cost of Air District programs and activities related to stationary sources is given in Section
42311 of the Health and Safety Code (HSC), under which the Air District is authorized
to:
• Recover the costs of programs related to permitted stationary sources
• Recover the costs of programs related to area-wide and indirect sources of
emissions which are regulated, but for which permits are not issued
• Recover the costs of certain hearing board proceedings
• Recover the costs related to programs that regulate toxic air contaminants
The measure of the revenue that may be recovered through stationary source fees is
the full cost of all activities related to th ese sources, including all direct Program costs
and a commensurate share of indirect Program costs. Such fees are valid so long as
they do not exceed the reasonable cost of the service or regulatory program for which
the fee is charged, and are apportioned amongst fee payers such that the costs allocated
to each fee-payer bears a fair or reasonable relationship to its burden on, and benefits
from, the regulatory system.
Air districts have restrictions in terms of the rate at which permit fees may be increased.
Under HSC Section 41512.7, permit fees may not be increased by more than 15 percent
on a facility in any calendar year.
3
-------
Study Methodology
The methodology for determining regulatory program revenue and costs is summarized
as follows:
Revenue
Revenue from all permit renewals and applications during the FYE 2020 was assigned
to the appropriate Permit Fee Schedules. This is a continued improvement over prior
years' process, as more facilities are managed in the New Production System.
Costs
Costs are expenditures that can be characterized as being either direct or indirect. Direct
costs can be identified specifically with a particular program activity. Direct costs include
wages and benefits, operating expenses, and capital expenditures used in direct support
of the particular activities of the Air District (e.g., permit-related activities, grant
distribution, etc.).
Indirect costs are those necessary for the general operation of the Air District as a whole.
Often referred to as "overhead", these costs include accounting, finance, human
resources, facility costs, information technology, executive management, etc. Indirect
costs are allocated to other indirect Programs, using the reciprocal (double-step down)
method, before being allocated to direct Programs.
Employee work time is tracked by the hour, or fraction thereof, using both Program and
Billing Code detail. This time-keeping system allows for the capture of all costs
allocatable to a revenue source on a level-of-effort basis.
Employee work time is allocated to activities within Programs by billing codes (BC1-
BC99), only two of which indicate general support. One of these two general support
codes (BC8) is identified with permitting activities of a general nature, not specifically
related to a particular Fee Schedule.
Operating and capital expenses are charged through the year to each Program, as
incurred. In cost recovery, these expenses, through the Program's Billing Code profile,
are allocated on a pro-rata basis to each Program's revenue-related activity. For
example, employees working in grant Programs (i.e., Smoking Vehicle, Mobile Source
Incentive Fund, etc.) use specific billing codes (i.e., BC3, BC17, etc.). All
operating/capital expense charges in those grant Programs are allocated pro-rata to
those grant activities. Employees working in permit-related Programs (i.e., Air Toxics,
Compliance Assurance, Source Testing, etc.) also use specific permit-related billing
codes (i.e., BC8, BC21, BC29, etc.) and all operating/capital expense charges incurred
by those Programs are allocated pro-rata to those Program's activity profiles, as defined
by the associated billing codes.
4
-------
Direct costs for permit activities include personnel, operating and capital costs based on
employee work time allocated to direct permit-related activities, and to general permit-
related support and administrative activities (allocated to Fee Schedules on pro-rata
basis). Indirect costs for permit activities include that portion of general support
personnel, operating and capital costs allocated pro-rata to permit fee revenue-related
program activities.
Study Results
Figure 1 shows a summary of overall regulatory program costs and revenue for FYE
2020. Figure 2 shows the details of costs and revenue on a fee schedule basis for FYE
2020. Figure 3 shows the details of average fee schedule costs and revenue for the
three-year period FYE 2018 through FYE 2020.
Discussion of Results
Figure 1 indicates that in FYE 2020 there continued to be a revenue shortfall, as the
direct and indirect costs of regulatory programs exceeded fee revenue. The overall
magnitude of the cost recovery gap was determined to be $9.4 million for FYE 2020.
This cost recovery gap was filled by General Fund revenue received by the Air District
from the counties.
Figure 2 shows that in FYE 2020 there were revenue shortfalls for most of the twenty-
three fee schedules for which cost recovery can be analyzed. For FYE 2020, the Air
District is recovering 84.5% of its fee-related activity costs. The revenue collected
exceeded Program costs for eight fee schedules. These are, Schedule C (Stationary
Containers for the Storage of Organic Liquids), Schedule D (Gasoline Transfer at
Gasoline Dispensing Facilities, Bulk Plants and Terminals), Schedule E (Solvent
Evaporating Sources), Schedule G-5 (Miscellaneous Sources), Schedule L (Asbestos
Operations), Schedule P (Major Facility Review Fees), Schedule R (Equipment
Registration Fees), and Schedule X (Community Air Monitoring). The revenue collected
was less than program costs for 15 fee schedules. These are Schedule A (Hearing
Board), Schedule B (Combustion of Fuels), Schedule F (Miscellaneous Sources),
Schedule G-1 (Miscellaneous Sources), Schedule G-2 (Miscellaneous Sources),
Schedule G-3 (Miscellaneous Sources), Schedule G-4 (Miscellaneous Sources),
Schedule H (Semiconductor and Related Operations), Schedule I (Dry Cleaners),
Schedule K (Solid Waste Disposal Sites), Schedule N (Toxic Inventory Fees), Schedule
S (Naturally Occurring Asbestos Operations), Schedule T (Greenhouse Gas Fees),
Schedule V (Open Burning), and Schedule W (Refinery Emissions Tracking),.
Figure 3 shows that over a three-year period (FYE 2018 through FYE 2020) there were
revenue shortfalls for most of the twenty-three fee schedules for which cost recovery can
be analyzed. For this three-year period, the Air District is recovering approximately
85.0% of its fee-related activity costs. The revenue collected exceeded costs for six fee
schedules. These are Schedule C (Stationary Containers for the Storage of Organic
Liquids), Schedule D (Gasoline Transfer at Gasoline Dispensing Facilities, Bulk Plants
and Terminals), Schedule G-5 (Miscellaneous Sources), Schedule L (Asbestos
Operations), Schedule R (Equipment Registration Fees), and Schedule X (Community
Air Monitoring). The revenue collected was lower than costs for 17 fee schedules.
5
-------
These are Schedule A (Hearing Board), Schedule B (Combustion of Fuel), Schedule E
(Solvent Evaporating Sources), Schedule F (Miscellaneous Sources), Schedule G-1
(Miscellaneous Sources), Schedule G-2 (Miscellaneous Sources), Schedule G-3
(Miscellaneous Sources), Schedule G-4 (Miscellaneous Sources), Schedule H
(Semiconductor and Related Operations), Schedule I (Dry Cleaners), Schedule K (Solid
Waste Disposal Sites), Schedule N (Toxic Inventory Fees), Schedule P (Major Facility
Review Fees), Schedule S (Naturally Occurring Asbestos Operations), Schedule T
(Greenhouse Gas Fees), Schedule V (Open Burning), and Schedule W (Refinery
Emissions Tracking).
The Air District uses the three-year averages shown in Figure 3 in evaluating proposed
amendments to Regulation 3, Fees at the fee schedule level because longer averaging
periods are less sensitive to year-to-year variations in activity levels that occur due to
economic or market variations and regulatory program changes affecting various source
categories.
Conclusions
Air District staff has updated the analysis of cost recovery of its regulatory programs
based on the methodology established by the accounting firms KPMG in 1999 and
Stonefield Josephson, Inc. in 2005 and updated by Matrix Consulting Group in 2011 and
in 2018. The analysis shows that fee revenue continues to fall short of recovering activity
costs. For FYE 2018 to 2020, the Air District is recovering approximately 85.0% of its
fee-related activity costs. The overall magnitude of this cost recovery gap was
determined to be approximately $8.5 million.
To reduce or stabilize expenditures, the Air District has implemented various types of
cost containment strategies, including developing an online permitting system for high-
volume source categories, maintaining unfilled positions when feasible, and reducing
service and supply budgets. In order to reduce the cost recovery gap, further fee
increases will need to be evaluated in accordance with the Cost Recovery Policy
adopted by the Air District's Board of Directors.
6
-------
Bay Area
Air Quality
Management
District
2021 Cost Recovery Study
FIGURES
-------
Figure 1: Total Permit Fee Revenue, Costs and Gap for FYE 2020 (in Millions)
8
-------
Figure 2: Fee Revenue and
Program Costs by Fee Schedule, FYE 2020
Reg 3-
Application
Reg 3-
327
Reg 3-
3 Yr
Cost
Direct
Indirect
& Renewal
Schedule
312
Renewal
311 -
Total
Surplus
Recovery
Cost
Cost
Total Cost
Revenue
M
Bubble
Processing Banking
Revenue
Deficit
%
A
Hearing Board
34,904
31,170
66,074
37,093
0
0
0
37,093
(28,981)
56.1%
B
Combustion of Fuel
6,502,684
3,767,955
10,270,639
8,308,863
694,801
193,890
462,260
11,176
9,670,991
(599,648)
94.2%
C
Storage Organic Liquid
754,010
428,562
1,182,572
2,258,275
139,716
172,986
32,950
2,603,926
1,421,354
220.2%
D
Gasoline Dispensing / Bulk!
3,629,779
2,103,899
5,733,678
6,737,714
43,647
58,089
238,047
7,077,497
1,343,820
123.4%
E
Solvent Evaporation
2,554,931
1,590,928
4,145,859
4,028,203
68,820
38,257
203,423
4,338,702
192,843
104.7%
F
Miscellaneous
2,720,691
1,569,518
4,290,209
2,395,565
162,906
90,929
141,782
2,791,183
(1,499,026)
65.1%
G1
Miscellaneous
3,797,994
2,189,792
5,987,787
3,092,209
147,602
94,370
43,502
3,377,683
(2,610,104)
56.4%
G2
Miscellaneous
1,107,628
644,724
1,752,352
992,082
33,564
68,224
7,851
1,101,720
(650,631)
62.9%
G3
Miscellaneous
739,290
445,393
1,184,682
701,913
21,684
63,219
567
787,383
(397,300)
66.5%
G4
Miscellaneous
2,219,283
1,295,895
3,515,178
1,448,914
792,773
61,887
619
2,304,192
(1,210,986)
65.5%
G5
Miscellaneous
339,096
226,803
565,899
670,430
31,853
61,798
335
764,415
198,516
135.1%
H
Semiconductor
170,674
99,621
270,295
236,693
0
0
4,867
241,559
(28,736)
89.4%
I
Drycleaners
26,507
17,098
43,605
2,363
0
0
358
2,721
(40,884)
6.2%
K
Waste Disposal
2,592,513
1,606,577
4,199,091
186,010
114,805
0
3,991
304,806
(3,894,285)
7.3%
L
Asbestos
1,515,640
1,204,827
2,720,468
4,283,337
0
0
0
4,283,337
1,562,869
157.4%
N
Toxic Inventory (AB2588)
1,084,457
535,641
1,620,097
754,864
0
0
0
754,864
(865,233)
46.6%
P
Major Facility Review (Title \i
3,469,393
2,123,430
5,592,823
6,096,660
0
0
0
6,096,660
503,837
109.0%
R
Registration
49,201
37,869
87,071
350,329
2,365
0
13,124
365,818
278,747
420.1%
S
Naturally Occurring Asbesto:
347,150
254,183
601,333
97,167
0
0
0
97,167
(504,166)
16.2%
T
GreenHouse Gas
3,112,676
1,516,281
4,628,957
3,136,724
0
0
0
3,136,724
(1,492,233)
67.8%
V
Open Burning
471,967
393,719
865,685
203,364
0
0
0
203,364
(662,322)
23.5%
W
Refinery Emissions Tracking
871,680
494,150
1,365,830
152,547
0
0
0
152,547
(1,213,283)
11.2%
X
Community Air Monitoring
47,835
29,624
77,459
860,838
0
0
0
860,838
783,379
1111.4%
Total
38,159,982
22,607,659
160,767,641
47,032,155 |
2,254,536
903,647
1,153,676
11,176
51,355,190
(9,412,451)
84.51%
-------
10
-------
Figure 3: Fee Revenue and Program Costs by Fee Schedule, FYE 2018-2020, 3-Year Average
Application
Reg 3-
Reg 3-
327
Reg 3-
3 Yr
Cost
Direct
Indirect
& Renewal
Schedule
312
Renewal
311 -
Total
Surplus
Recovery
Cost
Cost
Total Cost
Revenue
M
Bubble
Processing Banking
Revenue
Deficit
%
A
Hearing Board
78,865
45,023
123,889
33,380
0
0
0
33,380
(90,508)
26.9%
B
Combustion of Fuel
6,154,144
3,326,013
9,480,157
8,049,572
577,127
255,605
438,310
14,727
9,335,341
(144,816)
98.5%
C
Storage Organic Liquid
554,755
302,251
857,006
2,236,878
200,813
183,115
38,377
2,659,183
1,802,177
310.3%
D
Gasoline Dispensing / Bulk 1
4,127,072
2,205,973
6,333,045
6,241,800
24,150
25,498
228,519
6,519,967
186,922
103.0%
E
Solvent Evaporation
2,836,672
1,588,611
4,425,284
3,322,888
49,874
25,453
204,841
3,603,056
(822,228)
81.4%
F
Miscellaneous
2,302,552
1,239,686
3,542,238
2,178,505
679,721
74,104
139,803
3,072,134
(470,104)
86.7%
G1
Miscellaneous
3,885,148
2,084,356
5,969,504
2,721,065
88,270
76,869
45,676
2,931,880
(3,037,624)
49.1%
G2
Miscellaneous
1,020,280
551,461
1,571,742
795,842
25,025
40,899
8,216
869,982
(701,760)
55.4%
G3
Miscellaneous
597,927
338,224
936,151
653,452
10,820
34,213
1,195
699,680
(236,471)
74.7%
G4
Miscellaneous
2,138,918
1,144,892
3,283,810
1,375,225
522,104
84,833
943
1,983,105
(1,300,705)
60.4%
G5
Miscellaneous
269,732
161,613
431,345
726,420
20,279
33,677
943
781,319
349,974
181.1%
H
Semiconductor
181,418
98,965
280,383
208,760
0
201
5,187
214,149
(66,235)
76.4%
I
Dry cleaners
16,398
8,592
24,989
3,759
0
4,537
1,595
9,892
(15,098)
39.6%
K
Waste Disposal
2,065,032
1,182,426
3,247,458
171,255
120,037
110
3,873
295,275
(2,952,182)
9.1%
L
Asbestos
1,533,882
1,057,864
2,591,746
4,445,502
0
0
0
4,445,502
1,853,756
171.5%
N
Toxic Inventory (AB2588)
612,608
299,658
912,266
448,424
0
0
0
448,424
(463,842)
49.2%
P
Major Facility Review (Title V
3,992,021
2,132,956
6,124,977
5,733,911
0
0
0
5,733,911
(391,067)
93.6%
R
Registration
128,309
85,503
213,812
316,341
2,229
558
12,934
332,062
118,250
155.3%
S
Naturally Occurring Asbesto:
420,488
251,837
672,325
89,437
0
0
0
89,437
(582,888)
13.3%
T
GreenHouse Gas
2,828,758
1,179,936
4,008,694
2,948,942
0
0
0
2,948,942
(1,059,752)
73.6%
V
Open Burning
380,723
275,387
656,110
194,713
0
0
0
194,713
(461,397)
29.7%
W
Refinery Emissions Tracking
606,748
325,416
932,164
144,134
0
0
0
144,134
(788,030)
15.5%
X
Community Air Monitoring
147,424
74,027
221,451
948,431
0
0
0
948,431
726,980
428.3%
Total
36,879,874
19,960,670
156,840,545
43,988,636
2,320,447
839,674
1,130,413
14,727
48,293,897
(8,546,647)
84.96%
11
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Bay Area
Air Quality
Management
District
2022 COST RECOVERY REPORT
Prepared by the staff of the
Bay Area Air Quality Management District
375 Beale Street, Suite 600
San Francisco, CA
February 2022
Updated May 2022
-------
Table of Contents
1. Executive Summary 1
2. Background 1
3. Legal Authority 3
4. Study Methodology 4
5. Study Results 5
6. Discussion of Results 5
7. Conclusions 6
Figures
1. Total Fee Revenue and Program Costs, FYE 2021 8
2. Fee Revenue and Program Costs by Fee Schedule, FYE 2021 9
3. Fee Revenue and Program Costs by Fee Schedule, FYE 2019-2021,
3-yr Average 10
-------
Executive Summary
The 2022 Cost Recovery Report includes the latest fee-related cost and revenue data
gathered for FYE 2021 (i.e., July 1, 2019 - June 30, 2021). The results of this 2022 Cost
Recovery Report will be used as a tool in the preparation of the FYE 2023 budget, and
for evaluating potential amendments to the Air District's Regulation 3: Fees.
The completed cost recovery analysis indicates that in FYE 2021 there continued to be
a revenue shortfall, as overall direct and indirect costs of regulatory programs exceeded
fee revenue (see Figure 2).
For the 3-year period 2019 to 2021, the Air District is recovering approximately 83.8
percent of its fee-related activity costs (see Figure 3). The overall magnitude of this cost
recovery gap was determined to be approximately $10.2 million. This cost recovery gap
was filled using General Fund revenue received by the Air District from the counties'
property tax revenue. The Air District uses the three-year averages in evaluating
proposed amendments to Regulation 3, Fees at the fee schedule level because longer
averaging periods are less sensitive to year-to-year variations in activity levels that occur
due to economic or market variations and regulatory program changes affecting various
source categories.
The 2022 Cost Recovery Report also addressed fee-equity issues by analyzing whether
there is a revenue shortfall at the individual Fee Schedule level. For the 3-year period,
it was noted that of the twenty-two Fee Schedules for which cost recovery could be
analyzed, six of the component Fee Schedules had fee revenue contributions exceeding
total cost.
Background
The Air District is responsible for protecting public health and the environment by
achieving and maintaining health-based national and state ambient air quality standards,
and reducing public exposure to toxic air contaminants, in the nine-county Bay Area
region. Fulfilling this task involves reducing air pollutant emissions from sources of
regulated air pollutants and maintaining these emission reductions over time. In
accordance with State law, the Air District's primary regulatory focus is on stationary
sources of air pollution.
The Air District has defined units for organizational purposes (known as "Programs") to
encompass activities which are either dedicated to mission-critical "direct" functions,
such as permitting, rule-making, compliance assurance, sampling and testing, grant
distribution, etc., or are primarily dedicated to support and administrative "indirect"
functions. The Air District has also defined revenue source categories for time billing
purposes (known as "Billing Codes") for all activities, i.e., the permit fee schedules, grant
revenue sources, and general support activities.
The Air District's air quality regulatory activities are primarily funded by revenue from
regulatory fees, government grants and subventions, and county property taxes.
Between 1955 and 1970, the Air District was funded entirely through property taxes. In
1
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1970, the California Air Resources Board (CARB) and U.S. Environmental Protection
Agency began providing grant funding to the Air District. After the passage of
Proposition 13, the Air District qualified as a "special district" and became eligible for
AB-8 funds, which currently make up the county revenue portion of the budget.
State law authorizes the Air District to impose a schedule of fees to generate revenue to
recover the costs of activities related to implementing and enforcing air quality programs.
On a regular basis, the Air District has considered whether these fees result in the
collection of a sufficient and appropriate amount of revenue in comparison to the cost of
related program activities.
In 1999, a comprehensive review of the Air District's fee structure and revenue was
completed by the firm KPMG Peat Marwick LLP (Bay Area Air Quality Management
District Cost Recovery Study, Final Report: Phase One - Evaluation of Fee Revenues
and Activity Costs; February 16, 1999). The Study recommended an activity-based
costing model, which has been implemented. Also, as a result of that Study, the Air
District implemented a time-keeping system. These changes improved the Air District's
ability to track costs by program activities. The 1999 Cost Recovery Study indicated that
fee revenue did not offset the full costs of program activities associated with sources
subject to fees as authorized by State law. Property tax revenue (and in some years,
fund balances) have been used to close this gap.
In 2004, the Air District's Board of Directors approved funding for an updated Cost
Recovery Study that was conducted by the accounting/consulting firm Stonefield
Josephson, Inc. (Bay Area Air Quality Management District Cost Recovery Study, Final
Report; March 30, 2005). This Cost Recovery Study analyzed data collected during the
three-year period FYE 2002 through FYE 2004. It compared the Air District's costs of
program activities to the associated fee revenues and analyzed how these costs are
apportioned amongst the fee-payers. The Study indicated that a significant cost
recovery gap existed. The results of this 2005 report and subsequent internal cost
recovery studies have been used by the Air District in its budgeting process, and to set
various fee schedules.
In March 2011, another study was completed by Matrix Consulting Group (Cost
Recovery and Containment Study, Bay Area Air Quality Management District, Final
Report; March 9, 2011). The purpose of this Cost Recovery and Containment Study
was to provide the Air District with guidance and opportunities for improvement regarding
its organization, operation, and cost recovery/allocation practices. A Cost Allocation
Plan was developed and implemented utilizing FYE 2010 expenditures. This Study
indicated that overall, the Air District continued to under-recover the costs associated
with its fee-related services. In order to reduce the cost recovery gap, further fee
increases were recommended for adoption over a period of time in accordance with a
Cost Recovery Policy to be adopted by the Air District's Board of Directors. Also, Matrix
Consulting Group reviewed and discussed the design and implementation of the new
Production System which the Air District is developing in order to facilitate cost
containment through increased efficiency and effectiveness.
Air District staff initiated a process to develop a Cost Recovery Policy in May 2011, and
a Stakeholder Advisory Group was convened to provide input in this regard. A Cost
2
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Recovery Policy was adopted by the Air District's Board of Directors on March 7, 2012.
This policy specifies that the Air District should amend its fee regulation, in conjunction
with the adoption of budgets for Fiscal Year Ending (FYE) 2014 through FYE 2018, in a
manner sufficient to increase overall recovery of regulatory program activity costs to at
least 85%. The policy also indicates that amendments to specific fee schedules should
continue to be made in consideration of cost recovery analyses conducted at the fee
schedule-level, with larger increases being adopted for the schedules that have the
larger cost recovery gaps.
In February 2018, Matrix Consulting Group (Matrix) completed an update of the 2011
cost recovery and containment study for the fiscal year that ended June 30, 2017. The
primary purpose of this Study was to evaluate the indirect overhead costs associated
with the Air District and the cost recovery associated with the fees charged, by the Air
District. The project team evaluated the Air District's FYE 2017 Programs to assess their
classification as "direct" or "indirect". In addition, they audited the time tracking data
associated with each of the different fee schedules. The Study provided specific
recommendations related to direct and indirect cost recovery for the Air District, as well
as potential cost efficiencies. The Air District is currently working with Matrix to complete
an update of the February 2018 cost recovery and containment study.
This 2022 Cost Recovery Report incorporated the accounting methodologies developed
by KPMG in 1999, Stonefield Josephson, Inc. in 2005 and Matrix Consulting Group in
2011. The Study included the latest cost and revenue data gathered for FYE 2021 (i.e.,
July 1, 2019 - June 30, 2021). The results of the 2022 Cost Recovery Report will be
used as a tool in the preparation of the budget for FYE 2023, and for evaluating potential
amendments to the Air District's Regulation 3: Fees.
Legal Authority
In the post-Prop 13 era, the State Legislature determined that the cost of programs to
address air pollution should be borne by the individuals and businesses that cause air
pollution through regulatory and service fees. The primary authority for recovering the
cost of Air District programs and activities related to stationary sources is given in Section
42311 of the Health and Safety Code (HSC), under which the Air District is authorized
to:
• Recover the costs of programs related to permitted stationary sources
• Recover the costs of programs related to area-wide and indirect sources of
emissions which are regulated, but for which permits are not issued
• Recover the costs of certain hearing board proceedings
• Recover the costs related to programs that regulate toxic air contaminants
The measure of the revenue that may be recovered through stationary source fees is
the full cost of all activities related to these sources, including all direct Program costs
and a commensurate share of indirect Program costs. Such fees are valid so long as
they do not exceed the reasonable cost of the service or regulatory program for which
the fee is charged, and are apportioned amongst fee payers such that the costs allocated
3
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to each fee-payer bears a fair or reasonable relationship to its burden on, and benefits
from, the regulatory system.
Air districts have restrictions in terms of the rate at which permit fees may be increased.
Under HSC Section 41512.7, permit fees may not be increased by more than 15 percent
on a facility in any calendar year.
Study Methodology
The methodology for determining regulatory program revenue and costs is summarized
as follows:
Revenue
Revenue from all permit renewals and applications during the FYE 2021 was assigned
to the appropriate Permit Fee Schedules. This is a continued improvement over prior
years' process, as more facilities are managed in the New Production System.
Costs
Costs are expenditures that can be characterized as being either direct or indirect. Direct
costs can be identified specifically with a particular program activity. Direct costs include
wages and benefits, operating expenses, and capital expenditures used in direct support
of the particular activities of the Air District (e.g., permit-related activities, grant
distribution, etc.).
Indirect costs are those necessary for the general operation of the Air District as a whole.
Often referred to as "overhead", these costs include accounting, finance, human
resources, facility costs, information technology, executive management, etc. Indirect
costs are allocated to other indirect Programs, using the reciprocal (double-step down)
method, before being allocated to direct Programs.
Employee work time is tracked by the hour, or fraction thereof, using both Program and
Billing Code detail. This time-keeping system allows for the capture of all costs
allocatable to a revenue source on a level-of-effort basis.
Employee work time is allocated to activities within Programs by billing codes (BC1-
BC99), only two of which indicate general support. One of these two general support
codes (BC8) is identified with permitting activities of a general nature, not specifically
related to a particular Fee Schedule.
Operating and capital expenses are charged through the year to each Program, as
incurred. In cost recovery, these expenses, through the Program's Billing Code profile,
are allocated on a pro-rata basis to each Program's revenue-related activity. For
example, employees working in grant Programs (i.e., Smoking Vehicle, Mobile Source
Incentive Fund, etc.) use specific billing codes (i.e., BC3, BC17, etc.). All
operating/capital expense charges in those grant Programs are allocated pro-rata to
those grant activities. Employees working in permit-related Programs (i.e., Air Toxics,
4
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Compliance Assurance, Source Testing, etc.) also use specific permit-related billing
codes (i.e., BC8, BC21, BC29, etc.) and all operating/capital expense charges incurred
by those Programs are allocated pro-rata to those Program's activity profiles, as defined
by the associated billing codes.
Direct costs for permit activities include personnel, operating and capital costs based on
employee work time allocated to direct permit-related activities, and to general permit-
related support and administrative activities (allocated to Fee Schedules on pro-rata
basis). Indirect costs for permit activities include that portion of general support
personnel, operating and capital costs allocated pro-rata to permit fee revenue-related
program activities.
Study Results
Figure 1 shows a summary of overall regulatory program costs and revenue for FYE
2021. Figure 2 shows the details of costs and revenue on a fee schedule basis for FYE
2021. Figure 3 shows the details of average fee schedule costs and revenue for the
three-year period FYE 2019 through FYE 2021.
Discussion of Results
Figure 1 indicates that in FYE 2021 there continued to be a revenue shortfall, as the
direct and indirect costs of regulatory programs exceeded fee revenue. The overall
magnitude of the cost recovery gap was determined to be $10.2 million for FYE 2021.
This cost recovery gap was filled by General Fund revenue received by the Air District
from the counties.
Figure 2 shows that in FYE 2021 there were revenue shortfalls for most of the twenty-
three fee schedules for which cost recovery can be analyzed. For FYE 2021, the Air
District is recovering 83.4% of its fee-related activity costs. The revenue collected
exceeded Program costs for seven fee schedules. These are, Schedule C (Stationary
Containers for the Storage of Organic Liquids), Schedule D (Gasoline Transfer at
Gasoline Dispensing Facilities, Bulk Plants and Terminals), Schedule G-5
(Miscellaneous Sources), Schedule L (Asbestos Operations), Schedule N (Toxic
Inventory Fees), Schedule P (Major Facility Review Fees), and Schedule R (Equipment
Registration Fees). The revenue collected was less than program costs for 15 fee
schedules. These are Schedule A (Hearing Board), Schedule B (Combustion of Fuels),
Schedule E (Solvent Evaporating Sources), Schedule F (Miscellaneous Sources),
Schedule G-1 (Miscellaneous Sources), Schedule G-2 (Miscellaneous Sources),
Schedule G-3 (Miscellaneous Sources), Schedule G-4 (Miscellaneous Sources),
Schedule H (Semiconductor and Related Operations), Schedule I (Dry Cleaners),
Schedule K (Solid Waste Disposal Sites), Schedule S (Naturally Occurring Asbestos
Operations), Schedule T (Greenhouse Gas Fees), Schedule V (Open Burning), and
Schedule W (Refinery Emissions Tracking).
Figure 3 shows that over a three-year period (FYE 2019 through FYE 2021) there were
revenue shortfalls for most of the twenty-two fee schedules for which cost recovery can
be analyzed. For this three-year period, the Air District is recovering approximately
83.8% of its fee-related activity costs. The revenue collected exceeded costs for six fee
5
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schedules. These are Schedule C (Stationary Containers for the Storage of Organic
Liquids), Schedule D (Gasoline Transfer at Gasoline Dispensing Facilities, Bulk Plants
and Terminals), Schedule G-5 (Miscellaneous Sources), Schedule L (Asbestos
Operations), Schedule P (Major Facility Review, Title V), and Schedule R (Equipment
Registration Fees). The revenue collected was lower than costs for 16 fee schedules.
These are Schedule A (Hearing Board), Schedule B (Combustion of Fuel), Schedule E
(Solvent Evaporating Sources), Schedule F (Miscellaneous Sources), Schedule G-1
(Miscellaneous Sources), Schedule G-2 (Miscellaneous Sources), Schedule G-3
(Miscellaneous Sources), Schedule G-4 (Miscellaneous Sources), Schedule H
(Semiconductor and Related Operations), Schedule I (Dry Cleaners), Schedule K (Solid
Waste Disposal Sites), Schedule N (Toxic Inventory Fees), Schedule P (Major Facility
Review Fees), Schedule S (Naturally Occurring Asbestos Operations), Schedule T
(Greenhouse Gas Fees), Schedule V (Open Burning), and Schedule W (Refinery
Emissions Tracking).
The Air District uses the three-year averages shown in Figure 3 in evaluating proposed
amendments to Regulation 3, Fees at the fee schedule level because longer averaging
periods are less sensitive to year-to-year variations in activity levels that occur due to
economic or market variations and regulatory program changes affecting various source
categories.
Conclusions
Air District staff has updated the analysis of cost recovery of its regulatory programs
based on the methodology established by the accounting firms KPMG in 1999 and
Stonefield Josephson, Inc. in 2005 and updated by Matrix Consulting Group in 2011 and
in 2018. The analysis shows that fee revenue continues to fall short of recovering activity
costs. For FYE 2019 to 2021, the Air District is recovering approximately 83.8% of its
fee-related activity costs. The overall magnitude of this cost recovery gap was
determined to be approximately $10.2 million.
To reduce or stabilize expenditures, the Air District has implemented various types of
cost containment strategies, including developing an online permitting system for high-
volume source categories and expanding it to all source categories, maintaining unfilled
positions when feasible, and reducing service and supply budgets. In addition, a
management audit is currently underway that is analyzing the Air District's programs and
the use of staff resources for its programs. In order to reduce the cost recovery gap,
further fee increases will need to be evaluated in accordance with the Cost Recovery
Policy adopted by the Air District's Board of Directors.
6
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Bay Area
Air Quality
Management
District
2022 Cost Recovery Report
FIGURES
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Figure 1: Total Permit Fee Revenue, Costs and Gap for FYE 2021 (in Millions)
$70.0
$60.0
$50.0
$40.0
$30.0
$20.0
$10.0
$.0
($10.0)
($20.0)
$61.6
$51.4
($10.2)
Revenue
Costs
Gap
8
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Figure 2: Fee Revenue and Program Costs by Fee Schedule, FYE 2021
Direct
Indirect
Application
& Renewal
Schedule
Reg 3-312
Reg 3-327.1
Renewal
Reg 3-
327.2 -
AB617
Reg 3-
311 -
Total
Surplus/
Cost
Recovery
Fee Schedule
Cost
Cost
Total Cost
Revenue
M
Bubble
Processing
Fee
Banking
Revenue
Deficit
%
FS_A-Hearing Board
$56,402
$28,208
$84,610
$14,318
$0
$0
$0
$0
$0
$14,318
($70,292)
16.92%
FS_B-Combustion of Fuel
$7,726,960
$3,923,244
$11,650,204
$8,645,644
$675,657
$185,643
$478,794
$258,497
$7,620
$10,251,855
($1,398,348)
88.00%
FS_C-Storage Organic Liquid j
$1,068,686
$518,311
$1,586,997
$2,425,794
$141,097
$164,370
$33,347
$117,138
$0
$2,881,746
$1,294,749
181.58%
FS_D
$4,245,809
$2,265,650
$6,511,460
$6,888,556
$47,035
$59,251
$240,285
$47,495
$0
$7,282,623
$771,163
111.84%
FS_E-Solvent Evaporation
$2,163,333
$1,151,288
$3,314,621
$2,810,725
$68,961
$38,453
$194,272
$29,561
$0
$3,141,973
($172,648)
94.79%
FS_F-Misc.
$3,374,077
$1,671,605
$5,045,682
$2,198,594
$151,028
$87,616
$139,464
$160,529
$0
$2,737,231
($2,308,450)
54.25%
FS_G1-Misc.
$3,944,152
$2,073,463
$6,017,615
$3,169,503
$148,630
$91,132
$42,963
$79,901
$0
$3,532,130
($2,485,485)
58.70%
FS_G2-Misc.
$1,482,840
$797,629
$2,280,468
$1,028,305
$35,490
$67,996
$7,754
$39,801
$0
$1,179,345
($1,101,123)
51.72%
FS_G3-Misc.
$985,122
$565,482
$1,550,603
$731,826
$24,454
$63,793
$596
$37,938
$0
$858,606
($691,997)
55.37%
FS_G4-Misc.
$2,097,031
$1,074,611
$3,171,642
$1,546,403
$617,392
$62,646
$558
$41,136
$0
$2,268,137
($903,506)
71.51%
FS_G5-Misc.
$545,053
$300,970
$846,023
$748,634
$34,567
$62,482
$349
$35,734
$0
$881,766
$35,743
104.22%
FS_H-Semiconductor
$221,204
$114,991
$336,195
$191,526
$0
$0
$4,738
$0
$0
$196,264
($139,931)
58.38%
FSJ-Drycleaners
$11,530
$6,843
$18,373
$2,146
$0
$0
$200
$0
$0
$2,346
($16,027)
12.77%
FS_K-Waste Disposal
$1,983,563
$1,114,094
$3,097,657
$207,361
$107,226
$0
$3,896
$10,547
$0
$329,030
($2,768,627)
10.62%
FS_L-Asbestos
$1,546,351
$986,036
$2,532,388
$3,989,403
$0
$0
$0
$0
$0
$3,989,403
$1,457,015
157.54%
FS_N-AB 2588
$1,194,223
$568,270
$1,762,492
$1,972,317
$0
$0
$0
$0
$0
$1,972,317
$209,825
111.90%
FS_P-Title V
$3,631,018
$2,029,885
$5,660,903
$6,188,182
$0
$0
$0
$0
$0
$6,188,182
$527,279
109.31%
FS_R-Registration
$79,494
$45,046
$124,540
$285,718
$2,136
$0
$20,203
$8,464
$0
$316,521
$191,981
254.15%
FS_S-NatOccAsbBillable
$387,951
$212,922
$600,874
$105,251
$0
$0
$0
$0
$0
$105,251
($495,623)
17.52%
FS_T-GHG
$2,077,606
$943,056
$3,020,663
$2,890,490
$0
$0
$0
$0
$0
$2,890,490
($130,173)
95.69%
FS_V-Open Burning
$435,117
$249,791
$684,908
$212,252
$0
$0
$0
$0
$0
$212,252
($472,656)
30.99%
FS_W-PetroleumRefiningEmiss;
$1,149,167
$570,251
$1,719,417
$152,547
$0
$0
$0
$0
$0
$152,547
($1,566,870)
8.87%
$40,406,691
$21,211,645
$61,618,336
$46,405,496
$2,053,673
$883,383
$1,167,419
$866,741
$7,620
$51,384,333
($10,234,003)
83.39%
9
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Figure 3: Fee Revenue and Program Costs by Fee Schedule, FYE 2019-2021, 3-Year Average
Fee Schedule
Application
Reg 3-327.1
Reg 3-
327.2
Reg 3-
Cost
Direct
Indirect
& Renewal
Schedule
Reg 3-312
Renewal
AB617
311 -
Total
Surplus/
Recovery
Cost
Cost
Total Cost
Revenue
M
Bubble
Processing
Fee
Banking
Revenue
Deficit
%
FS_A-Hearing Board
$54,160
$31,971
$86,131
$33,013
$0
$0
$0
$0
$0
$33,013
($53,118)
38.27%
FS_B-Combustion of Fuel
$6,713,225
$3,573,708
$10,286,933
$8,211,381
$750,383
$192,292
$466,769
$258,497
$15,371
$9,722,362
($564,571)
94.51%
FS_C-Storage Organic Liquid ;
$784,050
$407,471
$1,191,521
$2,305,715
$130,239
$213,388
$37,927
$117,138
$0
$2,726,315
$1,534,794
228.81%
FS_D
$3,992,391
$2,143,728
$6,136,119
$6,625,156
$34,439
$44,126
$235,429
$47,495
$0
$6,954,982
$818,863
113.34%
FS_E-Solvent Evaporation
$2,650,656
$1,483,250
$4,133,906
$3,346,377
$58,947
$31,999
$199,980
$29,561
$0
$3,647,157
($486,750)
88.23%
FS_F-Misc.
$2,736,826
$1,437,997
$4,174,823
$2,232,287
$193,675
$93,395
$140,611
$160,529
$0
$2,713,477
($1,461,346)
65.00%
FS_G1-Misc.
$4,024,226
$2,160,741
$6,184,967
$2,966,303
$118,859
$93,958
$44,099
$79,901
$0
$3,249,853
($2,935,114)
52.54%
FS_G2-Misc.
$1,277,814
$693,548
$1,971,362
$927,447
$28,722
$57,664
$7,942
$39,801
$0
$1,035,041
($936,321)
52.50%
FS_G3-Misc.
$761,704
$435,734
$1,197,438
$696,720
$17,602
$51,852
$770
$37,938
$0
$779,590
($417,848)
65.10%
FS_G4-Misc.
$2,161,571
$1,158,731
$3,320,301
$1,507,515
$721,813
$49,025
$574
$41,136
$0
$2,292,638
($1,027,663)
69.05%
FS_G5-Misc.
$380,014
$222,017
$602,031
$689,016
$27,072
$49,114
$497
$35,734
$0
$777,610
$175,579
129.16%
FS_H-Semiconductor
$194,222
$104,963
$299,185
$204,280
$0
$0
$5,290
$0
$0
$209,570
($89,615)
70.05%
FSJ-Drycleaners
$14,350
$8,630
$22,980
$3,002
$0
$0
$918
$0
$0
$3,920
($19,060)
17.06%
FS_K-Waste Disposal
$2,222,129
$1,278,442
$3,500,571
$190,262
$115,081
$110
$4,013
$10,547
$0
$312,981
($3,187,589)
8.94%
FS_L-Asbestos
$1,513,105
$1,051,936
$2,565,041
$4,443,249
$0
$0
$0
$0
$0
$4,443,249
$1,878,208
173.22%
FS_N-AB 2588
$950,852
$458,243
$1,409,096
$996,846
$0
$0
$0
$0
$0
$996,846
($412,250)
70.74%
FS_P-Title V
$3,715,763
$2,047,547
$5,763,310
$5,974,575
$0
$0
$0
$0
$0
$5,974,575
$211,266
103.67%
FS_R-Registration
$93,493
$60,440
$153,933
$324,036
$1,697
$516
$15,464
$8,464
$0
$344,534
$190,601
223.82%
FS_S-NatOccAsbBillable
$397,629
$239,589
$637,218
$100,977
$0
$0
$0
$0
$0
$100,977
($536,241)
15.85%
FS_T-GHG
$2,633,873
$1,070,481
$3,704,354
$2,997,067
$0
$0
$0
$0
$0
$2,997,067
($707,287)
80.91%
FS_V-Open Burning
$439,073
$305,337
$744,410
$208,916
$0
$0
$0
$0
$0
$208,916
($535,494)
28.06%
FS_W-PetroleumRefiningEmiss;
$806,092
$422,056
$1,228,148
$148,333
$0
$0
$0
$0
$0
$148,333
($1,079,814)
12.08%
$38,517,219
$20,796,558
$59,313,778
$45,132,472
$2,198,530
$877,438
$1,160,282
$866,741
$15,371
$49,673,006
($9,640,771)
83.75%
10
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SCHEDULE P
MAJOR FACILITY REVIEW FEES
(Adopted Moremter 3, 1993}
1. MFR SYNTHETIC MINOR ANNUAL FEES
Eac'r» facility, which is req Jtea to undergo tnaiw facility review ir accordance with the requirements
of Regulation 2. Rule 8. shall pay annual fees ("a ar-d *b below) for each source hotelng a District
Perrmt to Operate. These fees shall be n addition to aid shall be paid in conjunction with the annual
renewal fees paid by the facr'ity. However, these MFR permit fees shafl not be Included in tr\e bass
to calculate Alternative Emission Control Pari iDubblej cr toxic air contaminant su'e,barges. If a
ma;cr facility applies for arid obtains a syrette -thick ope*at>ng pe'rrii the requirement tc pay the
fees in 1a and lb shall terminate as of the date the APCO issues the synthetic minor operating
permit.
a. MFR SOURCE FEE p« source
b. MFR EMISSIONS FEE $42.(18 per tor* of regulated ar pollutants emitted
EacH MFR facility and each synthetic minor facility sha;l pay an annual monitoring fee (1c below) 'or
each pollutant measured by a District-approved continuous emission monitor or a District-approved
parametric em.ssion monitoring system.
c. MFRi'SYNTHETIC MINOR WON I FORiNG FEE $t0.690 per monitor per pollutant
2. SYNTHETIC MINOR APPLiCAl ION FEES
Eac'i facrity that apples for a synthetic minor operating permit or a revis
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Each fadlly that Is required to undergo a public notice related to any permit action pursuant to
Regulation 2-6 shall pay the following fee upon receipt of a District Invoice.
MFR PUBLIC NOTICE FEE ..............Cost of Publication
5. MFR PUBLIC HEARING FEES
If a public hearing is required for any MFR permit action, the facility shall pay the following fees upon
receipt of a District invoice.
a. MFR PUBLIC HEARING FEE Cost of Pubic Hearing not to exceed SIB,182
b, NOTICE OF PUBLIC HEARING FEE ...... Cost of distributing Notice of Public Hearing
S. POTENTIAL TO EMIT DEMONSTRATION FEE
Each facility that mates a potential to emit demonstration under Regulation 2-8-312 in order to avoid
the requirement for sn MFR permit shall pay the following fee:
a PTE DEMONSTRATION FEE $254 per source, not to exceed $25,003
ftawM mm*, tommr, mm. mam, mm mm, mm, mim &wm, mms, m»s, mm,
mim, saws; mmo, smt tmz mtms. mm, vws, mm* wwt, m/m, mm, vtmt mm®
2 of 2
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Appendix I. Fee Guidances
Page 65 of 68
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iith UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
Ml RESEARCH TRIANGLE PARK, NC 27711
AIR "JING
WAR 2 7 2018
MEMORANDUM
Sl'lMKC'T: Program and IYv 1 \ ;i 11) at iuj i__S 1 ra (nikLgicc fur 40 CI R Pari 70
FROM; Peter Tsirigotis / ^
TO: Regional Air Division Directors, Regions 1-10
The attached guidance is being issued in response to the Environmental Protection Agency Office
of Inspector General's (OIG) 2014 report regarding the importance of enhanced EPA oversight of state,
local, and tribal1 fee practices under title V of the Clean Air Act (CAA).2 Specifically, this guidance
reflects the EPA's August 22, 2014, commitment to the OIG in response to the OlG's Recommendations
2 through 8 to "issue a guidance document that sets forth a fee oversight strategy" (we refer to the attached
guidance as the "title V evaluation guidance"). The EPA's response to the OIG's other recommendation
is being issued concurrently in a separate memorandum and guidance concerning the EPA's review of fee
schedules for title V programs ("updated fee schedule guidance").3
The title V evaluation guidance is consistent with EPA principles and best practices for efficient
and effective oversight of state permitting programs4 and applies those principles and best practices to the
specific context of title V program and fee evaluations under part 70 of the CAA. As a result, this guidance
highlights opportunities for communication and collaboration between the EPA and air agencies
throughout the evaluation process. Principles and best practices are discussed in Section 1 of the attached
title V evaluation guidance.
1 As used herein, the term l'air agency" refers to state, local, and tribal agencies.
2 Enhanced EPA Oversight Needed to Address Risks from Declining Clean Air Act Title V Revenues: U.S. EPA Office of the
Inspector General. Report No. I5-P-0006. October 20.2014 ("OIG Report").
•' Updated Guidance on EPA Review of Fee Schedules for Operating Permit Programs Under Title K Peter Tsirigotis,
Director, Office of Air Quality Planning and Standards (OAQPS), U.S. EPA. to Regional Air Division Directors, Regions 1 -
10, March 27, 2018 ("updated fee schedule guidance"). See the EPA's title V guidance website at https://www.epa.gov/iitle-
v-operating-permits/titlc-v-operating-permit-policy-and-guidance-document-index.
4 See Promoting Environmental Program Health and Integrity: Principles and Best Practices for (hersight of State
Permitting Programs (August 30, 2016).
Internet Address (URL) « http://www.epa.gov
HoEjeiecl/BnEjciibie « Printed with Vegetable Oil Based Inks on Recycled Paper {Minimum 25% Postoomsttintirj
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Example best practices for conducting part 70 fee or program evaluations described in the
guidance, as well as other existing guidance documents relevant to title V evaluations, include:
Example Best Practices:
•i The frequency and timing of program and fee evaluations areidefined in the Office of Air andi
Radiation's National ProgramiManager Guidance (NPM guidance), which is issued for a 2-yeari
period.3 See Section III of the title V evaluation guidance.i
•i The EPA willipost final evaluation reports on publicly accessible websites established for thisi
purpose. See Section III.D of the titleiV evaluation guidance.i
mi A best practice for resolving concerns that arise during or after an evaluation isito use collaborativei
approaches, such as face-to-face meetings between the airiagency and the EPAiwhen possible, andi
preferably prior to taking formal approaches providedifor inithe part 70 regulations. See Sectioni
III.Eiofithe title V evaluation guidance.
Other Available Guidance:
•i EPA guidance on the sufficiency of fees and other fee requirements of part 70 i'or permittingi
programs, including guidance on certain requirements related to fee demonstrations. See Sectioni
IV of the title V evaluation guidance.i
•i EPA guidance on governmental accounting standards tailored to the part 70 program, including ani
example method for calculating annual fees, costs, and the "presumptive minimum" fee amount;i
types of revenue that may be counted as "fees"; clarification on the definition of "direct costs,"i
"other direct costs." and "indirect costs"; and a review of methods for determining indirect costs.i
See list of EPA guidance on part 70 fee requirements in Attachment B of the title V evaluationi
guidance.i
Finally, the title V evaluation guidance contains several attachments:i
•i Attachment A is a checklist that may be used by the EPA to help plan for a particular program ori
fee evaluation using a step-by-step approach with suggested timeframes for completing each step,i
including a timeframe for the issuance of the final evaluation report.i
•i Attachment B is a list of reference documents and other resources that may be useful as backgroundi
information for reviewing issues that may arise during a program or fee evaluation.i
•i Attachment C provides an example annual financial data reporting form. It may be used as a tooli
to collect information to track an air agency's compliance with certain part 70 fee requirements.i
The form may be used to track information on fee revenue, program costs, and the presumptivei
minimum fee amount for a particular air agency. The example form also includes helpfuli
explanations of common accounting terms referenced in part 70.i
The EPA is also working to increase and improve internal collaboration, communication,i
expertise, and the sharing of infonnation between the EPA staff working on title V evaluations. Fori
example, as a best practice, the EPA plans to establish an internal system to facilitate staff input on and
sharing of evaluation tools and evaluation reports.
5 See Final FY2017 OAR National Program Manager Guidance Addendum, U.S. EPA, Publication Number 440B16001
(May 6, 2016) (NPM guidance) located at https://wmv.epa.gov/sites/production/files/20l6-05/doaiments/fyI7-oar-npm-
guidance-addendimi.pdf.
2
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The development of this guidance included outreach and discussions with stakeholders, including
the EPA Regions, the National Association of Clean Air Agencies, and the Association of Air Pollution
Control Agencies.
1 f you have any questions concerning the title V evaluation guidance, please contact Juan Santiago,
Associate Director, Air Quality Policy Division, Office of Air Quality Planning and Standards, at (919)
541-1084 or Santiago, juan@epa.gor.
Attachments
1. Program and Fee Evaluation Strategy Guidance for 40 CFR Part 70 ("title V evaluation guidance")
2. Attachment A - Evaluation Checklist for 40 CFR Part 70
3. Attachment B - Resources
4. Attachment C - Example Annua! Financial Data Form for 40 CFR Part 70
3
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DISCLAIMER
These documents explain the requirements of the EPA's regulations, describe the EPA's policies, and
recommend procedures for sources and permitting authorities to use to ensure that program evaluations
and fee evaluations are consistent with applicable regulations. These documents are not a rule or
regulation, and the guidance they contain may not apply to a particular situation based upon the
individual facts and circumstances. The guidance does not change or substitute for any law, regulation,
or any other legally binding requirement and is not legally enforceable. The use of non-mandatory
language such as "guidance, " "recommend, " "may, " "should, " and "can, " is intended to describe the
EPA's policies and recommendations. Mandatory terminology such as "must" and "required" is
intended to describe controlling requirements under the terms of the Clean Air Act and the EPA's
regulations, but the documents do not establish legally binding requirements in and of themselves.
4
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Program and Fee Evaluation Strategy Guidance for 40 CFR Part 70
I. Principles and Best Practices for EPA Oversight of Permitting Programs
As part of the EPA's ongoing efforts to strengthen partnerships with state, local, and tribal
agencies (referred to here as, "air agencies'"), in 2016, the EPA established common principles
and best practices for oversight of state permitting programs for air, water, and solid waste. See
Promoting Environmental Program Health and Integrity: Principles and Best Practices for
Oversight of State Permitting Programs, August 30, 2016.' The principles and best practices are
intended to promote efficient and effective oversight that optimizes both collaboration and
accountability in support of program health and integrity.
The title V evaluation guidance aligns with these principles and best practices and will consider
them in title V evaluations of local and tribal air permitting programs as well as state programs.
For example, this guidance provides for air agency evaluations that will be accomplished through
clear, accurate, and up-to-date guidance, including guidance on evaluations and fee requirements
for air agencies; routine review of air agency programs to identify and implement program
improvements; requirements for yearly program evaluations on timeframes established in the
Office of Air and Radiation's National Program Manager Guidance (NPM guidance);2 the use of
tools, including checklists, for planning and tracking the timely completion of evaluations;
opportunities for collaboration between the EPA and air agencies throughout the evaluation
process; and electronic posting of final evaluation reports.
II. Summary of Title V Requirements for Air Agencies
A. Ceneral Program Requirements
Title V of the Clean Air Act (CAA or Act) of 1990 establishes an operating permit program for
major sources of air pollutants, as well as some other sources.3 The EPA promulgated regulations
under 40 CFR part 70 (part 70), consistent with title V of the Act, to establish the minimum
elements for operating permit programs to be administered by permitting authorities.
Air agencies with approved permit programs under part 70 must comply with minimum permit
program requirements, such as reviewing application forms, adhering to certain permit
processing procedures (including timeframes), ensuring certain permit content, collecting fees
sufficient to fund the program, providing for public participation and EPA review of individual
1 The report is located at https://yvww.epa.gov/sites/productiort/files/2016-
IO/documents/principles_and_best_practices Jbr_oversight of state perm itting_programs. pi!)¦
2 The latest NPM guidance is for FY 2018 and FY 2019: Final FY2018 - 2019 OAR National Program Manager
Guidance, U.S. EPA, Publication Number 440P17002 (September 29.2017) (NPM guidance) located at
https://Mnnv.epa.gov/sites/production/files/20/ 7-09/documentsffy / 8- / 9-oar-npm-guidance.pdf. The most recent
NPM guidance should be consulted for specific program requirements and timeframes.
3 See CAA §§ 501-507; 42 U.S.C. §§ 7661-766If.
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permits, and supplementing permits with compliance provisions (when needed), among other
requirements.4
B. Summary of Title V Fee Requirements
The EPA is issuing a separate memorandum and updated fee schedule guidance on the activities
that constitute title V permit program costs and must, therefore, be funded by permit fees. The
requirements for air agency fee programs are further discussed in Section 1 of the updated fee
schedule guidance.3 This title V evaluation guidance identifies best practices and guidance on
EPA oversight of air agency fee programs, particularly through program and fee evaluations.
Attachment B of the title V evaluation guidance provides a list of all previously issued EPA
guidance on part 70 fee requirements. The following is a summary of the fee requirements that
will guide the EPA reviews of air agency programs:6
• Permit fees must be paid by "part 70 sources,"7 and the permit fees must cover all
"reasonable (direct and indirect) costs" of the permit program.8 If the permit fees at least
cover the total permit program costs, the fees are deemed to be sufficient.
• Permit fees paid by "part 70 sources" are "exchange revenue" or "earned revenue" in
governmental accounting terminology because a good or service (e.g., a permit) is
exchanged by a governmental entity for a price (e.g., a permit fee).9 Only revenue
classified as "exchange revenue" should be compared to costs to determine the overall
financial results of operations for a period.i° This means that no legislative
appropriations, taxes, grants," fines and penalties, which are generally characterized as
4 See 40 CFR §§ 70.1(a) and 70.4.
5 Updated Guidance on EPA Rex'iew of Fee Schedules for Operating Permit Programs Under Title V, Peter
Tsirigotis, Director. OAQPS, to Regional Air Division Directors, Regions 1-10, March 27, 2018 (updated fee
schedule guidance).
h See the updated fee schedule guidance at Section I. General Principles for Review of Title V Fee Schedules.
7 The term "part 70 sources" is defined in 40 CFR §t70.2 to mean "any source subject to the permitting requirements
of this part, as provided in 40 CFR §§ 70.3(a) and 70.3(b) of this part."
8 See CAA section 502(b)(3)(A); 40 CFR § 70.9(a).
9 See Statement of Recommended Accounting Standards Number 7, Accounting for Revenue and Other Financing
Sources and Concepts for Reconciling Budgetary and Financial Accounting, issued by the Federal Accounting
Standards Advisory Board (FASAB) ("FASAB No. 7") at page 2 and see Statement No. 33, Accounting and
Financial Reportingfar Nonexchange Transactions (December 1998), issued by the Governmental Accounting
Standards Board (GASB) at pages 1-4.
10 See FASAB No. 7 at page 8. For example, see Governmental Accounting Standards Series, Statement No. 33,
Accounting and Financial Reporting for Nonexchange Transactions (December 1998), issued by GASB, and
Statement of Recommended Accounting Standards Number 7, Accounting for Revenue and Other Financing
Sources and Concepts for Reconciling Budgetary and Financial Accounting, issued by FASAB.
" Since part 70 fees are "program income" under 40 CFR § 31.25(a), part 70 fees cannot be used as match for
section 105 grants, and no state may count the same activity for both grant and part 70 fee purposes. See an
October 22, 1993, memo (and several other memos) on this subject, listed in Attachment B of this document.
2
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"non-exchange revenue,"!2 should be compared to program costs to determine if permit
fees are sufficient to cover costs.
•i Anyifee required by parti70 must "be used solelyifor permit program costs"—in otheri
words, required permit fees may not beidiverted for non-part 70 purposes.1314 Nothing ini
part 70irestricts air agencies from collecting additionalifees beyond theiminimum amounti
needed to cover part 70 program cost; however, all feesi(includingisurplus) must be usedi
for part 70 purposes.i
•i During permit program implementation, theiEPA may require "periodic updates" of thei
"initial accounting" portion of the "fee demonstration" to show whether fee revenuei
required by part 70 is used solely to cover the costs of the permit program.15
•i During programiimplementation, theiEPA may also require a "detailed accounting" toi
show that the fee schedule is adequate to cover costs when an air agency changes itsifeei
schedule to collect less than the "presumptive minimum"16 or if the EPA determines,i
based on commentsirebutting a presumptioniof fee sufficiency or on the EPA'siowni
initiative, that there are seriousiquestions regarding whether theifee schedule is sufficienti
to cover the permit program costs.17
12 "Nonexchange revenue" arises primarily from the exercise of governmental power to demand payment from the
public (e.g., income tax, sales tax, property taxes, fines, and penalties) and when a government gives value directly
without directly receiving equal value in return (e.g., legislative appropriations and intergovernmental grants).
13 Part 70 purposes are all activities in a permit program that must be funded by part 70 fees. As the EPA has
previously explained in the EPA's November 1993 memo, Title V Fee Demonstration and Additional Fee
Demonstration Guidance ("fee demonstration guidance"), the types of activities included in a permit program to be
funded by permit fees, and the costs of those activities will differ depending on many factors associated with the
particular permitting authority. These include the number and complexity of sources within the area covered by the
program; how often the permitting authority reviews permits (e.g., some permitting authorities may renew permits
every year instead of every 5 years); the universe of sources covered (i.e., some permitting authorities may not opt to
def er permitting for non-major sources); the experience of the permitting authority with permitting (e.g., agencies
with permitting experience may not need as extensive training programs as those with no operating permit
experience); and many other factors. Each permitting authority will have to determine its own permitting effort and
what activities are directly or indirectly concerned with operating permits.
14 See 40 CFR § 70.9(a).
15 See fee demonstration requirements at 40 CFR §§ 70.9(c) and 70.9(d) and .see the EPA's November 1993 memo,
Title V Fee Demonstration and Additional Fee Demonstration Guidance ("fee demonstration guidance'"}, on
preparing fee demonstrations for the initial part 70 program submittal.
16 A fee schedule that would result in fees above the "presumptive minimum" is considered to be "presumptively
adequate." The "presumptive minimum" is generally defined to be "an amount not less than $25 per year [adjusted
for increases in the Consumer Price Index] times the total tons of the actual emissions of each "regulated air
pollutant (for presumptive fee calculation)" emitted from part 70 sources." Note that the calculation of the
"presumptive minimum" also excludes certain emissions and adds a "GHG cost adjustment." See 40 CFR
70.9(b)(2)(i) through (v).
17 See 40 CFR § 70.9(b)(5) and Section 2.0 of the fee demonstration guidance for an example "detailed accounting."
The scope and content o fa "detailed accounting" may vary but will generally involve information on program fees
and costs and accounting procedures and practices that will show how the air agency's fee schedule will be
sufficient to cover all program costs.
3
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Ill.i Best Practices for EPA Evaluation of Part 70 Programsi
This section includes an overview of title V program and fee evaluations and describes the
EPA's recommended best practices for conducting program and fee evaluations. This includes a
general process and recommended steps for conducting such evaluations, including a timeframe
for completion of final evaluation reports. This section also includes recommendations for
activities that may occur after a final evaluation report is issued, including for resolution of
concerns raised during an evaluation process, and for public posting of final evaluation reports.
A.i Overview of Part 70iProgram and Fee Evaluations!
In its oversight capacity, the EPA periodically evaluates parta70 programs to ensure that they are
being implemented and enforced inaiccordance with the requirements of title V and part 70.
Program and fee evaluations help the EPA pinpoint areas for program improvement, determine if
previously suggested areasasf improvement have been addressed by the air agency, and identify
bestqpracticesahatacan be shared with other air agencies and the EPA Regions to promote
program health and integrity.
The frequency and timeframes for conducting part 70 evaluations are documented inahe NPM
18
guidance.aTherftequency and timeframe for a specific evaluation should be consistent with the
NPM guidance for the period in which the evaluation occurs.19 The current NPM guidance
requires each EPA Region to complete oneapart 70 evaluation each year. This means that final
evaluation reports should be issued within a 1 -year timeframe.20 It may be possible for the EPA
to complete some evaluations ona shorter timeframe than specified by the NPM guidance when
the scope ofain air agency evaluation is tailored to someaelement of theqprogram, based on
previous performance, as evidenced by previous evaluations. Looking for these opportunities and
completing evaluation reports in less than a year is encouraged as a best practice.a
Program evaluationsacan be conducted on any particular element or elements of theqpart 70
program, including the complete program, or theaair agency's implementation (including fee
reviews), enforcement, and legal authority for the program.
As a best practice, the EPA Regions should reviewqprevious evaluation results that may help
inform and tailor the appropriate scope of an upcoming evaluation and may give particular focus
to issues that have previously been identified as problematic. In addition, the EPA Regions
should be aware of any recent statutory or regulatory changes (including to federal or state rules)
and may want to focus part of the evaluation on these newer implementation areas.
18 The final FY 2018 - 2019 NPM guidance includes a goal for the EPA Regions to perforin an evaluation for at
least one permitting authority for each EPA Region per year. The Regional goals in the guidance are reviewed
periodically and may change in the future.
19 The NPM guidance is currently revised on a 2-year cycle. The current guidance is effective for fiscal years 2018
and 2019.
20 The EPA notes that program or fee evaluations are not currently required to begin on the first day of the fiscal
year; thus, an evaluation may start during one fiscal year and end during the next fiscal year.
4
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To ensure that permitting authorities have adequate resources to implement their part 70
programs, another best practice is to conduct a fee evaluation as part of the overall program
evaluation. The content and scope of a fee evaluation may be specific to the air agency being
evaluated, but frequent topics include those identified in Sections 11.B and IV of this title V
evaluation guidance.
B. Preparing for Title V Evaluations
Developing an evaluation checklist and an evaluation questionnaire can help expedite the
program review process and is considered a best practice for the EPA Regions in preparing for a
part 70 program evaluation. An example evaluation checklist, to plan for and track the progress
of a particular evaluation, is provided in Attachment A. An evaluation checklist provides a
framework of specific topics to be evaluated and recommended steps leading to issuance of a
final evaluation report, including a timeline based on the 1-year timeframe of the current NPM
guidance. Note that the timeframes for the individual steps in the example checklist are flexible,
provided the I-year overall timeframe is met. Another recommended best practice is to share the
checklist with the air agency prior to the actual evaluation to assist them in preparing for the
evaluation.
An evaluation questionnaire is another tool that the EPA Regions may prepare in advance of an
evaluation. Typically, an evaluation questionnaire is a compilation of specific questions intended
to gather information and data from an air agency to assist the EPA in its evaluation of a
particular part 70 program. As a best practice, the EPA Regions should share draft questionnaires
with other EPA Regions or Headquarters offices to seek input and share "lessons learned" prior
to transmitting to the air agency. Collaboration can enhance national consistency and help the
Regional office learn from the experiences of other Headquarters offices.
C. Information and Data Gathering Phase
An important initial step of any program or fee evaluation is gathering information about current
program implementation. Typically, an evaluation formally begins when the EPA Region sends a
letter to the air agency informing the agency of the EPA's intent to conduct an evaluation, with a
request for specific information and data needed to conduct the evaluation. Usually such a letter
will be preceded by an informal call or email to provide the air agency with notice of the
evaluation. The letter should specify the scope of the evaluation and a timeline for when a
response from the air agency is expected. As a best practice, if the EPA Region intends to use an
evaluation questionnaire, that questionnaire should be included with the letter.
The next recommended step is for the air agency to respond in writing to the EPA's questions
and provide the information or data that was requested. The length of time to complete this step
is dependent on the scope of the evaluation and the air agency's data collection systems. If the air
agency foresees an issue with providing the information requested in a timely manner, it should
reach out to the EPA Region to discuss steps to address the issue and reach consensus on a
revised timeline.
If resources allow, the EPA Region should, as a best practice, conduct an in-person meeting with
the air agency shortly after sending the letter (and questionnaire if one is to be used) to answer
5
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preliminary questions on timing and scope. In addition, the EPA Region and the air agency could
hold a follow-up meeting to discuss the air agency's draft response. In preparing for these
meetings, the EPA staff should make every effort to gather as much relevant information as
possible before meeting with the air agency in order to make the best use of time.
In addition to the evaluation questionnaire, another method for collecting information or data for
an evaluation includes file and permit reviews. File reviews may also be used by the EPA to
evaluate the effective implementation of certain program responsibilities (e.g., to quality assure
fee collection procedures). The EPA may use a permit review (reviewing a sample of issued
permits) to evaluate whether the air agency is satisfying permit-content requirements and permit-
issuance procedures in practice.21
D. Evaluation Report Phase
The EPA staff should document each title V evaluation in an evaluation report. The report may
describe concerns identified during the evaluation and, if any concerns are identified, may
include recommended corrective actions with intended timeframes for resolution. The EPA may
also ask the air agency to provide an explanation of how it will resolve these concerns and an
estimate of the timeframe needed for the air agency to complete its work.
The EPA staff drafting the evaluation report should consult with Regional management or
Headquarters offices as needed, particularly if the report addresses nationally significant issues.
Once completed, the draft evaluation report's findings and recommendations, including those
addressing novel or controversial issues, should be shared with EPA management and other
offices.
As a best practice, the EPA should provide the draft report to the air agency with an option to
provide comments back to the EPA. During this time, the EPA and the air agency may also
choose to have further discussions of the draft report findings. If further discussion occurs,
additional time may be necessary to complete the final report and corrective action plan.
After attaching any air agency comments to the report and revising the report to incorporate
input from EPA management and the air agency being evaluated, the final report should be
signed by the relevant EPA air program manager or other designated EPA official. The final
report should then be transmitted to the air agency and an electronic copy should be posted on a
publicly accessible website maintained by the EPA (the Regional websites are linked to the
national webpage for the part 70 program).22 As a best practice, any supporting information
related to the evaluation should be posted on the EPA website with the final report, including the
air agency's response to the questionnaire, relevant communications, and other supporting data.
Approaches used to address novel or controversial issues should be summarized and shared for
potential use in future reviews.
21 See 40 CFR §§ 70.6 and 70.7.
22 See hitps:/fwww.epagov/title-v~operating-permits/epa-oversight-operating-permits-program.
6
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E. Post-Report Activities
Activities that occur after the EPA transmits the final evaluation report are not included in the 1 -
year timeframe for completing the evaluation process pursuant to the NPM guidance. Subsequent
activities will proceed on a separate track under different timeframes.
The EPA may provide an opportunity for the air agency to respond in writing to the final
evaluation report, particularly in cases where the EPA identified concerns but a corrective action
plan was not agreed upon during the preparation of the final report. This step is not necessarily
part of the evaluation process and may proceed on a separate track. The EPA would not expect
such responses to necessarily be part of the final report, particularly in cases where the responses
occur after the final report has been transmitted to the air agency. However, these post-report
responses may be included as supporting information on the website, along with the final report.
The EPA encourages its staff to, where possible, conduct in-person meetings with their air
agency counterparts in order to best facilitate resolution of any issues identified in the report.
Depending on the complexity of the issue, such face-to-face meetings may be facilitated by the
involvement of a third-party negotiator or other EPA offices (e.g., the Office of the Chief
Financial Officer) as appropriate. Such meetings may prove useful to resolve straight forward
issues that can be expeditiously resolved (e.g., permit administration or implementation issues
that do not require regulator}' changes), as well as to discuss long-term plans for resolving more
complex issues (e.g., where resolution may involve changes to statutory authority, regulatory
changes, or a multi-step process that may take multiple years to complete). In cases where initial
discussions between the EPA and air agency staff do not result in a plan to resolve issues, a best
practice is to elevate the issue to the management level (e.g., EPA and air agency management).
Finally, if the issue resolution process described above fails to resolve the issues identified
during a program or fee evaluation, the EPA has the authority to consider whether an official
EPA finding of a program deficiency is warranted.23 The decision to make such a finding should
be coordinated with EPA management at the Regional and Headquarter level. Section 502(i) of
the Act provides that whenever the EPA Administrator determines that an air agency is not
adequately administering or enforcing a title V program, or any portion of a title V program, the
EPA shall provide notice to the air agency and may take certain measures intended to incentivize
compliance. In practice, the EPA refers to the determination as a "finding," the inadequate
administration or implementation as a "deficiency," and the notice as a "Notice of Deficiency"
(NOD).24 The EPA will use its bestjudgment to decide when a finding of a program deficiency
is warranted; whenever such a finding is made, the EPA will issue an NOD and follow the
requirements that flow from that finding.
25 See 40 CFR §§ 70.10(b) and 70.4(i)(l).
24 NODs are published in the Federal Register.
1
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IV. Assessment of Fee Sufficiency and Other Fee Requirements
This section discusses the requirement for part 70 permit fees to be sufficient to cover program
costs, including requirements for updates to certain elements of part 70 fee demonstrations,
including for "periodic updates" to the "initial accounting" and for a "detailed accounting" in
certain circumstances. This section also discusses Attachment C, which is an example annual
financial data reporting form that may be used to report fee revenue, program costs, and to
calculate the "presumptive minimum" for an air agency for a particular year.
Fee sufficiencv.aThe part 70 rule uses the term "sufficient" in relation to fees and costs.23 Since
the question of whether fees are sufficient is a key concern that may be considered by the EPA as
part of a program or fee evaluation, further explanation may be helpful:
• Section 502(b)(3)(A) of the Act requires permit programs to fund all "reasonable (direct
and indirect) costs" of the permit programs through permit fees collected from sources.
Similarly, part 70 requires the fees to be paid by "part 70 sources."26 requires the fees to
be sufficient to cover all reasonable permit program costs, and requires the fees to be
used "solely" for permit program costs.27
• The costs against which fees are compared must include, at a minimum, certain activities
required by the part 70 rules28 and all "reasonable (direct and indirect) costs."29
Additional discussion on the revenue and costs that should be used in this comparison is
provided in the separate updated fee schedule guidance as well as Section II.B of this title
V evaluation guidance.
• If concerns regarding fee sufficiency are raised by the EPA, the EPA will typically follow
the issue resolution procedures discussed in Section lll.E of this title V evaluation
guidance.
Initial fee demonstration. As part of the initial part 70 program submittal to the EPA, air agencies
are required to provide a "fee demonstration" to show that the fee schedules selected by the air
agencies would result in the collection and retention of fees in an amount sufficient to meet the
fee requirements of part 70.30 The contents of the "fee demonstration" vary depending on the
status of the air agency with respect to the "presumptive minimum":
25 See 40 CFR §§ 70.9(a), (b) and (c).
26 The term "part 70 sources" is defined in 40 CFR § 70.2 to mean "any source subject to the permitting
requirements of this part, as provided in 40 CFR §§ 70.3(a) and 70.3(b) of this part." Thus, a source is a part 70
source prior to obtaining a part 70 permit if the source is subject to permitting under the applicability provisions of
40 CFR § 70.3.
27 See 40 CFR § 70.9(a).
28 See 40 CFR § 70.9(b)(1).
29 CAA section 502(b)(3)(A).
50 See the fee demonstration requirements at 40 CFR §§ 70.9(c) and 70.9(d) and the EPA's November 1993 memo,
Title V Fee Demonstration and Additional Fee Demonstration Guidance ("fee demonstration guidance"), on
preparing fee demonstrations for the initial part 70 program submittal. See 40 CFR § 70.9(c), (d).
8
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• Air agencies with fee schedules that would result in fees abovedhe "presumptive
minimum" are required to submit a "presumptive minimum program cost" demonstration
showing that the expected fee revenue would in fact be above the "presumptive
minimum"31 and also provide an "initial accounting"32 to show that fees would be used
solely to cover part 70 program costs.
• Air agencies with fee schedules that would result in fees below the "presumptive
minimum" are required to submit a "detailed accounting"33 showing that the expected fee
revenue would still be sufficient to cover part 70 program costs and an "initial
accounting"34 to show that the required fees would be used solely to cover part 70
program costs.
Also, as part of the initial program submittal, part 70 requires the submittal of several additional
elements with respect to program costs.33
Detailed accounting. After program approval, a "detailed accounting" that permit fees are
collected and retained in an amount sufficient to cover all reasonable direct and indirect costs is
required in the following two circumstances:56
• When an air agency sets a fee schedule that would result in an amount less than the
"presumptive minimum,"37 or
• When the EPA determines—based on comments rebutting the presumption or its own
initiative—that there are serious questions regarding whether the fee schedule is
sufficient to cover costs.
A "detailed accounting" for an approved part 70 program would be based on data on fee revenue
and program costs. The level of detail required in the "detailed accounting" remains at the
discretion of the EPA and will depend on circumstance-specific factors related to the air agency
being evaluated.38
Periodic updates.aAf'ter program approval, the EPA may require "periodic updates"39 to the
"initial accounting" element of the fee demonstration to confirm that required fees are being used
solely to cover part 70 costs. A "periodic update" for an approved part 70 program is based on
31
This fee demonstration is referred to as the "presumptive minimum program cost" demonstration in Sections 1.1
and 3.2 of the EPA's November 1, 1993, memo. Title V Fee Demonstration and Additional Fee Demonstration
Guidance ("fee demonstration guidance'),
31 See 40 CFR § 70.9(d).
33
§ff §PK | ?§:§fffl(5) and an example "detailed accounting" in Section 2.0 of the fee demonstration guidance.
M See, e.g., 40 CFR § 70.4(b)(8)(v).
36 See the "detailed accounting" requirements at 40 CFR § 70.9(b)(5)(l).
37 The calculation of the "presumptive minimum" is provided in 40 CFR §§ 70.9(b)(2)(i) through (v).
31 See the fee demonstration guidance. Section 2.0, for an example ''detailed accounting."
39 See the "periodic update" provision at 40 CFR § 70.9(d).
9
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records showing that required fee revenue is actually being retained and used to cover the
reasonable direct and indirect costs of the part 70aprogram.
Example annual financial reporting form.a\ttachment C of this title V evaluation guidance is an
example annual financial reporting formafor part 70. This toolanay be used to help track the
collection of fee revenue, programa:osts, and the presumptive minimum fee amount for a
particular air agency. Attachment C also includes helpful explanations of common accounting
terms used for part 70qpurposes. This example annual financial reporting form represents one
way to collect theainformation previously described and is not required by part 70 for any
particular oversight activity.
V.i Identification of Financial and Accounting Expertise for Fee Reviewsi
TheaOIG Report requested thatathe EPA explain how to leverage financial or accounting
expertise toaassist with fee evaluations. Historically, the EPA staff withascientific, engineering, or
similar technical degreesaar experience are tasked with air agency program and fee evaluations.a
A recommended best practiceas to seek the assistance of existing EPA staff with governmental
accounting, financial, or economics expertise, who work outside of the part 70 program (e.g.,
staff involved in grants administration or in determining the economic penalty of noncompliance
for civil penalty assessment) to assist with fee evaluations as needed. One way for the EPA to
seek intemalassistance for fee evaluations would be to offer a formal detail opportunity
(a temporary reassignment for a set period of time) for a financial or accounting professional to
work on parta70 evaluations. Another way to seek internal EPA assistance would be to use the
EPA's Skills Marketplace.40
EPA staff without financial or accounting expertise who want to become familiar with state,
local,a>r tribal financial and accounting standards and practices may consider reviewing
governmental accounting guidance issued by the national accounting standards board (e.g., the
Governmental Accounting Standards Board (GASB)) and financial or audit reports generated by
the air agency. Financial oraaccounting audit reports generated by the air agency may also
provide useful data, address emerging issues with the part 70;program, or confirm that known fee
issues are being addressed.
Financial or accounting guidance.aThe primary focusaof part 70 fee evaluations isao review
whether the air agency's fee program is&eing implemented consistent with part 70 requirements
(see Section II of this guidance. Summary of Title V Requirements for Air Agencies). The focus
of fee evaluations under part 70 is different from the focus of typical financial or accounting
"audits" (as that term is used in the accounting profession).41 Attachment B of this guidancea
40 The Skills Marketplace is a component of the EPA's recently launched Talent Hub Portal SharePoint site located
at: https://usepa. sharepoint.com/sites/OA_Applicatiom/TalentHub/smpfSitePages/Home.aspx.
41 In the accounting profession, the primary purpose of an audit is to verify that financial statements of governmental
or private entities are consistent with specific accounting criteria.
10
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includes several examples of governmental accounting or financial guidance and other resources
that may be useful for technical staff to build expertise in these areas.
Financial or accounting audit reports generated bv air agencies. Audit reports or financial reports
prepared by air agencies for their own accounting, budgeting, or oversight purposes may include
useful background information for fee evaluations, including caseload statistics, historical
funding patterns, funding sources, and identification of program performance issues. The GASB
requires air agencies to prepare annual financial reports to determine compliance with their
budgetary requirements or finance-related requirements. Most air agencies follow these
requirements through review of financial reports by an auditor, with preparation of the reports by
the air agency budget office, legislature, or by the department itself. Most air agencies also
require local programs to be audited for submittal to the state auditor. These financial audits are
typically conducted at the departmental level, but part 70 data may be available upon request.
Such reports are not required by the EPA, but, if available and timely, they may provide useful
information for program or fee evaluations.
11
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ATTACHMENT A
Evaluation Checklist for 40 CFR Part 70
Regardless of the type of evaluation being conducted (program, fee, or combination of the two),
the EPA describes the evaluation process as consisting of two phases: 1) Information and Data
Gathering Phase and 2) Evaluation Report Phase, each of which is composed of several
recommended steps. The requirement of the EPA's national program manager guidance ("NPM
guidance) for fiscal years 2018 and 2019 is for part 70 evaluations to be completed within 1
year.1 The checklists in Tables 1 and 2 describe the phases, recommended steps, and timeframesa
for each phase and step, leading to completion of the evaluation process within the I -year
timeframe.
The EPA Regions may revise this checklist to meet their needs. For example, the column for
recommended duration could be replaced with expected dates for completion of each step for
planning purposes, and steps that do not apply for a specific evaluation could be deleted. The
column for comments could be used to document reasons why expected timeframes were not met
or other relevant information concerning implementation of a step.
Information and Data Gathering Phase
An EPA letter requesting certain information from the air agency, and the air agency's response
is the first phase of the evaluation process. The recommended best practice for this phase is that
it takes no longer than 160 days. Recommended steps and durations for the steps are listed in
Table 1.
Evaluation Report Phase
Drafting and finalization of the evaluation report is the second phase of the evaluation process.
The recommended timeframe for this phase is 205 days. Specific steps and a recommended
duration for each step are listed in Table 2.
1 Final FY 2018 - 2019 OAR National Program Manager Guidance, U.S. EPA. Publication Number 440PI7002
(September 29. 2017) (NPM guidance) located at https;//www.epa.gov/sites/produtiion/fties/'20}7-
09 fd ocuments/Jy 18-!9-oar-npm-g«i dance.pdf-
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Table 1: Information and Data Gathering Phase Checklist
(It is recommended that this phase take no more than 160 days.)
Description
The Region drafts
a checklist and
sends an
information
request letter to the
state, local or tribal
agency ("air
agency").
Air agency
responds to
questions in
writing.
Recommended
Duration
No longer than
40 days.
Checklist
~aStart drafting letter
and checklists
/ /
riaLetter transmitted:a
/ /
Comments
~»\ir agency response
received:a
/ /
No longer than
120 days.+
This phase
should be
completed
within 80 days
of project
initiation.
+ The scope of the evaluation and sophistication of the data collection systems employed by the
air agency will inform the time needed for this step.
2
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Table 2: Program and/tor Fee Evaluation Report Phase Checklist
(It is recommended that this phase take no more than 205 days.)
Description
Recommended
Duration
Checklist
Comments
The Region reviews
No longer than
~(Regional review ofi
the air agency
60 days.
air agency responsei
response and drafts
~iConsultation withi
evaluation report.
HQ (as needed)i
EPA HQ
consultation as
Date step completed:
needed.
/ /
The EPA and the
No longer than
oiEPA & air agencyi
air agency meet to
30 days after
meeting to discussi
discuss results
draft report
results:
(optional).
available.
/ /
EPA Regional
No longer than
oiEPA management!
management
50 days.tf
briefmg:i
briefed on draft
/ /
report; copy
provided to air
oiDraft report sent fori
agency for
comment:!
comment (optional).
/ /
Air agency
No more than 30
~iAir agency responsei
responds to draft
days.
received :i
report with
/ /
comments
(optional).
The EPA releases
No more than 35
~iFinal evaluation!
final version of
days/
report released:i
evaluation report.
/ /
n Iftan air agency will not be providing comments on the report, the EPA Region could issue the final report by the
end of this step or 140 days.
~ Some air agencies may request that the EPA also release the air agency's response with the release of the final
evaluation report. The EPA recommends that Regions include such responses in their final reports, when
practicable.
3
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ATTACHMENT B
Resources
This is a list of resources where users can find additional information related to the requirements
and issues discussed in this document.
Part 70 Monitoring Requirements
•a Source Monitoring Guidances
oa Monitoring Knowledge Base: http://cfpub.epa.gov/oarweb/mkb/.
oa Compliance Assurance Monitoring: http://mvw3.epa.gov/itn/ahv/cam/ricam.htmlj
oa Emissions Measurement Center: http://www3.epa.gov/itn/emc/.
•a Preconstruction Review:a
oa For EPA resources concerning preconstruction review permitting, seei
hi t'p:Wwww2. epa.gov/nsr.
oa For EPA guidance memos on preconstruction review, seel
hltpsfJwww.epa.gov/nsr/new-source-rexnew-po!icy-and-guidance-documenl-index.
EPA Responses to Part 70 Petitions (EPA Orders)
•a SeeiEPA responses and petitions at
hllps:/M!ww.epa.gov/iitIe-v-operating-permits/litIe-v-petition-database.
Greenhouse Gas Permitting Requirements
•a October 23, 2015a- Standards of Performance for Greenhouse Gas Emissions From New,a
Modified, and Reconstructed Stationary Sources: Electric Utility Generating Units, Finala
Rule: https://www.gpo.gov/fdsys/pkg/FR-2015-IO-23/pdf/20 l5-22837.pdf.
-------
Guidance oil Government Accounting Standards
•a Handbook of Federal Accounting Standards and Other Pronouncements, asaAmended, asa
of June 30, 2015, Federal Accounting Standards Advisory Board (FASAB Handbook):
http://wmv.fasab.gov/pdffiles/2015 Jasab Jtandbook.pdf:\
oa Statement of Federal Financial Accounting Standards 4: Managerial Costi
Accounting Standards and Concepts, page 396 of the FASAB Handbook (Junea
2015) ("SFFAS No. 4").a
oa Statement of Federal Financial Accounting Standards 7: Accounting for Revenues.
andiOtheri Financial Sources and Concepts for Reconciling Budgetary andl
Financial Accounting, page 592 of the FASAB Handbook (June 2015) ("SFFASa
No. 7").
•a Statements of the Governmental Accounting Standards Board (GASBdStatements):a
http://www.gasb.org/cs/ContentServer?c=Page&pagename=GASB%2FPage%2FGASBSi
ectionPage&cid-1176160042391 \
o Statement No. 33, Accounting and Financial Reporting for Nonexchangei
Transactions (December 1998) ("GASB Statement No. 33"):a
http://wwwgasb.org/jsp/GASB/Document _C/GASBDocumentPage?cid= 11 ?6l60 i
029148&acceptedDisclaimer=true.i
c Statement No. 34, Basic Financial Statements - and Management's Discussioni
and Analysis - for State and Local Governments (June 1999) ("GASB Statementa
No. 34"):
http://www.gasb.org/jsp/GASB/Document C/GASBDocumentPage?cid-11761601
029121 &acceptedDisclaimer—true.[
•a Examples of air agency financial or performance audit reports:
•
oa Accountability, New York State Department of Environmental Conservation,i
Report of Title V Operating Permit Program Revenues. Expenses and Changes in i
Fund Balance for the Two Fiscali Years Ended March 31. 2009, Report Numbera
2010-S-61. Accessed January 19, 2017. at:a
www.osc.state.ny. us/aitd its/allaudits/093011/10s6l.pdf
oa State of Washington, Department of Ecology, Air Operating Permit Prog rami
Report Fiscal Year 2014. Publication Number 15-02-008. Accessed January 19,a
2017, at www.fortress.wa.gov/ecy/publi cations/documents/I502008.pdfi
oa State of North Carolina, Division of Air Quality, Department of Environment anda
Natural Resources, Title V Air OualityiPermit Program Accountability Report,i
November 2009. Accessed January 19, 2017, at:
www.ncleg.ne(/documen(si(es/commi((ees/ERC/ERC%20Reports%20 Received/20
09/Dept%20of%20Environment%20and%20Natural%20Resources/2009- Nov%[
20-%20Tit!eŁ/o20V%20Ai r%20Ouali ty%20 Permi t%20 Program .pdf.
2
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List of EPA Guidance on Part 70 Fee Requirements
•a Januaryal992a- GuidelinesiforilmplementationiofiSection 507bftheiCleaniAiriActi
Amendments- Finali Guid e/wes,i U. S. ŁP A, Ł) ffi c e ao f AirEQualityflanningaandtStandardsa
(OAQPS),iJ.S.aEPA.aSeeipages 5 andal 1 -12 concerning fee flexibility for smallabusinessa
stationary asources:
httpyiAvww.epa.gov/site/production/files/20I5-08/documents/smbus.pdfi
•a Julya7,al993a- Questionsiand Answers on the Requirements ofiOperating Permit Programi
Regulations,iU.S.dBPA.aSeeiSection 9 at page 9-1: a
http://www.epa.gov/sites/production/Jiles/2015-08/documents/bbrd qaI pdf. i
•a August 4,a) 993a- ReissuanceiqfiGuidanceioniAgencyiReviewiqf State Fee Schedulesifori
OperatingiPermitiProgramsiUnden Tit lei Vj John.ŁS.ŁSeitz,ŁDirector,aOAQPS,dJ.S.dEPAaioa
Airi)ivisioni)irectors,dlegionsd-X4"1993afeeascheduleqguidance").dMoteŁthatahereavasa
anaearlieralocumentaDnahisasubjectahatavasasupersededsbyahisadocument:
http://www3.epa.gov/4tn/naaqs/aqmguide/collection/i5/fees.pdfi
•a August^,a!9 93a- Acid Rain-Titlei V Guidance on Fees and Incorporation by Referenced
Br8anaf.ŁMcLean,ŁDirector,a\ciddlaind3ivision,ŁLf.S.aEPAatoa\ir, aPesticides, mndafoxicsa
Divisioni)irectors,atoŁRegionsd, !V,andaVl,aAirandaWastedv!anagement,aDivisiona
Director,ŁRegionaH,aAirandaToxicsd3ivisionŁ)irectors,dlegionsŁilLaVll,aVllS,dX,fflnd^C
and Air andaRadiationaDivision Director,dRegionaV:
http://www.epa.gov/sites-/production/jiles-/2015-08/documents/combo809.pdfi
•a Septemben23,al993 - Matrix ofiTitlei V-Related and Air Grant-Eligible Activities,i
OAQPS,dJ.S.dZPA,aTheariatrixaiotes;lhatatasao bed'readaindajsedan concert&vithahea
Augusta!, 1993d"eeatschedule]aguidance'X"inatrixqguidance"):
hup: //www. epa.gov/'sites/production/files/2015-08/documents/matrix.pdf
•a October 22, 1993a- Use of Clean Air Act T itlei V Permit Fees as Match for Sectioni/05i
Grants, GeraldŁM.aYamada,aActingŁGeneral Council,iJ.S.aEPA toaMichaelaH.aShapiro,
Acting Administrator, Office of Air and Radiation, U.S.aEPA:a
http://yosemite.epa.gov/oa/eab_web_docket.nsf/fiHngs%20by%20appeal%20numbei-/95 7a
cb8b03e0ccaf08525 7-(b0005aa688/Sfile/addit ional%20filing%20%20no.il %20... 22.pdf.i
•a Novembenfil, 1993 - Titlei V Fee Demonstration and Additional Fee Demonstrationi
Guidance.i John;Ł ifieitz,aDirector,aOAQPS. U.S. EPA todDirector.aAir. Pesticides anda
ToxicsdvlanagementdDivision.aRegionsal andalV,dDirector,aA.iramdaWastedVlanagement
Division,aRegionaH,;Director.aAir.aRadiationaindaToxicsaDivision.aRegiondII,;Director,a<\ir
anddRadiationiDivision,dlegionaV.ŁDirector.a^ir,ŁPesticidesaindaroxicsŁDivision.dRegion
VI,aDirector,a<\iramdaroxicsaDivision,aRegionsaVII,aVIII.dX,aindŁX ("feeademonstration
guidance"):
http:/Avww3. epa.gov/itn/naaqs/aqmguideicol!ection/t5/feedemon.pdf
3
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•a Julya21, 1994a- TransitionrtorFundingrPor lions of State andrLocal AirrProgramsnvithn
PermitrFeesrRalhenthan Federa/^ra/?/.9,«MaryŁ).aNichols,aA.ssistantaAdministratorafbra
AiraandŁRadiation,aU.S.ŁEPAatoaRegionalaAdministrators,aR.egionsala- X:a
http:/i/www .epa.gov/sites/production/fihs/201 J-08/documents/gr antmem.pdj~.n
•a Augusta28, 1994a- Additional Guidancennv funding Support for State andiLocaln
/Vogram,/Maryd3.aNschols,a<\ssistanta<\dministratorafora<\irandaRadiation, U.S.dEPAao
RegionalaAdministrators,ŁRegionsd - X ("additionalqguidanceanemo"):
http: //www. epa.gov/sites/production/files/2015-08/'documents/'guidl ine.pdfn
•a Januarya23,aJ996a- Letter from Conrad Simon, Director,aAira& WastedVlanagementa
Division,dJ.S ŁEPAdlegiondIaoaMr.ŁBillyaI.iSexton,aDirector,aIef'fersonŁCounty
Depaitmenta3fŁPlanningaandaEnvironmentaldVlanagement,a1\inPollutionŁControlaDistrict,
Louisv\Uz,d4633:ahllp:tfwww.gpo.go\'(tikys/pkg/FR-2015-]0-23/pcif/2015-
22S37.pdf n
•a Marcha27, 2018- UpdatediGuidance onrEPA Review of FeerSchedules for Operatingn
PermitrProgramsiUnderfTitled/,fPeteraTsirigotis,aDircctor, OAQPS,i) S aEPA,Łtoa
RegionalaAiraDivisionaDirectors, Regionsal - 10^"updatedafeeascheduleqguidance"):a
hit ps.Wwww. epa.gov/iitle-v-operating-permits/title-v-operating-permit-policy-and-
guidance-document-index.
4
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ATTACHMENT C
Example Annual Financial Data Form for 40 CFR Part 70
Permitting Authority:
Annual Period: / / to / / _ (MM/DD/YYYY)
Annual Program Revenue
A
Total Program Revenue (Fees Paid by Part 70 Sources)
$
Annual Presumptive Minimum Cost Calculation
B
Total Emissions of "Regulated Pollutants (for presumptive fee
calculation)"
tons :
c:
Presumptive Minimum Fee Rate During Period (S/ton)
$ per ton :
D
Total Greenhouse Gas (GHG) Cost Ad justments (as applicable)
$
E = (B*C)+D
Presumptive Minimum Cost for the Program
$
A < E or
A > E
Compare Total Program Revenue to Presumptive Minimum Cost
Enter: "Less Than" or "Greater Than" or "Equal To"
Annual Program Costs
F
Direct Labor Costs'
$
G
Other Direct Costs2
$
H = F+G
Total Direct Costs
$
1
Known Indirect Costs3
$
J - K*L
Calculated Indirect Costs''
$
K
Indirect Rate
%
L
Total Cost Base for the Part 70 Program
$
M = I or J
Total Indirect Costs
$
N = H+M
Total Program Costs
$
0 = A-N
Annual Operating Result 5
(Report deficits in parentheses) [
1 This is the sum of all direct labor costs, including regular payroll, overtime payroll, leave, fringe, and any other
administrative surcharges.
2 This is the sum of all other direct costs, including travel, materials, equipment, contractor, and any other costs directly
allocable to the part 70 program.
3 Indirect Costs may either be known or calculated. If known, enter on this row; if calculated, skip to the next three rows.
4 If Indirect Costs are calculated, enter the result here, and enter the rate and base below. Accounting or budgeting personnel
may be able to provide additional information on or assistance with calculating Indirect Costs.
1
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Program Balance of Accounts (Report deficits in parentheses)
P
Beginning of Year Balance5
S
Q = o
Annual Operating Result
$
R
Fee Revenue Transferred In (describe in comments)
$
S
Non-Exchange Revenue Transferred In (describe in
comments)a- Informational Only
$
T
Fee Revenues Transferred Out (describe in comments)
$( )
U = O+Q+R-T
End of Year Balance
$
COMMENTS:
Use this section to describe any changes in accounting methods or program elements that
effect the fee program, categories of revenue or expenses that do not fit into any of the listed
categories or apply across multiple categories, transfers in or out, or any unusual activities or
circumstances relevant to fees administration. Attach additional pages if needed..
5 This is the prior year's "End of Year Balance.'
9
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BACKGROUND - EXAMPLE ANNUAL FINANCIAL DATA FORM FOR PART 40 CFR 70
TheŁxample Annual Financial Data Form is a tool that may be used to collectanformation fromastate,
local, or tribal ("air agencies") part 70qprograms concerning their compliance with part 70arequirements
for fees. The use of this form is not required for any specific air agency or time period and it may be
revised as appropriate. Air agencies may find this form usefulafor collecting programmatic information
for their own internal trackingcpurposes.
Fee sufficiencv.aThe primary purpose of the revenue, costs, and balance of accounts sections of the
financial dataaform is toacollect information concerning the sufficiency of fees, consistent with Clean Air
Act (Act)a§ 502(b)(3)(A) and 40 CFR § 70.9(a). The fee sufficiency requirements include requirements
for air agencies to collectaannual fees (or the equivalent over some other period) that are sufficient to
cover all reasonable direct and indirect costs ofahejprogram and to track if required fees ared>eing
6
diverted for non-part 70 purposes.aa
Presumptive minimum.aA secondary use for the financial data form is to assess an air agency's status
with respect to the "presumptive minimum" of part 70 7 This assessment may haveabeenamportant when
an air agency was originally approved to collect aboveahe ' presumptive minimum," but changes made
over time have resulted in total annual fees being collected that are less than the "presumptive
minimum."8 This assessment is important because 40 CFR § 70.9(b)(3) requires air agencies that collecta
less than the presumptive minimum to submit a "detailed accounting" to ensure fee sufficiency, and air
agencies that were originally approved to collect at least the presumptive minimum would not have
submitted the detailed accounting with the program submittal. Examples of cases where an air agency's
status in this respect may have changed include where the air agency uses a formula to calculate the
presumptive minimum that is outdated or inconsistent witha40 CFRa§ 70.9(b)(2) or where the program
was approved to charge fees to individual sources using the methodology for calculating the
presumptive minimum pursuant to 40ŁFR § 70.9(b)(2)aand the air agency's requirements for fee
payment from individual sources are outdated or inconsistent with the part 70acalculation 9
The EPA may use its discretion to decide when this form should be completed by an air agency and
which sections of the form should be completed. The EPA will evaluate any information submitted and
determineaappropriate next steps.
6 The requirements that fees be sufficient to cover all reasonable direct and indirect program costs, and that such fees not be
diverted f or other purposes, applies to all title V permit programs, regardless of whether or not the program was approved to
collect "not less than" or "less than" the presumptive minimum.
7 The presumptive minimum of CAAe§ 502(b)(3)(B) and 40 CFR § 70.9(b)(2) is generally calculated by multiplying a dollar
perton rate (which is adjusted annually for increases in the Consumer Price Index) by the tons of"regulated pollutants (for
presumptive fee calculation)" emitted by all part 70 sources in an air agency for a year (or equivalent period) and adding a
"GHG cost adjustment," which is a set dollar amount to reflect certain increased costs for permitting.
8 Air agencies have flexibility to charge fees to sources on any basis, including to charge emission fees, application fees,
service-based fees, or other types of fees, regardless of whether or not the program was approved to collect "not less than" or
'less than" the presumptive minimum.
9 The presumptive minimum calculation of 40 CFR § 70.9(b)(2) was updated in 2015 to add a GHG cost adjustment; see the
final rule. Standards of Performance for Greenhouse Gas Emissions from New, Modified and Reconstructed Stationary
Sources: Electric Utility Generating Units; Pinal Rule(80 FR 64510, October 23, 2015). See Section Xii.E, "Implications for
Title V Fee Requirements for GHGs" at page 64633:
httpSAvww. gpo.go \'fiisys/i}kg/FR-20! 5-10-23/pJJ?20!5-2283 7.pdf
3
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Accounting methods: The part 70 rules do not generally require any particular governmental accounting
standards or tracking systems to be used by air agencies. However, part 70 contains certain requirements
for tracking permit fees and program costs and for funding the program costs with permit fees that must
be met by all air agencies, regardless of the accounting standards and tracking systems being used. Due
to variability and changes in accounting standards, systems, and practices, it is important for air agencies
to note changes that may affect part 70 lees, costs, and accounting practices in the comments section of
this form.
The EPA recognizes the following resources may be helpful in understanding governmental accounting
standards as they relate to part 70 programs:
•a Handbook of Federal Accounting Standards and Other Pronouncements, as Amended, as of Junea
30, 2015, Federal Accounting Standards Advisory Board (FASAB).a
http://www.fmah.gov/pdffiles/2015Jasab handbook.pdf. n
oa Statement of Federal Financial Accounting Standards 4: Managerial Cost Accounlingn
Standards and Concepts, page 396 of the FASB Handbook (June 2015) ("SFFAS No.a
4").a
oa Statement of Federal Financial Accounting Standards 7: Accounting for Revenue andn
Other Financial Sources and Concepts for Reconciling Budgetary and Financialn
Accounting, page 592 of the FASAB Handbook (June 2015) ("SFFAS No. 7").a
®a Statements of the Governmental Accounting Standards Board (GASB):
http://www.gasb. org/jsp/GASB/Page/GA SBSectioniPage&cid-1176160042391 Hgasbs25n
oa Statement No. 33, Accounting and Financial Reporting/or Nonexchange Transactionsn
(December 1998) ("GASB Statement No. 33"):
hitp://www.gasb. org/jsp/G ASB/Document C/G AS B Document PageHcid= 11 M6160029148n
&accepted Disclaimer-truen
oa Statement No. 34, Basic Financial Statements - and Management's Discussion andn
Analysis - for State and Local Governments (June 1999) ("GASB Statement No. 34"):a
http://www.gasb. org:/jsp/GASB/Document _C/GASB Document Page?cid 1176160029121n
^accepted Disclaimer-truen
Definition of terms: Several terms (e.g., "Direct Labor" and "Indirect Costs") used in the Example
Annual Financial Data Form are not defined in part 70. Some terms are defined in the EPA's fee
guidance (particularly the EPA's updated fee schedule guidance^0), in the U.S. Office of Management
and Budget's (OMB's) Circular A-87 Revised (Cost Principles for State, Local, and Indian Tribal
Governments), and in the FASB Handbook's chapter on Managerial Cost Accounting Standards and
Concepts (SFFAS No. 4), among other reference documents.
Supporting information: The information reported on this example form should be based on relevant
supporting accounting information or documentation. Air agencies that complete the form for submittal
to the EPA should maintain such supporting information for submittal to the EPA upon request.
10 Updated Guidance on EPA Review of Fee Schedules for Operating Permit Programs Under Title V, Peter T sirigods.
Director, OAQPS, to Regional Air Division Directors. Regions I - 10, March 27.2018. (updated fee schedule guidance).
4
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INSTRUCTIONS - EXAMPLE ANNUAL FINANCIAL DATA FORM FOR PART 70
These instructions are a general explanation of how to complete the attached Example Annual Financial
Data Form for Part 70 ("example financial form"). This form is not required to be submitted on any
frequency by air agencies - it is simply a useful example of how an EPA Region may collect financial
information related to title V fee requirements. The EPA Regions may revise this form to suit a
particular air agency or may opt to only require certain sections be completed.
Annual Program Revenue
•a Total Program Revenue (Fees Paid by Part 70 Sources)($):dnclude allatitle V fees paid directly
by part 70 sources, including emission fees, application fees, and other fees under the air
agency's fee schedule.a
ca The fees collected under a part 70 program are referred to as "Exchange Revenue" or
"Earned Revenue" in governmental accounting guidance because a good or service isa
provided by a governmentalaentity (e.g., a permit) inasxchange for a price (e.g., a permita
11
f'ee).aAlso, governmental accounting guidance provides that only revenue classified asa
"Exchange Revenue" should be compared against costs to determine the overalldfinanciala
results of operations for a period.12 This means that legislative appropriations, taxes. grants,a
fines, or penalties, which are generally characterized as "Non-Exchange Revenue," shoulda
not be compared against costs to determine if fees are sufficient to cover part 70 program
costs.a
oa Some part 70 programs have direct access to permit fees to cover costs. However, other parta
70 programs are required by state or local law to deposit permit fees into general accounts,
with operating costs subject to legislative appropriation^ both scenarios, if the funds werea
originally paid as permit fees and used for part 70qpurposes for the report year, the fees maya
bexonsidered "Total Program Revenue" and entered as such on the example financial form a
Permit fees that were retained inai prior year and transferred for use in the report year shoulda
bea-eported as "Funds Transferred In."a
oa Note thataany non-part 70dee revenue ("Non-Exchange Revenue") should only be identifieda
for informational purposes in the "ProgramaBalance of Accounts" section of the example
14
financial form, specifically the "Non-Exchange Revenue Transferred In" line.
" See Statement of Recommended Accounting Standards Number 7, Accounting/or Revenue and Other Financing Sources
and Concepts fa- Reconciling Budgetary and Financial Accounting, issued by the Federal Accounting Standards Advisoiy
Board (FASAB) ("FASAB No. 7") at page 2. Also see Statement No. 33, Accounting and Financial Reporting for
Nonexchange Transactions (December 1998), issued by the Governmental Accounting Standards Board (GASB) at pages 1-
4. Conversely, "Non-Exchange Revenue" arises primarily from the exercise of governmental power to demand payment from
the public (e.g., income tax, sales tax, property taxes, fines, and penalties) and when a government gives value directlye
without directly receiving equal value in return (e.g., legislative appropriations and intergovernmental grants).
12 See FASAB No. 7 at page 8.
13 "Non-Exchange Revenue" arises primarily from the exercise o f governmental power to demand payment from the public
(e.g., income tax, sales tax, property taxes, fines, and penalties) and when a government gives value directly without directly
receiving equal value in return (e.g., legislative appropriations and intergovernmental grants).
14 Since "Non-Exchange Revenue" is not allowed to be counted as part 70 fees, they should not be compared to costs or
carried over to the "Beginning of Year Balance" or "End of Year Balance'' lines.
5
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Annual Presumptive Minimum Calculation
This section helps to determine if an air agency's status is considered to be "presumptively adequate" to
fund program costs for a year.i5 This determination is relevant to part 70 when an air agency's feea
schedule was approved to be above the "presumptive minimum," but due to changes overtime, it is now
collecting and retaining fee revenue below the "presumptive minimum." When such a change occurs, 40
CFR § 70.9(b)(5) requires the air agency to submit a "detailed accounting" to show that its fees are
sufficient to cover the part 70 program costs.
•a Total Emissions of "Regulated Pollutants (Tor presumptive fee calculation)" (tons/year): Report
the actual emissions of "Regulated Pollutants (for presumptive fee calculation)," as the term isa
defined in 40 CFR § 70.2, for all part 70 sources for the year. Also see 40 CFR § 70.9(b)(2)(ii)a
and (iii) for additional information on emissions that may be excluded from the total. The EPA
sometimes refers to these emissions as "Fee Pollutants" since they are only used for feea
purposes.a
•a Presumptive Minimum Fee Rate During Period fS/ton):aThe EPA calculates the "Presumptivea
Minimum Fee Rate" ($/ton) for part 70 in September of each year, and the fee rate is effectivea
from September 1 through August 31 of the following year. The EPA publishes the fee rate on
the EPA's title V permit websitei6 If a part 70 program uses a different 12-month period, thena
the fee rate in effect at the beginning of the reporting period or an average fee rate (prorated by
month) may be used .a
•a Total Greenhouse Gas (GHG) Cost Adjustments, as applicable3"S):aA final rule publisheda
October 23, 2015, included a "GHG Cost Adjustment," which is part of the calculation of the
"presumptive minimum" for an air agency under part 70.17 The adjustment is intended to reflecta
the increased costs of permitting GHGs for part 70 programs.a
•a Presumptive Minimum Cost for the Program ("$): To determine the total "presumptive minimum"a
for an air agency, multiply the actual emissions of "Regulated Pollutants (for presumptive fee
calculation)" by the "Presumptive Minimum Fee Rate" and add the "GHG Cost Adjustment" (as
applicable) for the period.a
•a Compare Revenue to Presumptive Minimum Cost: Compare the "Total Program Revenue" to the
calculated "Presumptive Minimum Cost for the Program" to determine if the fee revenue has
fallen below the "Presumptive Minimum." If the total program revenue is lower, a "detaileda
accounting" is required to show that fee revenue is sufficient to cover the program costs.18
lsSeet40 CFR § § 70.9(b)(2)(i) through (v)tfor moretontthet"presumptivetmimimum."
16 See https:fJmvw.epa.gav/title-v-operatmg-permits/permit-fees.
17 See 80 FRb-1659 and 40tCFR §§ 70.9(b)(2)(i) andt§ 70.9(b)(2)(v) concerning thef'GHG cost adjustment" for partt70.
18 Seam CFR § 70.9(b)(5).
6
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Annual Program Costs
The full cost of a part 70 program is described in accounting terms as being comprised of all reasonable
"direct and indirect costs." To assess the full cost, one should assess the total resources used to conduct a
program or complete an activity under a program. Full cost includes all "direct and indirect costs,"
regardless of funding sources. "Indirect costs" exist whether or not the program exists, while "direct
costs" exist only if the program exists. If, by eliminating the program, a particular cost is eliminated,
then the cost is labeled a "direct cost."
Examples of "Direct Labor Costs," "Other Direct Costs," and "Indirect Costs" are provided below. It is
beyond the scope of this example financial form to include a review of whether ail part 70 program
activities described in the separate updated fee schedule guidance^9 are included in the "Direct and
Indirect Costs;" however, such a review may be part of a "detailed accounting" or other EPA oversight
activity.
•a Direct Labor Costs^S):aSalary and wages for direct work on part 70, including for professional^
administrative, and supervisory staff.aThese costs should include fringe benefits (compensationan
aaanion to regular salary and wages). Also, include the portion of "Direct Labor Costs" not
covered by employeeacontributions, such as those associated with employee contributions to
insurance and retirements
•a Other Direct Costs($):aPirect parta70 expenses, such asanaterials, equipment, professional
services, official travel (i.e., food and lodging), public notice, publicdiearings, and contractors.a
•a Indirect Costs(S): "Indirect Costs"aire funds spent on general administration (sometimesareferred
to asaoverhead). For a part 70 program, this is a share of costs associated with managingahe
organization within whichahe permitqprogram resides, represented through an "IndirectaRate."
For example, to the extent that a program resides within a larger office, the program mayŁ>e
charged a proportionate share of the overhead expense associated withahe larger office. Thea
budget or accounting office of the environmental division or department may be able to provide
the indirect costs for part 70 or may be able to assist with determining them using one of thea
following methods:a
oa Known Indirect Costs(S):aThis is the known value of "Indirect Costs" for a part 70 program,a
such asanay be provided by an air agency budget or accounting office.a
oa Calculated indirect Costs (S ):alf thedlndirect Costs" are not known, then multiply ana
"Indirect Rate" (e.g., a percentage that represents a fraction of total costs that are indirecta
costs) by a known "Total Cost Base" (either "Total Costs" or "Total Labor Costs" for the parta
70 program) to calculate "Indirect Costs." If calculated in this manner, the "Indirect Rate"aind
the "Total Cost Base" should beancluded on the example financial form .a
•a Annual Operating Result ($)afhe differencedbetween the "Total Program Revenue" and "Totala
ProgramCosts" reveals the degree to which the program generated a surplus, deficit, or breaksa
even.alf costs exceed fee revenue, then thereavas a deficit. If fee revenue exceeds costs, thenahere
was a surplus. Deficits should be reported in parentheses to indicate a negative number.
19 See Updated Guidance on EPA Review of Fee Schedules far Operating Permit Programs Under Title V. Peter Tsirigotis,
Director, OAQPS, to Regional Air Division Directors, Regions 1—10, March 27, 2018 (updated fee schedule guidance).
7
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Program Balance of Accounts
This section of the example financial form shows the program's overall fiscal status over time based on
the balance at the beginning of the period, changes in account balances from operations, fund transfers,
and resulting year-end balance.
•a Beginning of Year Balance (S):aThe net balance (surplus or deficit) at the beginning of the year.a
If unknown, enter zero. This is the prior year's "End of Year Balance."a
•a Annual Operating Result ($):aThe amount of fees minus costs for the year. If negative, include ina
parentheses to indicate a deficit for the year.a
•a Fee Revenue Transferred In ($):aPermit fee revenue not already accounted for above that isa
transferred from other accounts, suchaas fee revenue that was collected and retained in prior
years used to cover costs for this year. Enter the amount of feearevenue and describe the sourceaDf
funds inahe comments section (e.g., permit fees retained in prior years) and whether theatransfers
are temporary (e.g., one-time) or permanent (e.g.recurring). If the funds originated asapermit
fees for the year being reported, enter the amount on the "Total Program Revenue" line,rather
thanahis line.a
•a Non-Exchange Revenue Transferred In ($): Non-Exchange Revenue (e.g., grants, taxes,
penalties, fines, and similar) transferred in to cover program costs. Enter theaamount hereaand
describe the source of funds in the comments section. This line is for information only and will
notabe included inainy calculations of permit fee revenue on this form.a
•a Fee Revenue Transferred Out (SVaPermit fee revenue transferred out of program accounts duringa
the report year. Inathe comments section, describe the intended use of the funds and whether thea
transfer is permanent or temporary. If you intend to use the fees inafutureayears for the part 70a
program, pleaseandicate so inacomments.alfanot, pleaseaJescribe the intended use of funds anda
whether the fees areain excess of the costs for the year. Any suchatransfers out will beasubject toa
close scrutiny by the EPA.a
•a End of Year Balanced $):aThe netabalancea(surplus or deficit) at the end of the year. In the
comments section, please describeaany steps that will be taken to address a significant deficit, ifa
known or available.
8
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EXAMPLES OF TYPICAL DIRECT AND INDIRECT COSTS
The following examples are intended to help permitting staff understand how various types of costs
would be categorized for accounting purposes. For a complete list of part 70 program activities that
should be included as part 70 costs, see the EPA's separate updated fee schedule guidance.
Direct Costs:
"Direct Costs" consists of two categories: 1) "Direct Labor Costs" and 2) "Other Direct Costs."
•a Examples of Direct Labor Costs:
- Cost of "direct labor';a
- Fringe benefits (i.e., retirement, health insurance, and life insurance); anda
- Leave, holiday, overtime and premium pay, and other personnel costs.a
•a Examples of Other Direct Costs:
- Equipment purchases; anda
- Miscellaneous items, such as supplies and materials, equipment rentals, travel, purchased
services such as printing, and contractual services.a
Indirect Costs:
"Indirect Costs" can be thought of as the time spent on administrative support and other office expenses,
which are not solely related to the program's operation because they benefit multiple programs or cost
objectives, but are needed to operate a part 70 program.
•a Examples of Indirect Costs:a
- Space rental, utilities, including telephones;a
- Administrative support related to an office's overall mission, including such costs as
procurement, contracting, office services, property management, vehicle management,
supply, finance, payroll, voucher processing, personnel services, records management,
and document control;a
- Miscellaneous supplies and materials, including postage;a
- Data processing, management, and control;a
- Equipment rentals and costs;a
- Training and developments
- Budget development, planning, and coordinations
- Public information and inquiries;a
- Safety management, including inspection, training, and promotions
- Recurring reports, such as accounting or property reports; anda
- Unemployment Compensation, Equal Employment Opportunity Office costs and othera
affirmative action program costs.a
9
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DETERMINING THE PROPORTIONAL SHARE OF INDIRECT COSTS
When "Indirect Costs" are not known, they can be calculated though the use of an "Indirect Rate."
Generally, an "Indirect Rate" is calculated by dividing total "Indirect Costs" by total "Direct Costs."
Because air agency accounting methods vary, the indirect and direct costs can be for all environmental
programs, the environmental department or division, or the air program. The resulting "Indirect Cost
Rate" is the percentage of "Total Costs" that are "Indirect Costs." The resulting "Indirect Rate" is then
multiplied by the "Total Cost Base," which may be either "Total Direct Labor Costs" or "Total Costs''
for part 70, as shown below.
Indirect Cost Rateff= Total Indirect Costsaf Total Direct Costs
Calculated Indirect Costs = Indirect Cost Rate * Total Direct Labor Costs for Part 70
or
Calculated Indirect Costsaa Indirect Cost Rated'' Total Costs for Part 70
FOR MORE INFORMATION ON DETERMINING AIR AGENCY COSTS
For further information on determining costs for state, local, and tribal governments, see OMB Circular
A-87 Revised, Cost Principles for State, Local and Indian Tribal Government (May 10, 2004) and OMBa
Circular A-133, Audits of State, Local Governments, and Non-Profit Organizations (last reviseda
June 26, 2007). These guidance documents are not specific to part 70 but are generally useful for
understanding costs for the purposes of the part 70 program.a
10
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UNITED STATER r.i JV
RESEARCH
CTION AGENCY
27711
WAR 2 1 ?01'3
OFFICE OF
AIR QUALITY PLANNING
AND STANDARDS
MEMORANDUM
SUBJECT: Updated Guidance on EPA Review of Fee Schedules for Operating Permit Programs
The attached guidance is being issued in response to the Environmental Protection Agency Office
of Inspector General's (OIG) 2014 report regarding the importance of enhanced EPA oversight of state,
local, and tribal1 fee practices under title V of the Clean Air Act (CAA).2 Specifically, this guidance
reflects the EPA's August 22, 2014, commitment to the OIG in response to OIG's Recommendation 1 to
"assess our existing fee guidance and to re-issue, revise, or supplement such guidance as necessary" (we
refer to the attached guidance as the "updated fee schedule guidance"). The EPA's response to the OIG's
other recommendations are being issued concurrently in a separate memorandum and guidance concerning
title V program and fee evaluations ("title V evaluation guidance"). '
Title V of the CAA and 40 CFR part 70 contain the minimum requirements for operating permit
programs developed and administered by air agencies, including requirements that each program issue
operating permits to certain facilities (facilities that are "major sources" of air pollution and certain other
facilities) and that each program charge fees ("permit fees") to these facilities to fund the permit program.
These operating permits are intended to identify all federal air pollution control requirements that apply
to a facility ("'applicable requirements") and to require the facility to track and report compliance pursuant
to a series of recordkeeping and reporting requirements. Section 502(b)(3) of the CAA requires each air
agency to collect fees "sufficient to cover all reasonable (direct and indirect) costs required to develop and
administer" its title V permit program.4 The 40 CFR part 70 regulations establish the minimum program
1 As used herein, the term "air agency" refers to state, local, and tribal agencies.
' Enhanced EPA Oversight Needed to Address Risks from Declining Clean Air Act Title V Revenues; U.S. EPA Office of the
Inspector General. Report No. 15-P-0006, October 20, 2014 ("OIG Report").
3 Program and Fee Evaluation Strategy and Guidance for 40 CFR Part 70, Peter T sirigotis, Director, Office of Air Quality
Planning and Standards (OAQPS), U.S. EPA. to Regional Air Division Directors, Regions 1 - 10, March 27, 2018 ("title V
evaluation guidance"). See the EPA's title V guidance website at https://www.epa.gov/title-v-operating-permits/title-v-
operating-permit-poiiiy and-guidance-dociiment-index.
4 42 U.S.C. § 766la(b)(3)(A).
Under Title V
TO:
FROM:
Internet Addiess (URL) • http://www.epa,gc»Ą
Recycled/Recyctabte « Printed with Vegetable Oil Based Inks on Recycled Paper (Minimum 25% Postconsumer)
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requirements for operating permit programs, including requirements for fees to be administered by air
agencies with approved part 70 programs.5
On August 4, 1993, the EPA issued a memorandum, commonly referred to as the "1993 fee
schedule guidance," to provide initial guidance on the Agency's approach to reviewing fee schedules for
part 70 programs.6 Since that time, the EPA has issued a number of memoranda and a final rule7 that have
touched upon, revised, or clarified certain topics contained in the 1993 fee schedule guidance.8 The
attached updated fee schedule guidance provides additional direction on how the EPA interprets the title
V permit issuance and fee collection activities, as well as discussion of other fee requirements for air
agencies. In addition to the memoranda and final rule noted above, the updated fee schedule guidance
includes numerous changes to remove outdated regulatory provisions and focuses on the review of
existing part 70 programs, rather than on initial program submittals.9
The updated fee schedule guidance sets forth updated principles, which will generally guide the
EPA's review of part 70 fee programs. These updates are consistent with the fee requirements of title V
and part 70, as well as prior guidance on fee requirements. Accordingly, these updates do not themselves
provide substantively new fee guidance or create any inconsistencies with fee requirements or prior fee
guidance.
The development of this guidance included outreach and discussions with stakeholders, including
the EPA Regions, the National Association of Clean Air Agencies, and the Association of Air Pollution
Control Agencies.
If you have any questions concerning the updated fee schedule guidance, please contact Juan
Santiago, Associate Director, Air Quality Policy Division, Office of Air Quality Planning and Standards,
at (919) 541-1084 or Santiago, juan@epa.gov.
Attachments:
1. Updated Guidance on EPA Review of Fee Schedules for Operating Permit Programs under Title V
2. Attachment A - List of Guidance Relevant to Part 70 Fee Requirements
3. Attachment B - Example Presumptive Minimum Calculation
5 40 C.F.R. § 70.9.
6 See Reissuance of Guidance on Agency Review of State Fee Schedules for Operating Permits Programs under Title V, John
S. Seitz. Director. OAQPS, U.S. EPA, to AirDivision Directors. Regions 1-X (August 4, 1993} ("1993 fee schedule
guidance") at page 1. Note that there was an earlier document on this subject that was superseded by the 1993 fee schedule
guidance.
7 See the October 23, 2015, final rule, Standards of Performancetfor Greenhouse Gas Emissions from New, Modified and
Reconstructed Stationary Sources: Electric Utility Generating Units. 80 FR 64510, 64633 (Section Xll.E "Implications for
Title V Fee Requirements for GHGs").
8 A list of the relevant title V fee-related guidance memoranda is included as Attachment A.
9 At this time, all air agencies have EPA-approved part 70 programs. It is conceivable that additional part 70 program
submittals will be received in the future for a number of Indian tribes, and, if so, the EPA will work closely with the tribes to
assist them with identifying activities which must be included in costs related to the program submittal and to meet other fee
requirements of part 70.
2
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DISCLAIMER
These documents explain the requirements of the EPA regulations, describe the EPA policies, and
recommend procedures for sources and permitting authorities to use to ensure that title Vfee schedules
and fee evaluations are consistent with applicable regulations. These documents are not a rule or
regulation, and the guidance they contain may not apply to a particular situation based upon the
individual facts and circumstances. The guidance does not change or substitute for any law, regulation,
or any other legally binding requirement and is not legally enforceable. The use of non-mandatory
language such as "guidance, " "recommend, " "may, " "should, " and "can, " is intended to describe the
EPA policies and recommendations. Mandatory terminology, such as "must" and "required, " is
intended to describe controlling requirements under the terms of the Clean Air Act and the EPA 's
regulations, but the documents do not establish legally binding requirements in and of themselves.
3
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Updated Guidance on EPA Review of
Fee Schedules for Operating Permit Programs under Title V
The purpose of this document and the attachments is to provide guidance on the Environmental
Protection Agency's (EPA's) review of fee schedules for operating permit programs under 40 CFR part
70 (part 70), the regulations that set minimum requirements for permit programs administered by state,
local, and tribal air agencies (referred to here as, "air agencies") authorized under title V of the Clean
Air Act (CAA or Act). This document updates and clarifies the previous fee schedule guidance issued
by the EPA on August 4, 1993 (the "1993 fee schedule guidance").1 This updated fee schedule guidance
clarifies which permit program costs must be included in an analysis to demonstrate that adequate fees
are collected to fund all part 70 program costs. The guidance also discusses other fee-related
requirements for air agencies. The updated fee schedule guidance focuses on the costs of program
implementation, rather than on the costs of initial program development (as was the case for the 1993
fee schedule guidance).
I. General Principles for Review of Title V Fee Schedules
Section 502(b)(3)(A) of the Act requires operating permit programs to fund all "reasonable direct and
indirect costs" of the permit programs through fees collected from "part 70 sources"2 and requires the
fees to be sufficient to coverall reasonable permit program costs.3 The terms "fee schedule" and "permit
fees" are sometimes used interchangeably to describe the fees that an air agency charges to part 70
sources to fulfill this requirement.4 Section II of this guidance provides an explanation of the term
"direct and indirect costs" and a detailed explanation of specific permit program activities to be included
in costs for the purpose of analyzing whether the permit fees are sufficient to cover all the permit
program costs.
The fees collected under a part 70 program are classified as "exchange revenue" or "earned revenue" in
governmental accounting guidance because a good or service (e.g., a permit) is provided by a
governmental entity in exchange for a price (e.g., a permit fee).f Also, governmental accounting
guidance provides that only revenue classified as "exchange revenue" should be compared to costs to
1 See Reissuance of Guidance on Agency Review of State Fee Schedules for Operating Permits Programs under Title V, John
S. Seitz, Director, OAQPS, U.S. EPA, to Air Division Directors. Regions 1-X (August 4, 1993) ("1993 fee schedule
guidance").
2 The term "part 70 sources" is defined in 40 CFR § 7.2 to mean "any source subject to the permitting requirements of this
part, as provided in 40 CFR §§ 70.3(a) and 70.3(b) of this part." Thus, a source is a part 70 source prior to obtaining a part 70
permit if the source is subject to permitting under the applicability provisions of 40 CFR § 70.3.
3 See 40 CFR § 70.9(a).
4 The fee schedule is typically included in the regulations that the air agency uses to implement part 70; it is a component of
the part 70 program. The fee schedule (and other elements of an air agency's regulations for part 70) can vary significantly
across air agencies.
s See Statement of Recommended Accounting Standards Number 7, Accounting for Revenue and Other Financing Sources
and Concepts for Reconciling Budgetary and Financial Accounting, issued by the Federal Accounting Standards Advisory-
Board (FASAB) ("FASAB No. 7") at page 2. See also Statement No. 33, Accounting and Financial Reporting for
Nonexchange Transactions (December 1998), issued by the Governmental Accounting Standards Board (GASB) at pages 1-4
("GASB No. 33").
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determine the overall financial results of operations for a period.6 This means that legislative
appropriations, taxes, grants,7 fines and penalties, which areagenerally characterized asd'nonexchange
revenue,"8 should not be compared to part 70 program costs toadetermine if permit feesaare sufficient to
cover costs.
Any fee required by part 70 must "be used solely for permit program costs" (in other words, therfeesa
mustaiot±>eadiverted foraion-part 70 purposes).9 Manyaair agencies transfer feesahat are inasxcess of
program costs for a particular year into accounts to be used for^art 70 purposes in another year when
there is expected to beaa fee shortfall, and this isaan acceptable practice. However, if title V fees area
transferred for uses not authorized by part 70 (e.g., highway maintenance oraDther general obligations of
government), they would be considered improperly diverted.
Each air agency is required, as part of its part 70aprogram submittal, toasubmit a "feeademonstration" toa
show that its fee schedule would result in the collection andaretention of feesasufficient toacover program
costs, including an "initial accounting" to show that "required fee revenues" would be used solely toa
cover program costs.10
The EPA will generally presume thataa feeascheduleais sufficient to cover program costs if it results in
thea:ollection and retention of fees inaanaamount above the "presumptive minimum"—i.e., "an amount
noteless than $25 per ton" adjusted annually for increases in the Consumer Price Index11 "times thedotal
tons of the actual emissions of each regulated air pollutant (for presumptive fee calculation) emitted
from part 70 sources," plus any greenhouse gas (GHG) cost adjustments, asaapplicable.12 A feeaBchedule
that is expected toa-esult in feesaabove the "presumptive minimum" isa:onsidered to be "presumptively
adequate." Note that thed'presumptive minimum" isainique toaeach air agency because thedotal tons of
actual emissions of "regulated air pollutants (for presumptive fee calculation)" are unique to each air
agency.
As partaof a fee demonstration, air agencies with fee schedules that would not be presumptively
adequate are required toasubmit a "detailed accounting" to show that collection and retention of fee
6 See FASAB No. 7 at page 8; GASB No. 33.
7 Concerning grants, an EPA memo, Use of Clean Air Act Title V Permit Fees as Match for Section 105 Grants, Gerald
Yamada, Acting General Counsel, U.S. EPA, to Michael H. Shapiro, Acting Assistant Administrator, Office of Air and
Radiation, U.S. EPA, October 22, 1993, states that part 70 fees are "program income" under 40 CFR § 31.25(a), and, because
of this, part 70 fees cannot be used as match for section 105 grants and no air agency may count the same activity for botht
grant and part 70 fee purposes.t
K "Nonexchange revenue" arises primarily from the exercise of governmental power to demand payment from the public
(e.g., income tax, sales tax, property taxes, fines, and penalties) and when a government gives value directly without directly
receiving equal value in return (e.g., legislative appropriations and intergovernmental grants).
9 See 40 CFR § 70.9(a).
10 See 40 CFR §§ 70.9(c)-(d) (fee demonstration requirements); 1993 fee schedule guidance (explaining that preparing the fee
demonstrations that is part of the initial part 70 program submittal).
11 See CAAt§ 502(b)(3)(B); 40 CFR § 70.9(b). The presumptive minimum fee rate is adjusted for increases in the Consumer
Price Index each year in September. The fee rate for the period of September I, 2016, through August 31, 2017, is $48.88 per
ton. For more information, including a list of historical adjustment to the fee rate, see https://www.epa.gov/title-v-operating-
permits/perm it-fees.
12 See 40 CFR § 70.9(b)(2) (emphasis added). The components of the "presumptive minimum" calculation—including certain
emissions that may be excluded from the calculation, and an upward L'GHG cost adjustment" that may apply—are addressed
in 40 CFR §§ 70.9(b)(2)(i)-(v).
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revenue would be sufficient to cover program costs.13 Air agencies are also required to provide an
"initial accounting" to show how ""required fee revenues" will be used solely to cover permitting
program costsi4 Air agencies with fee schedules considered "presumptively adequate" are nevertheless
required to submit fee demonstrations,13 but they may be '"presumptive minimum program cost"
demonstrations^6 showing that expected fee revenues are above the "'presumptive minimum" calculated
for the air agency. In order to receive the EPA's approval, any fee demonstration must provide an
""initial accounting" showing how required fee revenues will be used solely to cover program costs.17
After an air agency fee program is approved by the EPA, there are several fee requirements that may
apply to the permit program as circumstances dictate. One requirement is for an air agency to submit, as
required by the EPA, "periodic updates" of the ""initial accounting" portion of the fee demonstration to
show how "required fee revenues" are used solely to cover the costs of the permit program.18 Further, an
air agency must submit a ""detailed accounting" demonstrating that the fee schedule is adequate to cover
costs ifan air agency changes its fee schedule to collect less than the presumptive minimum or if the
EPA determines—based on the EPA's own initiative, or based on comments rebutting a presumption of
fee sufficiency—that there are serious questions regarding whether the fee schedule is sufficient to cover
the costsi9
In addition, title V and part 70 provide general authority for the EPA to conduct oversight activities to
ensure air agencies adequately administer and enforce the requirements for operating permits programs,
including that the requirements for fees are being met on an ongoing basis.20 One method the EPA uses
to perform such oversight is through periodic program or fee evaluations of part 70 programs. As part of
such an evaluation, the EPA may carefully review how the state has addressed the fee requirements of
part 70 as previously described and work with the air agency to seek improvements or make corrections
and adjustments if any fee concerns are uncovered. Also, as part of such an evaluation, the EPA may
require "periodic updates" to a fee demonstration or a "detailed accounting" that fees are sufficient to
cover permit program costs.21 See the EPA's separate Program an J Fee Evaluation Strategy and
Guidance for 40 CFR Part 70 ("title V evaluation guidance") for more on this subject.22
13 See 40 CFR § 70.9(b).
14 See 40 CFR § 70.9(d).
15 See 40 CFR § 70.9(c).
16 See Sections 1.1 and 3.2 of the fee demonstration guidance.
17 See 40 CFR § 70.9(d).
18 See 40 CFR § 70.9(d).
19 See 40 CFR § 70.9(b)(5); fee demonstration guidance, Section 2.0 (providing an example ofta "detailed accounting"). The
scope and content of a "detailed accounting" may vary but will generally involve information on program fees and costs and
other accounting procedures and practices that will show how the air agency's fee schedule will be sufficient to cover all
program costs.
20 See C AA § 502(i); 40 CFR § 70.10(b).
21 See 40 CFR §§ 70.9(a); 70.9(b)(1), (5)(ii).
22 Program and Fee Evaluation Strategy and Guidance for 40 CFR Part 70, Peter Tsirigotis, Director, Office of Air Quality
Planning and Standards (OAQPS), U.S. EPA, to Regional Air Division Directors, Regions 1 -10. March 27,2018.
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II.a Types of Costs and Activities Included in Title V Costsa
A.aOverviewa
Activities that count as part 70 costs (direct and indirect costs of part 70).tPart 70 uses the term "permit
program costs" to describe the costs that must counttfor fee purposes under part 70.23 This term is
defined in 40 CFR § 70.2 as "all reasonable (direct and indirect) costs required to develop and
administer a permit program, as set forth in [40 CFR § 70.9(b)] (whether such costs are incurred by the
permitting authority or other State or local agencies that do not issue permits directly, but that support
permit issuance or administration)." At a minimum, any air program activity performed by an air agencyt
under title V or part 70 must be included in program costs. Many of the activities required under title V
or part 70 are described in Sections II.B through II. K of this guidance.t
As described above, part 70 costs must include all "reasonable direct and indirect costs"24 that are
incurred by air agencies intthe development, implementation, and enforcement of the part 70 program.
"Direct costs" are expenses thattcantbe directly attributed to partt70 program activities or services.
"Direct costs" can generally be subdivided into two categories: "direct labor costs" and "other direct
costs." The term "direct labor costs" refers to salary and wages for direct work on part 70, including
fringe benefits. The term "other direct costs" refers to other direct part 70 expenses, such as materials,
equipment, professional services, official travel (e.g.,transportation^ food and lodging), public notices,
public hearings, and contracted services, 'indirect costs" are costs for ''general administration" or
"overhead" that are nottdirectly attributable to a part 70 program because they benefit multiple programs
or cost objectives, but they are needed to operate a part 70 program. "Indirect costs" for a part 70
program are typically determined based on an indirect rate or a proportional share of the expenses of a
larger organization. Examples of "indirect costs" include, but are not limited to, costs for utilities,trent,
general administrative support, data processing charges, training and staff development, budget and
accounting support, suppliestand postage.
Intaddition, note that air agencytaccounting practices vary in how they nominally categorize costs as
"direct costs," "indirect costs," or "other direct costs," depending on the specific nature of the activity!
An example would be training costs, which are typically treated as "indirect costs" but sometimes ast
"direct costs," particularly where the training ist about part 70 (e.g., for permit staff development). While
accounting practices and terminology may vary among air agencies, the importanttprinciple to remember
is that all reasonable direct and indirect costs of the program must be represented in the costs reported to
the EPA, regardless of how the costs are categori zed by the air agency.
Part 70 and the 1993 fee schedule guidance describe the part 70 activities of "reviewing and acting on
any application for a part 70 permit"23 and "implementing and enforcingtthe terms of anytpart 70t
23 See 40 CFR § 70.9(a).
24 The phrases, "reasonable direct and indirect costs" and "reasonable (direct and indirect) costs" have the same meaning. The
phrase "reasonable direct and indirect costs" was initially used by the EPA in the 1993 fee schedule guidance, page I. The
phrase "reasonable (direct and indirect) costs" is also found in CAA section 502(b)(3)(A), (C)(iii).
25 The response to comments document for the part 70 final rule clarifies that the phrase "acting on permit applications" in
section 503(c) of the Act means the act of issuing or denying a permit, not just beginning review of a permit application. See
Technical Support Document for Title V Operating Permits Programs (May 1992) at page 4-4, EPA Docket No. EPA-HQ-
OAR-2004-02 88; Legacy Docket No. A-90-33.
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permit," and these activities must be included in part 70 costs.26 The following paragraphs use these
phrases to clarify the extent that certain activities performed by the air agency must be included in part
70 costs. The phrase ''reviewing and acting on any application for a part 70 permit" refers to all
activities related to processing the permit application and issuing (or denying) the final part 70 permit,
while the phrase "implementing and enforcing the terms of any part 70 permit" refers to all activities
necessary to administer and enforce final part 70 permits, prior to the filing of an administrative or
judicial complaint or order.27
Also, the following paragraphs clarify the extent to which fees must fund the costs of "permit programs
under provisions of the Act other than title V" (hereafter referred to as "other permits") (e.g.,
preconstruction review permits) and "activities which relate to provisions of the Act in addition to title
V" (hereafter referred to as "other activities") (e.g.. a requirement for an air agency to develop a case-
by-case emissions standard for an existing source).-8
Costs related to "other permits."29 The costs of "implementing and enforcing" the terms of a part 70
permit must be treated as a part 70 cost.30 Thus, part 70 costs must include the cost of implementing and
enforcing any term or condition of a non-part 70 permit required under the Act31 that is incorporated into
a part 70 permit and meets the definition of "applicable requirement''32 in part 70. Similarly, the cost of
implementing and enforcing any term or condition of a consent decree or order that originates in a non-
part 70 permit that has been incorporated into a part 70 permit must be included as a part 70 cost.33
The costs of implementing and enforcing "applicable req uirements" from a non-part 70 permit that will
go into a part 70 permit in the future may be counted as part 70 costs. However, once a source has
26 The phrases "reviewing and actingon any application for a part 70 permit" and "implementing and enforcing the terms of
any part 70 permit" are found at 40 CFR § 70.9(b)(l)(ii) and (iv). Similar phrases are found in the EPA's 1993 fee schedule
guidance at page 3 and the phrases in the guidance have the same meaning as the phrases in part 70. See also, CAA §
502(b)(3)(A).
21 An EPA memo. Matrix of Title V-Related and Air Grant-Eligible Activities, OAQPS, U.S. EPA, September 23, 1993 (the
"matrix guidance"), page 8, which clarifies that enforcement costs are counted lor part 70 purposes prior to the filing ofta
complaint or order. See page 8.
28 The phrases cited here were originally discussed on pages 2 and 3 of the cover memorandum lorthe 1993 fee schedule
guidance.
2' Note that the EPA's 1993 fee schedule guidance contains the statement that "the costs of reviewing and acting on
applications for permits required under Act provisions other than title V need not be recouped by title V fee." This statement
has been interpreted by some to mean that the costs of non-title V permits "are not needed" or "may optionally" be counted
in title V costs.
r,(} See 40 CFR § 70.9(b)(l)(iv).
31 Examples of non-pait 70 permits required under the Act may include "minor new source review" (minor NSR) permits,
"synthetic minor" permits, Prevention ofSignificant Deterioration (PSD) permits, and Nonattainment NSR permits
authorized under title 1 of the Act.
32 "Applicable requirements" are the air quality requirements that must be included in part 70 permits. See the definition of
"applicable requirement" in 40 CFR § 70.2, which includes "any terms and conditions of any preconstruction permits issued
pursuant to any regulations [under title 1]," and certain requirements under titles 1, 111, IV and VI of the Act.
33 The EPA has previously explained that consent decrees and orders reflect the conclusion of a judicial or administrative
process resulting from the enforcement ofCappli cable requirements," and, because of this, all CAA-reiated requirements in
such consent decrees and orders "are appropriately treated as 'applicable requirements' and must be included in title V
permits. . ." See In the Matter ofCitgo Refining and Chemicals Company, LP., Order on Petition Number Vl-2007-01, at 12
(May 28, 2009).
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submitted a timely and complete part 70 application and paid part 70 fees,tall costs oftimplementing and
enforcing the non-part 70 permit must be counted as part 70 costs.34
Also, any implementation and enforcement activities related to a requirementtthat is incorporated into a
part 70 permit that is not ""federally enforceable" and would not meet the definition of an ""applicable
requirement" (e.g., a "state-only" requirement) need not be treated as a part 70 cost.33 The matrixt
guidance also clarifies that state-only requirements are air grant-eligibletactivities, rather than title V-
eligible activities.
Costs of performing certain other activities related to applicable requirements.t Certain activities required
bytthe Acttor its implementing regulations are not "applicable requirements" as defined in part 70
because they apply to the permitting authority rather than thetsource.36 We refer to such activities ast
""other activities." As such, questions often arisetasto whether the costs of "other activities" are part 70t
costs, coststof the underlying standard, or coststofithe preconstruction review permitting process.
Examples of applicable requirements associated with ""other activities" include, but are not limited to,
the following:
•t Emissions standards or other requirements for new sources under section 111(b) of the Act;t
®t Emissions standards or other requirements for existing sources under section 111(d) of the Act;t
•t Case-by-case maximum achievable control technology (MACT) standards that may be required
under section 112 of the Act; andt
•t Activities required by a state, federal, or tribal implementation plan (SIP, F1P, or TIP), includingt
section 110 of the Act.t
The 1993 fee schedule guidance stated that the cost for performing ""other activities" would be part 70
costs only to the extent the activities are ""necessary for part 70 purposes."37 The 1993 fee schedulet
guidance has resulted in numerous questions over the years as to the scope of the term "part 70
purposes." The EPA believes a clearer standard for determining when "other activities" must be
included in part 70 costs would include an evaluation of: the extent to which the air agency is required to
perform the "other activities" pursuant to part 70, title V, or the approved part 70 program; the extent to
which the activity is performed to assure compliance with, or enforce, part 70 permit terms and
conditions; or the extent to which a non-part 70 rule (e.g., a section 111 or 112 standard) requires the air
agency to perform the activity in the part 70 permitting context. If an "other activity" does not meet any
34 See EPA memo, Additional Guidance on Funding Support for State and Local Programs, Mary D Nichols, Assistant
Administrator for Air and Radiation, U.S. EPA, to Regional Administrators, Regions 1- X, August 28, 1994.
35 See 40 CFR § 70.6(b)(2).
36 Although the "other activities" may originate within a federal standard or requirement that we generally refer to as an
"applicable requirement" and the activities may result in an "applicable requirement," the activities themselves do not meet
the definition of "applicable requirement" within 40 CFR § 70.2.
37 See page 2 of the introductoiy memorandum for the 1993 fee schedule guidance.
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of these criteria (e.g., a non-part 70 rule requires an activity in a non-part 70 context), it should not be
included in part 70 costs.
Nonetheless, if any activity is an "applicable requirement" for a source, the applicable requirement must
be included in a part 70 permit and the costs to the air agency of including it in the permit (and
implementing and enforcing) must be treated as part 70 costs.38
For example, the cost of incorporating a standard (e.g., a section 111(b) standard) into a part 70
permit—where the task is merely one of copying the requirements from the regulation unchanged into a
permit—would be a part 70 cost. However, the cost of developing a source-specific emission limitation
outside the permit processing context (e.g.. a standard pursuant to section 111(d) emission guidelines)
would be a section 111 cost (although the cost of subsequently incorporating that standard into the part
70 permit would be a part 70 cost).
The costs of "other activities' related to implementation plans, including section 110 or 111 of the Act,
should not be counted for part 70 purposes if the activities are required as part o f the preconstruction
review process or directly relate to implementation plan development, as required by title I of the Act.39
On the other hand, part 70 costs can include ambient monitoring or emission inventories necessary to
implement the part 70 program (e.g., development and quality assurance of emissions inventory for
potential part 70 sources for the purpose of determining applicability)# If an air agency is unsure where
to draw the line on including such activities in part 70 costs, they should contact the EPA for assistance.
General standard for EPA review of part 70 costs for a particular air agency. In general, the EPA expects
that part 70 permit fees will fund the activities listed in this guidance. However, in evaluating a part 70
program, the EPA will consider the particular design and attributes of that program. Because the nature
of permitting-related activities can vary across air agencies, the EPA evaluates each program
individually. The activities listed in this guidance may not represent the full range of activities to be
covered by permit fees.41 Additionally, some air agencies may have further program needs based on the
particularities o f their own air quality issues and program structure.
Sections II.B through ILK of this guidance provide further information on specific permitting activities
and the extent to w hich the costs of such activities must be treated as part 70 costs.
B. The Costs of Part 70 Program Administration
All part 70 program administration costs must be treated as part 70 costs.42 Examples of program
administration costs include:
38 Seee§ 70.9(b)(l)(ii), (4).
39 Implementation plan development is mandated under title 1 of the Act and costs typically include such activities as
maintaining state-wide emissions inventories and performing ambient monitoring and emissions modeling of air pollutants
for which national ambient air quality standards have been set.
40 See the matrix guidance at page 1.
41 The fee demonstration guidance cites various factors that may affect the types of activities included in a permit program
and influence costs. See fee demonstration guidance at 4-5.
42 This section includes many activities that would be categorized as part 70 costs under 40 CFR §§ 70.9(b){ 1 )(i)-(iii) that are
not covered elsewhere in subsequent sections of this guidance and are necessary to conduct a pait 70 program.
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Program infrastructure costs (e.g., development of part 70 regulations, implementation guidance,
policies, procedures, and forms);
Program integrati on costs (adapting to changes in related programs, such as NSR, secti on 112
programs, and other programs);
Data system implementati on costs (including data systems for submitting permitting informati on
to the EPA. for permit program administration, implementation and tracking and to provide
public access to permits or permit informati on);
Costs to operate local or Regional offices for part 70, the costs of interfacing with other state,
local, or tribal offices (e.g., briefing legislative or executive staff on program issues and
responding to internal audits);
Costs related to interfacing with the EPA (e.g., related to program oversight, including program
evaluations, responding to public petitions, revising implementati on agreements between the air
agency and the EPA); and
• Activities similar to those above.
In additi on. there are other program implementati on costs, such as the costs of making determinations of
which sources are subject to part 70 permitting requirements that must be treated as part 70 costs.43
Examples of such activities include:
• Maintaining an inventory of part 70 sources (e.g., for enforcement of the requirement for sources
to obtain a permit or for part 70 fee purposes);
• Costs of determining if an individual source is a major source (for applicability purposes);
• Costs of determining if a source qualifies for coverage under a general permit (if the air agency
chooses to issue them); and
• Costs of determining if a n on-major source is required to obtain a part 70 permit and costs of
implementing any insignificant activity and emission level exemptions under part 70.
C. TheCostsof Part 70 Program Revisions
All costs of revising an approved part 70 program must be treated as part 70 costs, including the costs of
developing new program elements to respond to changes in requirements, whether the revisions are the
air agency's own initiative or required by the EPA.44 Examples of program revision costs include:
• Costs of revising the program elements that are changing (e.g.. program legal authority,
implementing regulations, data systems, and other program elements);
43 Many of these activities may also be described as related to reviewing and acting on applications for part 70 permits, as
provided in 40 CFR § 70.9(b)(l)(ii).
44 See 40 CFR § 70.4(i).
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• Costs of documenting the changes; and
• Costs associated with obtaining the needed approvals, including for submitting program
revisions to the EPA and any necessary follow-up work related to obtaining approval.
D. The Costs of Reviewing Applications and Acting on Part 70 Permits
All costs of reviewing an application for a part 70 permit, developing applicable requirements as part of
the process of a permit, and ultimately acting upon the application must be treated as part 70 costs.t*5
These costs must include the costs of the application completeness determination, the technical review
of the application (including the review of any supplemental monitoring that may be needed, review of
any compliance plans, compliance schedules, and review of initial compliance certifications included in
the application), drafting permit terms and conditions to reflect the applicable requirements that apply to
the source, determining if any permit shields apply, public participation, the EPA and affected air
agency review, and issuing the permit. The cost of these activities must be included for initial permit
processing, permit renewal, permit reopening, and permit modification.
The costs of developing part 70 permit terms and conditions. All costs associated with the development
of permit terms and conditions to reflect the "applicable requirements," including the costs of
incorporating such terms in part 70 permits, must be treated as part 70 costs. The applicable
requirements include the emissions limitations and standards and other requirements as provided for in
the definition of applicable requirements in 40 CFR § 70.2. Such costs may include the costs to
determine the provisions of the applicable requirements that specifically apply to the source, to devel op
operational flexibility provisions, netting/trading conditions, and appropriate compliance conditions
(e.g., inspection and entry, monitoring and reporting). Appropriate compliance provisions may include
periodic monitoring and testing under 40 CFR § 70.6(a)(3) (i)(B) and monitoring sufficient to assure
compliance under 40 CFR § 70.6(c)(1).
Part 70 also requires certain regulatory provisions to be included in permits, such as citation to the origin
and authority of each permit term, a statement of permit duration, requirements related to fee payment,
certain part 70 compliance and reporting requirements, a permit shield (if provided by the air agency),
and similar terms. The costs of developing such terms must be covered by permit fees.46
The costs of developing "state-only" permit terms need not be treated as part 70 costs. Air agencies
should screen or separate ""state-only" requirements from federally-enforceable requirements and—
while the act of separating part 70 terms from state-only terms should be treated as part 70 costs—the
costs of developing state-only permit terms, putting them in the part 70 permit, and implementing and
enforcing them as they appear in the part 70 perm it need not be treated as part 70 costs for fee
purposes^7
45 See CAA section 502(b)(3)(A)(i); 40 CFR § 70.9(b)(lf)(ii).
46 See 40 CFR § 70.6.
47 See the matrix guidance, which notes that state-only requirements in part 70 permits are air-grant-eligible activities, rather
than title V-eligible activities.
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The costs of public participation and review (bv the EPA and the affected air agency)! All costs of
notices (or transmitting information) to the public, affected air agencies and the EPA for part 70 permit
issuance, renewal, significant modifications and (if required by state or local law) for minor
modifications (including staff time and publication costs) must be treated as part 70 costs.48
Any costs associated with hearings for part 70 permit issuance, renewal, significant modifications, and
for minor modifications (if required by state or local law), including preparation, administration,
response, and documentation, must be treated as part 70 costs.
All costs for the air agency to develop and provide a response to public comments received during the
public comment period must be treated as part 70 costs.
Any costs associated with transmitting necessary documentation to the EPA for review and response to
an EPA objection must be treated as part 70 costs.49 Also, the costs associated with an air agency's
response to an EPA order granting objection to a part 70 permit and/or the costs of defending challenges
to part 70 permit terms in state court must be treated as part 70 costs.
E. The Costs of Implementation and Enforcement of Part 70 Permits
With some exceptions related to court costs and enforcement actions, the costs of implementing and
enforcing the terms of any part 70 permit must be treated as part 70 program costs.30 Implementation and
enforcement of permit terms and conditions related to part 70 includes requirements for compliance
plans, schedules of compliance, monitoring reports, deviation reports, and annual certifications.
The costs of any follow-up activities when compliance/enforcement issues are encountered should be
treated as part 70 costs. Part 70 costs include such activities as conducting site visits, stack tests,
inspections, audits, and requests for information either before or after a violation is identified (e.g.,
requests similar to the EPA's CAA section 114 letters).
Part 70 costs should include the costs for any notices, findings, and letters of violation, and the
development of cases and referrals up until the filing of the complaint or order. Excluded from permit
costs are enforcement costs incurred after the filing of an administrative or judicial complaint.31
Part 70 costs must also include the costs of implementing and enforcing any restrictions on potential to
emit (PTE) that are included in a part 70 permit, whether they originate in the part 70 permit or were
transferred from a non-part 70 permit, such as a minor NSR permit for a ''synthetic minor source."
48 See 40 CFR § 70.7(h) concerning public participation and 40 CFR § 70.8 concerning the EPA and affected air agency
review.
49 See 40 CFR § 70.8(a).
50 See 40 CFR §§ 70.4(b), 70.6,70.9(b)(l)(iv), and 70.11.
51 See the matrix guidance at page 8.
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F. The Costs of Implementing and Enforcing the Requirements of Non-Title V Permits Required
Under the Act
Part 70 fees must cover the costs of implementing and enforcing the terms and conditions of "other
permits" (n on-part 70 permits) required under the Act, such as prec on struct ion review permits under title
1, that have been incorporated in part 70 permits as "applicable requirements."52
Also, the costs of implementing and enforcing the terms and conditions of consent decrees and orders
that originate in a non-part 70 permit that are incorporated into a part 70 permit must be treated as part
70 costs. See Section 11.A of this guidance.
The costs of implementing and enforcing applicable requirements for "prospective part 70 sources" need
not be treated as part 70 costs until such time as the source submits a timely and complete permit
application and pays fees. In addition, the costs of implementing and enforcing "state-only"
requirements need not be treated as part 70 costs.
G. The Costs of Performing Certain "Other Activities" Related to Applicable Require me nts
Certain activities are required by the Act but are not "applicable requirements" because they apply to the
permitting authority, rather than the source; such activities are referred to as "other activities."53
Examples of applicable requirements that contain these activities include, but are not limited to.
standards for existing sources under section 111(d) of the Act; case-by-case MACT under sections 112
of the Act; and certain activities required by a SIP, FIP, or TIP. including section 110 of the Act. The
costs of other activities must be treated as part 70 costs, if the air agency is required to perform the
activities by part 70, title V, or the air agency's approved part 70 program; if a n on-part 70 rule requires
them to be performed in the part 70 permitting context; or if the activities are needed to assure
compliance with, or to enforce, the terms and conditions of a part 70 permit. The costs of other activities
should not be treated as part 70 costs, if they do not meet any of these criteria (e.g., a n on-part 70 rule
requires an activity that occurs in a non-part 70 context). See Section II.A of this guidance.
H. The Costs of Revising, Reopening, and Renewing Part 70 Permits
All costs associated with processing permit revisions, including for administrative amendments, minor
modifications (fast-track and group processing^ and significant modifications, must be treated as part 70
costs.34 The part 70 costs must include all the costs of reviewing and acting on the application, as well as
implementing and enforcing the revised permit terms.35 The costs of implementing any "operational
flexibility provisions"56 approved into a program to streamline permit revision procedures must be
treated as permit program costs (this may also generally be considered to be one of the costs of
implementing a permit).
52 Required to be treated as part 70 costs in certain cases by 40 CFR § 70.9(b)(l)(iv).
53 Required to be treated as part 70 costs in certain cases by 40 CFR §§ 70,9(b)(l)(ii) and (iv).
54 Required to be treated as part 70 costs under 40 CFR § 70.9(b)(l)(ii), Also see 40 CFR § 70.7 for more on permit issuance,
renewal, reopening and revision procedures.
55 40 CFR §§ 70.9(b)(l)(ii) and (iv).
56 Section 502(b)( 10) of the Act requires the operating permit regulations to include provisions to allow changes within a
permitted facility without requiring a permit revision under certain circumstances. The EPA refers to these provisions as
'"operational flexibility provisions." See 40 CFR § 70.4(b)(12).
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The cost for the air agency to reopen a part 70 permit for cause must be treated as part 70 costs. The
proceedings to reopen a permit shall follow the same procedures that apply to initial permit issuance,
and include a requirement for the air agency to provide a notice to the source of the agency's intent to
reopen the permit.
When the EPA reopens a part 70 permit for cause, the air agency's costs for the proposed determination
of termination, modification, or revocation and reissuance, and the costs to resolve the objection in
accordance with the EPA's objection, must be treated as part 70 costs.
The cost of renewing permits every 5 years, which involves the same procedural requirements, including
public participation, and the EPA and affected air agency review, must be treated as part 70 costs,57 just
as for initial permit issuance.
I. The Costs of General and Model Permits
All costs for development and implementation of general and model permits under part 70 must be
included in part 70 program costs, including the costs of drafting permits, public participation, the EPA
review and any affected air agency's review, permit issuance, publication, assessing applications for
coverage under the general permit, and other related costs.58 Note that the issuance of general and model
permits is an option for air agencies, but if such permits are issued by an air agency under part 70, the
costs must be included in part 70 costs.
J. The Costs of the Portion of the Small Business Assistance Program (S BAP) Attributable to
Part 70 Sources
The SBAP under title V is authorized to provide counseling to help small business stationary sources to
determine and meet their obligations under the Act.59 The SBAP is authorized to provide assistance to
small business stationary sources, as defined by CAAt§ 507(c)(1), under the preconstruction and
operating permit programs; however, air agencies need only to include costs related to assistance with
part 70 in part 70 costs.60 See 40 CFR § 70.9(b)(l)(viii). Allowable costs for part 70 include the costs to
establish a small business ombudsman program to provide information on the applicability of part 70 to
sources, available assistance for part 70 sources, the rights and obligations of part 70 sources, and
options for sources subject to part 70. Allowable costs also include the costs associated with part 70
applicability determinations.
57 40 CFR § 70.9(b)(lt)(ii).
58 Required to be included in part 70 costs by 40 CFR §§ 70.9(b)(l)(ii) and (iv). Also see40 CFR § 70.6(d) for more on the
administration of general permits.
59 For examples of the types of activities of a SBAP that could be attributable to part 70 sources and funded by part 70 fees,
see Transition to Funding Portions of State and Local Air Programs with Permit Fees Rather than Federal Grants, Mary D.
Nichols, Assistant Administrator for Air and Radiation, U.S. EPA, to Regional Administrators, Regions I - X, July 21, 1994
("transition guidance"); Letter from Conrad Simon, Director, Air & Waste Management Division, EPA Region 11 to Mr.
Billy J. Sexton, Director, Jefferson County Department of Planning and Environmental Management, Air Pollution Control
District, Louisville, Kentucky, January 23, 1996 ("Sexton memo").
60 Note that the preconstruction review permitting costs of assisting non-part 70 sources should generally not be included as
part 70 costs, except for costs related to implementation and enforcement of permit terms from a preconstruction review
permit that have been included in a part 70 permit.
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Part 70 costs for S BAP must include the costs for outreach/publications on the requirements of part 70
and/or the applicable requirements included in part 70 permits, the costs of assisting part 70 sources
through a clearinghouse on compliance methods and technologies, including pollution prevention
approaches, and the costs to assist sources with part 70 permitting, which may include the portion of
costs for a small business compliance advisory panel that are related to part 70.
K. The Costs of Permit Fee Program Administration
All costs associated with the administration of an air agency's part 70 fee program must be included in
part 70 costs, including the costs for revising fee schedules (as needed to cover all required costs),
periodic updates, detailed accounting (if needed), determining the presumptive minimum for the air
agency, participating in EPA evaluations of fee programs or similar EPA oversight activities, assisting
sources with fee issues, auditing fee payment by sources, assessing penalties for fee payment errors,
responding to internal audits and inquiries, and similar activities.61
III. Flexibility in Fee Schedule Design
An air agency may design its fee schedule to collect fees from sources using various methods, provided
the fee structure raises sufficient revenue to cover all required program costs.62 Thus, air agencies may
charge: emissions-based fees based on actual emissions or allowable emissions; fixed fees for certain
permit processes (different fees for initial permit review, renewals, or for various types of permit
revisions); different fee rates (e.g., dollars per ton of emissions) for certain air pollutants; fees reflecting
the actual costs of services for sources (such as charging for time and materials for a review); or other
types of fees, including any combination of such fees. Finally, air agencies may charge annual fees or
fees covering some other period of time.
This flexibility for fee schedule design is available without regard to whether the air agency has set its
fees to collect above or below the presumptive minimum. Many air agencies have designed their fee
schedules to collect fees using an emissions-based approach that mirrors the approach of part 70 for
determining the presumptive minimum program cost for an air agency.63 However, air agencies are not
required to charge fees to sources in that manner, and it is possible that such an approach may not
necessarily result in fees that would be sufficient to cover all part 70 program costs.
51 See 40 CFR § 70.9(b)(l)(ii); Overview of Clean Air Title V Financial Management and Reporting - A Handbook for
Financial Managers, Environment Finance Center, University of Maryland, Maryland Sea Grant College, University of
Maryland. Supported by a grant from the U.S. EPA, January 1997 ("Financial Manager's Handbook") (providing an
overview of air agency application of general government accounting, budgeting, and financial reporting concepts to the part
70 program).
62 See 40 CFR § 70 9(b)(3).
63 See 40 CFR § 70.9(b)(2)(f).
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IV. The EPA Review of Existing Air Agency Fee Programs
The initial program submittals involved review of data on expected fee revenue, program costs and
accounting practices that were prospective in nature, since little or no data would have been available on
actual fees or costs at that time.
At this point, the EPA review of air agency fee programs generally focuses on a review ofactual data on
fee revenue, program costs, and review of existing accounting practices. The EPA oversight of existing
fee programs will also likely be conducted as part of a program evaluation, a separate fee evaluation, or
through submittal of any periodic updates or detailed accountings related to fee demonstration
requirements. The EPA has issued a separate memorandum and guidance on part 70 program and fee
evaluations concurrently with this updated fee schedule guidance.^4
Fee evaluations for existing part 70 programs will generally focus on certain key requirements of the Act
and part 70 for fees discussed in Section 1, General Principles for Review of Title V Fee Schedules, of
this guidance. Such reviews may cover certain aspects of air agency accounting practices and procedures
related to fees, particularly fee assessment procedures, tracking of fee collection and revenue uses
(including transfers in and out of part 70 program accounts), whether all part 70 costs are included in the
air agency's accounting of costs, and potentially other accounting aspects.
A fee evaluation may include a review of an air agency's fee program status with respect to the
presumptive minimum defined in 40 CFR § 70.9(b)(2). This may be important in cases where a part 70
program was initially approved to charge above the presumptive minimum, in order to determine if the
air agency is now charging less than the presumptive minimum. This is relevant because 40 CFR §
70.9(b)(5)(i) requires an air agency to submit a detailed accounting to show that its fees would be
adequate to cover the program costs if the air agency charges less than the presumptive minimum. This
requirement is ongoing (not restricted to program submittals).
In addition, the EPA revised the part 70 requirements related to calculating the presumptive minimum to
add a "GHG cost adjustment'' in an October 23, 2015, final rule.65 Although the EPA has announced a
review of this final rule (82 FR 16330, April 4, 2017), the EPA has not proposed any specific changes to
the "GHG cost adjustment." Because air agencies are required to collect sufficient fees to cover the costs
of implementing their operating permit programs, they may still use the "GHG cost adjustment" (as
applicable) in calculating the fees owed to reflect the associated administrative burden of considering
GHGs in the permitting process. The "GHG cost adjustment" is designed to cover the overall added
administrative burden of adding GHGs to the permitting program in a general sense.
6-1 Program and Fee Evaluation Strategy and Guidance for Part 70, Peter Tsirigotis, Director, Office of Air Quality Planning
and Standards (OAQPS), U.S. EPA, to Regional Air Division Directors, Regions 1 — 10, March 27, 2018.
65 The "GHG cost adjustment" was promulgated as part oftan October 23, 2015, final rule titled. Standards of Performance
fir Greenhouse Gas Emissions from New, Modified and Reconstructed Stationary Sources; Electric Utility Generating Units,
80 FR 64510. Specifically, see Section XII.E. 'implications for Title V Fee Requirements for GHGs" at page 64633, See also
40 CFR §§ 70.9(b)(2)(v) and (d)(3)(viii).
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"Presumptive Minimum" Calculation
1. Calculate the "Cost of Emissions." The calculation is based on multiplying the actual
emissions of "fee pollutants"66 (tons) from the air agency's part 70 sources for a preceding 12-
month period by the "presumptive minimum fee rate"67 ($/ton) that is in effect at the time the
calculation is performed.
Air agencies may exclude the following types of fee pollutants from the calculation:
- Actual emissions of each regulated fee pollutant in excess of 4,000 tons per year on
source-by-source basis.68
- Actual emissions of any regulated fee pollutant emitted by a part 70 source that was
already included in the presumptive minimum fee calculation (i.e.. double-counting of
the same pollutant is not required).69
- Insignificant quantities of actual emissions not required in a permit application pursuant
to 40 CFR § 70.5(c).70
2. Calculate the "GHG Cost Adjustment" (as applicable)71 The ';GHG cost adjustment" is the
cost for the air agency to conduct certain application reviews (activities) to determine i f GHGs
have been properly addressed for an annual period. The adjustment is calculated by multiplying
the total hours to conduct the activities (burden hours) by the average cost of staff time ($/hour)
to conduct the activities.
To calculate the total hours for the air agency to conduct the activities, multiply the number of
activities performed in each category listed in the following table by the corresponding "burden
hours per activity factor," and sum the results.72
Table 1. GHG reviews counted for GHG cost adjustment purposes
Activity
Burden Hours per
Activity' Factor
GHG completeness determination
(for initial permit or updated application)
43
GHG evaluation for a permit modification or
related permit action
7
GHG evaluation at permit renewal
10
66 The term "fee pollutants" used here is shorthand for "regulated pollutants (for presumptive fee calculation)," as defined in
40 CFR § 70.2.
67 The "presumptive minimum fee rate" is calculated by the EPA in September of each year and is effective from September
I to August 31 of the following year. The fee rate is adjusted annually for changes in the Consumer Price Index (CP1) and is
published on the following Internet site: htrps;//www.epa.gov/title-v-operating-permits/permh-fees.
68 See 40 CFR § 70.9(b)(2)(ii)(B).
69 See 40 CFR § 70.9(b)(2)(ii)(C). For example, a source may emit an air pollutant that is defined as both a hazardous air
pollutant and a pollutant for which a national ambient air quality standard has been established, e.g., a volatile organic
compound. The actual emissions of such a pollutant is not required to be counted twice for fee purposes.
70 See 40 CFR § 70.9(b)(2)(ii)(D),
71 See 40 CFR §§ 70.9(b)(2)(i) and (v).
II The table shown here is found at 40 CFR § 70.9(b)(2)(v).
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To determine the GHG cost adjustment^ $), the total hours to conduct the reviews (calculated
above) is multiplied by the average cost of staff time ($/hour). The average cost of staff time
must include wages, employee benefits, and overhead and will be unique to the air agency. The
average cost may be known for the air program or may be available from the air agency budget
office or accounting staff.
3. Calculate the Total Presumptive Minimum. The total presumptive minimumt($) for the annual
period is determined by adding the "cost of emissions" (determined in Step 1) and the "GHG
cost adjustment," as applicable (determined in Step 2).
See Attachment B, Example Presumptive Minimum Calculation, for an example calculation for a
hypothetical air agency that incorporates the "GHG cost adjustment."
V. Future Adjustments to Fee Schedules
Air agencies must collect part 70 fees that are sufficient to cover the part 70 permit program costs.73
Accordingly, air agencies may need to revise fee schedules periodically to remain in compliance with
the requirement that permit fees cover all part 70 permit program costs. Changes in costs over time may
be due to many factors, including but not limited to: changes in the number of sources required to obtain
part 70 permits; changes in the types of permitting actions being performed; promulgation of new
emission standards; and minor source permitting requirements for CAA sections 111, 112, or 129
standards. Air agencies should keep the EPA Regions apprised of any changes to fee schedules over
time. The EPA will assess the proposed revision and determine whether it must be processed by the EPA
as a substantial or non-substantial revision. As part of this process, the EPA may request additional
information, as appropriate.
73 40 CFR § 70.9(a).
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ATTACHMENT A
List of Guidance Relevant to Part 70 Fee Requirements
EPA Guidance on Part 70 Requirements:
• January 1992 - Guidelines for Implementation of Section 507 of the Clean Air Act Amend me ntsa-
Final Guidelines, Office of Air Quality Planning and Standards (OAQPS), U.S. EPA. See pages 5
and 11-12 concerning fee flexibility for small business stationary- sources:
hlt'p://\vww.e pa. gov/si tes/production/files/2015-08/documents/smbus.pdf.
• July 7, 1 993 - Questions and Answers on the Requirements of Operating Permits Program
Regulations, U.S. EPA. See Section 9: http://www.epa.gov/sites/production/files/2015-
08/documentsfbhrd_qa I .pdf.
• August 4, 1993 - Reissuance of Guidance on Agency Review of State Fee Schedules for Operating
Permits Programs under Title V, John S. Seitz, Director, OAQPS, U.S. EPA, to Air Division
Directors, Regions I-X ("1993 fee schedule guidance"). Note that there was an earlier document on
this subject that was superseded by this document:
http:fJwww3.epa.gov/ttn/naaqs/aqmguide/colleclion/i5/fees.pdf
• August 9, 1993 - Acid RaimTitle V Guidance on Fees and Incorporation by Reference, Brian J.
McLean, Director, Acid Rain Division, U.S. EPA, to Air, Pesticides, and Toxics Division Directors,
Regions I, IV, and VI, Air and Waste Management Division Director, Region II, Air and Toxics
Division Directors, Regions III, Vll, VIII, IX and X and Air and Radiation Division Director,
Region V: hitp://www.epa.gov/sites/production/filesf20l5-0H/documenis/combo809.pdf
• September 23, 1 993 — Matrix of Title V-Related and Air GrantaEligible Activities, OAQPS. U.S.
EPA ("matrix guidance"). The matrix notes that it is to be '"read and used in concert with the August
4, 1993, fee [schedule] guidance": http://www.epa.gov/sites/productionJfiles/20l5-
08/documents/matrix.pdf.
• October 22, 1 993 - Use of Clean Air Act Title V Permit Fees as Match for Section 105 Grants,
Gerald M. Yamada, Acting General Counsel, U.S. EPA, to Michael H. Shapiro, Acting
Administrator, Office of Air and Radiation, U.S. EPA:
htrpsfJwww.epa.gov/sites/production/files/20l5-08/documents/usefees.pdf
• November 01, 1993 — Title V Fee Demonstration and Additional Fee Demonstration Guidance. John
5. Seitz, Director, OAQPS, U.S. EPA, to Director, Air, Pesticides and Toxics Management Division,
Regions I and IV, Director, Air and Waste Management Division, Region 11, Director, Air, Radiation
and Toxics Division, Region 111, Director, Air and Radiation Division. Region V, Director, Air,
Pesticides and Toxics Division, Region VI and Director, Air and Toxics Division, Regions VII, VI11.
IX and X, U.S. EPA ("fee demonstration guidance"):
http: f/www3.epa.gov/ttn/naaqs/aqmguide/col lection/i5(feedemon.pdf
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• July 21,1 994 - Transition to Funding Portions of State and Local Air Programs with Permit Fees
Rather than Federal Grants, Mary D. Nichols, Assistant Administrator for Air and Radiation, U.S.
EPA, to Regional Administrators, Regions I - X ("transition guidance"):
http://www.epa.gov/sites-/production/files/20I5-08Aiocuments/grantmem.pdf
• August 28, 1994 - Additional Guidance on Funding Support for State and Local Programs, Mary D.
Nichols, Assistant Administrator for Air and Radiation, U.S. EPA, to Regional Administrators,
Regions 1 - X ("additional guidance memo"): http://www.epa.goV/sites/productioti/files:/2015-
08/documents/guidl ine .pdf.
• January 25, 1995 - Options for Limiting the Potential to Emit (PTE) of a Stationary Source Under
Section J12 and Title V of the Clean Air Act (Act), John S. Seitz, Director for Office of Air Quality
Planning and Standards, U.S. EPA, to Regional Directors, Regions 1 - X:
https://www.epa.gov/sites/production/files/documents/Hmit-pte-rpt.pdf.
• January 23,1996 - Letter from Conrad Simon, Director, Air & Waste Management Division, EPA
Region II to Mr. Billy J. Sexton, Director, Jefferson County Department of Planning and
Environmental Management, Air Pollution Control District, Louisville, Kentucky ("Sexton memo"):
hl(ps:/'Jwww.epa.gov/sites/production/files/20l6-04/documents/sexton _l996.pdf
• January 1997 - Overview of Clean A ir Title V Financial Management and Reporting - A Handbook
for Financial Managers, Environment Finance Center, University of Maryland, Maryland Sea Grant
College, University of Maryland. Supported by a grant from the U.S. EPA ("financial manager's
handbook"): http://www.epa.gov/sites/production/files/20J5-08/docimenis/t5jinance.pdf
• October 23, 2015 - Standards of Performance for Greenhouse Gas Emissions from New, Modified
and Reconstructed Stationary Sources: Electric Utility Generating Units: Final Rule (80 FR 645tl 0).
See Section XII.E, 'implications for Title V Fee Requirements for GHGs" at page 64633:
http://www.gpo.gov/fdsys/pkg/FR-2015-10-23/pdf/2015-2283 7.pdf
Guidance on Governmental Accounting Standards Relevant to Part 70:
• Handbook of Federal Accounting Standards and Other Pronouncements, as Amended, as of June 30,
2015, Federal Accounting Standards Advisory Board (FASAB).
http://www.fasab.gov/pdffiles/2015Jasab_handbook.pJf
• Statement of Federal Financial Accounting Standards 4: Managerial Cost Accounting Standards and
Concepts, page 396 of the FASB Handbook ("SFFAS No. 4").
• Statement of Federal Financial Accounting Standards 7: Accounting for Revenue and Other
Financial Sources and Concepts for Reconciling Budgetary and Financial Accounting, page 592 of
the FASAB Handbook ("SFFAS No. 7").
Statements of the Governmental Accounting Standards Board (GASB):
• Statement No. 33, Accounting and Financial Reporting for Nonexchange Transactions (December
1998) ("GASB Statement No. 33"):
http://www.gasb.org/jsp/GASB/Document C. GASBDocumentPage?cid-l 176160029148&accepted
Disclaimer= true.
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• Statement No. 34, Basic Financial Statements - and Management's Discussion and Analysis for
State and Local Governments (June 1999) ("GASB Statement No. 34"):
http://www.gasb.org/jsp/GASB/Document_C/GASBDocumentPage?cid= 117616002912l&accepted
Disclaimer=true.
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ATTACHMENT B
Example Presumptive Minimum Calculation
This attachment provides an example calculation of the "presumptive minimum" under 40 CFR part
70 for a hypothetical air agency ("Air Agency X").i
Background:
•t The "presumptive minimum" is an amount of fee revenue for an air agency that is presumed to
be adequate to cover part 70 costs.2
ot If an air agency's fee schedule would result in fees that would be less than the
presumptive minimum, there is no presumption that its fees would be adequate to cover
part 70 costs and the air agency is required to submit a "detailed accounting" to show that
its fees would be sufficient to cover its part 70 costs.3
ot If an air agency's fee schedule would result in fees that would be at least equal to the
presumptive minimum, there is a presumption that its fees would be adequate to covert
costs and a "detailed accounting" is not required. However, a "detailed accounting" is
required whenever the EPA determines, based on comments rebutting the presumption oft
fee adequacy or on the EPA's own initiative, that there are serious questions regarding
whether its fees are sufficient to cover part 70 costs.4
®t In addition, independent of the air agency's status with respect to the presumptive minimum, at
"detailed accounting" is required whenever the EPA determines on its own initiative that theret
are serious questions regarding whether an air agency's fee schedule is sufficient to cover its partt
70 costs. This is required because part 70 requires an air agency's fee revenue to be sufficient to
cover part 70 permit program costs.5
•t The quantity of air pollutants and the "GHG cost adjustment" are unique to each air agency andt
vary from year-to-year. As a result, the presumptive minimum calculated for an air agency ist
also unique to that particular agency on a year-to-year basis.t
•t No source should use the presumptive minimum calculation described in this attachment to
calculate its part 70 fees.6 Sources should instead contact their air agency for more informationt
on how to calculate fees for a source.t
1 The example calculation follows the requirements of40 CFR § 70.9(b)(2)(i)-(v).t
2 See 40 CFR § 70.9(b)(2)(i).
3 See40 CFR § 70.9(b)(5) (concerning the "detailed accounting" requirement).
4 See 40 CFR § 70.9(b)(5)(ii).
5 See 40 CFR §§ 70.9(a) and (b)(1).
6 See40 CFR § 70.9(b)(3) (providingair agencies with flexibility on how they charge fees to individual sources).
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• An air agency may calculate the presumptive minimum in several circumstances:
o As part of a fee demonstration submitted to the EPA when an air agency sets its fee
schedule to collect at or above the presumptive minimum.
o As part of a fee evaluation to determine if an air agency with a fee schedule originally-
approved to be at or above the presumptive minimum now results in fees that are below
the current presumptive minimum. When this occurs, the air agency is required to submit
a ''detailed accounting" to show that its fee schedule w ill be sufficient to cover all
required program costs. Such a change in the presunptive minimum for an air agency-
may occur for many reasons overtime.7
o To update the presunptive minimum amount for the air agency to account for changes
that have occurred since the calculation was last performedaA common reason for an air
agency to do this is to recalculate the arnount to add the GHG cost adjustment.8
The presumptive minimum calculation is generally composed of three steps:
1. Calculation of the "cost of emissions. "aThe "cost of emissions" is proportional to the emissions
of certain air pollutants of part 70 sources.
2. Calculation of the "GHG cost adjustment" (as applicable). The "GHG cost adjustment,"
promulgated in October 23, 2015, is intended to recover the costs of incorporating GHGs into the
permitting program.
3. Sum the values calculated in Steps 1 and2.
7 It has been almost two decades since most part 70 programs were approved. Changes may have occurred since then that
would affect the presumptive minimum calculation for an air agency. For example, changes in the emissions inventory for
part 70 sources or changes to air agency fee schedules. The part 70 rules were also revised in 2015 to add a "GHG cost
adjustment" to the calculation of the presumptive minimum fee.
*See 80 FR 64633 (October 23. 2016); 40 CFR § 70.9(b)(2)(v).
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Example Scenario and Calculation:
Air Agency X performs its presumptive minimum calculation in November of2016 using data for Fiscal
Year 2016 (FY16 or October 1, 2015, through September 30, 2016).
Step 1 - Calculate the Cost of Emissions:
The "cost of emissions" is determined by multiplying the air agency's inventory of actual emissions of
certain pollutants from part 70 sources ("fee pollutants") by an annual fee rate determined by the EPA.
A. Determine the Actual Emissions of "Fee Pollutants" for a 12-month Period Prior to the
Calculation.
Note that the term "fee pollutants" used here is shorthand for "regulated pollutants (for
presumptive fee calculation)," a defined term in part 70,9 which includes air pollutants for which
a national ambient air quality standard has been set, hazardous air pollutants, and air pollutants
subject to a standard under section 111 of the Act, excluding carbon monoxide, greenhouse
gases, and certain other pollutants.10 Note that any preceding 12-month period may be used, for
example, a calendar year, a fiscal year, or any other period that is representative of normal source
operation and consistent with the fee schedule used by the air agency.
For example, a review of Air Agency X's emissions inventory records for part 70 sources for the
12-month period (FY16) indicates that the actual emissions of "fee pollutants" were 15,700 tons.
Total "Fee Pollutants"t= 15,700 tons for FY16
B. Determine the Presumptive Minimum Fee Rate (S/ton) Effective at the Time the
Calculation is Performed.
The presumptive minimum fee rate is updated by the EPA annually and is effective from
September 1 until August 31 of the following year. Historical and current fee rates are available
online: h{tps://www.epa.gov!/title-v-opera!ing-permits/permit-fees._Jhe fee rate used in the
calculation is the one that is effective on the date the calculation is performed, rather than the fee
rate in effect for the annual period of the emissions data.
For example. Air Agency X calculates its "presumptive minimum" for FY! 6 in November 2016.
The air agency first refers to the EPA website (listed above) to find the fee rate effective for
November 2016. This fee rate ($48.88) is used in the next step to calculate the cost of emissions.
Presumptive Minimum Fee Rate ($/ton) = S 48.88 per ton.
9 The definition of "regulated pollutant (for presumptive lee calculation)" is found at 40 CFR § 70.2.
10 Note that 40 CFR §§ 70,9(b)(2)(ii) and (iii) provides exclusions for certain air pollutants and includes a definition of
'"actual emissions."
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C.aCalculate the Cost of Emissions^
Calculate the cost of emissions by multiplying the total tonstof '"fee pollutants" (value found int
A)tby the presumptive minimum fee rate (value found intB).t
Cost of Emissionst= "Fee Pollutants" (tons) * Presumptive Minimum Fee Rate ($/ton)
= 15,700 tonst* $48.88/ton
= $767,416
Value Calculated in Step 1: Cost of Emissionsa= $767,416
Step 2 - Calculate the GHG Cost Ad iustment (as applicable):
The "GHG cost adjustment" is the cost for the air agency to review applications for certain permitting
actions to determine ifGHGs have been properly addressed.
A.a Determine the Number of GHG Activities for Each Activity Category^
Determine the total number of activities processed during the period for each activity category
listed in the following table [based on table at 40 CfR § 70.9(b)(2)(v)].
Activity
Burden Factor
(hours per activity)
GHG Completeness Determinations
(for initial permit or updated application)
43
GHG Evaluations for Permit Modification or
Related Permit Actions
7
GHG Evaluations at Permit Renewal
10
For example, Air Agency X's records were reviewed to determine the number of activities that
occurred for each activity category during FY 16:
•t 2 GHG completeness determinations for initial applicationst
•t 46 GHG evaluations for permit modifications or related actions
(II significant modifications and 35 minor modifications)
•t 20 GHG evaluations at permit renewalt
Note that the activities above are assumed to occur for each initial application, permit
modification, or permit renewal, regardless of whether the source emits GHGs or is subject to
applicable requirements for GHGs. Thus, there were 20 GHG evaluations at permit renewal
because there were 20 permit renewals.
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B. Calculate the GHG Burden for Each Activity Category.
The GHG burden for each activity category is calculated by multiplying the number of activities
for each category (identified in A) by the relevant burden factor (hours/activity) listed in the
table above.
GHG Burden = Number of activities * Burden factor (hours/activity)
For example, Air Agency X calculated GHG burden as follows:
• 2 Completeness Determinations * 43 hours/activity = 86 hours
• 46 Evaluations for Mods or Related Actions * 7 hours/activityt= 322 hours
• 20 Evaluations at Permit Renewal * 10 hours/activity = 200 hours
G Calculate the Total GHG Burden (in hours).
The total GHG burden hours are calculated by summing the GHG burden hours for each activity
category determined in B.
For example, Air Agency X calculated total GHG burden hours as follows:
Total GHG Burden Hours = 86 hours + 322 hours + 200 hours
= 608 hours
D. Calculate the GHG Cost Adjustment.
Calculate the GHG cost adjustment for the period by multiplying the total GHG burden hours
(value calculated in C) by the cost of staff time.
GHG Cost Adjustments Total GHG burden hours (hours)t* Cost of staff time ($/hour)
For example, Air Agency X's budget office reported that the average cost of staff time for the
Department of Natural Resources (including wages, benefits, and overhead) for FY16 was
$56/hour.
GHG Cost Ad justmentt= Total GHG burden hourst* Cost of staff time
= 608 hours * $56/hour
= $34,048
Value Calculated in Step 2: GHG Cost Adjustments S34,048
5
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Step 3 - Calculate the Total Presumptive Minimum:
Calculate the total for the period by adding the cost of emissions (value calculated in Step 1) and the
GHG cost adjustment, as applicable (value calculated in Step 2).
Presumptive minimumt= Cost of emission ($) + GHG cost adjust mentt($)
= $767,416 + $34,048
- $801,464
TotalaPresu mptive Minimum=aS801,464
Conclusions
$801,464 is the Air Agency X's presumptive minimum for FY1 6. Thistvalue would be compared against
the total part 70 fee revenue for the same period to determine if the total fee revenue istgreater than or
lesstthan the presumptive minimum.
6
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#eos%
UNITED STATES ENVIRONMENTAL PROTECTION AGENCY
RESEARCH TRIANGU i \U- :•
OFFICE OF
AIR QUALITY PLANNING
AND STANDARDS
May 25, 2023
MEMORANDUM
SUBJECT: Fee Evaluation and Oversight Guidance for 40 CFR Part 70
FROM: Scott Mathias, Directoi
Air Quality Policy Div:
TO:
Regional Air Division Directors, Regions 1-10
The attached guidance is being issued as a supplement to the Environmental Protection
Agency's prior guidance titled Program and Fee Evaluation Strategy and Guidance for 40 CFR
Part 701 in response to the EPA Office of Inspector General's (OIG) 2022 report regarding the
need to address ongoing state, local, and tribal2 program fee issues and improve oversight of fee
practices and evaluations under title Ą of the Clean Air Act (CAA or Act).3 Specifically, this
guidance reflects EPA's commitment to the OIG in response to the OIG's Recommendations 3
and 4 to "update the EPA's guidance documents to require regions to establish time frames for
permitting authorities to complete corrective actions in program and fee evaluation reports and
clear, escalating consequences if timely corrective actions are not completed" and "update the
Clean Air Act Title Ą guidance documents to establish criteria for when regions must conduct
Title Ą fee evaluations and require a minimum standard of review for fee evaluations."4 This
document identifies best practices and guidance on EPA oversight of air agency fee programs,
particularly expectations for title Ą program and fee evaluations and corrective actions resulting
from those evaluations.
1 Program and Fee Evaluation Strategy and Guidance for 40 CFR Part 70, Memorandum from Peter Tsirigotis,
Director Office of Air Quality Planning and Standards, to Regional Air Division Directors, March 27, 2018 ("2018
Part 70 Fee Evaluation Guidance"), https://www.epa.gov/sites/default/files/2018-03/documents/fee_eval_2018.pdf
2 As used herein, the term "permitting authority" refers to state, local, and tribal agencies.
3 EPA's Title VProgram Needs to Address Ongoing Fee Issues and Improve Oversight, U.S. EPA Office of the
Inspector General. Report No. 22-E-0017. January 12, 2022 ("OIG Report").
4 Id. at 14, 19.
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Attachment
Supplement to EPA's Program and Fee Evaluation Strategy and Guidance for
40 CFR Part 70 Guidance
I. Summary of Title V Requirements for Air Agencies
A. General Program Requirements
Title V of the CAA of 1990 establishes an operating permit program for major sources of air
pollutants, as well as some other sources.5 EPA promulgated regulations under 40 CFR part 70
(part 70), consistent with title V of the Act, to establish the minimum elements for operating
permit programs to be administered by permitting authorities. Air agencies with approved permit
programs under part 70 must comply with minimum permit program requirements, such as
reviewing application forms, adhering to certain permit processing procedures (including
timeframes), ensuring certain permit content, collecting fees sufficient to fund the program,
providing for public participation and EPA review of individual permits, and supplementing
permits with compliance provisions (when needed), among other requirements.6'7
B. Summary of Title VFee Requirements
The following is a summary of the fee requirements that will guide EPA reviews of permitting
authority programs:
• Permit fees must be paid by "part 70 sources,"8 the permit fees must cover all "reasonable
(direct and indirect) costs required to develop and administer" the permit program (e.g.,
the permit fees must be sufficient to at least cover the total permit program costs).9
• Any fee required by part 70 must "be used solely for permit program costs" - in other
words, required permit fees may not be diverted for non-part 70 purposes.10 Nothing in
part 70 restricts air agencies from collecting additional fees beyond the minimum amount
needed to cover part 70 program cost; however, all fees (including surplus fees collected)
must be used for part 70 purposes.
5 See CAA §§ 501-507; 42 U.S.C. §§ 7661-7661f.
6 See 40 CFR §§ 70.1(a) and 70.4.
7 EPA has issued guidance on Small Business Technical Assistance Program activities that should be covered by
part 70 fees as well as potential activities that could be covered by part 70 fees. See EPA's 1995 memo Use of Title
V Emission Fees for Small Business Activities (https://www.epa.gov/title-v-operating-permits/use-title-v-emission-
fees-small-business-activities).
8 The term "part 70 sources" is defined in 40 CFR §70.2 to mean "any source subject to the permitting requirements
of this part, as provided in 40 CFR §§ 70.3(a) and 70.3(b) of this part."
9 CAA section 502(b)(3)(A); 40 CFR § 70.9(a).
10 40 CFR § 70.9(a).
1
-------
• Part 70 purposes are all activities in a permit program that must be funded by part 70
fees.11 As EPA has previously explained in EPA's November 1993 memo, Title V Fee
Demonstration and Additional Fee Demonstration Guidance ("Fee Demonstration
Guidance"),12 the types of activities included in a permit program to be funded by permit
fees and the costs of those activities will differ depending on many factors associated
with the particular permitting authority. These include, but are not limited to:
o The number and complexity of sources within the area covered by the program;
o How often the permitting authority reviews or modifies permits;
o The universe of sources covered (i.e., some permitting authorities may not opt to
defer permitting for non-major sources);
o The experience of the permitting authority with permitting (e.g., agencies with
experienced permitting staff may not need as much extensive training programs as
those with less staff operating permit experience).
• Each permitting authority will have to determine its own permitting effort and what
activities are directly or indirectly concerned with operating permits.
• As part of its ongoing oversight of part 70 programs, EPA may require "periodic updates"
of the "initial accounting" portion of the "fee demonstration" to show whether fee
revenue required by part 70 is used solely to cover the costs of the permit program.13
• EPA may also require a "detailed accounting"14 to ensure that the fee schedule is
adequate to cover costs when a permitting authority changes its fee schedule to collect
less than the "presumptive minimum"15 or if EPA determines, based on comments
rebutting a presumption of fee sufficiency or on EPA's own initiative, that there are
questions regarding whether the fee schedule is sufficient to cover the permit program
costs.16
• EPA will presume that a fee schedule meets the requirements of part 7017 if that schedule
would result in fees above the "presumptive minimum." The "presumptive minimum" is
generally defined to be "an amount not less than $25 per year [adjusted for increases in
11 40 CFR § 70.9(b)(1).
12 Title V Fee Demonstration and Additional Fee Demonstration Guidance, Memorandum from John S. Seitz,
Director Office of Air Quality Planning and Standards, to Regional Directors, November 1993.
https://www.epa.gOv/sites/default/files/2018-03/documents/fee_eval_2018.pdf.
13 40 CFR § 70.9(c), (d)..
14 40 CFR § 70.9(b)(5).
15 40 CFR § 70.9(b)(2)(i) through (v).
16 40 CFR § 70.9(b)(5); See Section 2.0 of the Fee Demonstration Guidance for an example "detailed accounting."
The scope and content of a "detailed accounting" may vary but will generally involve information on program fees
and costs and accounting procedures and practices that will show how the permitting authority's fee schedule will be
sufficient to cover all program costs.
17 40 CFR § 70.9(b)(1).
2
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the Consumer Price Index] times the total tons of the actual emissions of each "regulated
air pollutant (for presumptive fee calculation)" emitted from part 70 sources." Note that
the calculation of the "presumptive minimum" also excludes certain emissions and adds a
"GHG cost adjustment."18
C. Overview of Part 70 Program and Fee Evaluations
In its oversight capacity, EPA periodically evaluates part 70 programs to ensure that they are
being implemented and enforced in accordance with the requirements of title V and part 70.
EPA's operating permit program evaluations are intended to help pinpoint areas for improving
program implementation, determine if previously suggested areas of improvement have been
addressed by the permitting authority, and identify best practices that can be shared with other air
agencies and the EPA Regions to enhance the implementation and integrity of all operating
permit programs. As noted in EPA's 2018 Part 70 Fee Evaluation Guidance, program
evaluations can be conducted on any particular element or elements of the part 70 program,
including the complete program, or the air agency's implementation (including fee reviews),
enforcement, and legal authority for the program.
II. Criteria for Title V Fee Evaluations
A. Timing of Title V Fee Evaluations
In EPA's 2018 Part 70 Fee Evaluation Guidance, EPA cited to the Office of Air and Radiation's
2017 National Program Manager Guidance ("NPM Guidance") as the mechanism for
establishing annual requirements regarding the frequency and timing of EPA Regions' part 70
program evaluations.19 The NPM Guidance established the expectation that each EPA Region
complete at least one title V program evaluation and report each year but did not specify an
expectation of whether each instance of a program evaluation was to include a fee evaluation.
The 2018 Part 70 Fee Evaluation Guidance noted that a best practice is to conduct a fee
evaluation as part of the overall program evaluation.
It is impractical to prescribe a timeframe applicable to all EPA Regions for conducting part 70
fee evaluations, for example, due to the differences across EPA Regions in the number of
programs they oversee.20 Nonetheless, this guidance now establishes a required best practice for
each Region to conduct a fee evaluation as a part of their expected yearly title V program
evaluation for one permitting authority, as prescribed in the NPM Guidance. The fee evaluation
should follow the minimum standard of review outlined in the following section and should
generally focus on fee revenue and program costs to determine if deficiencies are present and to
18 40 CFR § 70.9(b)(2).
19 Final FY 2017 OAR National Program Manager Guidance Addendum. U.S. EPA, Publication Number
440B16001 (May 6, 2016) located at https://www.epa.gov/sites/default/files/2016-05/documents/fy 17-oar-npm-
guidance-addendum.pdf.
20 Currently, the number of title V programs in each Region varies significantly (between 4 and 43 individual
programs). In addition, the scope of each title V program varies greatly, with some relatively small programs issuing
a small number of permits to a small variety of sources each year and other larger programs issuing numerous
permits to a wide variety of source types.
3
-------
identify any concerns such as staff shortages or permitting backlogs. If that evaluation presents
concerns about deficiencies or sustainability of fees, the Region should complete a more in-depth
evaluation (detailed accounting) within 1 year.
B. Minimum Standard of Review for Title V Fee Evaluations
EPA has developed tools and resources for conducting fee evaluations and a minimum level of
review to ensure consistency in information and data collection and evaluation reporting. A title
V fee evaluation will be conducted differently for every permitting authority depending on the
size and scope of permitting in that jurisdiction; however, EPA has developed an Example
Annual Financial Data Form for 40 CFR Part 70 that regions should use as a minimum for fee
evaluations conducted as a part of an annual program evaluation. This and additional tools can be
found as attachments in EPA's 2018 Part 70 Fee Evaluation Guidance. EPA regions may revise
the tools to meet their needs, but, in general, the Example Annual Financial Data Form should
result in collection of similar information at a comparable level of detail.
III. Corrective Actions in Program and Fee Evaluation Reports
A. Timeliness of Corrective Actions
EPA Regions should work collaboratively with permitting authorities to determine the most
appropriate timeframes for addressing corrective actions identified in EPA program and fee
evaluation reports. Permitting authorities should be afforded flexibility in setting timeframes for
completing corrective actions, but also be expected to complete the corrective actions as
expeditiously as possible. The time afforded may depend on the level of effort and resources
necessary to meaningfully address the issues. For example, states may require more than a year
to adopt new fee schedules, but they should be expected to respond to requests for additional
information in a matter of weeks. EPA regions should document these timeframes as a schedule
of corrective actions with clear milestones. These milestones can be revised as necessary, but
failure to meet the milestones should result in the consequences outlined in the following section.
B. Consequences of Failure to Complete Corrective Actions
Failure by a permitting authority to complete corrective actions in EPA evaluation reports in a
timely manner may result in pervasive and increasing fee deficits, which can lead to negative
impacts on permit processing time, implementation and enforcement of title V permit terms,
staffing, and ultimately, in unsustainable title V programs. While consistent communication
between EPA regions and permitting authorities regarding the completion of corrective actions
and potential need for extensions is preferred, in situations where the permitting authority fails to
complete corrective actions in a timely manner, EPA regions should pursue specific and
escalating consequences.
In general, EPA regions should keep the Office of Air Quality Planning and Standards (OAQPS)
apprised of correspondence with permitting authorities and consult with OAQPS as necessary
while pursuing the escalating consequences.
4
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EPA regions should take the following steps after determining that a permitting authority failed
to meet its corrective action obligations:
1. Initiate communication between the EPA Regional Section Chief or Manager and
equivalent manager/director within the permitting authority informing it of its failure to
complete corrective actions in a timely manner.
• Discuss reasoning for the failure to complete the corrective actions
• Discuss revising or revisiting the corrective actions and propose new timeframe
2. If the revised corrective actions are still not completed within the adjusted timeframe or
the permitting authority has indicated it will not complete the corrective actions, initiate
communication between the EPA Regional Air Program Branch Manager and equivalent
manager/director within the permitting authority to discuss resolution.
3. If needed, continue to escalate conversations to EPA Regional Air Division Director, then
subsequently to the Regional Administrator and equivalent managers/directors within the
permitting authority to discuss EPA's next course of action.
4. If these steps do not result in any corrective actions being completed, appropriate EPA
officials should discuss taking action consistent with CAA section 502(i) and 40 CFR §
70.10(b) and after consultation with the national title V program managers at OAQPS:
• Whenever the EPA determines that a permitting authority is not adequately
administering or enforcing a part 70 program, or any portion thereof, the
Administrator will notify the permitting authority of the determination and the
reasons and publish the notice in the Federal Register.
• If, 90 days after issuing such a notice, the permitting authority fails to take
significant action to assure adequate administration and enforcement of the
program, EPA may take one or more of the following actions:
o Withdraw approval of the program or portion thereof;
o Apply any of the sanctions specified in section 179(b) of the Act;
o Promulgate, administer, or enforce a federal program under title V of the Act.
¦ In this instance, pursuant to CAA section 502(b)(C)(i), EPA may collect
reasonable fees from sources and those fees shall be designed solely to
cover EPA's cost of administering the provisions of the permit program
promulgated by EPA.
5
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Overview
Title V Financial
Management a
A Handbook for Financial Officers
and Program Managers
I ' * „ . ^ -
-------
Acknowledgm ents
The production of this kiokJet is made possible through grant miiitbei
993379-0!-0 from the Environmental Protection Agency to the Maryland Sea
Grant College. We arc particularly appreciative of support from the Office of Air
Quality Planning and Standards and Region III.
Fund accounts andrfinanmi tonus in Appendix A arc from Gmvnmummi
Accounting, Auditing and Financial Reporting, reprinted with permission of the
Government Finance Officers Association, J80 N. Michigan Avenue, Suite §00,
Chicago, II, 60601.
Special thanks to Mark Kelleii for bis help m producing this report.
For additional copies of this himcibook, contact;
Environmental 'Finance Center
Maryland Sea Grant College
University of Maryland
0112 Skinner Hall
College Park, MP.20742
-------
Overview of
Title V Financial
Management and Reporting
A Handbook for Financial Officers
and Program Managers
Produced by
Environmental Finance Center
University of Maryland System
Supported by
U.S. Environmental Protection Agency
Maryland Sea Grant College
January 1997
-------
to 19*17 by Maryland Sea Grant Colli pe
Publication Number UM-SG-CEPF-OT-tB
Produced bv the Environmental Finance Center, University of Maryland System m coop-
eration with the Maryland Sea Grant College, University of Maryland, College1 Park,
The Environmental Finance Center (EPC) Network is an association of six wiivcrsttici.
(realed under KPA sponsorship, providing fmrmce training and educational services to
slate and local officials and small businesses, EFC service?: arc designed to demonstrate
ways til lowering (he cans of, and increasing investments in. environmental facilities and
services. Funding for the network came initially through EPA grantK then Iron) othei
MinrceA as well, Mich a% public agencies and private source t. and from fees for training
courses, materials, and conferences.
The participating institutions! are; the University of New Mexico, University of Maryland
System; Maxwell School at Syracuse I'nivetsity; California State Untversiiy ;« Hay ward;
Cleveland State Untversiiy; and Idaho Universities Policy Group al Boise State.
Printed in ti« United States of America on recycled paper,
-------
Contents
Introduction v
Overview of Title V Program Management Challenge viii
CHAPTER 1
Turn- Keeping and Cost Allocation i
introduction J
Allocating Title V Costs 4
Time Keeping < 7
Lessons Learned by Air Quality Agencies 15
Conclusion . 19
CHAPTER. 2
Accounting Framework lor Title V Programs 21
Types of Funds 23
Government Fund Accounting Reports 29
Accounting for the Title Ą Program 29
Summary: Pros and Cons of Title V Accounting
Structure Alternatives . 38
C riteria for Evaluating the Need so Modify
an Agency's Title V Accounting Structure 40
CHAPTER 3
Management Reporting and Tracking 43
Introduction 43
Internal Reporting - - 44
External Reporting 49
Conclusion 55
Appendix A 59
Appendix B . >.., . ,...,.....,.,,....,....81
m
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Introduction
Title V of the Clean Air Act Amendments of 1990
(P.L. 103-549) establishes an operating permit pro-
gram for stationary sources of air pollution. Title V
requires that state agencies and local air programs col- [
lect fees from air permit holders to support operation i
of the permit program. Since the passage of the Clean j
Air Art, states have been working diligently to ad- i
dress the many challenges associated with the impie- j
mentation of the Title V program. All states and U. S. j
territories (6) have submitted operating permit pro-
grams io EPA for approval. Most of these programs
have been approved.
Among the myriad challenges confronting slates
in designing and implementing the Title V operating
permit program is the need to address associated fi-
nancial management responsibilities. This document
explores the financial challenges air quality agencies
face when implementing the Title V program. The
goal of the document is to help state. local, and feder-
al air program personnel—especially those with limit-
ed financial management experience—to understand
the fundamentals of financial management and report-
ing. It provides an oveiview of Title V program fi-
nancial management challenges, discusses generally
how states are addressing these challenges, provides
state-specific exampJes of Title V management and re-
porting practices, and discusses pros and cons of vari-
ous approaches to financial management.
Introduction v
-------
This overview report was developed to be an
introductory guide to Key Title V financial manage-
ment responsibilities — but should not be considered
to he formal EPA guidance. The report was devel-
oped through a broadly designed interview-survey
process that explored die state/local application of gen-
eral government accounting, budgeting, and financial
reporting concepts to the Title V program. The prima-
ry target audience for this document includes state and
local air quality agencies that are in the process of de-
veloping or refining the financial management and re-
porting aspect of their Title Ą programs.
The remainder of this report is presented in five
.sections. The next section provides a brief description
of the Title V management challenges as were identi-
fied through the research phase of the project.
Sections three, four, and five explore the primary fi-
nancial management challenges. The findings of the
study are summarized in the conclusion section of this
report.
How Many Air Programs Are There?
There, are 56 state (including the District of
Columbia and Territories) and 60 local air operating
permit programs in the United Stales. Most states in
the U.S. have a single program account for all air pro-
gram operating procedures, fees, and permits within
their state.
In eleven states there are also local air programs.
Some states allow these local programs to collect and
-------
distribute their own Title V fees. In other states,
however, a state agency collects ail Title V fees and
distributes them to the local programs. In California,
on the other hand, there is no stale program at ail. and
all 34 local permitting authorities submit operating
permit programs directly to the EPA,
There are no multi-state Title V permit programs.
There are. however, some multi-state boards which
discuss certain environmental issues, including air
pollution and Title V permits.
Region States/Territories State Programs Local Programs
Clean Air Act
Operating Permits Programs
Number of
Number of
Number of
IV
V
VI
VII
VIII
IX
X
111
6
4
6
8
6
4
6
7
4
6
4
6
a
6
5
4
6
7
4
0
0
0
10
0
1
2
0
39
8
Total
58
56
60
Introduction m
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Stacks with Local Programs
Number of
Region
State
Local Programs
IV
Alabama
2
IV
Kentucky
1
IV
North Carolina
3
IV
Tennessee
4
VI
New Mexico
1
VII
Nebraska
2
IX
Arizona
3
IX
California
34
IX
Nevada
2
X
Oregon
1
X
Washington
8
Overview of Tille \' Program Management
Challenges
The introduction of the Clean Air Act Tille V Fee
Program presented many challenges to state air quali-
ty agency personnel specifically in the areas of finan-
cial management and reporting. Historically, these
agencies have been involved with the implementation
and management of the Section 105 program, funded
by federal grants. Conversely, Title V does not pro-
vide federal grants to state air quality agencies for
program implementation. Instead, the Title V pro-
gram is designed to be completely self sufficient, rely-
ing on fees received from Title "V permittees to offset
program expenditures. In many eases, the Title V pro-
gram is the first major fee-based program implement-
ed by state air quality agencies.
viii Introduction
-------
Learning to fiscally account for fee-based program
revenues and expenditures is the primary challenge
facing air quality agencies thai have historically dealt
primarily with grant-based programs. Further, these
agencies must now learn to manage fee-based and
grant-based program resources simultaneously. The
Title V program requires stale ait quality agencies to
account for Title V resources in a fashion that segre-
gates them from other air quality programs, requiring
state agencies to review the methods used to account
for program resources.
Based on interviews conducted with state and lo-
cal air program personnel the financial management
and reporting challenges facing Title V program agen-
cies can be broken denvn into three categories:
* Time Keeping and Cost Allocation. As a result ol
Title V, air quality agencies modified procedures for
tracking and distributing labor and non-labor costs
among Title V and non-Title V programs, A key
challenge these agencies face is addressing the
manner in which indirect costs are allocated to
these programs.
* Accounting Fund Structures and Controls. In es-
tablishing the Title V program, air quality agencies
had to select on accounting fund structure for the
Title V program. Different fund structures are rec-
ommended for different types of activity by She
governmental accounting industry. Also, (he fund
structure would need to assure the permit program
is managed as a segregated set of accounts to assure
compliance with the Clean Air Act,
Introduction Ix
-------
4 Internal ant! Externa! Reporting, Finally. those
agencies implementing the Title V program are de-
veloping internal and external reporting procedures
for their stakeholders. Assessing the success of the
Title V program will rely heavily on the use of
sound reporting practices.
These categories follow the natural sequence of
actual financial management activities. First, the flow
of financial information begins with the initial input
of labor cost information in the time keeping process.
Next, financial information is organized in the budget
and accounting system. Finally, the information is
reported in financial and other reports that are gener-
ated for internal and external reporting.
x Introduction
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Chapter 1: Time Keeping
and Cost Allocation
Introduction
Time Keeping
The ability (o accurately track tune spent by em-
ployees is just as important in she government sector
as it is in the private sector. Private sector businesses
need to keep track of whaf their employees are doing
— as well as when they are doing it •— in order to
minimize costs and maximize efficiency. While these
goals are also important for governments, sound time
keeping procedures also allow government accounting
departments and program staff m monitor (he labor
charges from program to program. Government bud-
geting arid accounting is characterized by strict segre-
gation of the numerous programs.
This same argument holds true for the Title V pro-
gram. Funds to be used to pay the engineers, man-
agers, and administrative staff for working on Tide V
casks must come from ihe Title V program. The only
way to ensure the proper segregation of these labor
charges is through the use of an appropriately de-
signed time sheet process, Employees record their
time on a daily basis by using different time codes,
each of which refers to a unique account to which
time is charged. After time sheets are submitted, the
Chapter I: Time Keeping and Cost Allocatitm 1
-------
total labor hours charged to each project can be calcu-
lated, either manually or through a computerized sys-
tem. Mosl importantly, this information can then be
used by accounting staff and managers alike to moni-
tor the status of Title V. Section 105, or any other spe-
cific air quality program.
Cost Allocation
A primary function of any government accounting
system is to record accurately revenues and expendi-
tures as they are realized or incurred. Timely record-
ing or posting of account activity is necessary in order
to ensure up-to-date accuracy of financial reports that
may be scrutinized by a variety of entities. While
timeliness is important when measuring the effective-
ness of an accounting system, it is also necessary to
review the manner in which expenditures are allocated
to various revenue sources. The costs of implementing
a fee-based program such as Title V should be recov-
ered by the revenues realized through the operation of
that same program. In order for this to occur, effective
governmental accounting systems need lo record all
direct and indirect costs associated with program im-
plementation in a manner that allows those costs to be
identified or recognized — as a Title V program ex-
pense, for example. Once the accounting system has
identified the program(s) to which the expense is at-
tributed, the expense can then be allocated., offsetting
the corresponding revenue source(s). Figure 1 graphi-
cally depicts the flow of information associated with
the time keeping and cost allocation process.
2 Chapter 1: Time Keeping and Co&t Allocation
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Figure 1: Cost Allocation
and Time Keeping Activity
Chapter 1: Time Keeping and Cost Allocation 3
-------
Allocating Title V Costs
Numerous costs are associated with Title V pro-
gram implementation, all of which can be allocated in
a variety of ways. Direct labor includes those profes-
sionals who can attribute all or a portion of their work
to the Title V program. Indirect labor includes the ad-
ministrative and managerial personnel who provide
general support for the entire air quality division or
department. Direct (non-labor) costs are those costs
incurred through the direct implementation of the Title
V program. Finally, indirect (non-labor) costs are
those costs incurred by the entire air quality division
or department that will benefit all air programs. Ex-
amples of each of these types of expense are present-
ed below.
Expense C nicy on
lixampJes
Direct labor
> Employees responsible for Title V permitting
• Air quality engineers conducting permittee
inspections
Indirect labor
* Managers of air quality agencies
• Air quality agency administrative
support staff
Direct (non-labor t
• Travel expense to visit Title V permittee
• Telephone charges for Title V program tasks
Indirect (non-labor)
* Office supplies for air quality agency
~ Utilities for air quality agency
4 Chopin !: Time Keeping iiru! Cost Allocution
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Din ct Cast Allocution Overview
Allocating the appropriate direct costs to the Title
V program is best accomplished by using time sheets,
either manual or automated, that can interact with the
government accounting system. With such a system in
place, assigning direct costs to various air quality pro-
grams is a straightforward process. Air quality de-
partment employees fill out lime sheets weekly or
bi-weekly to reflect the number of hours spent on var-
ious tasks. By assigning a unique account charge code
to each task, accounting stall are able to track, in de- j
tail, the amount of direct labor charged to each air
quality program. This information allows accounting
departments to reconcile direct labor charges with the !
Title V program budget and also provides Title V pro-
gram managers with information on how labor is be-
ing distributed across various air quality programs
such as Title V. Section 105, and others.
Direct, non-labor charges should be allocated us-
ing the same approach. Air quality employees that
charge direct expenses, such as travel, to air quality
programs can use the same accounting charge code
procedures as for direct labor. |
i
Indirect Cost,\lloi auon Overview
Charging indirect labor and non-labor costs to var- i
ions air quality programs is much more challenging |
than under the direct cost scenario. In order to main- |
tain efficient and accurate accounting practices, air
quality program accountants and managers alike need
Chapter I: Time Keeping ami (osl Allocation 5
-------
to ensure that all indirect costs are recovered, and thai
they are recovered equitably.
The most practical method of allocating indirect
labor costs to Title V and non-Title V programs in-
volves using direct labor charges as an index. Under
this framework, indirect labor charges are allocated to
Title V and non-Title V programs based on the num-
ber of direct labor hours charged to the various air
programs. For example, if Title V direct labor charges
represent sixty percent of the total direct labor charges
within the air quality division, assigning sixty percent
of the indirect labor costs to the Title V program is
justifiable, ft can be assumed that sixty percent of the
secretarial and managerial support time is being spent
on Title V related tasks under this scenario. Percent-
age allocations for indirect labor costs can be adjusted
weekly or monthly, based on the direct labor charges
for that period.
Allocating indirect non-labor costs among Title V
and non-Title V is more complicated. As indirect costs
are to be shared among a variety of programs, they
should be allocated in a manner where the program
receiving the greatest benefit from the source of the
cost is responsible for the majority of the cost recov-
ery, Unfortunately, this presents a tedious and compli-
cated task for accounting staff. Instead, common
practice usually involves the same process as de-
scribed for indirect labor; as the indirect non-labor
costs are allocated based on the percentage direct
labor charged to each program. However, some state
programs use their own discretion for allocating these
6 Chapter1; Time Keeping and Cost Allocation
-------
costs, often treating indirect non-labor costs as general
overhead and charging to each air quality program
equally. Stale-specific approaches to this type of cost
allocation are described in the next section.
State Title V Programs
Accounting personnel from state ah quality divi-
sions across the country were contacted in order to
determine the common practices regarding cost allo-
cation for Title V and non-Title V programs. The ma-
jority of the state air quality agencies interviewed rely
on the methods described and recommended in the
previous section oi' this document when tracking time,
and allocating and recording costs.
The table on page S contains a sample of the suites
contacted and describes their approach to cost allocation.
Time Keeping
Of the state air quality divisions contacted, all but
one require the completion of weekly time sheets to
provide accounting and program staff with a detailed
account of where time is spent during the week. To
complete the time-sheet employees must provide the
number of (direct labor) hours worked daily on each
particular task, each of which identified by its own
unique account/charge code. The level of detail in the
account/charge code system varies from state to state,
but at the very minimum, the Title V program is rep-
resented by its own unique identifier. The majority of
the time sheet systems in the state air quality agencies
Chapter 1: Time Keeping and Cost Allocation 7
-------
Trru- V Cosi Allocation ami Time Keeping Procedures
.Stale Cost Allocation Time Keeping
Maryland Non-Iaboi costs arc allocated
to each program (Title V, new-
Title V, 105) based oil direct
labor charges to each pro-
gram. Maryland's sophisticat-
ed MIS (Management
Information Systems') allo-
cates these costs based largely
on the Program Cost Accounts
iPCAs'j employees use to
charge their time.
Time sheets are used to allocate la-
bor to appropriate account. Title V
will also use the PCA system,which
drives a number of other llscaj re-
ports as well bs. indirect charges.
Time sheet and financial reporting
systems- arc very closely integrated.
Mississippi Non-labor costs are allocated
to each program (Title V, non-
Title V, J 05) based on direct
labor charges to each pro-
gram.
Pre-printed time sheets arc uied and
interface with MIS by account code.
Employees are prevented from
charging non-air-relaied accotmis.
Title V is only one account code —
more detail i& desired by depart-
ment Summary reports distributed
w program managers monthly.
North Non-labor costs are allocated
Carolina to each program (Title V. non-
Title V, 1051 based on direct
labor charges to each pre-
grant
Time sheet system will interface
with new accounting software Time
tracking began in 1994 and divides
staff time into a number of cate-
gories, including Title V. Activity
codes are used to identify' specific
tasks charged to under the Title V
category.
Oregon Non-labor costs, are allocated
to each program (Title V. non-
Title Y, 105) based on direct
labor charges to each pro-
gram.
The sophisticated on-line accounting
system interface? with the employee
time sheet system, using very de-
tailed task codes to refteci employee
charges to Title V.
PcNtisxlvania
Non-laboi costs are allocated
based on program staffers'
recommendations as to the
relative percentages that
should be charged to Title V
& non-Title V. PA is working
on a more exact allocation
svstem.
Time sheets art filled in manually,
hut contain codes correspond tag to
low-level tasks for the Title V pro-
gram, Information is entered into
MIS and reports arc, generated show-
ing expended funds per employee,
per task, etc
8 Chapter J: Hum Keeping and 17m Allocation
-------
are computerized and interface with the other manage-
ment information system! s) (MIS) in place in the
state. This relationship among computer .systems al-
lows timeshcei information, for example the total
number of hours charged to Title V for the week, to
be immediately reflected in the Title V budget system.
Figure 2 shows an example of a completed time
sheet. Id this example, the actual codes and sub-codes
used to segregate tasks correctly are shown in the first
two columns under the "Project" heading. This partic-
ular employee has divided his or her time among six
unique tasks, necessitating six unique account codes,
The first three activities are "NSR" ("New Source
Review") subtasks. The last three project functions
listed are OPP (Operating Permit Program) activities.
The second column lists the operating permit program
activity (section code). Based on this information, ac-
counting and program personnel can review the time
sheet and know exactly how much time was spent on
each task and to what accounts that time should be
charged, all without any guesswork. Figure 2 includes
the actual pages from the same air quality agency that
list and define the appropriate account sub-codes for
the slate air activities including the Title V Operating
Permit Program.
Labor Cos is: I tire'.:!
Direct labor, those hours dedicated to a specific
task, are accounted for usiny the time sheet system
described above. Employees simply enter the number
of hours worked and the account code (or sub-code if
Chapter I: Time Keeping and Cost Allocation 'J
-------
POS # 1008 DEPARTMENT OF ENVIRONMENTAL QUALITY - TIME REPORT - REPORT ENDING 04/15/96
s
I
I
&
¦3
I"
1
3
1
S*.
o
LAST. First NAME t Print)
n-tr,rn? i o\>, inc,statement aftufs
T'K>N1 V NW-S'XEm ?-MFUM Ą$S
{certify to ih>* xLtirment rep«ya»nte \hc hmn worked
by mt Ajjch work dw ?nH wesk «f sfitt pay ftnri
and the paj ?n which f am enfitlfd for ibK pay frrimi
employef signature.
CTRTFFTEH BY _
PROJECT
1
2
3
4
5
6
7
8
9
10
11
12
13 U 15
FUNC.
SECT.
(1
16
17
18
19
20
21 '
22
23
24
25
26
27
28 29. 30
31
TOTAL
N i-
014
2,00
4,00
8.00
6.00
1.00
21.00
NSR
024
3.00
1.00
1.00
8.00
3 00
16.00
NSR
034
1,00
5.00
5.00
2.00
4.00
17,00
OPP
MS
5.00
4,00
;
2.00
7.00
18,00
OPP
PAR
3.00
4.00
1.00
I
j
8,00
OPP
EIF
1.00
7.00
i
,
8.00
I
0.00
•
0.00
;
0.00
I ! :
0.I
V.T.T.
! i
¦¦ ::'.:
S.L.T.
I '.'.J '¦
0.00
M.I.L.
I " i"*1
0. '
A.C.T
|—4—
0.00
] TOTAL HOURS
5.00
8.00
8.00
8.00
8.0
! o.oo
1 0.00
8.00
8.00
8.00
8.00
8.00
15&1® 8.00
0.00
88,00
COMP. EARNED
0.00
-------
applicable.) After the time sheets are submitted and
approved, the actual hours are charged to appropriate
Title V or non Title V program.
Figure 2 also shows total direct labor charges for
an air quality agency employee. The "Total Hours"
line displays the total hours charged for the day and
period (two weeks in this case), while the far right
column "Total" shows the number of hours spent on
each particular task.
Air Quality Division
Time Sheet Budget & Acnvrrv Cooes
June 21,1994
Operating Permit Program
Function Code OPP
Section Code
(Activity) Explanation
INS Facility Inspections and Report
Writing/Staff Review
PAR Operating Permit Application Review
GIF Emissions Inventory/fee Assessment
RŁG Regulation and SIP Development for
Stationary Sources
AMM Ambient Monitoring — See March 24,
1994 budget Chargeable Work
Activities for list of activities.
VIS Visibility Monitoring
CEM CEMs Certification and Audits
SKT Stack Tests Witness and Review
Chapter I: Time Keeping and Cost Aitocalhn
-------
CPL Review of Facility Compliance
Reports
SBA Small Business Technical Assistance
Program
EPA EPA Reporting
ML Filing
AQB Air Quality Advisory Board
BPT Budget Preparation and Track]rig
CM] Complaint Investigation (Stationary
Source)
) ENF Enforcement prior to Filing In Court
; ADM General Administrative Duties,
j (Reserved for Administrator
| Secretaries, Program Manager)
New Source Review (NSR) Function Code NSR
Section Code (Project/Activity)
Assigned
I Application # A Unique Application number is
1 assigned for each application corre-
i spending to company name and date
| of application
| ADM General Administrative Duties
i (Reserved for Program Mgr. and
Administrator)
12 Chapter I: Time Kt eping and Cost Allocaium
-------
Non Fee Program (EPA 105 Grant and State Genera!
Fund)
Function Code
(Budget) 105
Section Code (Activity) and Explanation
A MM
ASB
CM I
REG
BPT
ENF
ADM
RAD
RSI
Ambient Monitoring (Sec March 24,
J 994 Budget Chargeable Work
Activities for full list of activities)
Asbestos and Indoor Air
Complaint Investigation (Not related
to stationary sources,)
Regulation and SIP Development (Not
related to stationary sources).
Budget Preparation and Tracking
Enforcement Activities-including ail
enforcement actions for asbestos and
work after filing in court for stationary
sources.
General Administrative Duties
(Reserved for Administrator,
Secretaries, and Program Manager)
Radiological Activities
Railroad Safety Initiative
Labor Costs: Indirect
For most of the air quality agencies interviewed,
the process of allocating indirect labor cost is based
on the direct labor tracking system described above.
Labor costs for air quality division managers and
Chapter I: Time Keeping and Coat Allocation 13
-------
administrative support stall" that are not directly attrib-
utable to a program activity code art- allocated based
on the percentage of total labor charged to each of the
air programs, e.g.. Title V, Section 105, etc. Using
the employee time sheet system, the total number of
direct labor hours charged to each air quality program
is calculated along with the percentage that program
represents of total direct labor charges. These percent-
ages are then multiplied by the total number of indi-
rect labor hours charged for the same period, resulting
in the proper allocation to be charged to each air qual-
ity program. Most air quality agencies interviewed
rely on their MIS to perform these calculations, while
others make the calculations manually.
\!on-labor Costs
Direct non-labor costs are allocated and recorded
differently from state to state. Some agency staff that
were interviewed rely on the time sheet system to
track these costs, usually for travel expenditures that
are to be charged to a particular program, e.g., a Title
V permittee inspection. Other agencies use an inde-
pendent expense authorization system to approve, pay,
allocate, and record direct costs. Regardless of the
subtle procedural differences, all agency staff inter-
viewed use an account/charge code to ensure that the
direct (non-labor) costs are charged to the appropriate
air quality program, a code that usually differs from
that used to allocate and record labor charges within
the lime sheet system, Additionally, all those inter-
viewed relied on their agency's MIS at some level to
charge direct costs to the various air program budgets.
J 4 Chapter I: Tutit Keeping and Costi Allocation
-------
As expected, allocating and recordino indirect
non-labor costs to the various air quality programs
presents it greater challenge to the state agencies con-
tacted. As described previously, indirect non-labor
costs would besi be allocated among various air pro-
grams by assessing the amount of benefit or usage
each program realizes as a result of incurring the indi-
rect cost. Again, measuring the relative contribution of
each indirect expenditure to each air program could
present a unacceptable administrative burden as at-
tempts are made to calculate, for example, the amount
of air conditioning costs to be charged to the Title V
program. Instead, the majority of the state air quality
agencies interviewed relied on the direct labor per-
centage calculation described above in order to allo-
cate their indirect non-labor costs. The remaining
states grouped these indirect noil-labor costs into an
overhead-like category, distributing the costs equally
among all of the air quality programs, Again, all state
agencies contacted rely on their MIS at some level to
allocate, record, and post these costs to the proper air
program budgets.
Lessons Learned by Air Quality Agencies
Although the Title V program is relatively new
and state and local agencies are just now beginning to
implement the accounting procedures necessary to
manage the program, a few lessons* have been learned
that can provide insight for local air quality agencies
as they develop their own programs.
Chapter 1: Time Keeping and Cost Allocation JS
-------
; A {location Methods
I
| Generally speaking, the methods used by various
j air quality ageucies to allocate costs among Title V
; and non-Title V programs have been in use for many
i yean,. The use of time sheets and the practice of in-
j dexing indirect labor and indirect non-labor costs to
i direct labor hours has a long history in both public
| and private sectors. However, most of the agencies
! contacted expressed the desire for a more exact or de-
= tailed approach to indirect cost allocation. While these
' agencies. for the most part, were unable to offer any
: suggestions toward efficient improvements, a few of
: the agencies were in the process of refining their MIS
to allow for greater control over indirect cost alloca-
I tion. using indices in place of or in addition 10 direct
i labor hours.
Some air quality agencies also raised concerns
over direct non-labor cost allocation practices. While
mosl charges are easily categorized and recorded as
Title V, Section 105, etc., some direct charges, espe-
1 cially those shared among programs, are more diffi-
i cull lo allocate. For example, an air quality engineer
I incurs travel expenses for a trip to visit a Title V per-
| mi tree. However, on the same trip, that engineer also
1 performs a site visit under the Section 105 program.
1 To which program should the engineer charge the (di-
| reel) travel costs? Indirect costs would be allocated
[ based on direct labor hours, but travel expenses are
| direct costs and must be charged directly to a specific
j program. In some states, the answer lies in the engi-
I neer's own judgement regarding the extent to which
16 Chapter I: Time Keeping and Cost Allocation
-------
the trip was primarily to conduct one activity or an-
other. Most states have informal policies or practices
in place that result in equal sharing of costs between
air program budget centers such as the Title V pro-
gram and the Section 105 grant program. Regardless
of the process that stales have devised, it is important
to point out that these procedures should be formally
documented and communicated to EPA Regional Air
contacts. Documentation of the piactices will help to
minimize any misunderstandings regarding cost shar-
ing approaches.
.. \ccowuiChargc C odv\
Many air quality agencies expressed difficulty in
implementing the time sheet system with respect to
account/charge codes. Interviews with agency ac-
counting personnel indicated that some time sheet sys-
tems contain too man}1- codes, sub-codes, sub-sub-
codes. etc. for charging tasks under Title V. or non-
Title V programs. In these cases, air quality program
personnel are sometimes inconsistent with respect to
charging time to identical tasks. This problem is ag-
gravated by the fact that few accounting staff persons
are required to understand the subtle differences be-
tween these often technical tasks and are unable to
correct the MIS-coding singlehandedly,
Conversely, about the same number of agencies
claim the account/charge codes are not detailed
enough, with a few air quality agencies using only
one account/charge code for all Title-V'-related tasks.
This weakness leaves air program managers without
Chapter 1; Time Keeping and Cos! Allocation 17
-------
I adequate information concerning the specific tasks
I with which their employees are involved,
! Several agencies indicated that they have, already
j modified their activity code lists to facilitate use and
achieve more accurate recording of time and expense
charges, ft should be expected thai, agencies wilt con-
tinue to modify their activity codes as they gain more
experience with the Title V program and identify
ways of improving the process,
i MJS/Timc Sheet System
...
i Many of the individuals interviewed in air quality
| agencies are currently working to enhance their man-
! agement information systems (MIS) and to expand the
I role of MIS in air quality program management,
i While alt of those interviewed employ MIS to some
! degree, most are moving towards significant system
, enhancements that will present budget comparison re-
; ports, labor distribution reports, and other financial
; comparisons in real time, taking into account ihe most
j up-to-date data in the system. For all of the state air
quality agencies, these enhancements include sophisti-
cated interfaces between the .MIS accounting/finance
i modules and the agency's time sheet system, allowing
; up-to-date information on labor cost allocation among
\ Title V and other air quality programs.
Report R econciliationlRcvie. w
J
! Finally, most of the air quality agencies expressed
I the need for a more thorough review process with
IS Chapter 1: Time Keeping and Cost Allocation
-------
respect to the time sheet system and cost allocation
procedures. Specifically, air quality agency accounting
personnel believe periodic interaction is required be-
tween accounting staff and air program staff" to ensure |
that direct and indirect labor and non-labor charges j
are being allocated and recorded correctly. Because
most accounting personnel are not familiar with the
technical nuances among programs and tasks, the rc- j
view of time and com allocation procedures should in- I
elude air program managers io ensure thai those |
allocations closely mirror actual program aciivities, i
!¦
Conclusion
All of the state air quality agencies referenced in !
this section have been quite successful in implement- j
ing procedures to monitor time and track indirect and
direct costs associated with administering the Title V
program in concen with other non-Title V programs.
Most agencies are relying on methods of cost alloca-
tion that have been in use for many years and yield
j
acceptable results, while other states are working to
improve the procedures further. The fiscal manage-
ment of the Title V program will continue to be re- j
fined by state air quality agencies as program ami j
accounting staff continue to share knowledge and j
expanding management information systems take on
greater roles.
Chapter 1; Time Seeping and Cost Allocation 19
-------
Chapter 2: Accounting
Frameworks for Title V
Programs
Government accounting and financial reporting
practices differ considerably from those found in the
private, commercial sector. Generally accepted ac-
counting principles (GAAP) for government provide
strict guidelines concerning the methods used to man-
age the resources provided by taxpayers. While
GAAP standards for business enterprises are designed
to provide information needed by investors and credi-
tors. GAAP standards for government are intended to
ensure legal compliance as well as security for public
resources. In most cases, GAAP standards are aceom- 1
panieel by state accounting rules that must also be fol- [
lowed, resulting in a multi-layered oversight of the I
government accounting process. |
One of the primary differences between govern-
ment accounting and the private sector is the GAAP-
recommended use of fund accounting. According to
the Governmental Accounting Standards Board
(GASP), a fund is defined as:
A fiscal and accounting entity with a a•elf-balanc-
ing set of accounts recording cash anil of fur
financial resources, together will oil related lia-
bilities and residual equities or balances, and
changes therein, which arc segregated for the pur-
pose of carrying on specific activities or attaining |
certain objectives in accordance with special '
Chapter 2: Accounting Fmmewarks for Title V I'roprumn 21
-------
regulations, restrictions, or limitations. (Source;
GASB Codification of Governmental Accounting
and Financial Reporting Standards. Section 1300)
Simply stated, fund accounting is the practice of
separating the record keeping activity of any number
of individual funds. A fund can be viewed as a fiscal
entity with segregated accounting records used to im-
plement a specific program or activity, A federal
grant, for example, might be accounted for in a sepa-
rate fund. Most state and local governments have re-
lied on fund-based accounting systems for many years
in order to administer and manage a variety of differ-
ent programs.
Understanding fund accounting is very important
to the management of Title V permit programs at the
state and local program level. The assignment of a
specific fund type 10 the Title V program by a state/lo-
cal program establishes the expected level of segrega-
tion from other state funds; the degree to which the
fund is meant to be a self-supporting, business-type
enterprise; and the types of reports that will be avail-
able for internal and external reporting.
This section is designed to familiarize state and lo-
cal program managers with fund accounting as it re-
lates to the operation of Title V programs. It provides
an explanation of fund types that are available for use
by states, describes the accounting approach that
states and local programs are now using, and presents
criteria for evaluating the need to modify a state's ac-
counting structure.
22 Chapter 2; Aremtnting Frum? works fnr Title V Pmgramx
-------
Types of Funds
Jn general, governments can choose from generic
types of funds to manage pi og rams. Tlie.se fund types
are generally divided into foui categories: Govern-
ment Funds, Proprietary Funds, Fiduciary Funds and
Account Groups. Each type of" fund has its own char-
acteristics and is used for different government activi-
ties and programs.
Figure 3 provides a graphical summary of the or-
ganization of government funds.
6'Ovvrmm-nt Funds
The largest fund category, governmenl funds
are used to account for all general government op-
erations, such as fire and police protection, public
works, parks, and recreation. There are five iund
types within this category:
1. The General Fund i^ the chief operating
fund of a stale or local government and is
used to account for all program resources
that arc not accounted for in other funds.
The government uses only one general
fund, containing the majority of its finan-
cial transactions.
2. Special Revenue Funds are used to
account for finances thai are legally restric-
ted or earmarked for specific purposes,
such as the state implementation of an
Chapter 2; Accounting Frameworks jar Titk V Programs
-------
environmental mandate. For example, a
federal grant most likely would reside in a
fund of this type,
GASB states that special revenue fund
types may be used;
to account for the proceeds of specific rev-
enue sources that are legally restricted to
expenditure for specific purposes. (Source:
GASB Codification of Governmental .4c-
countmt» and Financial Reporting Stan-
dards, Section 1300.104)
It should be noted that the definition of a special
revenue fund is permissive, not prescriptive, A
special revenue fund nuty be used under govern-
ment program circumstances described above,
but it is not a requirement. Many governments
do not use speci.il revenue funds, choosing in-
stead to report (restricted) activities in their gen-
eral fund. However, the benefits of special
revenue fund accounting over that of the general
fund will be examined later in this document.
3. Capital Projects Funds account for finances
used for major capital development, Govern-
ments usually prefer to account for these re-
sources in funds separate from other
operations,
4. Debt Service Funds are used to account for
the repayment of government long-term
debt, such as major bond issuances,
24 Chapri-r 21 ccou/Uing Frameworks for Title V Program:;
-------
Figure 3:
Fund Organization Chart
SEate
i. Governmental i
Fund Types
Genera!
Fund
2. Special
Revenue
' 3. Capita!
Projects
4. Debt
Service
: 5.Special jji
^ Assessment i
II. Proprietary i
Fund Types
i
1.
Enterprise
2. Internal
Service
III. Fiduciary
Fund Types
1. Trust and
Agency Funds
Agency
Pension
Trust
: Expendable
Trust
^ Nonexpend-
; able Trust
Chapter 2: Accounting Frameworks for Title V Programs 25
-------
5. Special Assessments Funds account for the
funding obtained through special assess-
ments for public improvements. For exam-
ple, after levying a special assessment tax
for a new sidewalk, the funds are account-
ed for lie re.
Proprietary Funds
In general, proprietary funds are used to ac-
count for those government activities and pro-
grams thai are similar to the private commercial
sector, such as a transportation system or water
system that receives direct payment for services.
1. E/iterprise Funds are used to account for
activities that are operated much like pri-
vate sector business enterprises. Govern-
ments need to charge users for a variety of
public services to recover all or a portion
of the costs associated with a particular
program or activity. Public utilities are a
popular example of an entity fiscally man-
aged within this type of fund.
According to GASB, this type of fund may
be used:
to account for operations (a) that are fi-
nanced and operated in a manner similar
to private business enterprises — where
the intent of the governing body is that the
costs (expenses, including depreciation) of
26 Chapter 2: Accounting Frameworks for Ttitv I' Programs
-------
providing goods or ser\>ices m the general
public on a continuing basis he financed
or recovered primarily through user
charges; or (b) where the governing body
has decided that periodic determination or
revenues earned, expenses incurred, and/or
net income is appropriate for capital main-
tenance, public policy:, numagement con-
trol, accountability, or other purposes,
(Source: GASB Codification of
Governmental Accounting and Financial
Reporting Standards, Section 13(H).104)
The benefits of using enterprise funds
to account for the Title V program will be
presented in the next section,
2. Internal Service Funds account for opera-
tions similar to those found in an enterprise
fund, but for entities that provide goods
and services to other government depart-
ments. Government printing and data pro-
cessing are examples of activities
accounted for in these funds.
Fiduciary Funds
Fiduciary funds are used to account for assets
held by the, government as a third-party trustee or
agent. Examples of the funds accounted for in-
clude government pension plans and willed assets.
Chapter 2; Accounting Frameworks for Title V Programs 27
-------
I. Trust and Agency Funds
• Agency Funds are used to account for
non-government assets or assets be-
longing to another government, such as
a county that collects taxes on a coun-
ty-wide basis,
• Pension Trust Funds account for gov-
ernment pension plans
• Expendable Trust Funds account for
government assets that have been pro-
vided to that government via a trust or
other agreement. Under expendable
trusts, interest and principal may be ex-
pended based on the provisions of the
agreement. Assets left to the govern-
ment are often placed in this type of
fund,
The use of expendable trust funds to account
for Title V program resources will be present-
ed in the next section,
• Nonexpendable Trust Funds are similai
to expendable trusts, except that only
interest earnings may be expended,
leaving the original principal intact.
JiV Chapter 2: Acrnuitllng Framcworls for Title I' Programs
-------
< loveniment lumf Accounting Reports
All of the government funds described abo\e are
designed to ensure effective accounting for public
monies. In order to test this objective, governments
rely on financial reports. Stakeholders, which include
tax payers, government accounting departments and
program personnel to name a few. have a vested inter-
est in the statun of fund resources. The creation ol peri-
odic financial reports such as balance sheets, revenue/
expenditure statements, budget vs. actual compar-
isons, etc. pro\ide important information. More spe-
cifically. these reports can be used to verify that
specific programs, such its Title V, are being imple-
mented efficiently and in accordance with government
accounting standards.
As described in the following section, the reports
that can be generated and subsequently used to account
for the resources of a government program vary slight-
ly based on the specific government fund type used.
Aceotmfmy for the Title V Program !
State and local air quality agencies are concerned
with how Title V resources are managed. First ol all.
agency managers need to know that the program is
being managed in such a way that user fees are cover-
ing program costs. They also need to know that Title
V staff time and expenses are being covered using
Title V resources and. conversely, that non-Title V
program expenses are not being recovered through the
Title V program. Not only is this information valuable
Chupivr 2: Accounting Frameworks for Title V Programs 29
-------
to the air quality agencies administering the Title V
program, but also to a number of other stakeholders,
including the Title V permittees, state and local gov-
ernment officials, USEPA, and flic general public,
each of which has an interest in the efficient and ef-
fective operation of the Title V program.
As long as the particular government fund com-
plies with GAAP and state or local requirements,
there are no restrictions as to which accounting fund
encompasses the Title V program, However, while
there are numerous fund types in governmental ac-
counting, only a few can be considered viable for
Title V accounting based on the GASB definition of
the fund types. In the governmental fund type catego-
ry, possible candidates include the general fund and a
special revenue fund, though it is likely that general
fund accounting for a Title V permit program would
be considered inappropriate because of the lack of
earmarked fund segregation (see below). Capital
Title V Program Accounting;
Appropriate Government Fund Types
fund Category
fiinti Type
Governmental Funds
• General Fund
« Special Revenue Fund
• Enterprise Fund
• Expendable Trust
Proprietary Funds
Fiduciary Funds
30 Chapter 2: Acauiniiny; frameworks for Tith¦ V Programs
-------
projects; debt serviea mid!special fassessment, tlMci s
serve puippscs-xiiisiinilar to'those oft the Titib Ą pro-
grant,JflitheqTfropne,titrj«; iCutdi cat agon1, fiUu \Vc©«{ ait
infemil serriu'eTimcill Inliitr fund cateuwy. »i
start -miahr.'adopt.an ,«\\peuKfeh 1c intstr bincti rha! could
accciintSbr ibfc.Ti!ldv (iiTigriari Jhitnimatey fiiiiriK,
pension;]0.181 f WMk -.aid iiurkecpumdttble trust. ftuids
woufil'iiot'tibmsecl.'.'V sjimnrsn; 'tidhe fund ivpre j -
He irvncconnf'fcij* itie n?tio V pjnemm is shown* M'-va.' ,
General Fnt>ci
The general fund 'is comprised (if a largiemimftw ;
of accounts assoc iated - with the general .sejwwi^ ;r.t-
quiredby aiw state, or municipality. This fluid iiudinfe.
accoiuitsd#f ©lice, and fire protection, parks, jfiilWic
areas. anrf.:.a«y>,ot.tei-government program 01 acrivitA> ;
that is nor accounted for elsewhere in die acc.fninris;g-
system. If the Title V program were to be fiscally
managed from the general fund, ii would be ideniifetf
as an independent account, separate from other gemo:- ,
al fund accounts. All revenue and expenditure aetiivk-y
such as permit fees (receipts) and the costs of open-it- j'
ing the program (staff salaries, for example) would1 ;i
flow in and out of the Title V account within the •*{Ł•$>-
eral fund. Funds would not flow 10 or from the ITSfe j
account to or from ianv other general fiiod.aecQMBi;
- - 1!
without some soil' of. legislative approval,.
While, il wrmld be oons'idfened.acceptable. itntfer •
GASB to use tha-gtaieral fund toaceoum fot: dti? Tiide- |
V progmm.-it'is* clearly-iroi the best'ahoictf1.. First of [
al], Title V pmgmnprepotf jug! i» »iot as detailed1 Svfeefi \
itfmr 'Title ĄPmgrmm<\:ilJ
-------
i using the general fund. Under this scenario, i itie V is
: merely one of a large number of accounts, and while
! general in format ion on the program's fiscal activity is
, available through the general fund financial reports.
[ the information is not as robust as it would be under
J
: another government accounting fund type.
| More importantly, most government general funds
! do not restrict the movement of resources among the
J many general fund account groups and accounts,
: Further, it is a common government accounting prac-
' tice to reallocate program resources among general
! fund accounts. Title V resources must be accounted
for separately, without interaction between any other
accounts, This requirement makes the general fund an
| unattractive option tor Title V accounting.
i Of the state air quality agencies interviewed, none
i uses !he government's general fund to account for the
| Title V program, based on the limitations described
; above. Appendix A contains illustrative general fund
| statements that show the types of reports included as
part of the general fund process,
l The types of general fund reports provided as part
! of a comprehensive annual financial report include the
following:
j The statement of revenues, expenditures, and
changes in fund balance. This statement reports
] the financial performance of the entity over the
| annual reporting period. It. is meant to cormnuru-
' cate the sources, uses, and balances of current
32 Chtiptt'f 2: AiXDUitiitig Pratntwarks for Title V Programs
-------
financial resources used to run general govern-
ment operations.
The balance sheet. This report is best viewed J
as u snapshot in time of the entity's financial posi- |
tion. It presents the balance between governmental j
assets and liabilities and fund equity.
Standard accounting formats include presentation
of combining statements that group all sub-funds into
a summitry report as well as separate statements on j
component units. |
Because Title V is a new program specific lllustra- j
tions of financial statements are not yet available. In j
order to illustrate the way the statements will be pre- j
sen ted, illustrative general fund financial statements j
have been included as an appendix to this report.
Special Revenue I unci
The decision to select one particular fund type
over the others has been primarily credited to historic
precedent. Grant-funded programs and activities, such
as the Section 105 program, have been accounted for j
hv state and local governments through special rev-
enue funds as common practice lor many years. While
the Title V program does not involve {fie management
of federal grants, many air quality agencies have
viewed Title V as a "sister program" of sorts to the |
Section 105 program. Subsequently. Title V resources j
have been managed through the same government ac- j
counting fund type — the special revenue fund — as
Chapter 2: Accounting- Frameworks for Title V Programs 33
-------
the Section 105 program. In nearly all state and local
air programs contacted, the Title V program is man-
aged within a special revenue fund.
Special revenue funds are the backbone of govern-
ment accounting structures, as most governments op-
erate numerous special revenue funds to implement a
variety of programs and activities. As stated previous-
ly, special revenue funds account for financial re-
sources, often in the form of federal grants, that are in
some way restricted or ear-marked for a specific gov-
ernment purpose. The permit fees Chat flow into the
state Title V programs are restricted just as a federal
grant would be. even though these funds originate
from private sector permittees and not the federal gov-
ernment. Because Title V revenues may not he used
for any purpose other than the implementation and
management of the Title V program, a special revenue
fund is an appropriate accounting entity. All revenues
and expenditures flowing in and out of the Title V
special revenue account are used solely for that pro-
gram and may not be co-mingled with any other spe-
cial revenue fund without state legislative approval.
Governments may also account for Title V re-
sources using a Title V account within an existing spe-
cial revenue fund. Under the scenario described
above, the Title V program is accounted for through
the management of its own special revenue fund.
Conversely, governments may account for Title V
simply as an account within a special revenue fund
possessing similar restrictions, such as a Clean Air
special revenue fund that accounts for resources for
,?>/ Clioixcr 2; .-1 ccounting Frameworks for Title V Program.*
-------
Title V it nil non-Title V programs. In this situation, j
Title V (account) resources are restricted for use only
within Title V programs and may not he transferred
outside of the fund without state legislative approval.
This structure is often used for agencies in which the
Title V program is not large enough to justify segrega-
tion into a separate fund.
Wilh only one exception, all state air quality agen- j
cich interviewed use the special revenue fund to ac-
count for the Title V program. Most of the agencies
account for Title V by utilizing a separate special rev-
enue fund (Title V only,), while the remaining use a
separate Title V account within an existing j
gram) special revenue fund. Appendix A presents illus-
trations of special revenue fund reports, Because they
are part of the general fund, they are presented both as
a component of the combining statements for the gen- !
eral fund and as individual special revenue funds.
hntvrpriKc / utnl
Enterprise funds are used to account for govern-
mental programs and activities that are similar in
nature to private sector commercial transactions. Ser-
vices that require a cash outlay from the purchaser, as
opposed to those services provided via tax revenues,
are generally accounted for within enterprise funds.
Good examples of these business-like services are
public transportation systems and public utilities.
Although Title V programs could fall into this catego-
ry, no states are currently using an enterprise fund
structure for Title V programs. Pending changes by
Chapter 2; Acvmmting Frame works for Title \r Programs 35
-------
the accounting regulators may, however, change this
in the near future.
The Government Accounting Standards Board
(GASB) is in the process of modifying the require-
ments for the use of enterprise funds. Due out in raid-
J 997, the new requirements will encourage a broader
use of enterprise fluids for self-supporting activities. If
the new requirements are passed by GASB, it is possi-
ble that Title Ą programs would need to be classified as
enterprise funds by states to be in full compliance with
GAAP. GASB language as now drafted is as follows;
Bitswe,ss~r\pe activities should be reported as pro-
prietary (enterprise) funds. To provide more con-
sistency among governments, the circumstances
under which enterprise accounting may or should
be used are revised as follows;
Any activity thai charges a fee to users for its
services may be reported using enterprise fund
accounting and financial reporting. An activity is
required to be reported using enterprise fund
accounting and reporting if anv one of these
criteria is met:
a. The activity issues debt that is secured
solely by a pledge of the net revenue from
fees and charges of the activity,
h 0f. i()cai Iaws. ()r re(,}(tari0ns require
that the activity recover the costs of pro-
viding services, including capital usv
charges or debt service, with fees and
charges.
36 Chapter 2; Accounting Frameworks for Title V Programs
-------
c. The pricing policies oft In: activity establish
fees and charges designed to recover the
costs of providing services, including capi-
tal use charges or debt service. (Source:
Preliminary Views of the Governmental Ac-
counting Standards Board on Major Issues
Related to Governmental Financial Report-
ing Model; Core Financial Statements.
June, /995)
Bccau.se Title V permittees pay fees directly to the
Title V program's administering air quality agency, as
opposed to paying for the government program via in-
come taxes or other sources, the program acts much
like a commercial enterprise. Thus, an enterprise fund
may ultimately be the structure used lor Title V fee
programs.
Enterprise' fund accounting includes the use of
financial reports that are not found under other gov-
ernment fund accounting scenarios, providing infor-
mation to stakeholders from a more business-like
perspective. Specifically, enterprise fund accounting
features "Statement of Cash Flows" reports dial would
he useful in showing the movement of resources in
and out of the Title V program. Accounting statements
provided as part of an enterprise fund are included as
part of Appendix A,
Chapter 2; Accounting Frameworks for Title V Prngmms 37
-------
Expendable Trust
Expendable trusts are. employed by governments
to account for resources provided to the government
under a trust agreement for implementation of a spe-
cific objective, These resources are often in the form
of gifts or donations to the government, but have also
historically taken the form, of federal grants. As op-
posed to a non-expendable trust, both principal and
interest of expendable trust resources can be expended
in accordance with the trust agreement.
Title V resources can be accounted for under an
expendable trust structure. While the Title V program
does not provide any gifts or direct grants to be en-
trusted to the state governments, the program does re-
sult in revenue generation through permittee fees.
These fees become the resources of the trust and can
be expended only to implement the Title V program.
One of the state air quality agencies interviewed
uses an expendable trust to account for the Title V
program.
Summary: Pros and Cons of Title V Accounting
Struct ore Alternatives
While the four government fund options discussed
may be used for the Title V program, some are clearly
better than others. The table below summarizes the
strengths and weaknesses of each option for use in the
Title V program.
.i.S' Chapter 2; 4rrounUng Yramrvarhs for Tulr \' Pragrums'
-------
Usage by
fides
Fund T) pa
Strengths
\S c,ikm'SM\s
Ki-portJ
Int'.t vimved
General
Easily imple-
Funds can he
Statement of
None
Fund
mented; alt
moved from
revenues, ex-
states have
one account to
penditures
general funds
another with
and change*.
in place.
ease — a vio-
in fund bal-
lation of Title
V guidelines.
ance; balance
sheetf; budget
vs. actual
Special
Funds are seg-
Creates: anoth-
Statement ot
All states hut
Kcv.iuk
regated Gen-
er reporting
revenues, ex-
one (')6 of 17
Fund
erally itcjuircs
entity; many
penditures,
legislative or
states have
and changes
gubernatorial
numerous spe-
in fund bal-
approval to
cial revenue
ance; balance
move lo bc-
funds. Does
sheets; budge!
iwecn funds.
not report on
cash flow.v
vs. actual.
Enterprise
Behaves
Generally not
Statement of
None
Fiinit
much like a
used for small
revenues-, ex-
commercial
programs such
penditures,
business
as Title V.
and changes
enterprise.
in fund bal-
Emphasis is
ance; balance
balancing
sheets; budget
resources with
vs. actual;
expenses.
statement of
Higher im-
cash flows.
plied level of
segregation.
Allows cash
flow reporting.
r.xpcndahle
Funds arc
Not originally
Statement of
Otic agency
Trust
segregated
intended for
revenues, ex-
0 of 17)
Fund
for specific
fee-based pro-
penditures.
purpose. Pro-
grams, histori-
and changes
vides same
cally used for
in fund bal-
reports as en-
federal grants.
ance; balance
terprise fund
sheets; budget
accounting.
vs. actual;
statement of
cash flows.
Chapter 2: Accounting Frameworks for Tale. V Programs 39
-------
Criteria for Evaluating the Need to Modify an
Agency's Title V Accounting Structure
As most state and local air programs are just be-
ginning to work with accounting procedures for the
Title V program, few have had the opportunity to as-
sess whether or not the selected accounting structure
(fund type) is acceptable in terms of meeting the re-
quirements of the program itself and providing ac-
counting staff and Title V program managers with
information needed to accurately monitor costs.
In order to assess the adequacy of the Title V ac-
counting program, air programs should ask the fol-
lowing questions:
• Does the current accounting structure ensure that
Title V resources are being managed and report-
ed on independently of all other non-Title V pro-
grams?
• Do accounting managers within the state or local
agency foresee any possibility that Title V funds
could be transferred to another account for unau-
thorized use? If so, which fund structure within
the agency provides the highest level of protec-
tion from transfers?
• Does the current accounting structure allow for
the creation of reports that are meaningful to air
quality agency managers and other stakeholders
such as permittees and US EPA?
Chapter 2:, ii'cour.d)iz Framrworks for Title 5' Pnniramf
-------
• Ik the current accounting structure flexible
enough to allow changes in reporting procedures
— for example, to correct any inadequacies?
The answers to these questions may indicate that a
change in accounting structures is necessary in order
to manage the Title V program more effectively,
Chapter 2: Accounting Frameworks for Title V Programs 41
-------
Chapter 3: Management
Reporting and Tracking
Introduction
Managerial reporting is one of the most important
activities in both the private and public sectors. The
presentation of current, accurate information to the j
stakeholders of a private business or government
program can literally make the difference between
bankruptcy for the private business or program in-
effectiveness for a government agency,
Many academics and business leaders alike agree !
that information is the most important resource in any
entity, private or public. For example, a manufactur-
ing business needs information on how costs are alio- !
cated among different products, just as Title V
program managers are interested in identifying how
program personnel spend their time among Title V
and non-Tide V programs. These examples reflect the
need for 'internal" reporting — providing information
to those within the organization.
Similarly, information is required by those outside
the organization that have an interest in the success of
the program. A bank is not going to loan a business
millions of dollars without first taking a look at the fi-
nancial position of the operation. Similarly, stakehold-
ers in the Title V program including permittees, the
state legislature, and the federal government need
Chapter 3: Management Reporting and Tracking 43
-------
to know that financial resources are being used as
intended by the U.S. Congress in the Clean Air Act.
These two examples show the necessity of "external"7
reporting — providing information to stakeholders
outside of the organization.
This section represents the third of the three steps
in the natural sequence of financial management and
reporting activities. Internal and external reporting
logically follows the activities that occur in the first
two steps. To recap, the first step involves gathering
the accounting information via tools such as time
sheets and recording the direct and indirect labor and
non-labor costs as they are incurred. The second step
emails introducing the cost information to the particu-
lar government fund put in place to manage the Title
Ą program. Once the information has been gathered
and posted to the fund, it is time to put that informa-
tion to work in the form of financial reports for inter-
nal and external usage.
Step 1: Gather time keeping/cost allocation
information
Step 2: Post information to Title Ą
accounting fund
Step 3: Develop internal and external
financial report;;
internal Reporting
Internal reporting procedures allow important pro-
gram and accounting information concerning the Title
J-4 Chattier 3:
Management Reporting and Tracking
-------
V program to be disseminated throughout the air pro-
gram. This sharing of information accomplishes sev-
eral important objectives, including; (!) it allows
program and accounting personnel to understand the
status ot the Title V program in a timely manner, and
(2! it helps identify those areas of the Title V program
in need of modification or improvement. This second
point is significant as the Title V program is quite new
and its constant improvement will require the sharing
of information throughout the administering agency.
The I 'inancial Reporting System
As described above, financial reporting represents
the third of three main steps to the financial manage-
ment and reporting process. Subsequently, the activity
that occurs in this final step is a function of what hap-
pens in the first two, Most financial reporting systems
are set up to provide a siandaid set of budget and fi-
nancial statement reports for internal users, based on
the type of governmental accounting fund in use. For
example, if the Title V program is accounted lor as a
special revenue fund, the standard reports accessible
via the accounting system include balance sheets,
statements of revenues, expenditures and changes
in fund balance, and budget versus actual reports.
The reports, usually generated monthly, are based on
(1 (the information provided through recordation of
permit fee receipts, time sheet and cost allocation
practices and (2) the type of government fund in use
for Title V accounting, Because of governmental ac-
counting standards, all air programs have the ability to
create these reports through their accounting systems,
showing Title V-specifie information. Some have the
Chapter 3; Mantigrmeiir Report in? ami Tracking 45
-------
[ ability to access the information on line. Appendix A
shows examples of the types of standard reports thai
can are generated through the government financial
reporting system,
Specialized Financial Reporting
The reports described in the previous section are
very important to the air program staff, providing in-
formation concerning Title V fund account balances
and actual expenditures and revenues to date. Inter-
views conducted with air program staff revealed,
however, that reports customized to fit various indi-
vidual needs of the users beyond those offered by a
traditional reporting system can also be extremely
useful. For some agencies, these specialized reports
include:
• Summaries of Title V obligations and
encumbrances
• List of permittees and fee revenues generated
• Account balances by object code
Specialized reports such as these are extremely use-
ful to air program managers as they implement a new
program such as Title V for two main reasons. First, the
nature of a fee-based program involves constant moni-
toring of the balance of revenues and expenditures, ne-
cessitating up-to-date information on permit fee
revenues and labor cost allocation, for example. In or-
der to recognize whether or not the permit fees are ade-
quately offsetting program expenditures, a specialized
level of reporting is needed. Second, specialized reports
46 Chapter J." Management Reporting and Tracking
-------
can be used to monitor internal performance character- (
isties of the Title V program itself. The amount of di-
rect labor spent per Title V permittee, for example, may
be useful information to Title V managers as would a
summary of Tide V indirect cost allocation.
While most of (he agencies interviewed desire
the ability to generate custom reports, few are able to
accomplish this objective with their current manage-
ment information systems (MIS). For many states, j
geneiating customized reports entails bubmitting a for- j
mal request to the accounting or MIS department thai
describes the financial information requested. De-
livery of the report can take up to two weeks in some
cases, often resulting in information that is too dated
to be of much use. A few states, however, have so-
phisticated MIS in place that allow a large variety of
specialized financial reports to be generated on-Jine.
in real time. In these cases, the financial reports re- j
fled the most up-to-date information possible. [
The slate of Wyoming provides a good example of
the usefulness of customized financial reports. Three
diHerein financial reports are generated by Wyoming's
MIS. Each of the reports displays accounting infor-
mation not contained in the standard special revenue
fund reports described in the previous section,
Wyoming's system provides another filter to the data,
subsequently giving Title V program managers de-
tailed information on the status of their fee-based pro-
gram. The first page of the system includes a
Summary of Obligations representing the costs with
the amount expended or encumbered, and the remain-
Chuplvr 3; Management Kiportuif; ami Tracking 47
-------
ing balance. The last line of (lie first page shows the
Title Ą fees that are available to cover these costs.
This information is crucial to managers of a fee-based
program, as it provides cash flow information. The
last two financial reports present detailed information
on Title V permit program expenditures, again, infor-
mation thai is more detailed and more useful than the
standard special revenue fund reports.
Summary: Inte rnal Reporting
In order to effectively manage resources. Title V
agencies need access to different types of internal re-
ports: those general purpose statements that are avail-
able through the government fund accounting system,
and specialized financial reports that can be created
by Title V managers to provide detailed information
lacking in the general purpose reports. Generating
customized financial reports is best accomplished
through the use of a sophisticated MIS that can pro-
vide the detailed information on-line,
Interviews of air program personnel yielded the
following general information regarding internal re-
porting:
• Most Title V programs are incorporated into
state environmental department-wide general
purpose financial statements (balance sheets,
statements of revenues and expenditures, etc.) on
a regular basis, via their government fund ac-
counting systems. Financial reports specific to
the Title V fund can be requested by state or lo-
cal permit program managers.
48 Chapter 3; Management Reporting and Tracking
-------
• Most Title V agencies expressed the need for
more specialized internal financial reports.
• A few agencies have the ability to generate de-
tailed, specialized financial reports by using .so-
phisticated MIS; the remaining must submit
formal requests for such customized reports and
sometimes must wait weeks to receive them.
As air programs begin to identify areas for im-
proving their implementation of the Title V program,
the v ariety and detail of internal reports will most
likely increase,
KxUtikiI Reporting
External reporting is the practice of providing in-
formation lo entities outside of a business or agency.
For various reasons, stakeholders like to be kepi in-
formed as to the financial status of a public or private
entity. For the Title V program, stakeholders that may
wish to review the administering agency's financial
reports include Title V permittees, state legislatures,
or USKPA.
Title V Kxwrual licpurtin^ Status
In general, external reporting procedures lor the
Title V program have yet lo be developed lor a couple
of reasons. First, as the Title V program is relative!)
new, states have been concentrating on designing and
implementing the program itsell. In order for external
reporting to be meaningful, Title V program adminis-
trators first need to get the program established and
Chupitr 3: Altmagemaii Reporting and Trucking 41
-------
develop measurement criteria that stakeholders will
find useful. Secondly, Title V stakeholders have yet to
place external reporting demands on the air programs.
Stakeholders. Title V permittees in particular, appreci-
ate the fact that the program is still under develop-
ment and agency personnel are concentrating on
implementation for the time being,
(Unrmmcutal Reporting Procedures
Any description of external reporting responsibili-
ties for government agencies would be incomplete
without mentioning the CAFR. The Comprehensive
Annual Financial Report (CAFR) is a detailed report
that encompasses the fiscal activity of every fund and
account group used by the government. The National
Council on Governmental Accounting (MCGA) re-
quires completion of a CAFR each year to provide very
detailed accounting information, to a wide audience. In
addition to the information concerning government ac-
counting activity for the year, the CAFR also presents
other general and statistical information. A key charac-
teristic of the CAFR is that it presents audited financial
statements for the state or local government.
Through the structure of government fund
accounting and management information systems, ac-
counting information on the Tiiie V program is pro-
vided to tipper levels of the governmental entity.
This information is then summarized and becomes
part of the CAFR. In most cases, the Title V-specific
information is not readily identifiable in this report,
even though many Title V programs are accounted for
St) Chapter 3: Management Reporting mid Tracking
-------
in their own special revenue funds. While the CAFR
presents information on all special revenue funds,
most Title V programs are far too small in comparison
to other funds to be listed separately. Subsequently,
the Title V accounting information is buried within
another special revenue fund summary.
External Oversight ComimiUt s
As mentioned above, typical external reporting
techniques have yet to materialize for the Title V pro-
gram. However, many agencies have formed external
(third-party) oversight committees lo help monitor the
fee-based Title V program from a multiple-stakehold-
er perspective. These committees will most likely be
the impetus to the development of external reporting
procedures. A number of the agency personnel inter-
viewed have set up these committees, which are com-
posed of Title V permittees, state legislators, and other
regulatory representatives. The mission of the over-
sight committees is lo help the Title V administering
agency develop a program that addresses the needs of
all stakeholders, one of those needs being the access
to information.
To restate, stakeholders have'yet to put pressure
on Title V agencies for external reporting. As the Title
V program takes shape, stakeholders will become
more, interested in receiving up to dale program infor-
mation such as:
* Current fee levels
• Costs associated with program implementation
Chapter J; Management Reporting and Tracking SJ
-------
• Expenditure and revenue reconciliation
- Various performance indicators
Simply staled, the stakeholders, especially those
that have mobilized into forming oversight commit-
tees, will want to know where their fees are going anu
how efficiently they are being used to administer the
fee-based Title Ą program.
External Reporting: Measuring Performance
A challenge thai will face Title V agencies as they
develop external reporting procedures is identifying
and measuring program performance criteria. Once
Title V programs ate implemented and underway, it is
safe to assume stakeholders will soon be demanding
financial and performance-based reports. Title V
stakeholders may desire performance-based reports
that answer questions such as:
* How many labor hours does it take to implement
the Title V program foe each permittee?
* How many days does it take to review a Titie V
permit?
* Are Title V-related labor and other costs decreas-
ing or increasing over time compared to work-
load?
The air programs must take great caie when devel-
oping their external reporting program, as the applica-
bility of cost and performance data may vary widely
across the Title V program. For example, a report
showing the relationship between the total number of
52 Chapter J: Management Reporting and Tracking
-------
permittees and tlie annual cost of Tifle V program irn- I
piemen tation may provide misleading information as j
the required amount of labor hours (cost) may vary
among Title V permittees. !
For the most pan, the benefits of performance I
tracking outweigh the potential pitfalls described I
above. States should work hard to develop external re- j
porting processes that provide meaningful measures of
performance, while still meeting the needs of Title V
stakeholders. j
t
External Reporting: Sew York as Examph
The State of New York's Department of Environ- J
mental Conservation develops an annual report for the j
New York State Operating Permit Program (Title V), j
Selected portions are included in Appendix B. The |
New York report is a useful example of external re-
porting in practice. Presented each year to the New
York State Legislature, the Governor and the Office
of the State Comptroller (stakeholders), the report I
summarizes the Title V program's activity and in-
cludes both fiscal and performance-based criteria,
such as the estimated versus actual costs of program j
implementation, the average number of permits issued j
annually, as well as future fiscal year projections.
Summary: External Reporting
i
Most agencies are in the process of implementing
and refining their Title V programs and have not yet
addressed external reporting. How ev er, based on the
Chapter 3: Management Reporting mid Tracking 53
-------
interviews conducted, the- following similarities have-
been identified:
« Stakeholders such as permittees and regulatory
agencies have not. yet demanded external report-
ing from the Title V agencies as the program
continues to he implemented.
8 Governmental fund accounting systems support
externa] reporting to be used for the
Comprehensive Annual Financial Report
iCAFR). However, due to the relatively small
size of the Title- V program, it is rarely identified
in the CA.FR.
* Some agencies have organized oversight com-
mittees to provide feedback to Title V-adminis-
tering agencies. These committees will be the
driving force in the creation of external reports
for stakeholders in those states.
• Agencies will need to begin to develop external
reporting to respond to requests from stakehold-
ers.
$•/ Chapter J; Management Reporting and Tracking
-------
CONCLTSION
The Clean Air Act Title V Operating Permit Program
presents new requirements for state and local air quality
agencies. Most of these requirements are a challenge to
agencies that have historically managed grant-based pro
grams such as Seetion J 05, Fee-bused programs need
special considerations in terms of time keeping, eoxi al-
location. accounting fund type selection, and report ing,
This study found thai .state and local air programs
are making great snides in addressing the many finan-
cial management challenges associated with the Title V
program. However, because the program is beginning
the implementation phase, it is likely that state ami lo-
cal program,s will need to adjust the financial manage-
ment of the program as they gain more experience.
Conditions in the three primar) financial manage-
ment activities identified in the study are as follows:
I. Time Keeping and Cost Allocation
• Air quality agencies must refine procedures
for tracking labor and non-labor costs among
Title V and non-Title V programs. Of those
interviewed, all but one agency utilize time
sheets to record labor costs incurred for Title
V and non-Title V programs, Some of (he.se
systems are very sophisticated and interact
with the management information system
(MIS) to generate detailed reports.
Conclusion J5
-------
* These agencies must also address the manner
in which indirect costs are allocated to these
programs. All individuals interviewed have
procedures in place to record and allocate in-
direct labor and non-labor costs to appropri-
ate Title V and non-Title V program
accounts. State and local programs would
benefit from documenting these procedures if
they have not done so.
Accounting Fund Structures and Controls
•Air quality agencies must review their ac-
counting structures and assess whether the
current procedures are adequate for managing
the resources of a fee-based program or if
new accounting methods are required for pro-
gram efficiency and/or compliance with Title
V requirements,
• All agencies interviewed are currently em-
ploying acceptable methods of accounting for
Title V resources independently of non-Title
Ą programs. All but one of the agencies in-
terviewed rely on special revenue accounts
for Title V program management, while the
remaining agency accounts for Title V via an
expendable trust fund. Agencies should be
aware that government accounting regulators
may impose a fund definition that would ne-
cessitate a change in the Title V fund struc-
ture — changing Tide V to an enterprise
fund, Such a change will result in financial
-------
reports for Title V that more closely reflect
the fact thai the Title V program is user fee
supported.
3. Internal and External Reporting
• Agencies are challenged with identifying the
financial data they require in internal program
reports to manage the program. While the
budget process will provide regular reporting
on encumbrances against account codes, other
detailed information will be available through
the accounting system to evaluate costs and
revenues on a regular basis.
• Many state and local programs have yet to be-
come adept at manipulating the accounting
system to provide management information.
However, where programs are further along in
implementation, it seems that internal track-
ing information is more readily available.
• External reporting is an area that, to a great
extent, has not developed at the state and local
level. As the programs move from the start-up
period to the operation period, interests in pro-
viding external information will increase.
While there are difficulties in overly simplistic
performance measures that do not consider the
normal variability of individual activities, the
development of useful summary performance
information is a worthwhile endeavor that
Title V programs should undertake.
Conclusion 57
-------
I
L
Appendix A
Hxccrptcd from Governmental Accounting, Auditing and Financial j
Reporting (Government Finance Officers Association),
Appendix A 59
-------
General Fund
The general fund is used to account for resources, traditionally
associated with government, which are not required legally or by
sound financial management to be accounted for in another fund.
Namk of Government
General Fund
Comparative Statements of Revenues, Expenditures
and Changes in Fund Balances
For the fiscal years ended December 31,19X4 and 19X3
(amounts expressed in thousands)
T9X4 19X3
Revenues:
Taxes:
Property $14,133 $13,886
Sales 6,642 5,253
Franchise 4,293 4,126
Licenses arid permits 2,041 1,820
Intergovernmental 5,770 4,469
Charges for sen/ices 2,300 2,335
Fines 808 521
Interest 623 476
Contributions 145 —
Payments in lieu of taxes 365 314
Drug forfeitures 75 -
Total revenues 37,195 33,200
Expenditures:
Current:
General government 4,232 3,844
Public safety 13,438 13,150
Highways and streets 3,735 3,389
Sanitation 3,726 3,404
Culture and recreation 5,899 6,167
Debt sen/ice:
Principal 15 -
Bond issuance costs 150 —
Total expenditures 31,195 29,954
Excess of revenues over expenditures: 6,000 3,248
(id Appendix A
-------
19X4 11X3
Other financing sources (uses):
Operating transfer in-electric fund 1,576 —
Operating transfers out
Debt service fund (3,32?) (3,331)
Pipeline construction fund (1,210) —
Component unit (25) —
CDBG revitalization project fund (63) —
Capita! leases 140 —
Sales of general fixed assets 5 —
Total other financing sources (uses) (2,094) (3,S31)
Excess (deficiency) of revenues and other financing
sources over (under) expenditures
and other financing uses 3,096 (85)
Fund balances, January 1 1,807 1,892
Residual equity transfers out-fleet
management fund (45) —
Fund balances, December 31 $4,858 S 1,807
The notes to the financial statements are an integral part of this statement.
Appendix A 61
-------
Namk ok Government
Gf.nkral Funu
Comparative Statements of Revenues, Expenditures and
Changes in Fund Balances - Budget and Actual
For the fiscal years ended December 31, 19X4 and 19X3
(amounts expressed In thousands)
19X4 — -—19X3-
Variance Van i nee
FifortMi Fsvwibte
Budget Actual (unfavorable) Budget Actus! (Unfavorable)
Revenues
Taxes:
Property
114,007
$14,133
S 128
313,844.
$13,886
$42
Sales
5,900
6,642
742
5, OS
5253
55
Franchise
4,312
4,293
(13)
4,124
4,126
2
Licenses end parrwis ..,
1,02?
2,041
214
1,503
1,620
317
Intergovernmental
5,661
5,770
109
5,395
4,469
(926}
Charges for services
2,1 S3
2,300
142
2,085
2,335
240
Floes
810
808
(2)
487
521
34
Interest
555
S3
60
529
476
(44)
Contribullona ,.
_
14S
145
—
_
_
Paymants In lieu of taxes .,
345
365
20
314
314
0
Drug torfsitures
_
75
75
_
_
_
Total revenues
35,575
37,195
«,620
33,450
33,200
(280)
Expwtfilurta:
Current:
Genera! Government
Council
110
92
16
94
113
119)
Commissions
88
84
22
71
63
8
Manager
4S0
505
(151
426
414
12
Attorney
360
387
(7)
218
206
to
Clerk
275
250
25
247
237
10
Personnel
356
304
52
274
249
25
Finance and admin
904
86B
36
648
830
16
Other-unclassified
2,256
1,762
494
1,884
1,732
152
Total general gov'i
4,86?
4,232
626
4,058
3,844
Ł14
Public safety:
Police
6,513
6,354
159
6,026
8,801
(775)
Fire
6,040
6,031
9
5,521
5,415
106
Inspection
1,092
1,053
3S
970
334
36
Total public safety ,,
13,645
13,438
207
12,517
53,150
(633)
Highways and Streets:
Enoineering
014
796
18
777
762
IS
Maintenance
3.052
2,939
113
2,681
2,627
64
Tola! highways & SB,,..
3,866
3,735
131
3,458
3,389
69
Sanitation
3,848
3,726
122
3,428
3,404
22
Culture & recreation
5,950
5,899
51
5,477
5,167
(690)
f>2 Appendix /t
-------
——-19X4 — —19X3 —
Variance Variance
Favorable Fawrabte
: ¦ ¦ ¦ ¦ ¦¦¦ . Budge! Actual |Unf ¦
Depl se^ite:
Principal
-
.;-5i
—
—
Bond issuance costs
150
Wj
0
—
Tolal deb! service
150
•Br
05)
—
—
Total expenditures
32,316
51 'PS
1.1 ei
2Ł 936
Ł9 95^
11,013}
Excess of revenues
over expenditures .,,
SJ59
s.csri
Ł,?ji
4 5.14
8.24C'
itmi
Other financing sources (uses);
Ooerat ia transfers (n
1,576
1,576
r»
--
—
Operating iiansletr out:
Debt service (una
(3.400.
7, 1,2101
%
—
Comportfcr' unii
-
i25)
(25»
—
CDBG re'/italizatiori proj, ,
—
,F,S:
i6?i
—
Capita; leases
-
i
-------
Na.vih of Government
Gknkrai. Fund
Comparative Balance Sheets
December 31» 19x4 and 19x3
(amounts expressed in thousands)
19X4 19X3
Assets $3,097 $ 557
Cash and cash equivalents 2,091 1,226
Investments
Receivables (net of allowances for uncollectible®):
(merest 92 48
Taxes:
Property 88 74
Property—interest and penalties 11 4
Liens 25 19
Sates 330 800
Accounts 72 59
Intergovernmental:
Federal — 150
County 215 127
Due from other funds:
Transportation fund ,. — 38
Water and Sewer fund 65 193
Fleet management fund 8 —
Due from componenl unit 12 —
Iriterfund receivables:
Fleet management fund 8 —
Management information systems fund 24 —
Inventories 39 37
Advances to other funds:
Fleet management (unci 32 -
Management information systems fund 46 50
Tolal assets 6,753 3,382
64 Appendix A
-------
19X4 19X3
Liabilities and fund balances
Liabilities:
Accounts Payable 88?
Compensated absences 225
Contracts payable 67
Due to other funds:
Pipeline construction fund 335
Water and sewer fond 37
Fleet management fund 47
Management information systems tad 57
Deferred revenue:
inleresl — 48
Property taxes — 24 75
Interest and penalties-property taxes 10 8
Tax liens 25 19
Federal government 181 85
Tots! liabilities 1,895 1,575
Fund balances:
Reserved for encumbrances 320 211
Reserved for senior recreation program 145 —
Reserved for drug enforcement 75 —
Reserved for advances 78 50
Unreserved, undesignated ........ 4,240 1,546
Total fund balances 4,858 1,807
Total liabilities and fund balances 6,753 3,382
The notes to the financial statements are an integral part of this statement.
Appendix A 65
-------
Name of Government
Special Revenue Funds
Combining Statement of Revenues, Expenditures and
Changes in Fund Balances
For the fiscal year ended December 31,19x4
(With comparative totals for the fiscal year ended December 19x3)
{amounts expressed in thousands)
—Totals—
15x4 19x3
Parks CDBS
Trans- Main- Revitali-
portation tenance zatiori
Revenues:
Motor fuel tax; 729 — —
Alcoholic beverage tax 798 — 739
Intergovernmental — 100 — 338
Interest 77 39 —
Donations ..... — 148 —
Total revenue 906 987 338
Expendiiures:
Current
Highways and streets 742 — —
Economic and physical
Development - — 401
Culture and Recreation — 1,001 —
Total expenditures 742 1,001 401
Excess (deficiency) of revenues
over (under) expenditures 184 (14) (63)
Other financing source:
Operating transfer:
General fund — — 63
Excess (deficiency) of revenues and other financing sources
over (under) expenditures and
other financing uses 164 (14) —
Fund balances, January 1 744 480 5
Fund balances, December 31 ..... 900 466 5
The notes to the financial statements are an integral part of this statement.
729
651
438
116
149
2,231
742
401
1,001
2,144
87
83
150
1,229
1,379
355
28
70
239
1,343
28
805
633
710
71
514
1,229
6 ft Appendix A
-------
Special Revenue Funds
Special revenue fund,1, are used to account for specific revenues
that are legally restricted 10 expenditures for particular purposes,
Transportation Fun J — This fund is used to account for the
government's share of motor fuel tax revenues and special state
prants that are legally restricted to the maintenance of state high-
ways within the government's boundaries.
Parts Maintenance Fund •— This fund is used to account for
private donations and alcoholic beverage tax revenues (.approved
by voters ir, J9X3) that are specifically restricted to the mainte-
nance of the government's parks.
CDBG Revitalizaiion Project Fund — This fund is used to ac-
count for the community development block grant that is funding
the revitalization project for substandard housing in the govern-
ment's jurisdiction
Appendix .4 ft?
-------
Name of Government
Special Revenue Funds
Combining Balance Sheet
December 31, 19x4
(with comparative totals for December 31,19x3)
(amounts expressed in thousands)
Parte
CDBG
Trans-
Main-
Revttalt-
—Totals
portation
tenance
Mttlon
11*4
19x3
Assets
Cash and cash equivalents
65
146
211
188
Investments
. 1,174
403
_
1,577
1,144
Interest receivable
1
1
—
2
12
Cash-restricted
_
4
4
Intergovernmental raceivatte
restricted
—
19
19
5
Total assets
1,240
550
23
1,613
1.349
Liabilities and fund balances
Liabilities:
Accounts payable —
332
84
—
416
82
Due to other funds-general fund ,
—
_
_
_
38
liabilities payable from
restricted assets
_
_
18
18
—
Total liabilities
. 332
84
16
434
120
Fund balances:
Reserved for encumbrances
. 353
8
5
366
159
Unreserved, undesignated......
555
458
—
1,013
1.070
Total fund balances
908
466
5
1,379
1,229
Total liabilities and
fund balances
1,240
550
23
1,813
1,349
The notes to the financial statements are an integral pari of this statement.
68 Appendix .4
-------
Enterprise Funds
Enterprise Funds arc used to account for operations that are fi-
ll an mi and operated in a manner similar to private business enter-
prises — where the intent of the government's council is that the
costs of providing Łoods or services to the general public on a con-
tinuing basis be financed or recovered primarily through user
charges; or where the government's council has decided that peri-
odic determination of net income is appropriate for accountability
purposes.
Water and Sewer Authority Fund — This fund is used to ac-
count for the activities of the Water and Sewer Authority (a blended
component unit of the mamk of government).
Electric Fund — This fund is used to account for the activities
of the government's electric distribution operations
Appendix A 6<>
-------
Name of Government
Emfrpiusi: Fi;.\n>
Combining Balance Sheet
December 31, 19X4
(With comparative totals for December 31, 19X3)
(amounts expressed in thousands)
Water
and Sewer — Totals —
Authority Electric 19X4 19X3
Assets
Current Assets:
Cash and cash equivalents $ 1,388 $4,253 S 5,619 $ 4,121
Cash with fiscal agenl 123 — 123 —
Investments 14,610 1,735 18,405 8,879
Interest receivable 408 51 ^80 435
Accounls receivable (net of
allowance for uncoltecti'bles) 2,621 1,378 3,999 3,551
Due from other funds;
General fund 37 - 37 39
Reel management fund 2 — 2 —
Inventories 308 637 §45 930
Total current assets 19,476 8,114 27,590 17,955
Restricted assets:
Customer deposits 1.543 188 1.731 1,375
Revenue bond operations
and maintenance account 1,294 — 1,294 1,023
Revenue bond construction account 18,542 — 18,452 —
Revenue bond current debt service account 3,706 — 3,706 1,380
Revenue bond future debt service account 737 — 737 523
Revenue bond renewal and replacement account ... 1,832 — 1,632 1,165
Total restricted assets 27,454 188 27,642 5,466
Defe'red charges 568 — 580 489
Fixed assets:
Land.... 604 451 1,055 1,055
Buildings ana'system 20,928 7,043 27,97! 19,817
Accumulated depreciation-buildings and system ., (2,476) (3,013) (5,489) (4,769)
Improvements other than buildings 1,250 — 1,250 1,250
Accumulated depreciation-
improvements other than buildings (342) — (342) (188)
Machinery and equipment 104,283 1,034 105,377 104,761
70 Appendix A
-------
Water
snd Se*,er
—Totals'—
Authority
Electric
18X4
19X3
Accumulated depreciation-
machinery and equipment
, - (t-,723)
(5585
115.281]
113,429)
Construction in progress
. . 7,11b
—
7,118
~
Fixed assets (net ofaecynUateo depreciation) ,,
.. 116,642
5,017
-21,659
108,407
Total assets
8*64,140
S13,319
177 ,"59
132,337
Liabilities and earn
Current liabilities:
Accounts payable
.. $:,?37
Ł1,130
$ 2,367
$ 2 261
Compensated absence? psvabte
37*
16
390
378
Relainaae payable
536
_
Ł36
—
Due to otner funds:
General fund
—
65
193
Fieei management fund
at "*
_
17
—
Management info. sys. (unci
_
5
14
Interoovenmentai payable
-
—
11
Matured boners payable
68
-
68
_
Matured interest payable
55
_
55
--
Accrued interest payable
. 1,045
_
1,045
1,100
General obligation bonds
oavabie-current
1 iftri
_
1,480
1,360
Capital teases payable-current
23
_
23
—
Total current liabilities ,. -
, 4,905
1,146
6,051
5,337
Current liabilities payable from restricted assets:
Customer deposits payable . ...
.
168
1.731
1,375
Revenue bonds payable
- 1,484
1,484
530
Accrued interest payable
, 1,331
-
1.331
448
Total current liabilities payable
from restricted assets
4,356
*86
4,546
2,353
Normurrents liabilities:
General obligation bonds payable
(net of unamortized discounts)
, 30,815
_
30,81 e
25,798
Revenue bonds payable fuel ot
unamortized discounts!
. 31.975
—
31,975
8,580
Capita' teases payable
78
—
76
_
Total noncurrent liabilities
. 62,871
—
62,871
32.378
Total liabiM'Es
72154
1.334
73,^68
40,068
Appendix 4 71
-------
Water
and Sewer -— Totals—-
Authority Electric 19X4 19X3
Equity:
Contributed capital:
Government 4,033 — 4,033
Customers 14,062 — 14,062
Developers,..., ....... 35,241 3,138 38,379
Intergovernmental 5,588 — 5,588
Total contributed capital 58,924 3,138 62,062
803
13,854
34,293
5,588
54.533
- 1,294 1,023
Retained earnings:
Reserved for revenue bond
operations and maintenance ,, ,, 1.294
Reserved for revenue bone!
current debt service 891 — 891 402
Reserved renewal and replacement 1,632 — 1,632 1,165
Unreserved 2335 8,84? 38,112 35,191
Total retained earnings 33,082 8,84? 41,929 37,781
Total equity 92,006 11,985 103,991 92,319
Total liabilities and equity -,,$164,140 $13,319 $177,459 $132,387
The notes to the financial statements are an integral part of this statement
72 Appendix A
-------
Namk or Gfn krnmkm
Em HRPiasi- Fumis
Combining Statement of Revenues, Expenses and Changes in Retained Earnings
for she fiscal year ended December 31, 19X4
(With comparative totals for the fiscal year ended December 31, 19X3}
(amounts expressed in thousands)
Water
and Sewer
Touts —
Authority
Electric
19X4
18X3
Operating revenues:
Charges for sale? and services:
..... 10,22?
Watcsstes
—
S 6,227
$7,588
Sewer charges
—
5,671
4,344
Tap fees
1,52!
—
1,521
1,155
Electric sales
..... —
15,250
15,250
15,110
Total operatic fvewes —
15,250
31,669
28,197
Operating expenses;
Costs 0? sales anci services
6,997
10,772
17,769
16,879
Administration
3,137
1,46?
<3.620
4.342
Deorecialion
2,436
318
2,754
2,597
Total operstina expenses
12,670
12,573
Ł5,143
23,818
Operating income
. . , 3,W9
2,677
6.526
4,379
Nonopereting revenues {expenses):
IntsraovetnmenJai
.. ... 350
4G
396
172
Interest revenue
1,753
523
2,278
2,357
Interest expense
, ,. {3.4391
—
(3,439)
(2,765)
Boicf issuance costs
(35J
_
.(25)
(10)
Loss on ssles of fixed assets
(10)
—
110}
_
Tota; nonoperating teveiues
(expenses)
.... (1.371}
569
(802)
(246)
Income before operating transfers
. . 2,478
3,246
5.724
4,133
Transfer (to) other funds:
General fund
<1.576)
(1.576)
—
Net income
-... 2,476
1,670
4,140
4.133
Retained eaminos, January 1
,, ., 30,604
7,177
37,781
33,648
Reisined earnings December 31
$33,082 S 8,847 $41,929 S37.781
The notes tc the financial statement? aw an integral pan of this statement
Appendix ,4 73
-------
\.*MF Of GOVI-RNMEN I
Fxn.Rpiri.sr Finds
Combining Statement of Cash Flows
For fiscal year ended December 31, 19X4
(With comparative totals for fiscal year ended December 31, 19X3)
(amounts expressed iri thousands)
Water
and Sewer —Totals ——
Authority Electric 19X4 19X3
Cash flows from operating activities:
Cash received from customers 816,151
Cash paid to suppliers (5,813!
Cash paid lor quasi-extemai transnctions
Cash paid to employees
Net cash provided by operating activities
Cash flows from noncapital financing activities:
Transfer to general fund
Subsidy from federal grant
Net cash provided (used) by
noncapital financing activities
11,202)
(3,117!
S.019
350
350
Cash flows from capital and related financing activities:
Proceeds from general obligation bonds 8,423
Proceeds from revenue bonds 34,150
(11
170)
02)
(2,310)
Principal payments-bonds
Principal payments-capital leases
Interest paid
Proceeds from sales of feed asssis
Purchase of fixed assets —
Capital tease obligation clown payments (6)
Construction (including capitalized
interest costs) ('1,396)
Contributed capital 4,294
Net casts provided (used) by capital and
related financing activities 21,978
Cash flows from investing activities:
Interest received
Net cash provided (used) by
investing activities
St 5,097 $31,248 $27,364
(10,558) (18,371) (18,064)
- (1,202)
(1,903s (5,020) (4.338)
2,636 8,655 6,962
- (1,576) (1,576)
46
396
(1,530) (1,180)
9,423
34,150
(11,1701
(121
(2,310)
S
(494)
(6)
(494)
- (11,396)
- 4.294
(494) 21,484
172
172
(1,885)
(2,887)
(1,637)
6.744
335
, 1,568
2,038
3,606
2,987
. (23,860)
(2,276)
(26,136)
(9.898)
1,347
593
1,940
2,316
. (20.945)
855
(20,590)
(4,593)
74 Appendix /I
-------
Water
and Sewer -— Totals —
Aultiofity Electric 19X4 19X3
Nel increase (decrease) h cash
anil cas>- equivalents — 7,402 907 6,365 2,676
Cash and cash equivalents, January 1
(including $8,611 in restricted accounts) 2.696 3.474 6,17c 3.296
Cash and cash equivalents,
December 31 (including $168
ri restricted accounts) $10,100 S 4,<41 $14.541 3 6,172
Rf'TOM iuation OF Ori:r(,vriNi; Jncomil 10 Nn
Cash Pkovidkd r\ Opkk-viin"*. Aciivmd-n
Water
end Sewer
Totals—
Authority
Electric
18X4
19X3
Ooerating income
$ 3,849
$ 2,677
$6,526
5 4,379
Adjustments to reconcile operating Income
to net cash provided by operating activities;
Depreciation expense
. 2,456
318
2,754
2,507
(Increase^ in accounts receivable
(506)
(153)
(681)
(40)
increase in due 'rom other funds
_
—
—
(11)
(Increase) in allowance for
uncoBecNb.% accounts
213
_
213
110
(Increase) decrease in inventories
iŁ3
(168)
(15)
(100)
increase in customer Deposits
233
12
245
84
increase (oecreasei in accounts payable
133
(47!
m
(34)
(increase) in awunls payable
related to equipment purchase .
(374)
_
(374)
-
Increase (decrease) in
compensated absences payable
15
(3)
12
(2)
Increase (decrease) in inter-governments-
payables
(11)
—
(11)
4
increase (decrease) in due to other funds ........
(120)
—
(120)
5
Total adjustments ......
2,170
1411
2,129
2,583
Net cash provided by operating activities
$6,019
$ Ł,636
$ 8,655
$ 6,962
Noncash Investing, Capital and financing Activities
Borrowing under capital lease
101
_
Contributions of feed assets 'rom government
3,230
-
Purchase of equipment on account
374
—
The notes to the financial statements are an integral pari of this statement.
Appendix A 75
-------
Trust and Agency Funds
Trust funds are used to account for assets held by the govern-
ment in a trustee capacity. Agency funds are used to account for
assets held by the government as an agent for individuals, private
organizations, other governments and/or other funds.
Senior Citizens' Transportation Fund — This fund is used to
account for donations that are received pursuant to a trust agree-
ment that restricts the use of those donations to providing subsidies
for senior citizens' transportation to special government sponsored
events,
Perpetual Care Fund — This fund is used to account for princi-
pal trust amounts received and related interest income. The interest
portion of the trust can be used to maintain the community cemetery.
Public Safety Employees Retirements System Fund — This
fund is used to account for the accumulation of resources for pen-
sion benefit payments to qualified public safety employees.
Deferred Compensation Fund — This fund is used to account
for assets held for employees in accordance with the provisions
of Internal Revenue Code Section 457.
76 Appendix A
-------
Name of Government
Trust and Agency Funds
Combining Balance Sheet
December 31, 19X4
(With comparative totals for December 31, 19X3)
(amounts expressed in thousands)
ixpfisJftlt
Ttwt
Senior
CfcMtt'
TrsftsjsMtelioB
Nifl-
EXptndaMt
Twii
Ptrpttoil
Car*
Ptrjion
fruit
Public
Safety
Employ«s
Agency
DrfdfT»8
Conipen-
ittton
18X4
Tolife ——
19X3
Assefi
Cash end casi equivalent ,.
$11
$231
$33
$18
$293
$87
Investments
41
1,752
14,335
1,188
17,327
15,394
Interest receivable
6
82
348
—
434
163
Total assels
$58
$ 2,068
S 14,714
§ 1.216
$ 16,05*
S 15,644
Lis Dili ties and fund balances
Liabilities:
Accounts payable
$ (
11?
$18
—
$30
$36
Deferred compensation
benefits payable
—
—
—
1,216
1,216
900
Total liabilities
1
13
16
1,216
1,254
936
Fund balances:
Reserved for
perpetual care
1,102
—.
—
1,102
1,102
Reserved for employees
retirement system
—
—
IS,802
,—
16,802
14,248
Unreserved,
undesignated
51
9S1
|2,108)
—.
(1,104)
(642)
Total fund balances
51
2,053
14,636
—
16,800
14,708
Total liabilities and
fund balances
8 58
S 2,065
$14,714
$1,216
118,054
S 15,644
The notes to the financial statements are an integral part of Us statement.
Appendix A 77
-------
Name of Government
Senior CrnzKNS' Transportation
Expendable Trust Fund
Comparative Balance sheets
December 31, 19X4 and 19X3
(amounts expressed in thousands)
19X4 19X3
Assets
Cash and cash equivalents $11 $18
Investments 41 33
Interest receivable 8 ?
Total assets $58 $51
Liabilities and fund balances
Liabilities;
Accounts payable $ 7 $ 2
Fund balances:
Unreserved, undesignated — 51 49
Total liabilities and fund balances $ 58 $ 51
The notes to the financial statements m an integral part of this statement.
7H Appi'ndix ,-l
-------
Name of Government
Senior Citizens" Transportation
Expandable Tkijst Fund
Comparative Statements of Revenues, Expenditures
and Changes in Fund Balances for fiscal years ended
December 31, 19X4 and 19X3
(amounts expressed in thousands)
19X4
19X3
Revenues:
Interest
$ 6
$ 2
Donations
82
52
Total revenues
88
54
Expenditures:
Current;
General government
B6
25
Excess of revenues over expenditures —
2
25
Fund balances, January 1
49
24
Fund balances, December 31
$ 51
$49
The notes to the financial statements are an integral part of this statement.
Appendix .4 79
-------
Appendix B
Excerpted from New York State
Operating Permit Program, Annual Report 1996 (pp. 6-13).
Appendix B 81
-------
Nmv York State Operating Permit Program
1995 Annual Report
Contents Page
Introduction ]
Preface I
Background 2
New York State's Operating Permit Program Status 3
New York State's Operating Permit Program Implementation 4
Fiscal Report 6
Operating Permit Program Fee 6
Clean Air Compliance Act Reporting Requirements 7
Recommended Fee Adjustment S
Program Report.............. 12
Slate Fiscal Year 94/95 Details and Projections 12
Other Involved Agencies ...13
Appendices
Appendix A; NYS Department of Economic Department-Clean
Air Act SmallBusiness Ombudsman, Annual Report to the NYS
DEC-Augu&t 1995
Appendix B: NYS Department of Health-Clean Air Compliance
Activities-November 1995
Appendix C; NYS Environmental Facilities Corporation-Small Business
Assistance Program Annual Report to DEC-August 1995
Figures
Figure 1: 1994/95 Operating Permit actual Costs 9
Figure 2; 1995/96 Operating Permit Estimated Costs 10
Figure 3: 1996/97 Operating Permit Estimated Costs 11
Figure 4: Projected Number of Permits Subject to Review
for Title V OPP Implementation 12
Appi ndtx B
-------
Fiscal Report
Optra tint IVnnit Program I-it
Beginning in J 994. Title V facilities were required jo pin tfie tonnage based
OPP fee, pursuant to section 72-0303 oj the ECL, OPP lees collected arc de-
posited in I he OPP Account of the Clean Aw Fond established by Slate Finance
Law, Non-Title V .sources? continue to pay Air Qualm Control Program fees tftat
are deposited to the Environmental Regulatory Account established in 1%'?.
Both lite ledera) Act and the NYSC'ACA requiic fee revenues sufficient to
covet all reasonable direct and indirect costs required to develop, administer and
enforce the Stated Tjtle V peuiw piogram. Once EPA approver the, .State's plan
for delegation ol the Title V program to the State, Title V/OPP fees ciin only be
used1 fo fund Title V permit program activities. Prk« to approval. Title A" activities
can be funded from any souices available to the State Fur fjseal years 1994/95
and 1995/%. the DEC's Title V workload has been funded from lie General Fund,
the Utility Regulatory Account. Federal Funds and the OPP Aecount.
In !994/u5. Title V activities constituted ?5'« of the DEC's air program ef-
fort. however the OPP Account only paid foi 2h'7i of DEC V air program costs. It
is anticipated that as newly authorized positions funded from the OPP Account
ure filled during 1995/96. the amount expended from the OPP Account will ap-
proach lOU'v of tile Title V program cost. Many of the employees who will be
recruited to the new OPP jobs will be transferring from existing positions cm-
renth funded In the Section 105 li-dend grant. Section 105 funds may noi he
used for Title V costs once federal appro\al of the OPP is obtained. Those gran!
funds are expected to be reduced accordingly by the federal government.
The Style legislation sequires that commencing January 1, ] 094 and annual-
ly thereafter, the Department u-\- a formula to calculate the fee per ton of emis-
sions that subject sources arc required to pay and that the calculation and fee he
established a* a rule through publication jn the Environmental Notice Bulletin.
The fee is calculated by dividing the current Stale fiscal year appropriation for
the OPP by the total tons of emissions of regulated air contaminants from
sources subject to the OPP during the prior calendar year, with consideration
given to any .surplus or deficit in the OPP Account of the Clean Ail Fund, any
loan repayment from the Mobile Source Account of the Clean Air Fund and ttje
tatc of collection of bills issued for the fee. The fee is limited to a maximum lee
of $25 per ion, increased by the percentage, if any. by which the Consumer Price
Index iCPl) exceeds' the CP! for the prior year. Based upon this ceiling, the J044
ice was $25.fi9 and the J9C»5 fee was $26,44,
Appendix B S3
-------
( loan Air Compliance Act Repot tiny Requirements
The NYSCACA specific* the fiscal information that this report must con-
tain. These are an follows: the actual direct and indirect costs and revenues re-
ceived in State fiscal year iSPY) 1994/95; SFY 1W5/96 estimates for direct and
indirect costs, revenues and the year end balance of the Clean Air Fluid's OPP
Account; SFY 1996/9? projections for direct and indirect costs and tonnage of
pollutants that will be subject to OPP fees; and finally, a recommendation on an
adjustment to the fees to assure, adequate funding during future fiscal years.
Each of these requirements is addressed under subheadings below
Cost iigures provided in tilth report are actual or projected expenditures be-
tween April 1 and March 51 for a giver) State fiscal year. Expenditure figures
rather than appropriations are used in this report since expenditmes provide
more, accurate reflection of actual program costs. Appropriations only reflect the
level of spending the Legislature has authorized in a particular year, and autho-
rized funds may not be disbursed in that year. A legislative appropriation is usu-
ally based on anticipated revenues. If actual revenues generated by the OPP fees
are less than the appropriation, the full appropriation cannot be spent.
Expenditures may he made against a prior year's appropriations, current year ap-
propriations or a ^appropriation depending on when the liability was incurred.
State Fiscal V.-ar 1994/V5
The actual direct and indirect costs of the OPP in SFY 1W4/95 were
S10,687.7W. This amount includes expenditures by the Departments of Environ-
mental Conservation, Health. Emnomie Development, and the Environmental
Facilities Corporation. A detailed summary is included in Figure i. The sources
of funds for the program were OPP Account $7,413,029 with the balance com-
ing from die General Fund, Federal Funds, and the Utility Regulatory Account,
Total revenues received by the OPP account during SFY 1994-95 were
$11,084,735. Revenues included fees, interest and penalties.
Slate Fiscal Year 1995,%
The estimated direct and indirect costs of the OPP in SFY i '¦Ą>5/96 are
$13,653,881. This amount reflects expenditures by the Departments of Environ-
mental Conservation, Health. Economic Development, and the Environmental
Facilities Corporation. A detailed summary is included in Figure 2.
Revenues anticipated lo be received in SFY 19^5-96 total S 10,427,629. This
amount is based on emission tonnage hilling of 453,32(1 tons times a per ton fee
of $26.44 minus a I3'ii uncollectible figure. This revenue estimate does not irt-
84 Appendix ft
-------
dude any additional funds that may he collected from prior year tees, penalties
•and interest.
DEC estimates that the balance in the OPP Account at the end of SF-Y
19Q5/95 will be $4,564,49S. This estimate is based on.
Stale Fiscal Year 19%/()7
'1 he estimated direct and indirect costs ol the OPP in SPY l')9W% are
3>14^!l)(i.658. Th^ amount reflects pi ejected e\|>cnditoies by the Departments of
Environiijcntnl Conservation. Health, Economic Development anil the Environ-
mental Pftciliiies Corporation, A detailed siimman is included in Fienre 3,
Under current legislation, revenues estimated to lie received it) SFY 1 9Wi/y7
total $10,522,530. This amount is based on an emission tonnage billing of
430,000 tons times a pet ion 1ee ol $27.19 minus a 10Ci, uncollectible figure. Tlx
lee uf $2"?.19 it: the maximum allowed by the ceiling current!) prescribed in the
NYSCACA,
Ucconmu mled ) * t Adjustment
The 19%,"J7 appropriations requested he DOC for the OPP represent no fur-
ther enhancement. Rather, the icquest is merely lor the hill annual value of the
program levels authorized on a part-yeai basis in the 1U93M4 and 1444/95 bud-
gets, DfiC is makhip no recommendation lot an adjustment at this time.
Beginning balance
Anticipated revenues...
Projected expenditures
finding balance
.. $7,711,MS
$10,427,624
$13,653,881
. $4.4 85,366
Appendix II R5
-------
Figure 1;
1994-J 995 Oper viw; Pkrmjt Arn ai. Costs,
Category
Personal Fringe Nonpersonal
Servlct Benefits Service Capital
Tetssf
Direct Program Costs
Environmental Conservation
.. 4,234.341
1,253,520
385,050
343,708
Health
«B,886
137,838
116,543
0
Economic Development
222, 649
88,398
441,718
0
Environmental facilities Cora
0
0
556,853
0
8,816,619
703,085
732,763
658,853
Tola! Direct Costs
4,908,676 1,453,754 2,100.162 343JOB 8,809,300
Indirect Program Costs
Environmental Conservation 1,716,141
Health 150.736
Economic Development , 111,622
Environmental Facilities Corp 0
Total indirect costs ..... 1,878,499
Total Operating Permit Program Costs 10,687,799
ASSUMPTIONS:
DEPARTMENT OF ENVIRONMENTAL CONSERVATION:
Direct costs were based on Trine and Activity records including adjustments made by supervisor)' staff. It was
determined that 35% of Air stiff time was devoted to Operating Perm,: Program activities in SFY1994-05. This
percentage was applied to the total Air expenditure in SFY 1394—95. Indirect costs were calculated at 31.6% of
persons! service and fringe benefit costs and reflect costs associated with agency operations, auxiliary support
staff and other stale overhead responsibilities
Departments of Health and Economic Development: Reports containing expenditure information were provided
to DEC by these agendas.
H6 Appendix H
-------
FlGi.'Ki 2:
1995-96 Opi;k u !\c Permit Ksiimaj i n Costs
Personal
Fringe
Nonpersonsi
Category Service
Benefits
Subtotal
Service
Capital
Tote!
Direct Program Costs
Environmental
Conservator 4,476,601
1. Ł96,835
5,878.434
1,879,786
1,503,000
9,256,222
Health 249,579
78 043
3Ł7,62Ł
15,312
0
2*13,334
Economic
Deve'opment ,, . , 403,345
126,126
529,471
613,731
0
1,M3,20Ł
Environmental
Facilities Corp 0
0
C
1 040,61*1
0
1,040,614
Total Direct Costs 5,125,525
1.604,002
6,753,527
3,549,445
1,500,020
11,782,97!
Indirect Program Costs
Environmental Conservation
, 1,754,116
0
1,754,11)
Health
&7,79Ł
0
97,79!
Economic Development
18,998
0
18,99!
Environmental Facilities Corp ,. .....
0
0
C
Tot® Inoirect Costs
1,870,909
0
1 ,B70,90S
Total Operating Costs ,, 5,125,525
1,60*5,00;
6732,527
Ł.420,3=4
l.EQO,OK
13,6S3,»
ASSUMPTIONS:
Environmental Conservation:
Persons! Service expenditures reflect acuta' carry-in from 1994-95 oLs 12 month projected expenditures for 65
pos'Sions carried over from ! 894-95 and 3 trartfh projected expenditures tot 42 direr,t cosiiions tc be filled our-
irtg the current fiscal yeai.
Funding for 11 positions from SFY 1954-95 anfl B positions from SFY 1995-96 that are ass'gneoto (he Divi&on
of Regulatory Services and other support offices is shown unaer the Indirect Program costs heading.
Nonpersuns* service expencfstires reflect acta1 carry-in from 1994—SS projected 12 month disbursements
against 1995—€ appropriations (88% of planned in 12 mwrh sjeraxsj.
Cap'tai expenditures assume 100% of planner! amount.
Environmental Faclliltes Corporation
Nenpefsonal servic? expenditures reflect actual carry-in from 189*1-55 plus projected *2 month tiisoursercents
aga'nst 1995-98 appropriations, i'88% of planned in 12 month period).
Fringe Benefits/Indirect:
Fringe benefits for all agencies art calculates at S1 27% of personal service
Indirect costs for Environments, Conservation ant! Health are calculated t>i 29.65'."!. of personal
service and fringe benefits.
Indirect costs for Economic devetownent Ere 4.71% of personal service.
Appendix B 87
-------
Figure 3:
1996-97 Opkratjnc Permit Estimated Costs
Personal
Fringe
Monpersonai
Category
Service
Benefits
Subtotal
Service
Capital
Total
Direct Program Costs
Environmental
Conservation
5,210,708
1,629,388
6,840,096
1,829,032
1,000,000
0,809,128
Health
248,579
78,043
327,822
75,312
0
402,934
Economic
O«v8topm«nt
399,366
124,882
524,248
558,298
0
1,082,544
Environmental
Facilities Corp
0
0
0
1,000,000
0
1,000,000
Total Direct Costs .. .
5,859,663
1,832,318
7,691,966
3,602,640
1,000,000
12,294,808
Indirect Program Costs
Environmental Conservation
. 2,041,789
0
2,041,769
Health
57,795
0
97,769
Economic Development ,..
, 156,468
0
156,466
Environmental Facilities Corp
0
0
0
Total Indirect Costs
2,298,052
0
2,296,052
Tola! Opirating Costs .., 5,859,653 1,632,313 7,691,966 S,896,682 1,000,000 14,690,658
ASSUMPTIONS'
Planned expenditures for all agencies mllecs projected carry-in amounts against 1995-98 appropriations p!us
99% of requested personal service and 88% of non-personal service appropriations,
Capiial expenditures are estimatad af 1,000,000,
FRINGE BENEFITSMDIRECT.
Fringe benefits for all agsneies are calculated at 31.27% of personal service.
Indirect costs for all agencies are calculated at 29.85% of personal service and fringe benefits.
88 Appendix if
-------
State Fiscal Year 1994/95
Details and Projections
The NYSCACA requites DEC to report the number of Operating Permit ap-
plications on which filial action was talvc.n iti the previous fisenl year with details
on nveiage review time per permit, number of person houi> .spent per permit unci
the number of complete permit applications fried. Since the State did not have a
federally approved OPP in effect in SFY l5, no Title V permits were re-
viewed or issued and actual data on average review time per permit is not avail-
able. However, the Department has projected, to the extent possible, the
minimum number of permit reviews that will be necessary to implement the pro-
gram over the ties! five years. These are reflected in Figure 4.
FiGL'ilL 4:
1'RO.jt:c J F.D \TMBF.R <>]' PERMITS
sntji rr to ur.vni\ okolr to mi'LMii'Xr tjti.i: V
Permits to be reviewed
Average Review
Permit Type
over the next 5 years
Time* (days/permit)
Existing major facilities
876
40
Nox and VOC Reasonable Achievable Technologies'
Cent. (RACT) permit moditoitons
200
15
We V General Permits
150
10
New source review (Tite lj IncludesPSO reviews,
netting/lradinq permit modilifationE
100
60
Known MACT (Section 1121 sources
150"
30
Capping guI of Title V and RACT
9650""
"
* This time represents estimated technics! review time oy Division of Air staff oily. Specific permit appli-
cations coufd take considerably mwe o' less tine depending on the size end complexity of the facility.
Also (tie review lime does not include that required by Division of Regulatory Affairs to process and issue
permiti,
*" The numbers in trie table are estimates. o( the effort required id review permits for si* categories o'
sources tor which MACT standards have been adopted by EPA, Tfie'e are 174 categories for which
MACT standards are utilmately requ'red to be developed, As new MACT standards are promulgated there
wii: be a sipnifitam Increase in bain the number of facilities that requre permits and the effort neeesary to
review those permits
Tnis includes the approximately 8000 New VorN Piy sources ihsi will nuEd tnoitticatons to their permits
in order to cap out of Title V
Appendix B $9
-------
Other involved agencies
The NYSCACA does not specifically require that the activities of other in-
volved agencies be reported. However, the Department of Health, Department of
Economic Development and the Environmental Facilities Corporation were
asked to report so that the direct costs of the fiscal portion of this report could be
determined, Expenditures reported by those agencies have been included in this
report. Their submissions to DEC are included as appendices to this report.
'-(/ Appendix /•'
-------
The Environmental Finance Center is part of the Coastal and Environmental
Policy Program (CEPP) and is hosted by the Maryland Sea Grant College.
About CEPP
The Coastal and Environmental Policy Program is a non-degree granting pro-
gram composed of the University of Maryland Sea Grant Program, the School
of Public Affairs, the College of Agriculture, the School of Law, and the
Center For Environmental and Estuarine Studies. CEPP provides informa-
tional, educational and research policy analysis and technical problem-solving
assistance.
A bout Sea Grant
-The National Sea Grant Program encourages wise stewardship of our marine
resources through research, education, outreach and technology transfer,
Mary land Sea Grain is one of twenty-nine Sea Grant programs across the
country — part of a national partnership supported jointly by state and federal
funds, from the National Oceanic and Atmospheric Administration,
About the HFC
.With support from the U.S. Environmental Protection Agency (EPA) and the
Maryland Sea Grant College Program, the Environmental Finance Center
(EFC) was created to train, provide assistance and act in an advisory capacity
to state- and local governments on issues related to environmental finance.
The Center promotes a comprehensive and integrative look at environmental
finance from a strategic management perspective that suggests that sound
environmental practices encompass a broad spectrum of activities. Activities
such as needs assessments, issue prioritization, identification of relevant envi-
ronmental regulations and compliance issues, development of capital facilities
plans, identification of revenue sources, and community participation are pre-
cursors to securing funding that form part of the EFC's holistic approach.
To find out more about the Environmental Finance Center visit our web
- page: http;//www.mdsg,nmd.edu/MDSG/EFC/index,htjnl
-------
Title V of the Clean Air Act
One of the most important benefits of the new Title V operating permits program of the Clean Air Act is
that the program itself will ensure that adequate resources are available for its administration. By col-
lecting fees from stationary air pollution sources in exchange for permits which regulate levels of emis-
sions, states and localities can achieve a number of desired goals:
• Use revenues generated by those regulated to monitor, enforce, and report on stationary
air emissions
• Create incentives for those sources to reduce emissions by forcing permit holders to internalize
the costs of emitting air pollutants . *
• Begin to track air pollution control requirements" and performance so it becomes easier to man-
age programs across media, such as air, water, and land
* •' * ' ^ «
If revenues generated from a program go to support other state efforts, then not only will the program
suffer from lack of resources, but those paying the permit fees will not receive the level of service that
they are paying for.
This handbook identifies ways a state or local air program agency can collect, segregate, and account for
Title V fees so that they are not commingled with other efforts.
\vEPA SeatSfiuif
Issues in Environmental Finance
Environmental Finance Center ¦ University of Maryland System
-------
Appendix J. BAAQMD Record Retention Schedule
Page 66 of 68
-------
Bay Area Air Quality Management District
939 Ellis Street
San Francisco, CA 94109
Record Retention Schedule
This schedule is a catalog of all record types employed by the Bay Area Air
Quality Management District (Air District) in carrying out the work of the agency.
Pursuant to California Government Code section 60201, this schedule and any
revisions to the schedule must be adopted by the Air District Board of Directors.
This schedule is a component of the Air District's records management program.
Guidelines for the records management program are set forth in the Air District
Administrative Code, Division I, Operating Policies and Procedures, Section 11.
The purpose of this program is to maintain records in a manner that furthers the
public purposes of the Air District while ensuring prompt and accurate retrieval of
records and compliance with all legal requirements.
For each record type, the schedule establishes a retention period. Certain
records will be kept permanently because of their continuing importance to the
Air District and the public. For records not kept permanently, the schedule
establishes a retention period. The retention period is the period of time that the
Air District will keep a record after its "use period" is over. For most records, use
occurs at a point in time, with the retention period beginning after this brief active
use period. Most of the records in this schedule are of this type.
For certain records, the use period extends over a significant period of time.
Examples include building blueprints, equipment manuals, contract documents,
and grant documents. For these records, the schedule indicates the triggering
event for the running of the retention period.
The substance of a record, rather than the format or medium in which it is held,
determines the appropriate category for the record. Thus, paper records, emails,
and electronic data alike acquire the retention period of the applicable
substantive category.
1
November 18, 2015
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BAAQMD Record Retention Schedule
Record type
Including these specific records:
Retention period
General
correspondence
Policies, procedures
and workbooks
Requests from public
Board audio and
video records
Board files
Board records
Executive files
Hearing Board
docket
Legislative and bill
files
Bonds, insurance
and warrants
records
Building records
General
General interoffice memoranda, general
correspondence
Policy documents, including enforcement
policies and procedures, BACT/TBACT
workbook, permit handbook, and source test
protocols and plans
Public records requests and responses
Boards and Executive
Audio and video records of Advisory Council,
Board of Directors, and committee meetings;
Hearing Board hearings
Oaths of office, expense reports for Advisory
Council, Board, Hearing Board, Board member
correspondence, Board member travel
authorizations and Board expense claims
Board, Board committees, Hearing Board,
Advisory Council and Advisory Council
committees: agenda packages, minutes,
reports, resolutions, and rosters
Chronological correspondence files, conflict of
interest forms, lobbyist employer/lobbyist
registration
All case related files
Bill file (documents, analyses,
correspondence), Legislative Committee
records
Administrative
Bonds, property and liability insurance policies
and documentation, warrants
Building blueprints, building equipment
information, building maintenance
information, construction drawings &
information, drawings - space plans,
maintenance working records.
3 years
Revised + 7 years
3 years
1 year
End of term + 7 years
Permanent
7 years
Final compliance date
+ 7 years
3 years
Permanent
Life of building + 7
years
Cal OSHA reports
Cal OSHA reports and citations
7 years
November 18, 2015
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BAAQMD Record Retention Schedule
Record type
Including these specific records:
Retention period
Contracts
Fleet vehicle records
Mailroom records
Contract files and any related task orders or
purchase orders, and any related bids, RFPs,
RFQs or accepted proposals, contractor
timesheets, contractor logs
Vehicle maintenance expenses, vehicle
mileage reports, vehicle request forms, vehicle
registration fees, travel trip slips
Certified mail log, certified mail receipts - fee 3 years
invoices, fee billing invoices, fee billing
problem resolution files, returned mail (fee
invoices and validations)
Physical security
reports
Rejected bids
Security guard activity reports
RFPs/RFQs/evaluations/unaccepted proposals
and bids
Stockroom records Stockroom requisitions
Tort and workers
compensation claims
Emission monitoring
records
Laboratory samples
and air quality
monitoring data
Meteorological and
air monitoring data
Meteorological
reports
Contract final
expiration + 7 years
Life of vehicle + 3 years
Tort claim liability files, worker's compensation
files
Emission Monitoring, Source
Testing, and Ambient Monitoring
Continuous emission monitoring (CEMS)
monthly reports, CEM indicated excesses -
source test evaluation forms, CEM approvals
pursuant to Regulation 1, Section 522
PM 2.5 filters and PM 10 filters collected from
sampling equipment, ambient air monitoring
data - strip charts, air monitoring station log
books, asbestos samples submitted for
analysis, instrument log books, laboratory
notebooks, results, methods of analysis,
photo-micrographics, standard operating
procedures
Ambient air monitoring data - data logger
data, forecasts, meteorological monitoring
data, ground level monitoring data; ground
level monitoring audit reports
Meteorological reports
3 years
Fiscal year of bid + 3
years
1 year
Until closed + 7 years
Life of facility + 7 years
7 years
Permanent
1 year
3
November 18, 2015
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BAAQMD Record Retention Schedule
Record type
Including these specific records:
Retention period
QA/QC and
calibration records
Source test results
and raw data
Technical equipment
records
Activity
authorization
Activity
authorization
Complaints
Compliance records
Flare records
Inspection records
Title V reports
Violation records
Lab, source test, and air monitoring equipment
calibration records and QA/QC records, quality
assurance manual
Source test results and raw data from both the
District and outside contractors, field accuracy
test results, raw data, and reports, contractor-
conducted source test notifications (ref:
Volume IV, V, MOP)
Manuals and maintenance records, 10%
quality assurance analysis reports, additional
records required by NVLAP accreditation
program, audit records, blind sample analysis
reports, inter-laboratory analysis reports,
maintenance and calibration reports,
proficiency test, quality control charts and data
Enforcement
Open burns, exemption petitions, tank
pulls/excavations, PERP, landfill reports
Asbestos dust mitigation plans, asbestos
removal, naturally occurring asbestos reports
All complaint information including wood
smoke and smoking vehicle complaints
Compliance advisories and compliance reports
required by regulation (Regs. 8-5, 8-10, 8-17,
8-18, 8-40, 9-10)
Flare minimization - approved plans (Reg. 12-
12), flaring notifications and reports (Reg. 12-
12), plan review documents (Reg. 12-12), flare
monitoring reports (Reg. 12-11)
Inspection reports, internal correspondence on
inspections
Title V semi-annual and annual reports, Title V
10-day and 30-day deviation reports
Notice of Violation files and Notice to Comply
files, including all supporting documentation
7 years
Life of facility + 7 years
Life of equipment + 3
years
7 years
Permanent
7 years
7 years
7 years
7 years
7 years
Lesser of 25 years or
life of facility + 7 years
4
November 18, 2015
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BAAQMD Record Retention Schedule
Accounts payable -
general
Accounts payable
check register,
reports
Accounts payable -
grants
Accounts receivable
- general
Accounts receivable
- other
Budget - adopted
Budget - other
Deposit records -
general
Deposit records -
grants
Fixed asset files
l-Bond (Goods
Movement)
documents
Refunds/unclaimed
property
Tax documents
Financial
General accounts payable invoices, general
checks-cancelled or voided, Board of Directors
travel and meeting expenses, credit card
payments and records, travel expense
reimbursement requests, fixed assets invoices
Accounts payable check register, accounts
payable general ledger post report, accounts
payable journal voucher report
Grant accounts payable files
Bank check deposits/permit check deposits,
supporting documents for check deposits,
credit card reports and supporting documents
Wire transfers/NSF checks, other accounts
receivable reports/registers
Annual adopted budget
Draft budget, proposed budget and supporting
documents, budget transfers and adjustments
General monthly bank statements, general
bank reconciliations
Grant bank statements and related records
Acquisition/disposal/sale/surplus records for
personal property; lease/rent schedule and
supporting documents for leased property;
inventory and schedule of infrastructure and
buildings for real property
7 years
3 years
End of project + 10
years (longer if
required by grantor)
5 years
3 years
Permanent
3 years
7 years
End of project + 10
years (longer if
required by grantor)
Asset disposal/lease
expiration/life of
building + 7 years
Grant financial files and supporting documents 35 years
Refund and unclaimed property files 3 years
1099, W9 and other related documents; Board 7 years (longer if
of Equalization sales tax reports related to grant and
required by grantor)
5
November 18, 2015
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BAAQMD Record Retention Schedule
Year-end financial
statements and
related reports
Employee accident
and injury records
Employee benefit
records
Employee HR
records
Employee
recruitment records
Equal employment
opportunity plan
Insurance benefits
records
Payroll records
Payroll records
Personnel files
Tax records
Training records
Annual audited financial statements and Permanent
related reports, journal entries and supporting
documents, certificate of participation
records/bonds
Human Resources
Accident files, employee injury (first aid) files 7 years
Tuition reimbursement, COBRA
documentation, Section 125 documentation
Disciplinary action log, employee workforce
data, grievances & arbitrations, negotiations,
complaint summary logs
Classification studies, class specifications, 7 years
recruitment files, wage and salary data,
acquisition records
Equal employment opportunity plan Until replaced
7 years
Permanent
Insurance contracts, life insurance
documentation, health insurance
documentation
Payroll registers, tickler files, timecards,
vacation requests, family/medical leave
requests
Payroll direct deposit records, CALPERS
reports, Form 941 quarterly reports, payroll
history YTD totals report, year end
clearing/closing reports
Personal and professional files of Executive
Officer, deputies and staff, disciplinary support
files, discrimination complaint files
457 deferred comp documents, W2, W2
reports, transmittal of W2
Training program files, employee training
completion records
Life of policy + 3 years
7 years
Permanent
Last day of
employment + 7 years
7 years
Permanent
6
November 18, 2015
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BAAQMD Record Retention Schedule
Grant files
l-Bond grant records
Reports to
CARB/EPA
Vehicle Buy Back
program
IT system backups
Legal records
Legal records
Data update forms
EPA grants
Permit application
records
Permit advisories
Plant (facility) files
Reports to
CARB/EPA
Toxics Hotspots
records
Incentives
Program audit documents, program eligibility End of project + 5 years
guideline documents; grant application, review
and decision documents; grant program
financial records; grantee monitoring
documents; internal activity and tracking
documents; project audit documents
l-Bond grant files 35 years
Grant reports to CARB/EPA 7 years
Vehicle Buy Back program - copies of vehicle
eligibility documents provided to District for
review
Information Systems
System backups
Legal
Comments on legislative, administrative and
hearing board matters
Litigation-pleadings and orders, settlement
agreements, opinions and advice files, rule
interpretations/opinions, civil enforcement
case records
Permitting
Responses to facility data update
questionnaires
EPA 105 grant documents
Authority to Construct documents, Permit to
Operate documents, banking documents,
registration documents, application forms,
permit exemptions
Advisories regarding permitting
Permit documents, ownership/facility status
records, emission-related documentation,
regulatory plan submittals, source data forms
Engineering reports to CARB/EPA
3 years
Until replaced
7 years
Permanent
Data entry + 3 years
Final report + 3 years
Life of facility or
emission reduction
credit + 7 years
7 years
Life of facility + 7 years
7 years
Toxics emissions inventory reports, risk
assessments
Life of facility + 7 years
November 18, 2015
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BAAQMD Record Retention Schedule
Air quality plans
CEQA records
Emission inventory
records
Annual reports
Community meeting
records
Mailing lists
News media records
Outreach documents
Publications
Requests from public
Rules and
regulations
Planning
State and federal air quality plans and
supporting documentation, including emission
inventory and modeling records,
environmental and socioeconomic review
documents, and any associated plan-related
reports to ARB or EPA
CEQA comments as responsible agency or
commenting agency
Final emission inventory reports and
supporting material for greenhouse gases,
criteria pollutants, and toxic air contaminants;
emission inventory annual reports submitted
to ARB CEIDARS database
Public Relations and Outreach
Annual reports
Community outreach community meeting files
and resource team records
Mailing lists
News releases and clips
Brochures
Newsletters and other publications
Requests for general information, requests for
publications, requests for speakers
Rulemaking
All versions of rules and regulations that were
adopted or made available to the public; rule
development files and any associated
economic or environmental analyses
Permanent
7 years
Permanent
Permanent
7 years
Until replaced
Permanent
Until replaced
7 years
3 years
Permanent
8
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Appendix K. BAAQMD Comments on Draft Report
Page 67 of 68
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Bay Area
Ai ii Quality
Management
District
ALAMEDA COUNTY
John J. Bauters
(Chair)
Juan Gonzalez
David Haubert
Nate Miley
CONTRA COSTA COUNTY
Ken Carlson
John Gioia
David Hudson
Mark Ross
MARIN COUNTY
Katie Rice
NAPA COUNTY
Joelle Gallagher
SAN FRANCISCO COUNTY
Tyrone Jue
(SF Mayor's Appointee)
Myrna Melgar
Shamann Walton
SAN MATEO COUNTY
Noelia Corzo
Davina Hurt
(Vice Chair)
Ray Mueller
SANTA CLARA COUNTY
Margaret Abe-Koga
Otto Lee
Sergio Lopez
Vicki Veenker
SOLANO COUNTY
Erin Hannigan
Steve Young
SONOMA COUNTY
Brian Barnacle
Lynda Hopkins
(Secretary)
Dr. Philip M. Fine
EXECUTIVE
OFFICE R/APCO
Connect with the
Bay Area Air District:
13 * O
BY EMAIL
October 13, 2023
Sheila Tsai
Acting Manager, Air Permits Section, Air and Radiation Division
United States Environmental Protection Agency, Region 9
75 Hawthorne Street
San Francisco, CA 94105-3901
Re: Comments on Draft Title V Evaluation Report for the Bay Area Air Quality
Management District
Dear Ms. Tsai:
I am writing in response to your letter dated August 28, 2023, in which you request
comments on EPA's Draft Title V Evaluation for the Bay Area Air Quality Management
District (Air District)
We are pleased to see that EPA believes that our Title V program excels in a number of
areas including the internal draft permit review practice, detailed statements of basis,
consistency between permit documents, the practice of streamlining title V permit
requirements, the use of our website to publish comprehensive and timely documentation
of title V permitting actions, and our effective field enforcement program. The Air District
puts a great deal of effort into issuing and enforcing Title V permits ~ these activities
consume over 10 percent of our total resources devoted to stationary source regulatory
programs.
We also appreciate EPA's input and suggestions on how our Title V program can be
improved. Our detailed comments are enclosed. We look forward to receiving the final
report when it is completed, and working with EPA to prepare a workplan that addresses
the findings.
Sincerely,
Dr. Philip M. Fine
Executive Officer/APCO
Enclosure
1
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BAAQMD Comments on Draft Title V Program Evaluation Findings
"2.1 Finding: The District's title V permits do not clearly incorporate all applicable
requirements in an enforceable manner; requirements that are only listed in Table
IV (Source-Specific Applicable Requirements) of the title V permit and not in
permit conditions may not be enforceable as a practical matter.
Discussion: A primary objective of the title V program is to provide each major
source with a single permit that describes how a source ensures compliance with
all applicable CAA requirements. To accomplish this objective, permitting
authorities must incorporate applicable requirements in sufficient detail such that
the public, facility owners and operators, and regulating agencies can clearly
understand which requirements apply to the source. These requirements include
emissions limits, operating limits, work practice standards, and monitoring,
recordkeeping, and reporting provisions that must be enforceable as a practical
matter.
During our file review, we found that the BAAQMD's title V permits do not
consistently incorporate all applicable requirements in a manner that is clear and
enforceable. The BAAQMD's title V permits list applicable requirements in
Section IV (Source-Specific Applicable Requirements) by tabulating applicable
SIP-approved rules, federal regulations, and NSR permit conditions in Table IV
with a short title or description of each requirement. However, some applicable
requirements are not included in Section VI (Permit Conditions) of the title V
permits, which can create confusion about what requirements the source must
comply with. For example, during our file review we found that some permits
identify 40 CFR part 63, subpart ZZZZ as an applicable requirement in Table IV.
However, the maintenance requirements from that subpart (e.g., 40 CFR
63.6603(a)) are not expressly included in Section VI.
During our interviews, we also found that District staff were concerned about
whether some facilities had followed their schedule of compliance, which is
incorporated into Section V (Schedule of Compliance) of a BAAQMD title V
permit but generally not into any source-specific applicable requirement in
Section IV or any permit condition in Section VI of a title V permit.
Recommendation: The BAAQMD should continue identifying all applicable
requirements in its title V permits; however, the District must incorporate these
requirements and approved schedules of compliance in a clearly enforceable
manner."
Comment:
The Air District believes its title V permits already incorporate all applicable
requirements in an enforceable manner. Applicable requirements are enforceable as a
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practical matter as long as they are described in sufficient detail in any section of the
permit. The standard condition in Section I.B.2 of the permit states: "The permit holder
shall comply with all conditions of this permit. The permit consists of this document and
all appendices. Any non-compliance with the terms and conditions of this permit will
constitute a violation of the law and will be grounds for enforcement action; permit
termination, revocation and re-issuance, or modification; or denial of a permit renewal
application. (Regulation 2-6-307; MOP Volume II, Part 3, §4.11)"
In this section, the word "condition" encompasses all of the provisions in the permit,
including the applicable requirements listed in Section IV and any Schedule of
Compliance in Section V. The permit conditions in Section VI of the permit are specific
conditions that include case-by-case determinations for a particular facility or class of
facilities. The only section in which provision is made for inadvertent conflicts between
the sections is this paragraph at the beginning of Section VII: "This section is only a
summary of the limits and monitoring requirements. In the case of a conflict with any
requirement in Section I-VI, the preceding sections take precedence over Section VII."
Repeating all of the requirements from Sections IV and V in Section VI is redundant,
unnecessary, and would make the permits overly cumbersome. As noted in Finding 2.10
below, the title V permits for complex facilities such as refineries are already voluminous
and contain some redundant text.
It would be possible to revise the language in Section I.B.2 to expressly include
"requirement", however, this change is unnecessary for enforceability. Additionally,
Section I.B.2 is a standard condition in the Manual of Procedures that has been adopted
by the Air District Board of Directors and approved by EPA into the Air District's title V
program, so this change would require rule-making, submittal to CARB for approval, and
subsequent submittal to EPA for approval to make this change. However, to maximize
clarity, the Air District will consider revising the language in Regulation 2-6-307 and the
Manual of Procedures Volume II, Part 3, §4.1 the next time these provisions are open for
revision. Meanwhile, the Air District asks EPA to understand that all conditions and
requirements in Sections I, parts of II (equipment), III, IV, V, VI, and VII are enforceable
provisions of the permit. Additionally, the tables clearly identify the applicable
requirements that apply to each emissions unit at a title V facility (See Finding 2.10
below).
The Air District acknowledges that it has been inconsistent in citing the maintenance
requirements of 40 CFR 63, Subpart ZZZZ. In some permits, it is fully described, in
others not. The Air District commits to augment the Subpart ZZZZ requirements in all
permits that contain it as they are renewed.
In addition, Air District staff will continue to work with EPA staff to review and
incorporate these requirements and approved schedules of compliance in a clearly
enforceable manner.
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"2.2 Finding: Certain BAAQMD title V permits contain permit shield language that
may unnecessarily limit the District's and EPA's authority to initiate an
enforcement action for a source that violates an applicable requirement.
Discussion: The majority of permits we reviewed did not include a permit shield.
Some permits included a permit shield that explains the shield regarding non-
applicable requirements and the subsumed applicable requirements. Overall, those
sections of the permit properly discussed the bases of the non-applicable
requirements and what specific permit conditions would ensure compliance with
the subsumed applicable requirements. However, similar to our 2009 Evaluation,
we found some of the permit shield language could unnecessarily limit the
District's and EPA's authority to initiate an enforcement action. For example, we
found the following language in the non-applicable requirements section of a
permit: " ...Enforcement actions and litigation may not be initiated against the
source or group of sources covered by this shield based on the regulatory and/or
statutory provisions cited, as long as the reasons listed below remain valid for the
source or group of sources covered by this shield\ and in the subsumed
requirement section: "...Enforcement actions and litigation may not be initiated
against the source or group of sources covered by this shield based on the
subsumed monitoring requirements cited'. Such language regarding enforcement
actions is not appropriate, because an enforcement action can still be taken if there
are reasons not explicitly stated in the permit that the shield should be invalidated.
Recommendation: To ensure the permit shield will not unnecessarily limit the
authority of the District, EPA, and the public to initiate enforcement actions, the
District must remove the permit shield language regarding enforcement actions
and litigation by amending the permit shield language in the District's Regulation
2, Rule 6. The District should consider including the language in 40 CFR
70.6(f)(3) in its permit shields."
Comment:
The italicized language shown from the Air District's title V permit is cited in the Air
District's federally approved title V program which was originally adopted on February
1, 1995. It is cited in BAAQMD Regulation 2-6-233, and in the BAAQMD Manual of
Procedures, Volume II, Part 3, Major Facility Review, Section 4.16.
The permit shield, as set out in 40 CFR 70.6(f), is intended to provide certainty to a
source, that if a decision of non-applicability has been documented in the title V permit,
enforcement action will not be taken against the source on the basis of that requirement
until the decision is reviewed formally by the permitting authority, including public
notice and EPA review.
The Air District understands that the permit shield would only be valid as long as the
shield was in place. If the Air District or EPA discovered that the basis for the shield was
invalid, the Air District or EPA could re-open the permit after due notice and delete the
shield. The applicable requirement from which the facility had been shielded would then
-------
apply. Enforcement actions and litigation could be initiated as of the date that the revised
permit was re-issued. Further, the use of "may" rather than "shall" in the italicized
language provides for enforcement discretion to make the enforcement action retroactive
if the Air District or EPA determines that the shield was invalid based on any fraudulent
representations in the permit application.
If the Air District determines that a permit shield was granted in error, the Air District
will reopen the permit, delete the permit shield, and take appropriate enforcement action.
The Air District recognizes that the permit shield regulations may not be clear to permit
holders and the public. The Air District's Manual of Procedures requires the use of the
current permit shield language. However, the Air District commits to explaining the
permit shield regulations fully in Statements of Basis for initial permits and permit
renewals where the permit contains permit shields, or any revision where a permit shield
is granted or revised. Further, the Air District will consider revising BAAQMD
Regulation 2-6-233 and Manual of Procedures, Volume II, Part 3, Major Facility Review,
Section 4.16.to provide more clarity the next time these provisions are open for revision.
The Air District would appreciate further clarification on why EPA believes that the
italicized language shown from the Air District's title V permit will unnecessarily limit
the authority of the District, EPA, and the public to initiate enforcement actions, and will
continue to work with EPA to find ways to improve the permit shield language in our title
V program.
"2.3 Finding: The BAAQMD has an internal quality assurance process for reviewing
draft versions of permits, which minimizes opportunities for errors before the
documents are made available for review by the public and the EPA.
Recommendation: The EPA commends the BAAQMD for its comprehensive
internal draft permit review practices. The EPA recommends that the District
update its title V checklist to document the review by the Compliance and
Enforcement and Legal Divisions."
Comment:
We appreciate the recommendation. The Air District will amend the current title V
checklist and use the updated version to document the internal review by each division
including the Engineering, Compliance and Enforcement, and Legal Divisions.
"2.4 Finding: The BAAQMD has improved its statements of basis over time, and
generally produces detailed statements of basis in accordance with EPA guidance.
Discussion: ... During interviews, staff reported that the Compliance and
Enforcement Division used to develop a report on the Source's compliance
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history for inclusion in the statement of basis; however, this practice discontinued
due to competing workload priorities.
Recommendation: The EPA commends the BAAQMD for its efforts in
producing detailed statements of basis that clearly state why the permitted source
is subject to a standard. To improve, the EPA recommends the BAAQMD also
include a summary of the source's compliance history in the statement of basis."
Comment:
The Air District agrees that compliance history can be helpful information in the
statement of basis. For title V facilities that have compliance issues, Air District staff in
Engineering and Compliance and Enforcement will coordinate to compile and include
compliance history in the statement of basis when processing title V permit applications.
"2.6 Finding: The District's statements of basis do not consistently include an
analysis of potential environmental justice issues, which could be used to inform
outreach efforts.
Discussion: The EPA defines "Environmental Justice" to include the fair
treatment and meaningful involvement of all people regardless of race, color,
national origin, or income with respect to the development, implementation, and
enforcement of environmental laws, regulations, and polices. The EPA's goal is to
provide an opportunity for overburdened populations or communities to
participate in the permitting process. "Overburdened" is used to describe the
minority, low-income, tribal and indigenous populations or communities in the
United States that potentially experience disproportionate environmental harms
and risks due to greater vulnerability to environmental hazards, lack of
opportunity for public participation, or other factors. The term describes situations
where multiple factors, including both environmental and socio-economic
stressors, may act cumulatively to affect health and the environment and
contribute to persistent environmental health disparities.
On December 15, 2021, in an attempt to better address air pollution in areas
overburdened by environmental health stressors, the BAAQMD adopted
amendments to Regulation 2, Rules 1 and 5. These changes are implemented
through the District's NSR permit program for the construction of new sources
and modification of existing sources of toxic air contaminants. These rule
amendments included: defining overburdened communities; setting a more
stringent cancer risk limit in overburdened communities by lowering it from 10 in
one million to 6 in one million; and enhancing the public notifications for projects
within overburdened communities. These rule amendments do not apply to the
District's title V program. The District does not discuss environmental justice or
overburdened communities in the title V permitting process. This issue is further
discussed in Finding 4.1. During our interviews, many District employees
suggested that EPA training on environmental justice would be appreciated.
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Recommendation: The EPA commends the District for attempting to mitigate
environmental impacts in overburdened communities. The EPA suggests that the
District expand its environmental justice efforts to its title V program.
Specifically, the District should consider working to enhance public involvement
in the title V process for communities with environmental justice concerns.
Further, the EPA is available to provide trainings to California Air Districts, when
available and appropriate, on environmental justice."
Comment:
The recent changes in the Air District's NSR permit program apply to all facilities under
our jurisdiction and many of the Air District's title V facilities are within overburdened
communities. Projects in title V facilities are first reviewed and approved in Air District's
NSR permit program and then incorporated into title V permits. Even though the Air
District has no separate discussions about environmental justice or overburdened
communities in the title V permitting process, a project that is being added into a title V
permit has already gone through a review process that includes public notice
requirements and lower health risk limit within overburdened communities. Engineering
evaluations which have detailed analysis and discussions on these requirements are
included in the statement of basis for the corresponding title V permit application.
Air District staff will work with EPA staff to identify opportunities to further enhance
public involvement and address environmental justice concerns specifically in the title V
process that cannot be addressed in Air District's NSR permit program. We also welcome
training opportunities for Air District staff on environmental justice.
"2.7 Finding: While the BAAQMD generally references the underlying origin and
authority for permit conditions, the references to the underlying origin often lack
specificity.
Discussion: Each title V permit is required to specify and reference the origin
and authority for each term or condition and identify any difference in form as
compared to the applicable requirement upon which the term or condition is
based. In most cases, the origin and authority for a permit condition can be
referenced by citing a particular rule or regulation. The District consistently cites
a basis for each permit condition; however, its practice of only citing to "BACT"
meaning Best Available Control Technology, "RACT" meaning Reasonably
Available Control Technology, or "Offsets" for NSR requirements is insufficient.
For NSR requirements, the authority for the permit condition stems from the SIP-
approved NSR rule. But, because NSR rules likely do not specify the emissions
limits and associated monitoring, recordkeeping, and reporting requirements to
which the source is subject to under the NSR determination, the origin of the title
V permit condition is the actual NSR permit issued to the source. Thus,
requirements stemming from NSR rules, or the Prevention of Significant
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Deterioration (PSD) program at 40 CFR 52.21, should generally cite the
underlying rule or regulation as the authority and the specific NSR permit
action—not just "BACT"—as the origin. Otherwise, it is unclear how the EPA
and public can verify BACT determinations have been correctly incorporated into
the title V permit.
Recommendation: To address this finding, the District should develop a plan to
revise its title V permits to assure that each permit cites the appropriate NSR/PSD
permits and District NSR rules as part of the origin and authority for a permit
term or condition as required by 40 CFR 70.6(a)(l)(i)."
Comment:
The Air District decided to cite "BACT" meaning Best Available Control Technology,
"RACT" meaning Reasonably Available Control Technology, or "Offsets" for NSR
requirements for some practical reasons. First of all, citing with the conventional names
of these requirements instead of the particular provisions in the NSR rules helps the
regulated communities and public to understand the origin of the requirements even if
they are not familiar with the Air District's rules and regulations. In addition, the Air
District's NSR rules have been amended multiple times over the years. Besides the
contents in some provisions, the numbering of the provisions within a rule can change
during an amendment. On the other hand, these conventional names remain the same.
Based on past experience in the Air District, citing with the conventional names has
helped to reduce the burden to update the citations in permit conditions during a rule
amendment for the large number of permits that the Air District issues and maintains.
NSR/PSD permits are not currently cited as the basis for any permit conditions because
the statement of basis of each title V permit application includes all relevant engineering
evaluations providing the detailed analysis to verify the NSR determinations. Whenever a
permit condition is added to or modified in a title V permit, the engineering evaluation(s)
related to the permit condition(s) is included as an attachment to the statement of basis.
The engineering evaluations are part of the title V permit application documents.
In addition, the Air District permits a number of sources that have been modified and
reviewed in many permit applications throughout the years, such as those in refineries
and landfills. Having to cite back to the permit application where a specific analysis
originated is burdensome.
District staff will work with EPA staff to find ways to assure compliance with 40 CFR
070.6 (a) (1) (i) while considering the above factors.
"2.9 Finding: Most title V permit conditions with District rule requirements are
appropriately marked as not federally enforceable. Additionally, most conditions
appropriately reference the current SIP rules most recently approved by EPA.
Recommendation: The EPA commends the BAAQMD for identifying which
conditions are federally and locally enforceable in their title V permits. The
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District should continue this labelling practice and ensure ATC and PTO
requirements remain federal applicable requirements. In addition, during the
permit preparation process, the District should ensure that they include all SIP-
approved requirements, especially in instances where the EPA has approved a
more recent version of the District-adopted rule. Region 9 maintains a database of
federally enforceable SIP rules on its website, which permit engineers may find
useful when verifying the latest SIP-approved versions of rules."
Comment:
The Air District has been utilizing various methods to ensure that SIP-approved
regulations are included and are correctly dated and marked as federally enforceable.
Engineering staff maintains a title V permit template that is updated on a regular basis to
show the correct dates of adoption for SIP-approved and newly amended Air District
regulations. The Air District permit staff also utilize the same EPA web page as
indicated in the draft report, which lists the current BAAQMD SIP-approved regulations,
as a reference while processing title V permits. The Air District is currently recruiting for
the title V Permit Program Engineer position, who will provide support to title V permit
engineers and perform quality control to ensure consistency and accuracy, including
checking the SIP-approved regulations. The Air District will continue to identify
additional measures to reduce these errors in our title V permits.
"2.10 Finding: While District staff and management are generally satisfied with the
District's title V permit format, the District has made no decisions on template
changes that were under discussion during our 2009 Evaluation.
Discussion: In our 2009 Evaluation, we reported that the District was considering
ways to improve the readability of the permits, which could include merging
permit Sections IV and VII (Source-Specific Applicable Requirements and
Applicable Limits & Compliance Monitoring Requirements). During interviews
for this evaluation, we heard that the District was still considering this change.
For most of the District's title V permits, the applicable requirements and
monitoring requirements are listed in tabular format, with one table per emissions
unit or group of emissions units. During interviews, staff indicated that the tables
make it easy to identify the applicable requirements that apply to each emissions
unit at a title V facility. Some staff and management are generally satisfied with
this format and believe that it promotes consistency, accuracy, and
comprehensiveness. However, some staff and management have acknowledged
that a disadvantage of this practice is that with complex sources such as refineries,
it results in voluminous permits with redundant text. Each applicable requirement,
e.g., an applicable NSPS or NESHAP provision, is listed in a row in Table IV
(Source-Specific Applicable Requirements). The applicable requirements are
typically listed multiple times in Table IV because they apply to more than one
emissions unit or group of emissions units. Some of the same applicable
requirements are then repeated several more times in Table VII (Applicable
Limits & Compliance Monitoring Requirements). The District combined the
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tables in approximately four permits but reported that it would significantly
increase the permit processing time to combine the tables in permits for sources
with more emissions units during the next permit revision.
Recommendation: The EPA recommends prioritizing discussions on the
improvement of permits and implementing decisions in a timely manner."
Comment:
The Air District's permitting staff has combined Sections IV and VII into one
section for some title V permits but received mixed feedback regarding the
effectiveness of this approach. In addition, implementing this change increases the
processing time of a title V permit application. Considering that the current top
priority is to address the existing permitting action backlog, the Air District does
not require permitting staff to combine Sections IV and VII as this could delay the
processing time of a title V permit application.
"3.1 Finding: The BAAQMD usually includes a detailed CAM analysis in their
statements of basis that clearly documents the BAAQMD's determination and
explains the applicable monitoring requirements.
Discussion: Further, the District's current statement of basis template indicates
that CAM should be discussed if it applies, as opposed to all the time. We found
examples where CAM did not appear to be re-evaluated in permit renewal
actions. CAM applicability can evolve over time as a source makes changes, and
thus its applicability should be verified in each iteration of a title V permit,
including in modification or renewal actions where the District determined CAM
did not apply in the initial title V action.
Recommendation: We commend the BAAQMD for including detailed CAM
analyses in statements of basis. The BAAQMD should continue to review and
discuss CAM applicability as it processes initial permits, permit renewals, and
significant modifications. Additionally, CAM training should be made available
for permitting staff."
Comment:
The Air District currently provides CAM training on a one-on-one basis to permit
engineers during the processing of title V renewal permit applications. We find this to be
an effective way to ensure consistent application and review of CAM. The District will
continue to verify CAM applicability for permit all title V permit actions (initial,
renewals, and significant modifications). Additional group training is always valuable,
and the Air District will include other CAM training classes offered by CARB and EPA.
"3.2 Finding: The BAAQMD's title V permit conditions generally contain
monitoring that is sufficient to determine compliance with emissions limits, as
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required by the Part 70 regulations, except for volatile organic compound (VOC)-
emitting equipment and certain aspects of the enforceability of monitoring
requirements.
Discussion: Part 70 and the BAAQMD's EPA-approved title V rules have
provisions that require that permits contain monitoring that is sufficient to
demonstrate compliance with all applicable requirements. During our file review,
we found that the BAAQMD's title V permits generally contain sufficient
monitoring requirements to assure compliance with applicable requirements and
permit conditions. Many of the applicable requirements incorporated into the
District's title V permits already contain sufficient monitoring (such as NSR
permit conditions, SIP- approved rules, NSPS/NESHAP proposed by the EPA
after November 15, 1990, and CEMS required for large combustion sources).
Source testing, parametric monitoring of control device operation, and associated
recordkeeping are used to assure compliance with emissions limits.
An exception where the BAAQMD's title V permits do not contain appropriate
monitoring provisions is related to monitoring requirements for VOC-emitting
equipment. In our 2009 Evaluation, we believed that the Reasonably Available
Control Technology (RACT) regulations, developed by the BAAQMD and
approved into the SIP as Regulation 8 (Organic Compounds), were sufficient to
meet the title V requirements. However, during our file review in this program
evaluation, we found that while most of the BAAQMD's title V permits contain
sufficient monitoring requirements, some lack appropriate monitoring
requirements for certain VOC-emitting equipment. Additionally, during
interviews, it was suggested that fugitive emissions of VOC were not sufficiently
monitored.
Another exception is related to the enforceability of monitoring requirements,
specifically Section VII and Table VII of the BAAQMD's title V permits. While
Section VII of the BAAQMD's title V permits summarizes applicable emissions
limits and compliance monitoring requirements from local rules, SIP-approved
rules, NSR permit conditions, and NSPS/NESHAP provisions, it can be
superseded by Sections I through VI of the permits in the case of conflict with any
requirement in preceding sections. If a prior section contains requirements that
differ from the requirements identified in Section VII, the enforceability of the
requirements in Section VII may be compromised.
Recommendation: We commend the BAAQMD for generally including
sufficient monitoring requirements in title V permits. The BAAQMD should
continue to ensure that all title V permits have monitoring sufficient to determine
compliance, including ensuring VOC emissions are appropriately and periodically
monitored. Additionally, the EPA recommends the District incorporate all
applicable monitoring requirements into permit conditions in Section VI of the
title V permit to ensure practical enforceability."
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Comment:
It has always been the Air District's intent to include sufficient and appropriate
monitoring requirements for VOC-emitting equipment in title V permits to ensure
compliance with the Air District's Regulation 8 (Organic Compounds) and other state
and federal requirements. Rule 18 of Regulation 8 specifically targets fugitive emissions
of VOC from equipment leaks at refineries, chemical plants, bulk plants, and bulk
terminals. Applicable monitoring requirements from this rule are listed in Section VII of
the BAAQMD title V permits for these facilities.
If unintentional omission or insufficiency is identified for certain VOC-emitting
equipment, the Air District will work with EPA to modify individual permits to ensure
appropriate monitoring requirements are included in these title V permits.
As we stated in the comment for Finding 2.1, the Air District considers all sections of the
permit to be enforceable, and all applicable monitoring requirements are listed in Section
IV (Source-Specific Applicable Requirements) of a BAAQMD title V permit.
Furthermore, including all applicable monitoring requirements as permit conditions will
require an additional administrative task to update these conditions whenever the
requirements are amended, which may cause unnecessary delay for issuing title V
permits.
"3.3 Finding: Emissions limitations used to avoid requirements like major NSR or
title V are generally enforceable as a practical matter; however, the District does
not have a policy for setting synthetic minor limits.
Discussion: A source may accept a voluntary limit (also known as a "synthetic
minor" limit when the source is not a true minor source) to maintain its potential
to emit (PTE) below an applicable major source threshold and thereby avoid
major NSR permit requirements and/or the need for a title V permit. Sources
establish such a limit by obtaining a synthetic minor permit containing practically
enforceable emissions limitations from the permitting authority.
According to the EPA's guidance, synthetic minor limits must be enforceable as a
practical matter, meaning they are both legally and practicably enforceable.
Additionally, for emissions limits in a permit to be practicably enforceable, the
permit provisions must specify: 1) technically-accurate limitations and the
portions of the source subject to such limitations; 2) the time period for the
limitations (emissions limit averaging period); and 3) the method to determine
compliance, including appropriate and practically enforceable monitoring,
recordkeeping, and reporting requirements.
In response to a petition regarding the Hu Honua Bioenergy Facility in Hawaii,
the EPA stated that synthetic minor permits must specify: 1) that all actual
emissions at the source are considered in determining compliance with its
synthetic minor limits, including emissions during startup, shutdown, malfunction
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or upset; 2) that emissions during startup and shutdown (as well as emissions
during other non-startup/shutdown operating conditions) must be included in the
semi-annual reports or in determining compliance with the emissions limits; and
3) how the source's emissions shall be determined or measured for assessing
compliance with the emissions limits.
The District does not have a policy for setting synthetic minor limits, but local
Regulation 2, Rule 6 allows sources seeking to avoid major source status to do so
through voluntarily limiting a source's PTE. During our file review, we found that
the emission limitations in the District's permits are generally enforceable as a
practical matter. However, as detailed in Finding 5.3 below, our interviews
indicate that the District is not consistently tracking the facility-wide PTE during
each minor source modification action, which could undermine the District's
major and minor source permitting (including synthetic minor permitting)
programs. See Finding 5.3 for additional information.
Recommendation: We commend the BAAQMD in setting practically
enforceable emission limits in most cases. For those facilities with a PTE above
the major source threshold that wish to avoid title V permitting, we recommend
the District develop internal guidance for permitting synthetic minor sources
consistent with EPA policy, and that permitting staff take the EPA's online
training for Setting Enforceable Potential to Emit Limits in NSR Permits."
Comment:
The Air District has developed and been using standard permit conditions for synthetic
minor operating permits, which specify annual facility-wide emission limits to be 95 tons
for any regulated air pollutant, 9 tons for the individual HAP, and 24 tons for all HAPs
combined. Based on each facility's unique operation, permit engineers also specify
emission limits and the corresponding emission estimate methods for each source
category, and the appropriate monitoring requirements as permit conditions. As guidance
for permitting different types of sources and setting permit limits, Air District permitting
staff have been utilizing the Air District's Permit Handbook, Complex Permitting
Handbook for BAAQMD New Source Review Permitting, and Engineering Policy and
Procedure Manual. Additional training for applying these existing standard permit
conditions and resources can improve the consistency of setting synthetic minor limits.
During the Air District's NSR permitting process, the facility-wide PTE including the
new and modified sources being evaluated is determined. The facility-wide potential to
emit for each criteria pollutant is used for determining the applicability of the offset
requirements. The toxic air pollutant emissions, which include most HAPs, at the facility
for the past five years are also calculated to verify compliance with the Air District
Regulation 2, Rule 5.
We are also implementing changes to improve tracking of the facility-wide PTE. By
October 2023, the Air District will fully transition to a new database to process permit
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applications and track permitted emissions. This new database will provide tools to track
a facility's potential to emit in addition to actual emissions.
We appreciate that EPA identified the available training resource to the Air District. We
will include this online training in our permitting staff training curriculum.
"4.1 Finding: The District is generally transitioning toward a more proactive
community engagement approach but has not incorporated this approach into its
title V program.
Recommendation: We commend the BAAQMD's transition to a more proactive
approach for community engagement and efforts to provide and improve
translation services for linguistically isolated communities within its jurisdiction
as part of its NSR program. The EPA encourages the District to also apply this
approach in its title V permit program. The BAAQMD should incorporate
translation efforts into its title V program by using mapping tools as appropriate
to assure updated demographic information. The EPA recommends that
Engineering Division management and staff increase communication,
coordination, and collaboration with the District's community engagement
efforts."
Comment:
The Air District appreciates EPA's recommendations to improve our title V permit
program. Engineering staff have initiated and will continue discussions with Community
Engagement staff to identify ways to improve community outreach of our title V permit
program. Suggestions include extending the public notice period based on community
need and feedback, compiling an email distribution list to include community groups
from previous community engagement experience of an area, utilizing additional
channels, such as social media and websites, for outreach.
The Air District will also review existing translation programs to determine the feasibility
of incorporating translation effort in our title V permit program.
"4.3 Finding: The District provides appropriate notification regarding the public's
right to petition the EPA Administrator to object to a title V permit but could
improve the information provided to the public by including links to the EPA's
title V permit dashboard in all public notices.
Recommendation: The EPA commends the BAAQMD for informing the public
of the right to petition the EPA Administrator to object to the issuance of a title V
permit. We recommend including links to the EPA's title V permit dashboard in
all public notices so the public can conveniently navigate to the relevant 45-day
review period dates."
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Comment:
The Air District appreciates the recommendation and agrees that it can help the public
navigate to the relevant dates. We will start to include links to the EPA's title V permit
dashboard in our public notice template.
"4.4 Finding: The District's practices around concurrent public and EPA review of
title V permits are implemented consistent with current EPA regulations and
guidance. However, the District has not adopted the recently amended language
from 40 CFR 70.8(a)(1) into its title V program rules.
Recommendation: We commend the BAAQMD for implementing a concurrent
review process that is consistent with the requirements of the title V program and
EPA guidance. We recommend that the District adopt the February 5, 2020
amendments to 40 CFR 70.8(a)(1) into the District's title V program rules."
Comment:
The Air District's Manual of Procedures, Volume 2, Part 3 (Major Facility Review
Permit Requirements) contains EPA review requirements similar to the February 5, 2020
amendments to 40 CFR 70.8(a)(1). Specifically, Section 6.1.2 states: "The District shall
send the proposed permit to EPA for review at the same time that the public notice is
published or after the public comment period, at the APCO's discretion. If the proposed
permit has been submitted to EPA, and substantial changes are made due to public
comments, the APCO shall withdraw the permit from EPA review, and resubmit a
revised proposed permit to EPA, restarting the 45-day review period." For consistency,
the Air District will consider adopting the February 5, 2020 amendments to 40 CFR
70.8(a)(1) into BAAQMD Regulation 2, Rule 6 the next time this rule is open for
revisions.
"4.6 Finding: We did not find evidence that the BAAQMD notified nearby tribes of
title V permitting actions.
Recommendation: The Robinson Rancheria in Lake County, California must be
included in public notifications as an "affected state" when a title V applicant is
within 50 miles of the tribal lands. More generally, we also encourage the District
to notify tribal governments when taking significant actions that may affect their
air quality."
Comment:
The Air District commits to contacting the tribal council office of Robinson Racheria in
Lake County, California to find out the address to send notice of draft title V permits for
any source within 50 miles of the Robinson Rancheria.
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"5.1 Finding: The District does not process title V actions in a timely manner,
impeding the public's right to enforce all applicable requirements.
Recommendation: The District should conduct a review of its permit issuance
process and then develop a plan of action for issuing title V permit actions in a
timely manner. The EPA will work with the District on this finding and monitor
whether the District is able to adequately administer the title V program."
Comment:
The Air District is committed to working with the EPA to improve the process.
As recommended, Air District management and staff will conduct a review and then
develop a plan of action for issuing title V permit actions in a timely manner.
"5.2 Finding: Though not always timely, the BAAQMD generally processes title V
permit actions in accordance with the District's EPA-approved title V program
and the federal part 70 regulations.
Discussion: ... In 2020, the EPA revised the Part 70 program at 40 CFR 70.7 and
70.8 to make clear that the statement of basis must be made available to the public
and the EPA. The District's title V rules were last amended in 2017, so they do
not include these updated requirements.
Recommendation: The EPA commends the District for submitting its proposed
and final permit actions to the EPA for review. As mentioned elsewhere in this
report, we encourage the District to update its title V rules so that they are
consistent with the EPA's 2020 amendments to 40 CFR 70.7 and 70.8."
Comment:
The Air District's current title V permit process already makes the statement of basis
available to the public and the EPA by posting it on the Air District website along with
the proposed title V permit and providing the link in public notices. The Air District
agrees that incorporating the EPA's 2020 amendments to 40 CFR 70.7 and 70.8 in our
title V rules will further ensure consistency. The Air District will consider incorporating
EPA's 2020 amendments to 40 CFR 70.7 and 70.8 into BAAQMD Regulation 2, Rule 6
the next time these provisions are open for revision.
"5.3 Finding: The District does not consistently evaluate the potential emissions from
sources without title V permits to determine if they are major sources, which
could result in sources improperly avoiding title V, major NSR, and other
requirements.
Discussion: As discussed in Finding 3.3, a source may accept a voluntary limit
(also known as a "synthetic minor" limit, because the source is not a true minor
source) to maintain its PTE below an applicable major source threshold and
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thereby avoid major NSR permit requirements and/or the need for a title V permit.
Sources establish such a limit by obtaining a synthetic minor permit containing
practically enforceable emissions limitations from the permitting authority.
However, based on several interview responses, the District does not consistently
track the facility-wide PTE of the sources it regulates. Instead, the District tracks
annual emissions based on actual throughput values. While using actual emissions
was acceptable for avoiding title V permitting as part of the EPA's 1995 transition
policy, that policy expired in 2000.
Determining whether a stationary source is a major source and subject to the title
V program is based on potential, not actual, emissions. We found during the
evaluation that District permitting staff are generally familiar with calculating the
PTE for title V sources, but they do not consistently calculate the PTE for minor
sources. Instead, they generally rely on the actual annual emissions of each
facility, which are calculated using reported throughputs from operating data.
Therefore, the District calculates the actual emissions for the source rather than
the maximum potential emissions. Because major source status is based on
facility-widepotential emissions, it is untenable for the District to use their record
of actual emissions to accurately determine when an existing minor source's
potential emissions require it to obtain a title V or synthetic minor permit. Beyond
title V applicability, this issue can also have implications in determining NSR
program requirements and requirements for major sources of hazardous air
pollutants (HAP). This also creates potential enforcement issues for the
BAAQMD and the EPA, as sources may be avoiding title V and major NSR
requirements despite having the potential to emit above major source thresholds.
Recommendation: The BAAQMD must develop a plan for ensuring the District
can determine title V applicability according to the definition for "major source"
under 40 CFR 70.2 by evaluating the facility-wide PTE when processing a permit
application."
Comment:
As stated in the comment for Finding 3.3, the applicability of offset requirements in the
Air District's NSR program is also based on facility-wide potential to emit. When
processing NSR applications for new and modified sources, Air District's permitting staff
includes an analysis for the offset requirements in which staff explains whether any offset
requirements are triggered. This analysis requires a determination of the facility's
potential to emit, which serves to verify major source applicability.
We are also implementing changes to improve tracking of the facility-wide PTE. By
October 2023, the Air District will fully transition to a new database to process permit
applications and track permitted emissions. This new database will provide tools to track
a facility's potential to emit in addition to actual emissions.
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On the other hand, this Finding serves as a reminder to the Air District that additional
permitting training, especially for new staff, is needed to ensure consistency in our NSR
permit review process during this high staff turnover period.
"5.4 Finding: The District provides the EPA and the public with an opportunity to
review and comment on proposed initial synthetic minor permits but does not do
so for proposed revisions to synthetic minor operating permits as required by the
District's rules.
Discussion: During our 2009 Evaluation, we found that the District did not
provide the EPA and the public an opportunity to review and comment on
proposed synthetic minor operating permits. The EPA's Part 70 regulations do not
provide specific requirements for synthetic minor permits. The EPA provides
guidance for permitting authorities to develop such requirements for synthetic
minor permits as part of their permitting programs in the agency's Memorandum
entitled "Guidance an (sic) Enforceability Requirements for Limiting Potential to
Emit through SIP and §112 Rules and General Permits" (January 25, 1995).
Section 2-6-423 of the District's Regulation 2, Rule 6 requires that the District
provide to the EPA "a copy of each proposed and final synthetic minor operating
permit." In practice, the District has provided opportunity for review and
comment only for initial synthetic minor permits. The District has submitted these
permits to the EPA and has made these permits available for public review and
comment. Though the District's rule requires submission of "each" proposed and
final synthetic minor permit to the EPA, the District has not provided the EPA
and the public an opportunity to review and comment on subsequent revisions to
synthetic minor permits.
Recommendation: The EPA commends the District for providing the EPA and
the public with an opportunity to review and comment on proposed initial
synthetic minor permits. However, per section 2-6-423 of the District's
Regulation 2, Rule 6, the District must provide the EPA a copy of each proposed
and final synthetic minor operating permit, which the EPA interprets as all
synthetic minor permit actions (including subsequent revisions). We recommend
that the District also provide for public review of revisions to synthetic minor
permits."
Comment:
Since the submittal of the title V Workplan on December 21, 2009, the Air District has
been publishing public notices and providing a 30-day EPA review period for initial
synthetic minor permits. EPA had no additional comment in regard to this proposed
corrective action in the 2009 Title V Workplan. It is the Air District's understanding that
our program satisfies the requirements in BAAQMD Rule 2-6-423 as currently
implemented. Section 2-6-423 states, "The APCO shall take action on applications for
synthetic minor operating permits and for synthetic minor operating permit revisions as
follows:" The section includes several sub-sections, some of which expressly apply to
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revisions while others do not. Section 2-6-423.4 that EPA cites does not expressly apply
to "revisions." By contrast, Sub-sections 2-6-423.5 and 2-6-423.6 expressly apply to
revisions. Therefore, the Air District interprets that 2-6-423.4 applies only to new
synthetic minor permits.
In general, the Air District prefers a simpler process for revisions to synthetic minor
permits for a number of reasons:
1. The facilities that apply for synthetic minor permits are qualitatively different
from the title V facilities. They are smaller and their emissions are less
significant. Their permitting staff is generally smaller and less sophisticated. As
such, the Air District and the facilities expect a qualitative difference in the
process to revise a synthetic minor permit. If this process includes the same
formalities as the process to revise a title V permit, a facility could opt to have a
title V permit instead and the Bay Area would lose the opportunity to get
voluntary emission reductions from the facility.
2. The Air District has expanded the use of synthetic minor limits to avoid
applicability of other requirements. (See BAAQMD Regulation 2, Rule 6,
Sections 101, 420, and 422.) If a synthetic minor limit applies to only a small part
of a facility or permit, public participation and EPA review of a revision of such a
permit are inappropriate and would discourage the use of this type of synthetic
minor limit, again depriving the Bay Area of some potential emission reductions.
3. Public participation and EPA review are expensive and resource-intensive, which
is not appropriate for revisions to synthetic minor permits at these smaller
facilities. The facility is expected to pay for publishing the public notice. District
staff must handle the publication of the notice and respond to any comments. The
Air District may incur the expense of a public hearing. While the Air District
does charge some fees for the application process (but not any hearing expenses),
EPA has not mandated fees for synthetic minor activities.
4. Public participation and EPA review introduces title V-like delays into the
permitting process for smaller facilities. A 30-day public participation and EPA
review process are actually equivalent to a 2-3 month delay. It takes about 10
days to publish a notice in most newspapers "of general circulation." After the
public participation and EPA review process, the Air District must respond
formally to any comments by the public or EPA.
5. Revisions to synthetic minor permits are generally about the details of the permit
or adding or subtracting emission units. The strategy by which the facility
maintains its emissions under the title V thresholds is rarely changed. Introducing
public participation and EPA review into the revisions would add unnecessary
delays and costs to the synthetic minor permit revisions.
"6.2 Finding: The District's Compliance and Enforcement Division is involved in title
V permit review for initial and renewal actions prior to public notice, which may
improve the enforceability of the District's permits.
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Recommendation: The EPA commends the Compliance and Enforcement
Division for reviewing draft permits. The Engineering Division could further
strengthen the collaboration with the Compliance and Enforcement Division staff
by updating the title V review checklist to standardize the inclusion of the
Compliance and Enforcement Division, specifically an inspector assigned to the
applicable source."
Comment:
Please see comment for Finding 2.3 above.
"7.1 Finding: Finding: Engineering and Compliance and Enforcement Division staff
generally report that they receive effective legal support from the District
Counsel's office but would like more information on the resolution of
enforcement cases.
Recommendation: The EPA commends the BAAQMD on hiring a new District
Counsel with extensive experience in air quality programs. The BAAQMD should
continue to ensure that it receives effective legal support for the Part 70 program.
The BAAQMD should improve communication and coordination with respect to
enforcement outcomes among those involved in the resolution of noncompliance
situations to ensure a common understanding of how enforcement efforts are
resolved."
Comment:
The Air District appreciates the recommendation and is continuing to implement
pathways for collaboration amongst its staff. The Air District will continue to ensure that
the District Counsel's office provides effective legal support to the Compliance and
Enforcement and Engineering Divisions.
"7.2 Finding: Finding: While the District tracks title V program expenses and
revenue and those funds are spent solely to support the title V program, it is
unclear whether these fees are sufficient to fully administer a successful program
given the large permitting backlog and resource issues.
Recommendation: During the evaluation, the EPA provided the BAAQMD with
the most recent EPA guidance on title V funding (see Appendix I). The
BAAQMD should review the guidance to ensure their fee program is consistent
with the EPA's title V fee policy and that fees will be sufficient going forward.
The District should also continue its efforts to provide appropriate resources to
administer the title V program more effectively, especially in addressing the
existing permitting action backlog."
Comment:
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The Air District uses employee timesheets with accounting billing codes that specify title
V-related work to track the amount of time that permit engineers and other staff spend on
title V program activities. The Engineering Division also tracks the expenditures through
Program 506, our title V program. Other divisions use Bill Code 80 and their specific
programs such as activity in Compliance and Enforcement and Source Test. Title V
revenues are tracked separately from all other revenues collected the Air District. We
have a dedicated ledger account for that purpose (Account Number 41305).
The Air District uses a cost recovery methodology as described in the attached 2023 Cost
Recovery Report ("https://www.baaqmd.gov/~/media/dotgov/files/rules/reg-3-fees/2023-
am en dm etrt/docum ents/20! jdtd reg0300-
pdf.pdf?la=en&h' Ubd9feb54f598fr I . I * ) to impose a schedule of fees
to generate revenue to recover the costs of activities related to implementing and
enforcing air quality programs. On a regular basis, the Air District has considered
whether these fees result in the collection of a sufficient and appropriate amount of
revenue in comparison to the cost of related program activities. As shown in Figure 5 of
the report, the title V program cost recovery is 104.82%, which means we have recovered
our costs for the program over the past 3 years. The cost recovery percentage does not
consider work backlog, the staff time needed for the Air District to meet its regulatory
obligations and the potential reduced level of service.
The Air District is currently undergoing a Management Audit and is embarking on a
district-wide Strategic Planning process to establish agency priorities and securing the
necessary resources to meet the goals we set for ourselves over the next five years,
including addressing the title V permitting backlog.
"7.3 Finding: Communication between the Engineering Division and Compliance and
Enforcement Division is inconsistent, which may impede the resolution of
complex compliance issues at facilities.
Recommendation: The EPA commends the BAAQMD's effort to maintain good
communication between Engineering Division and Compliance and Enforcement
Division management. However, the BAAQMD should promote increased
communication and cooperation between Engineering Division and Compliance
and Enforcement Division staff through systemic norms and processes, and
explore ways to resolve permitting and enforcement issues among BAAQMD's
Engineering Division and Compliance and Enforcement Division staff."
Comment:
The Air District staff in Compliance and Enforcement and Engineering Divisions are
working together to enhance the Enforcement referral process and improve information-
sharing across divisions. The referral process will utilize a digital program, AirTables, to
track and send information to the assigned Inspector and Engineer for resolving
compliance concerns. This tracking system will improve communications and
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coordination whenever questions and concerns arise that pertain to permitting and
enforcement matters.
"7.4 Finding: While the BAAQMD uses the EPA, the California Air Resources Board
(CARB), and in-house courses to train permit staff, BAAQMD staff may benefit
from additional training.
Recommendation: The EPA commends the BAAQMD for distributing the title
V workload to support succession planning. The District should identify
additional core training needs and develop a curriculum that title V program staff
in both the Engineering and Compliance and Enforcement Divisions should
complete to enhance title V program understanding and improve permit writing
and compliance determinations. This may include sharing Region 9's regulatory
updates with staff and setting aside time for staff to network with staff from other
agencies."
Comment:
The Air District's Compliance and Enforcement Division has a robust onboard training
program that includes training on title V inspections, investigations and required
reporting. Staff in the Compliance and Enforcement and Engineering Divisions will work
together to build upon the training program by including permitting staff in the training
program to ensure consistent application and implementation of the title V program.
"7.6 Finding: The District's Engineering Division faces staffing challenges, resulting
in several issues including a permitting backlog of over 150 overdue open
applications.
Recommendation: Based on discussions with the District, a next step to address
staffing challenges should include a review of the present permitting program
workload and an analysis of any upcoming workload change associated with
addressing the title V permitting backlog, discussed in Section 5 of this report, to
ensure that the permitting program can operate effectively and efficiently with
adequate staffing."
Comment:
In response to the Engineering Division's staffing challenges, the Air District has been
actively recruiting permitting staff. In the past two years, four new staff positions in the
Engineering Division were approved. We are currently in various stages of the
recruitment process for nine vacancies in Engineering. Only seven of these positions will
work on the title V program.
The Air District is also updating technologies to improve the efficiency of permit
application and renewal processes. Starting October 2023, permitting staff will use a new
system to process permit applications and renew existing permits, which provides new
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and improved tools to reduce staff time on administrative tasks and enhance permit data
quality.
The Air District will need to conduct a review of the permit issuance process, develop a
plan for issuing title V permits in a timely manner, and determine what staffing level is
needed to address the title V backlog. As stated in the comment to Finding 5.1, The Air
District is committed to working with EPA to improve the process.
The Air District is currently undergoing a Management Audit and is embarking on a
district-wide Strategic Planning process to establish agency priorities and securing the
necessary resources to meet the goals we set for ourselves over the next five years,
including addressing the title V permitting backlog.
"8.1 Finding: The District's permit record typically includes sufficient information
used to inform permitting decisions.
Discussion: ... We found during our evaluation that the District generally
provides comprehensive information on its webpage to inform permit decisions,
including all the District generated documents for the associated permit action;
however, permit applications submitted by the applicants are not posted online.
While in most cases, the District was able to provide a copy of the application
when requested by the EPA, the District did have some trouble locating some of
the applications if they were paper records.
Recommendation: The EPA commends the BAAQMD on its conversion to
electronic files. We recommend the BAAQMD follow their file retention policy
and make permit applications readily available to the public when informing its
permit decisions."
Comment:
The Air District has been making permit applications available to the public through our
public record request. Any individual or organization can submit a public record request
on the Air District's website.
"8.2 Finding: The District has a written file retention policy. However, most staff
interviewed were not aware of the District's record retention schedules.
Recommendation: The EPA commends the BAAQMD for having a written file
retention policy that complies with the federal regulation. We recommend that the
District provide training to staff on its records management policies."
Comment:
The Air District will review and determine the best way to provide training on the file
retention policy for all engineering staff.
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"8.3 Finding: The BAAQMD tracks title V permit data in a remotely hosted legacy
system that is being phased out, negatively affecting permit data retrievability and
representing a risk to retention of permitting data.
Recommendation: The EPA commends the BAAQMD for using an improved
Compliance and Enforcement tracking database. However, the BAAQMD should
explore modern database options and develop a long-term plan to effectively
manage and track its title V permitting data to ensure data is not lost."
Comment:
The Air District has identified and been implementing a modern database to replace the
legacy systems. By October 2023, the Air District will fully transition to a new database
which provides new and improved tools to process permit applications and track
permitted emissions. The new system will provide opportunities to further improve title
V permitting.
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Appendix L. EPA's Response to Comments
Page 68 of 68
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EPA Region 9 Responses to the BAAQMD Comments on the
Draft Title V Program Evaluation Report
December 15, 2023
Responses to Comments
Thank you for providing comments on the draft title V program evaluation report.1 Below, we've
summarized each comment from the BAAQMD's October 13, 2023 letter and provide our response.
Note: use of the words "we" or "our" in the EPA Response sections refer to the EPA.
1. Finding 2.1
BAAQMD Comment: The Air District believes its title V permits already incorporate all applicable
requirements in an enforceable manner. Applicable requirements are enforceable as a
practical matter as long as they are described in sufficient detail in any section of the permit. The
standard condition in Section I.B.2 of the permit states: "The permit holder shall comply with all
conditions of this permit. The permit consists of this document and all appendices. Any non-
compliance with the terms and conditions of this permit will constitute a violation of the law and
will be grounds for enforcement action; permit termination, revocation and re-issuance, or
modification; or denial of a permit renewal application. (Regulation 2-6-307; MOP Volume II, Part 3,
§4.11)"
In this section, the word "condition" encompasses all of the provisions in the permit, including the
applicable requirements listed in Section IV and any Schedule of Compliance in Section V. The
permit conditions in Section VI of the permit are specific conditions that include case-by-case
determinations for a particular facility or class of facilities. The only section in which provision is
made for inadvertent conflicts between the sections is this paragraph at the beginning of Section
VII: "This section is only a summary of the limits and monitoring requirements. In the case of a
conflict with any requirement in Section l-VI, the preceding sections take precedence over Section
VII." Repeating all of the requirements from Sections IV and V in Section VI is redundant,
unnecessary, and would make the permits overly cumbersome. As noted in Finding 2.10 below, the
title V permits for complex facilities such as refineries are already voluminous and contain some
redundant text.
It would be possible to revise the language in Section I.B.2 to expressly include "requirement",
however, this change is unnecessary for enforceability. Additionally, Section I.B.2 is a standard
condition in the Manual of Procedures that has been adopted by the Air District Board of Directors
and approved by EPA into the Air District's title V program, so this change would require rule-
making, submittal to CARB for approval, and subsequent submittal to EPA for approval to make this
change. However, to maximize clarity, the Air District will consider revising the language in
Regulation 2-6-307 and the Manual of Procedures Volume II, Part 3, §4.1 the next time these
provisions are open for revision. Meanwhile, the Air District asks EPA to understand that all
conditions and requirements in Sections I, parts of II (equipment), III, IV, V, VI, and VII are
1 The BAAQMD's comments, are included as Appendix K in the final report.
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enforceable provisions of the permit. Additionally, the tables clearly identify the applicable
requirements that apply to each emissions unit at a title V facility (See Finding 2.10 below).
The Air District acknowledges that it has been inconsistent in citing the maintenance requirements
of 40 CFR 63, Subpart ZZZZ. In some permits, it is fully described, in others not. The Air District
commits to augment the Subpart ZZZZ requirements in all permits that contain it as they are
renewed.
In addition, Air District staff will continue to work with EPA staff to review and incorporate these
requirements and approved schedules of compliance in a clearly enforceable manner.
EPA Response: The EPA appreciates the BAAQMD's commitment to ensure Subpart ZZZZ
requirements are fully described in renewed permits. We maintain that the format of the District's
title V permits may create confusion about what requirements the source must comply with. Table
IV lists applicable SIP-approved rules, federal regulations, and NSR permit conditions with a short
title or description of each requirement. The EPA generally does not believe this level of detail is
sufficient for the source to demonstrate compliance with the permit requirements (see EPA's
White Paper Number 2). It is unclear whether the source can rely on Section VII for additional
details since most District permits indicate that Section VII is only a summary and can be
superseded by previous sections.
As discussed in EPA's White Paper Number 2, the EPA generally recommends including all permit
requirements in enforceable permit conditions. We would be happy to work with the BAAQMD on
approaches that will allow the District to assure appropriate incorporation of federally applicable
requirements into title V permits, while minimizing the burden on the District throughout the
development and implementation of the District's workplan.
The finding has been updated to state that the District generally incorporates all applicable
requirements. However, the requirements in Table IV that are not included in permit conditions
may not be enforceable as a practical matter. Additionally, we added a reference to EPA's White
Paper Number 2 to the discussion as guidance for including a sufficient level of detail when using
citations, cross references, and incorporations by reference.
2. Finding 2.2
BAAQMD Comment: The italicized language shown from the Air District's title V permit is cited in
the Air District's federally approved title V program which was originally adopted on February 1,
1995. It is cited in BAAQMD Regulation 2-6-233, and in the BAAQMD Manual of Procedures,
Volume II, Part 3, Major Facility Review, Section 4.16.
The permit shield, as set out in 40 CFR 70.6(f), is intended to provide certainty to a source, that if a
decision of non-applicability has been documented in the title V permit, enforcement action will
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not be taken against the source on the basis of that requirement until the decision is reviewed
formally by the permitting authority, including public notice and EPA review.
The Air District understands that the permit shield would only be valid as long as the shield was in
place. If the Air District or EPA discovered that the basis for the shield was invalid, the Air District or
EPA could re-open the permit after due notice and delete the shield. The applicable requirement
from which the facility had been shielded would then apply. Enforcement actions and litigation
could be initiated as of the date that the revised permit was re-issued. Further, the use of "may"
rather than "shall" in the italicized language provides for enforcement discretion to make the
enforcement action retroactive if the Air District or EPA determines that the shield was invalid
based on any fraudulent representations in the permit application.
If the Air District determines that a permit shield was granted in error, the Air District will reopen
the permit, delete the permit shield, and take appropriate enforcement action.
The Air District recognizes that the permit shield regulations may not be clear to permit holders
and the public. The Air District's Manual of Procedures requires the use of the current permit shield
language. However, the Air District commits to explaining the permit shield regulations fully in
Statements of Basis for initial permits and permit renewals where the permit contains permit
shields, or any revision where a permit shield is granted or revised. Further, the Air District will
consider revising BAAQMD Regulation 2-6-233 and Manual of Procedures, Volume II, Part 3, Major
Facility Review, Section 4.16.to provide more clarity the next time these provisions are open for
revision.
The Air District would appreciate further clarification on why EPA believes that the italicized
language shown from the Air District's title V permit will unnecessarily limit the authority of the
District, EPA, and the public to initiate enforcement actions, and will continue to work with EPA to
find ways to improve the permit shield language in our title V program.
EPA Response: The EPA appreciates the BAAQMD's feedback and acknowledges the workload of
our recommendation since this language is codified in the District's Regulation 2-6-233. However,
the practice of updating permit shields as enforcement issues arise and the possibility of
retroactive enforcement actions do not alleviate our concerns.
Pursuant to 40 CFR 70.6(f), permit shields only provide a shield from federal enforcement (or
delegated enforcement authority) for the applicable requirement that is subsumed by the permit,
such that compliance with the terms and conditions of the permit is deemed compliance with the
subsumed requirements. This is also true for a permit shield that excludes an applicable
requirement. The EPA believes the italicized language in the permit shield section of the District's
permit exceeds this intent. The EPA and the permitting authority can investigate, and initiate
enforcement actions and litigation outside of the realm of the shield (i.e., against potential non-
compliance with the terms and conditions of the permit). For example, the District and the EPA can
conduct facility inspections, which can include verifying the veracity of criteria the District relied on
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to grant a shield. The ambiguity of the phrase "enforcement actions" could have the unintended
consequence of impairing the ability to use this and other investigative tools, or give the
impression that the District's initiation of a compliance investigation exceeds BAAQMD's regulatory
authority; which conflicts with the permit shield provisions in 40 CFR 70.6(f)(3)(iv).
The BAAQMD must ensure that its title V permits do not contain any suggestion that the EPA or the
District cannot take steps to determine a source's compliance status, which may lead to an
enforcement action. This finding and recommendation remain as drafted.
3. Finding 2.3/6.2
BAAQMD Comment on Finding 2.3: We appreciate the recommendation. The Air District will
amend the current title V checklist and use the updated version to document the internal review by
each division including the Engineering, Compliance and Enforcement, and Legal Divisions.
BAAQMD Comment on Finding 6.2: Please see comment for Finding 2.3 above.
EPA Response: The EPA appreciates the BAAQMD's efforts in incorporating our recommendations.
We will continue to work with the BAAQMD in tracking the recommendations via a workplan as
noted in the report. These findings and recommendations remain as drafted.
4. Finding 2.4
BAAQMD Comment: The Air District agrees that compliance history can be helpful information in
the statement of basis. For title V facilities that have compliance issues, Air District staff in
Engineering and Compliance and Enforcement will coordinate to compile and include compliance
history in the statement of basis when processing title V permit applications.
EPA Response: The EPA appreciates the BAAQMD's efforts in incorporating our recommendations.
We will continue to work with the BAAQMD in tracking the recommendations via a workplan as
noted in the report. This finding and recommendation remain as drafted.
5. Finding 2.6
BAAQMD Comment: The recent changes in the Air District's NSR permit program apply to all
facilities under our jurisdiction and many of the Air District's title V facilities are within
overburdened communities. Projects in title V facilities are first reviewed and approved in Air
District's NSR permit program and then incorporated into title V permits. Even though the Air
District has no separate discussions about environmental justice or overburdened communities in
the title V permitting process, a project that is being added into a title V permit has already gone
through a review process that includes public notice requirements and lower health risk limit
within overburdened communities. Engineering evaluations which have detailed analysis and
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discussions on these requirements are included in the statement of basis for the corresponding
title V permit application.
Air District staff will work with EPA staff to identify opportunities to further enhance public
involvement and address environmental justice concerns specifically in the title V process that
cannot be addressed in Air District's NSR permit program. We also welcome training opportunities
for Air District staff on environmental justice.
EPA Response: The EPA appreciates the BAAQMD's comment and recognizes that many title V
sources with NSR projects may have undergone EJ analyses during the NSR process. We clarified
this point in the discussion and noted that the BAAQMD does not conduct additional EJ analyses
during the title V process. We look forward to working with the BAAQMD to identify opportunities
for EJ work in the District's title V program.
6. Finding 2.7
BAAQMD Comment: The Air District decided to cite "BACT" meaning Best Available Control
Technology, "RACT" meaning Reasonably Available Control Technology, or "Offsets" for NSR
requirements for some practical reasons. First of all, citing with the conventional names of these
requirements instead of the particular provisions in the NSR rules helps the regulated communities
and public to understand the origin of the requirements even if they are not familiar with the Air
District's rules and regulations. In addition, the Air District's NSR rules have been amended multiple
times over the years. Besides the contents in some provisions, the numbering of the provisions
within a rule can change during an amendment. On the other hand, these conventional names
remain the same. Based on past experience in the Air District, citing with the conventional names
has helped to reduce the burden to update the citations in permit conditions during a rule
amendment for the large number of permits that the Air District issues and maintains.
NSR/PSD permits are not currently cited as the basis for any permit conditions because the
statement of basis of each title V permit application includes all relevant engineering evaluations
providing the detailed analysis to verify the NSR determinations. Whenever a permit condition is
added to or modified in a title V permit, the engineering evaluation(s) related to the permit
condition(s) is included as an attachment to the statement of basis. The engineering evaluations
are part of the title V permit application documents.
In addition, the Air District permits a number of sources that have been modified and reviewed in
many permit applications throughout the years, such as those in refineries and landfills. Having to
cite back to the permit application where a specific analysis originated is burdensome.
District staff will work with EPA staff to find ways to assure compliance with 40 CFR 70.6(a)(l)(i)
while considering the above factors.
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EPA Response: The EPA appreciates the additional context regarding the BAAQMD's citations.
However, we maintain the position that the title V conditions should reference the origin permit
when that information is available. While it is important for engineering evaluations from related
NSR actions to be included as part of the title V permit record, this practice does not satisfy the
requirement to cite the origin of each title V condition. We are happy to provide examples of
permits that include similar citations if the District would find this helpful. The finding and
recommendation remain as drafted.
7. Finding 2.9
BAAQMD Comment: The Air District has been utilizing various methods to ensure that SIP-
approved regulations are included and are correctly dated and marked as federally enforceable.
Engineering staff maintains a title V permit template that is updated on a regular basis to show the
correct dates of adoption for SIP-approved and newly amended Air District regulations. The Air
District permit staff also utilize the same EPA web page as indicated in the draft report, which lists
the current BAAQMD SIP-approved regulations, as a reference while processing title V permits. The
Air District is currently recruiting for the title V Permit Program Engineer position, who will provide
support to title V permit engineers and perform quality control to ensure consistency and accuracy,
including checking the SIP-approved regulations. The Air District will continue to identify additional
measures to reduce these errors in our title V permits.
EPA Response: The EPA appreciates the additional context provided in the BAAQMD's comment
and is happy to know that the BAAQMD is already implementing several of our recommendations.
This finding and recommendation remain as drafted.
8. Finding 2.10
BAAQMD Comment: The Air District's permitting staff has combined Sections IV and VII into one
section for some title V permits but received mixed feedback regarding the effectiveness of this
approach. In addition, implementing this change increases the processing time of a title V permit
application. Considering that the current top priority is to address the existing permitting action
backlog, the Air District does not require permitting staff to combine Sections IV and VII as this
could delay the processing time of a title V permit application.
EPA Response: The EPA did not intend for Finding 2.10 to suggest the District combine Sections IV
and VII. Rather, it was intended to highlight the long timeframe of the District's continued
consideration of this formatting change. This finding and recommendation remain as drafted. We
are happy to work with the District during the development of the workplan to explore ways to
address this finding.
9. Finding 3.1
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BAAQMD Comment: The Air District currently provides CAM training on a one-on-one basis to
permit engineers during the processing of title V renewal permit applications. We find this to be an
effective way to ensure consistent application and review of CAM. The District will continue to
verify CAM applicability for permit all title V permit actions (initial, renewals, and significant
modifications). Additional group training is always valuable, and the Air District will include other
CAM training classes offered by CARB and EPA.
EPA Response: The EPA appreciates the BAAQMD's comment. The finding remains as drafted. The
recommendation is amended to explain the District should continue to offer CAM training.
10. Finding 3.2
BAAQMD Comment: It has always been the Air District's intent to include sufficient and
appropriate monitoring requirements for VOC-emitting equipment in title V permits to ensure
compliance with the Air District's Regulation 8 (Organic Compounds) and other state and federal
requirements. Rule 18 of Regulation 8 specifically targets fugitive emissions of VOC from
equipment leaks at refineries, chemical plants, bulk plants, and bulk terminals. Applicable
monitoring requirements from this rule are listed in Section VII of the BAAQMD title V permits for
these facilities.
If unintentional omission or insufficiency is identified for certain VOC-emitting equipment, the Air
District will work with EPA to modify individual permits to ensure appropriate monitoring
requirements are included in these title V permits.
As we stated in the comment for Finding 2.1, the Air District considers all sections of the permit to
be enforceable, and all applicable monitoring requirements are listed in Section IV (Source-Specific
Applicable Requirements) of a BAAQMD title V permit. Furthermore, including all applicable
monitoring requirements as permit conditions will require an additional administrative task to
update these conditions whenever the requirements are amended, which may cause unnecessary
delay for issuing title V permits.
EPA Response: The EPA appreciates the BAAQMD's comment and looks forward to working with
the BAAQMD to ensure that enforceable monitoring requirements are included in BAAQMD
permits for VOC-emitting equipment. As discussed in our response for Finding 2.1, the EPA
maintains that the format of the District's title V permits may create confusion about what
requirements the source must comply with. In the introduction to Section VII, the BAAQMD
permits generally state "this section is only a summary of the limits and monitoring requirements.
In the case of a conflict with any requirement in Sections I - VI, the preceding sections take
precedence over Section VII." If this section is simply a summary and is not intended to be an
enforceable portion of the permit, it is unclear why it is included in the permit. If the details in
Section VII are needed to help the Source understand the permit requirements, this information
should likely be included in one of the previous sections of the permit or in a manner where it
cannot be superseded. The finding and recommendation remain as drafted.
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11. Finding 3.3
BAAQMD Comment: The Air District has developed and been using standard permit conditions for
synthetic minor operating permits, which specify annual facility-wide emission limits to be 95 tons
for any regulated air pollutant, 9 tons for the individual HAP, and 24 tons for all HAPs combined.
Based on each facility's unique operation, permit engineers also specify emission limits and the
corresponding emission estimate methods for each source category, and the appropriate
monitoring requirements as permit conditions. As guidance for permitting different types of
sources and setting permit limits, Air District permitting staff have been utilizing the Air District's
Permit Handbook, Complex Permitting Handbook for BAAQMD New Source Review Permitting, and
Engineering Policy and Procedure Manual. Additional training for applying these existing standard
permit conditions and resources can improve the consistency of setting synthetic minor limits.
During the Air District's NSR permitting process, the facility-wide PTE including the new and
modified sources being evaluated is determined. The facility-wide potential to emit for each criteria
pollutant is used for determining the applicability of the offset requirements. The toxic air pollutant
emissions, which include most HAPs, at the facility for the past five years are also calculated to
verify compliance with the Air District Regulation 2, Rule 5.
We are also implementing changes to improve tracking of the facility-wide PTE. By October 2023,
the Air District will fully transition to a new database to process permit applications and track
permitted emissions. This new database will provide tools to track a facility's potential to emit in
addition to actual emissions.
We appreciate that EPA identified the available training resource to the Air District. We will include
this online training in our permitting staff training curriculum.
EPA Response: The EPA appreciates the additional information about the new database. This
finding and associated discussion explain that the District generally sets enforceable synthetic
minor limits. We clarified that the District does not have a policy specifically for establishing
synthetic minor limits and added information about the guidance material used by the District. The
finding and recommendation statements are updated to remove the statements about the District
developing an internal policy/guidance for permitting synthetic minor sources and clarify the EPA's
evaluation. For reference, the EPA's website includes a compilation of documents with information
about limiting PTE and synthetic minor sources.2 Additionally, the discussion for Finding 5.3 is
updated to include a note about the new database that will allow for facility-wide PTE tracking.
12. Finding 4.1
2 See https://www.epa.gov/title-v-operating-permits/limiting-potential-emit-pte-SYnthetic-minor-sources.
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BAAQMD Comment: The Air District appreciates EPA's recommendations to improve our title V
permit program. Engineering staff have initiated and will continue discussions with Community
Engagement staff to identify ways to improve community outreach of our title V permit program.
Suggestions include extending the public notice period based on community need and feedback,
compiling an email distribution list to include community groups from previous community
engagement experience of an area, utilizing additional channels, such as social media and websites,
for outreach.
The Air District will also review existing translation programs to determine the feasibility of
incorporating translation effort in our title V permit program.
EPA Response: The EPA appreciates the BAAQMD's comment and strongly supports the included
suggestions. We encourage the BAAQMD to keep the EPA apprised of the District's public
engagement efforts so we may share successful practices with other permitting authorities. This
finding and recommendation remain as drafted.
13. Finding 4.3
BAAQMD Comment: The Air District appreciates the recommendation and agrees that it can help
the public navigate to the relevant dates. We will start to include links to the EPA's title V permit
dashboard in our public notice template.
EPA Response: The EPA appreciates the BAAQMD's efforts in incorporating our recommendations.
This finding and recommendation remain as drafted.
14. Finding 4.4
BAAQMD Comment: The Air District's Manual of Procedures, Volume 2, Part 3 (Major Facility
Review Permit Requirements) contains EPA review requirements similar to the February 5, 2020
amendments to 40 CFR 70.8(a)(1). Specifically, Section 6.1.2 states: "The District shall send the
proposed permit to EPA for review at the same time that the public notice is published or after the
public comment period, at the APCO's discretion. If the proposed permit has been submitted to
EPA, and substantial changes are made due to public comments, the APCO shall withdraw the
permit from EPA review, and resubmit a revised proposed permit to EPA, restarting the 45-day
review period." For consistency, the Air District will consider adopting the February 5, 2020
amendments to 40 CFR 70.8(a)(1) into BAAQMD Regulation 2, Rule 6 the next time this rule is open
for revisions.
EPA Response: The EPA appreciates and concurs with the BAAQMD's comment. The finding and
recommendation remain as drafted.
15. Finding 4.6
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BAAQMD Comment: The Air District commits to contacting the tribal council office of Robinson
Rancheria in Lake County, California to find out the address to send notice of draft title V permits
for any source within 50 miles of the Robinson Rancheria.
EPA Response: Though contacting the Robinson Rancheria as indicated in the BAAQMD's comment
may satisfy the minimum regulatory requirements, the EPA strongly encourages the BAAQMD to
explore opportunities to include all Tribes who may be impacted by a permitting action, including
Tribes who have not been approved as "affected states" under the title V program. The finding
includes a list of the five federally recognized Indian Reservations within the BAAQMD counties and
a link to a map of tribal lands in California. These resources can be used to evaluate whether a
permitting action could potentially impact a Tribe. The finding and recommendation remain as
drafted.
16. Finding 5.1
BAAQMD Comment: The Air District is committed to working with the EPA to improve the process.
As recommended, Air District management and staff will conduct a review and then develop a plan
of action for issuing title V permit actions in a timely manner.
EPA Response: The EPA appreciates the BAAQMD's willingness to incorporate our
recommendations. We look forward to working with the BAAQMD to develop and implement the
workplan. This finding and recommendation remain as drafted.
17. Finding 5.2
BAAQMD Comment: The Air District's current title V permit process already makes the statement
of basis available to the public and the EPA by posting it on the Air District website along with the
proposed title V permit and providing the link in public notices. The Air District agrees that
incorporating the EPA's 2020 amendments to 40 CFR 70.7 and 70.8 in our title V rules will further
ensure consistency. The Air District will consider incorporating EPA's 2020 amendments to 40 CFR
70.7 and 70.8 into BAAQMD Regulation 2, Rule 6 the next time these provisions are open for
revision.
EPA Response: The EPA appreciates and concurs with the BAAQMD's comment. The finding and
recommendation remain as drafted.
18. Finding 5.3
BAAQMD Comment: As stated in the comment for Finding 3.3, the applicability of offset
requirements in the Air District's NSR program is also based on facility-wide potential to emit.
When processing NSR applications for new and modified sources, Air District's permitting staff
includes an analysis for the offset requirements in which staff explains whether any offset
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requirements are triggered. This analysis requires a determination of the facility's potential to emit,
which serves to verify major source applicability.
We are also implementing changes to improve tracking of the facility-wide PTE. By October 2023,
the Air District will fully transition to a new database to process permit applications and track
permitted emissions. This new database will provide tools to track a facility's potential to emit in
addition to actual emissions.
On the other hand, this Finding serves as a reminder to the Air District that additional permitting
training, especially for new staff, is needed to ensure consistency in our NSR permit review process
during this high staff turnover period.
EPA Response: Based on our interviews, our understanding is that the District is not consistently
evaluating the facility-wide PTE during each minor source modification action. During our site visit,
it appeared that the District was relying on actual emissions to verify that sources, which were
previously determined to be minor sources, are still minor sources. If the District correctly tracks
facility-wide PTE for its sources, then it will be able to accurately verify that sources are not subject
to the title V program due to their PTE. As discussed in response to an earlier comment, the
discussion was updated to note the BAAQMD's transition to a new database that will include tools
for tracking facility-wide PTE.
19. Finding 5.4
BAAQMD Comment: Since the submittal of the title V Workplan on December 21, 2009, the Air
District has been publishing public notices and providing a 30-day EPA review period for initial
synthetic minor permits. EPA had no additional comment in regard to this proposed corrective
action in the 2009 Title V Workplan. It is the Air District's understanding that our program satisfies
the requirements in BAAQMD Rule 2-6-423 as currently implemented. Section 2-6-423 states, "The
APCO shall take action on applications for synthetic minor operating permits and for synthetic
minor operating permit revisions as follows:" The section includes several sub-sections, some of
which expressly apply to revisions while others do not. Section 2-6-423.4 that EPA cites does not
expressly apply to "revisions." By contrast, Sub-sections 2-6-423.5 and 2-6-423.6 expressly apply to
revisions. Therefore, the Air District interprets that 2-6-423.4 applies only to new synthetic minor
permits.
In general, the Air District prefers a simpler process for revisions to synthetic minor permits for a
number of reasons:
(1) The facilities that apply for synthetic minor permits are qualitatively different from the title V
facilities. They are smaller and their emissions are less significant. Their permitting staff is generally
smaller and less sophisticated. As such, the Air District and the facilities expect a qualitative
difference in the process to revise a synthetic minor permit. If this process includes the same
formalities as the process to revise a title V permit, a facility could opt to have a title V permit
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instead and the Bay Area would lose the opportunity to get voluntary emission reductions from the
facility.
(2) The Air District has expanded the use of synthetic minor limits to avoid applicability of other
requirements. (See BAAQMD Regulation 2, Rule 6, Sections 101, 420, and 422.) If a synthetic minor
limit applies to only a small part of a facility or permit, public participation and EPA review of a
revision of such a permit are inappropriate and would discourage the use of this type of synthetic
minor limit, again depriving the Bay Area of some potential emission reductions.
(3) Public participation and EPA review are expensive and resource-intensive, which is not
appropriate for revisions to synthetic minor permits at these smaller facilities. The facility is
expected to pay for publishing the public notice. District staff must handle the publication of the
notice and respond to any comments. The Air District may incur the expense of a public hearing.
While the Air District does charge some fees for the application process (but not any hearing
expenses), EPA has not mandated fees for synthetic minor activities.
(4) Public participation and EPA review introduces title V-like delays into the permitting process for
smaller facilities. A 30-day public participation and EPA review process are actually equivalent to a
2-3 month delay. It takes about 10 days to publish a notice in most newspapers "of general
circulation." After the public participation and EPA review process, the Air District must respond
formally to any comments by the public or EPA.
(5) Revisions to synthetic minor permits are generally about the details of the permit or adding or
subtracting emission units. The strategy by which the facility maintains its emissions under the title
V thresholds is rarely changed. Introducing public participation and EPA review into the revisions
would add unnecessary delays and costs to the synthetic minor permit revisions.
EPA Response: As the BAAQMD stated, Section 2-6-423 requires the APCO to take action on
applications for permit and permit revisions "as follows". Section 2-6-423.4 is a subsection that
follows so the EPA believes it could apply to permit revisions. However, Section 2-6-423.4 does not
expressly state it is applicable to permit revisions, so the EPA agrees that the applicability is
unclear. The finding and discussion are amended to explain that the requirement is unclear.
Additionally, the recommendation is updated to recommend the District consider updating
Regulation 2, Rule 6 to also provide revisions to synthetic minor permits for EPA and public review
when the revisions involve a substantial change to a synthetic minor limit.
Additionally, please note that our NSR and title V rules have been updated to allow for e-noticing in
lieu of or in addition to a newspaper.
20. Finding 7.1
BAAQMD Comment: The Air District appreciates the recommendation and is continuing to
implement pathways for collaboration amongst its staff. The Air District will continue to ensure
that the District Counsel's office provides effective legal support to the Compliance and
Enforcement and Engineering Divisions.
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EPA Response: The EPA appreciates the BAAQMD's comment and the BAAQMD's efforts in
incorporating our recommendations. This finding and recommendation remain as drafted.
21. Finding 7.2
BAAQMD Comment: The Air District uses employee timesheets with accounting billing codes that
specify title V-related work to track the amount of time that permit engineers and other staff spend
on title V program activities. The Engineering Division also tracks the expenditures through
Program 506, our title V program. Other divisions use Bill Code 80 and their specific programs such
as activity in Compliance and Enforcement and Source Test. Title V revenues are tracked separately
from all other revenues collected the Air District. We have a dedicated ledger account for that
purpose (Account Number 41305).
The Air District uses a cost recovery methodology as described in the attached 2023 Cost Recovery
Report (https://www.baaqmd.gov/~/media/dotgov/files/rules/reg-3-fees/2023-
amendment/documents/20230419 03 err updtd reg0300-
pdf.pdf?la=en&rev=le71abd9feb54f598f6133232e438769) to impose a schedule of fees to
generate revenue to recover the costs of activities related to implementing and enforcing air
quality programs. On a regular basis, the Air District has considered whether these fees result in the
collection of a sufficient and appropriate amount of revenue in comparison to the cost of related
program activities. As shown in Figure 5 of the report, the title V program cost recovery is 104.82%,
which means we have recovered our costs for the program over the past 3 years. The cost recovery
percentage does not consider work backlog, the staff time needed for the Air District to meet its
regulatory obligations and the potential reduced level of service.
The Air District is currently undergoing a Management Audit and is embarking on a district-wide
Strategic Planning process to establish agency priorities and securing the necessary resources to
meet the goals we set for ourselves over the next five years, including addressing the title V
permitting backlog.
EPA Response: The EPA appreciates the additional context provided in the BAAQMD's comment.
This finding explains the EPA's understanding of the BAAQMD's fee structure and provides updated
EPA fee guidance, while acknowledging the District's application backlog. We added a note about
the management audit to the discussion in Finding 7.6. See EPA response below. As noted in the
response to 7.6, we look forward to working with the District to implement our recommendations.
This finding and recommendation remain as drafted.
22. Finding 7.3
BAAQMD Comment: The Air District staff in Compliance and Enforcement and Engineering
Divisions are working together to enhance the Enforcement referral process and improve
information-sharing across divisions. The referral process will utilize a digital program, AirTables, to
track and send information to the assigned Inspector and Engineer for resolving compliance
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concerns. This tracking system will improve communications and coordination whenever questions
and concerns arise that pertain to permitting and enforcement matters.
EPA Response: The EPA appreciates the BAAQMD's comment. The discussion for this finding was
updated to include a note about the planned communication improvements citing the digital
enforcement referral process as an example.
23. Finding 7.4
BAAQMD Comment: The Air District's Compliance and Enforcement Division has a robust onboard
training program that includes training on title V inspections, investigations and required reporting.
Staff in the Compliance and Enforcement and Engineering Divisions will work together to build
upon the training program by including permitting staff in the training program to ensure
consistent application and implementation of the title V program.
EPA Response: The EPA has modified the discussion to clarify the Compliance and Enforcement
Division's training program using the information provided in the BAAQMD's comment.
24. Finding 7.6
BAAQMD Comment: In response to the Engineering Division's staffing challenges, the Air District
has been actively recruiting permitting staff. In the past two years, four new staff positions in the
Engineering Division were approved. We are currently in various stages of the recruitment process
for nine vacancies in Engineering. Only seven of these positions will work on the title V program.
The Air District is also updating technologies to improve the efficiency of permit application and
renewal processes. Starting October 2023, permitting staff will use a new system to process permit
applications and renew existing permits, which provides new and improved tools to reduce staff
time on administrative tasks and enhance permit data quality.
The Air District will need to conduct a review of the permit issuance process, develop a plan for
issuing title V permits in a timely manner, and determine what staffing level is needed to address
the title V backlog. As stated in the comment to Finding 5.1, The Air District is committed to
working with EPA to improve the process.
The Air District is currently undergoing a Management Audit and is embarking on a district-wide
Strategic Planning process to establish agency priorities and securing the necessary resources to
meet the goals we set for ourselves over the next five years, including addressing the title V
permitting backlog.
EPA Response: The EPA has modified its discussion to reflect the new information that the
BAAQMD provided and looks forward to working with the District to implement the
recommendation. The finding and recommendation remain as drafted.
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25. Finding 8.1
BAAQMD Comment: The Air District has been making permit applications available to the public
through our public record request. Any individual or organization can submit a public record
request on the Air District's website.
EPA Response: The EPA maintains the recommendation to make permit applications readily
available to the public when informing its permit decisions. Posting applications on the District's
website upon receipt or once deemed complete provides more time for the public to consider
potential impacts of a project. A member of the public may not know to submit a public record
request if information about the received application is not posted on the District's website. The
recommendation was updated to explain that the EPA recommends making the applications readily
available by posting them on the District's website.
26. Finding 8.2
BAAQMD Comment: The Air District will review and determine the best way to provide training on
the file retention policy for all engineering staff.
EPA Response: The EPA appreciates the BAAQMD's comment and the BAAQMD's efforts in
incorporating our recommendations. This finding and recommendation remain as drafted.
27. Finding 8.3
BAAQMD Comment: The Air District has identified and been implementing a modern database to
replace the legacy systems. By October 2023, the Air District will fully transition to a new database
which provides new and improved tools to process permit applications and track permitted
emissions. The new system will provide opportunities to further improve title V permitting.
EPA Response: The EPA has modified its discussion to reflect the new information that the
BAAQMD provided. However, it is unclear to the EPA how the modern database referenced in the
BAAQMD's comment relates to the databases referenced in the EPA's discussion. Additionally, the
EPA removed the recommendation to explore modern database options.
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