Stationary Agricultural Sources/Agricultural Operating Permits

In the past, agricultural operations had been exempt by state law from obtaining air quality permits from local air districts. However, in September 2003, the governor signed into law Senate Bill 700. This bill amended air pollution control requirements in the California Health and Safety Code to remove the agricultural exemption and to include specific new regulatory requirements for the agricultural sector.

SB 700 targeted agriculture and air pollution for two main reasons. First, California's previous agriculture exemption conflicted with federal law. California would have lost billions of dollars in federal transportation funding, as well as faced other sanctions if the bill had not passed. Secondly, in some parts of the state (including the Sacramento air basin), air quality is poor and agricultural activities contribute to the problem. Poor air quality harms public health by causing and/or exacerbating asthma, respiratory illness, heart and lung disease, and early mortality.

Senate Bill 700 (Florez): Agriculture & Air Quality Summary and Implementation

​April 2004
[Air Pollution Permits Required for Agricultural O​perations] 

SB 700 Table of Contents

Introduction

I. Defining "Agricultural Source"

a. Confined Animal Facilities
b. Internal Combustion Engines
c. Sources Subject to Title V

1) Potential to Emit 
2) Point vs. Fugitive Emissions 
3) Contiguous Property 
4) Common Ownership or Control

d. Sources Otherwise Subject to Regulation by Air Districts

II. Removing the Permit Exemption

III. Establishing Specific Permitting & Exemption Requirements

a. Sources Subject to Federal Permitting Requirements

1) New Source Review

i. Best Available Control Technology (BACT) 
ii. Emission Reduction Credits (ERCs) and Offset Requirements

2) Title V

b. Sources Whose Actual Emissions Equal or Exceed 50% of the Major Source Threshold

1) Calculating "actual" emissions for the threshold 
2) How existing agricultural sources are affected 
3) How new agricultural sources are affected 
4) How existing prohibitory rules may apply 
5) The findings a district board must make to exempt larger sources

c. Sources Whose Actual Emissions are Less than 50% of the Major Source Threshold

1) How existing agricultural sources are affected 
2) How new agricultural sources are affected 
3) How existing prohibitory rules may apply 
4) The findings a district board must make to permit smaller sources

d. Sources Whose Emissions are de minimis

e. Sources that Implement all Listed Mitigations

f. Summary and Timing

IV. Emission Control in Federal Nonattainment Areas for PM10

a. Serious PM Nonattainment Areas

b. Moderate PM Nonattainment Areas

c. Best Available Control Measures (BACM)

d. Best Available Retrofit Control Technology (BARCT)

e. Precursor Emissions

f. Procedures for Regulating Engines

V. Permits & Emissions Mitigation for "Large" CAFs

a. Defining "Large" CAF

b. Permit Requirements and Schedule for "Large" CAFs

c. Emissions Mitigation for "Large" CAFs

d. Procedures to Assess Other Impacts of Rulemaking

e. Areas that Attain the federal Ozone Standard

VI. Mitigation Clearinghouse

Senate Bill 700 (Florez): Agriculture & Air Quality
Summary & Implementation

Introduction

On September 22, 2003, Governor Davis signed into law Senate Bill 700, authored by Senator Florez. The bill amended air pollution control requirements in the California Health and Safety Code to include requirements for agricultural sources of air pollution.

Agricultural sources of air pollution were the focus of the bill for two main reasons. First, California law had previously exempted these sources from requirements to obtain air permits. This resulted in a conflict between state and federal law, and California faced sanctions if it failed [to] correct the problem. Had the bill not been signed, new and expanding businesses in the state would have faced significant and costly hurdles to obtain air permits required under federal law, and the state would have lost billions of dollars in federal transportation funding.

There was another reason for the bill to focus on air pollution resulting from agricultural activities, however. In some parts of the state, air quality is very bad and agricultural activities are significant contributors to the problem. Poor air quality harms public health; it causes and/or exacerbates asthma, respiratory illnesses, heart and lung disease, and early mortality. Children and the elderly are especially vulnerable. Parts of California, such as the San Joaquin Valley and the South Coast, have some of the highest asthma rates in the nation. Senate Bill 700 was intended to address the agricultural contribution to these problems while recognizing that the problems are not the same, nor is the contribution of agricultural sources, in all the regions of the state. 

The bill does six main things: (1) It defines "agricultural source" in state law; (2) It removes the restriction from state law that prevented air districts from requiring permits for agricultural sources; (3) It establishes specific permitting and exemption requirements for agricultural sources; (4) It requires emission control regulations in areas that do not attain National Ambient Air Quality Standards for PM10; (5) It requires permits and emissions mitigation for Confined Animal Facilities (CAFs) that are defined by ARB as "large" (based on a review of current scientific data about emissions from CAFs and the impact of those emissions on attainment of ambient air standards); and (6) It requires CAPCOA to compile a clearinghouse of information about available emissions control and mitigation for agricultural activities. It is important to note that the bill did not remove the exemption for agricultural operations from the general odor-nuisance provisions of the Health and Safety Code.

What follows is a summary of the requirements of SB 700 in each of these six areas, including a discussion of how the air districts (and in some cases ARB) interpret these requirements, and how we believe they can be implemented. A copy of SB 700 is included in Appendix A. Appendix B provides flow diagrams of the requirements of the bill.

I. Defining "agricultural source"

The bill generally defines "agricultural source" as a source, or group of sources, used in the production of crops or the raising of fowl or animals located on contiguous property and under common ownership or control. The bill specifically lists four categories of emissions sources that are part of the agricultural source: (a) Confined Animal Facilities; (b) internal combustion engines, including portable and off-road engines; (c) sources subject to requirements under Title V of the 1990 Amendments to the Federal Clean Air Act; and (d) sources of emissions that are otherwise subject to district regulation under the Health & Safety Code or the federal Clean Air Act.

a) Confined Animal Facilities (CAFs)

The bill defines "confined animal facility" to include essentially any type of confinement for animals or fowl that restricts them to a specific area, and involves feeding the animals by any method other than grazing. This specifically includes barns, pens, corrals, and coops, but should be interpreted broadly. The definition also specifically lists other markers of CAFs, including feed storage, milking parlors, and systems to collect, store, treat, and distribute liquid or solid manure from the confined animals.

b) Internal Combustion Engines

The bill includes in the "agricultural source" any internal combustion engine that is used in the production of crops or the raising of animals or fowl. It specifically includes portable engines and offroad engines, unless the engines are "used to propel implements of husbandry." That means these engines are specifically subject to the air permit requirements of the bill (see Item #3, below, for further explanation of these requirements).  

The ARB currently implements a registration program for portable equipment and engines that opt to register in the state program are relieved of the obligation to obtain local permits. The ARB registration program currently excludes agricultural engines by regulation. In order to open the program to agricultural engines, ARB would have to amend its rule, which would, among other things, require a finding that the engines would be subject to the same degree of emissions control as required under local permit programs, including the requirements of SB 700. Such a finding would have to be made at a public hearing.

ARB staff and CAPCOA further believe that before an agricultural engine could be registered with the state, the district in which that engine resides would have to take formal action allowing state registration in lieu of local permits.

c) Sources subject to Title V

Title V is the federal Operating Permits Program. It applies to "major stationary sources" and is intended to consolidate all air pollution control and compliance requirements into a single document. Sources are considered "major" on the basis of their potential to emit federally regulated air pollutants. The amount of emissions that is considered "major" depends on the magnitude of the air quality problem in a given area. In areas that meet federal standards, for example, a "major" source is one that has the potential to emit 100 tons per year of a regulated air pollutant, or 10 tons per year of a single Hazardous Air Pollutant, or 25 tons per year of a combination of two or more Hazardous Air Pollutants. A listing with the threshold for "major" in each air district is included in Appendix C. Appendix C also identifies current federally "regulated air pollutants."

1) Potential to Emit

A source’s "potential to emit" is generally considered to be the maximum amount it can emit, considering physical and other enforceable limitations. In traditional air pollution terms, it means that if a factory is physically capable of running three shifts, seven days a week, that it must be assumed to do so unless there is some enforceable restriction that prevents that from occurring. Some air districts have established a regulatory framework to bridge the gap between "potential" and "actual" emissions. Where that framework exists, it may help an agricultural source to determine whether or not it needs to have a permit under Title V. CAPCOA also has a subcommittee that works on Title V implementation issues. This subcommittee is developing materials to assist sources in determining whether they are subject to Title V, and districts will be working with U.S. EPA to identify what additional mechanisms may be available and/or needed to bridge the gap between "potential" and "actual" emissions at agricultural operations.

2) Point vs. Fugitive Emissions

Some air pollutants are emitted directly through a chimney, pipe, vent, or stack, or they can be reasonably collected and passed through some exit point. These kinds of "point" emissions are counted towards a source’s potential to emit. Other emissions can’t be collected, like dust that is created when a vehicle travels on an unpaved road or when a field is tilled. These emissions are called "fugitive" and they are only counted towards a source’s potential to emit if federal regulations list them; the current list includes about two dozen heavy industrial categories of sources, as well as any emission of Hazardous Air Pollutants. For the most part, fugitive emissions at agricultural operations have not been federally listed, so they are not counted where federal requirements, like Title V, are concerned. There are some gray areas, however, and fugitive emissions do need to be considered for other state and local air requirements.  

3) Contiguous Property

The simplest definition of "contiguous" is when two property parcels are actually touching at a boundary. There are other situations that the courts have determined to be "contiguous" for the purposes of determining what emitting activities are part of the source. Some examples include parcels that are divided by roadways, or which are separated by some distance but are functionally interconnected. Generally, the courts have ruled that artificial separations between related activities do not create separate sources.

4) Common Ownership or Control

Property is under "common ownership or control" if the same person owns both parcels or operations. Contractual agreements between two parties can also constitute "common ownership or control." This is another area that has been defined over time by court rulings.

d) Sources otherwise subject to district regulation

The federal Clean Air Act and the California Health & Safety Code give air districts broad authority to regulate non-mobile sources of air pollution. This includes traditional stationary sources of air pollution (like factories, stationary engines, or fuel dispensing), but also things like dust emitted from travel over unpaved roads, open fires to reduce vegetation in forests, range lands, or crop fields, and small, ubiquitous sources of pollution like woodstoves and water heaters. In the case of agricultural operations, equipment or activities like gasoline or diesel fuel storage or dispensing, degreasers for machine parts, storage silos, and on-the-farm operations for manufacturing feed would be considered "otherwise subject to district regulation." This is not a complete list, however. 
 

II. Removing the Permit Exemption

The bill eliminated the permit exemption language in the Health & Safety Code in its entirety. This allows California law and implementing regulations to conform with federal law and implementing regulations, which do not exempt agricultural sources of air emissions. As a result, agricultural sources may now be required to obtain air permits from the local air district with jurisdiction. The bill sets up some more specific guidance and requirements, but ultimately it will be up to individual air districts to determine how to implement the bill, and local air quality and source contribution may affect permitting requirements in a given district. The air districts are working together to identify common approaches and promote consistency across the state, but different regions have substantially different air quality needs, and this will affect both the thresholds of applicability (see Appendix C), and types of emission mitigation measures that are required (see Sections IV and V). 

III. Establishing specific Permitting and Exemption requirements

The bill addresses general air permits for agricultural sources in five groups: (a) Sources subject to federal permitting requirements; (b) Sources whose actual emissions equal or exceed 50% of the major source threshold; (c) Sources whose actual emissions are less than 50% of the major source threshold; (d) Sources that are de minimis; and (e) Sources that implement all listed mitigations. Each of these areas is discussed below. 

a) Sources subject to Federal Permitting requirements

The bill requires districts to ensure compliance with federal requirements for permits under Title I and Title V of the federal Clean Air Act, consistent with those requirements. Title I permits are required for new "major sources," or for existing "major sources" that are undertaking "major modifications", before the source begins construction. The Act requires that sources subject to this "New Source Review" use the best measures to reduce or mitigate emissions from the new or modified operation. The source may also be required to provide emission reductions to offset the emission increases associated with the new or modified operation. As described in Section I (c) above, Title V permits are required for existing "major sources."

1) New Source Review (NSR): SB 700 requires "any agricultural source that is required to obtain a permit pursuant to Title I … to obtain a permit in a manner consistent with the federal requirements." The bill also specifies that this be done through district regulations. This section applies to new major sources and major modifications, which are defined in the federal regulations based on an area’s attainment status. However, once a source triggers NSR, the applicable requirements will be determined by the district’s federally approved local NSR rule, unless the district develops a new rule and that rule is submitted for federal approval. In areas where the NSR thresholds are high, and new, large agricultural operations are not common, there may be sufficient time for the district to adopt a new rule to implement SB 700 permitting requirements. In areas where the threshold is lower, and where it is likely that new agricultural operations will reach NSR thresholds sooner, the district will probably not have sufficient time to develop a new, federally approvable rule, and will therefore have to use its existing program.

Agricultural sources that were in existence prior to January 1, 2004 and are now being permitted will be considered "grandfathered" under NSR, which means they are not subject to this review until they are modified. Existing Agricultural sources that undertake a modification and new agricultural sources which initiate construction or installation after January 1, 2004, may be subject NSR if their emissions reach the applicable thresholds for a "major source" and "major modification" (see Appendix C). The timeline for submitting permit applications, and the specific requirements that apply will be determined by the applicable regulations of the local air district.  

i) Best Available Control Technology (BACT): Generally speaking, "BACT" is the best technology or practice for reducing emissions from a source, that is either technologically feasible and cost-effective, OR it has been achieved in practice at other similar sources. Typically, this is a top-down review of technology and practices, where the most effective reduction strategy is considered first and is required if it has been achieved in practice at another similar source. If it has not been achieved in practice, the strategy will be required if it is feasible and cost-effective for the source. If the most effective strategy is not feasible or cost-effective, the next most effective strategy is considered. Each air district has a definition in its regulations for "BACT" and that definition will govern the specifics of the control requirement and the process by which the requirement is determined and costs are considered. Many districts also have guidance materials available to assist in this process, and there are also compilations, or clearinghouses, of BACT determinations that can be consulted.

ii) Emission Reduction Credits (ERCs) and Offset requirements: Sources that are subject to federal NSR are required to offset the emissions they increase by providing emission reductions. This is generally done with emission reduction credits, or ERCs. There are very strict federal requirements for the "quality" of ERCs that can be used to offset emissions increases under NSR. The emission reductions must be (1) real, (2) permanent, (3) quantifiable, (4) enforceable, and (5) surplus. Over time, EPA policies and court determinations have established fairly rigorous definitions and tests for each of these terms. 

For certain agricultural operations, it is difficult to demonstrate that emission reductions are real, permanent, quantifiable, enforceable, and surplus – as those terms are defined by EPA and case law. Under SB 700, the air districts are prohibited from requiring offsets for sources for which the above demonstration cannot be made. These sources may include, for example, crop farm fugitive dust, agricultural burning, and non-equipment operations at CAFs. When it becomes possible to demonstrate that emissions (increases and reductions) are real, permanent, quantifiable, enforceable, and surplus, ERCs may be granted and offsets required. A program to allow this would have to include a regulation that is approved by EPA and incorporated into the State Implementation Plan (SIP). Such regulations specify appropriate quantification methodologies, and other provisions that ensure the reduction meet all the applicable tests, and the regulatory process allows for public review and comment.

To date, California air districts have not succeeded in gaining EPA approval to issue ERCs for agricultural activities. This has been the case even for reductions from on-the-farm equipment that is similar to traditional stationary sources. Therefore, ERCs will not be granted, nor will offsets be required for agricultural sources until the local district has adopted the needed regulations, and EPA has approved those regulations and incorporated them into the SIP.  

The local regulation that implements federal Title I review for agricultural sources will need to specify the offsetting requirements for sources subject to federal NSR. For an air district to provide exemptions from this requirement, they must have EPA approval and may need to make certain adjustments in their SIP-approved NSR regulations, until a SIP-approved rule enabling the district to grant ERCs for agricultural sources is in place.

2) Title V: SB 700 does not change the applicability criteria or timelines associated with Title V permitting. Applicable federal regulations and air districts’ federally approved Title V programs establish the requirements and timelines for Title V applications and permits. For instance, fugitive emissions will generally not have to be included when determining Title V applicability (see Section I (c) above). Title V permit applications will not be due until January 1, 2005, unless the air district establishes an earlier submittal date.

Once a source is subject to Title V, all emission sources have to be included in the Title V permit, unless the source has been listed as "insignificant" on a federally approved list. The air districts will provide application forms and guidelines to help with the application process. When a complete application is submitted to the local district, the district drafts the permit, which is then subject to public comment and review by U.S. EPA. The permit becomes final only after EPA approves it. A Title V permit is valid for five years, subject to the conditions specified in the permit and in the local Title V program regulations. It must be reopened and revised when certain significant changes occur; these are outlined in the local Title V regulations as well.

The Title V regulations also specify timelines for permit actions. All Title V permits have to be issued within three years, with one third issued each year.

b) Sources whose actual emissions equal or exceed 50% of the major source threshold:

The bill requires air districts to issue permits to sources that reach or exceed this "50%" threshold, unless the district board makes certain findings; Appendix C lists both thresholds ("major" and "50%") for each air district. The bill specifies that the threshold is based on "actual" emissions, which is different from "potential to emit." It also specifies that "fugitive dust" is excluded from the calculation of "actual" emissions. Examples of "fugitive dust" would include the particulate matter (dust) created when soil is disturbed by vehicle traffic, or during operations like discing and harvesting. Although fugitive dust is excluded when calculating emissions for this threshold, other types of fugitive emissions are not excluded.

1) Calculating "actual" emissions for the "50%" threshold: It is easier to calculate actual emissions for existing sources, because usually there are historical records of activity that can be used to estimate emissions. For example, records of fuel use can be used to calculate combustion emissions from an engine, and the number and type of fuel tanks would be used to calculate evaporative emissions of reactive organic gases. Emissions are calculated on an annual basis, which helps account for some seasonal variation in activity. If there is significant variation from one year to the next, the highest emission level is used because that level has been shown to be part of a reasonably foreseeable operating scenario. To compare emissions to the threshold, emissions of a pollutant (e.g., particulate matter) from all equipment and activities are added together and compared to the threshold for that pollutant. This is done for each pollutant. If the total emissions of any pollutant reach the "50% threshold, then a permit is required. Once a permit is required, all pollutants may be covered in that permit, not only the pollutant which exceeded the threshold.

New sources do not have historical records. For local permitting requirements, districts generally use an estimate based on a conservative but reasonable scenario using information they have about similar operations. If this information is either not available or is deemed not to apply in a particular case, actual emissions are the same as the source’s potential to emit.

2) How existing agricultural sources are affected: Beginning January 1, 2004, existing sources with actual emissions (including fugitive emissions other than fugitive dust) at or above one half the major source thresholds, for any single pollutant, will be subject to local permitting requirements, unless the local rule specifically exempts them. Some districts have rules that specifically exempt agricultural operations, others relied on the exemption in state law without specifically restating it. In order to comply with SB 700, any district with permitting rules that currently exempt agricultural sources will have to change the rules, or adopt a new rule for permitting agricultural sources with actual emissions at or above the 50% threshold.

The bill does not provide any grace period to locate existing sources, estimate their emissions, or provide application materials. Nor does it provide a grace period for sources that self-identify to submit an application. Most districts, however, have a process to permit sources that previously enjoyed an exemption but are no longer able to use it. When an exemption is lost, most districts will establish a reasonable grace period for applications to be submitted. They publish notices (and use other mechanisms) to alert affected sources that the exemption is lost and the grace period in effect. The sources that apply and receive permits are not reviewed as "new" sources, rather as sources with a "loss of exemption." This means that BACT and offsets are not required, but the source may be subject to emission reduction requirements under other local prohibitory rules (see paragraph (4), below). Sources that fail to submit applications during the grace period may face enforcement action.

Once a source has been issued a permit, the activities at the source have to comply with the conditions of the permit or the source may face enforcement action. Permits are generally valid for a one year term and are renewed annually. If the source proposes an operational or physical change that constitutes a "modification" under the applicable district rules, or under Title I (see Section III (a) (1), above), the change would require a pre-construction permit. The local district can help clarify whether a change constitutes a "modification."

The requirement for existing sources to obtain a local permit is separate from the requirement to obtain a Title V permit. Air districts have separate programs for local and federal permits. This is primarily because local permits cannot substitute for federal permits, and permits issued under Title V are subject to additional restrictions and processes, which makes changing them more difficult. Although the permits and processes are separate, some districts may be able (consistent with applicable regulations) to coordinate the application process for local and Title V permits to avoid duplication. Title V is discussed in Section III (a) (2), above.

3) How new agricultural sources are affected: Effective January 1, 2004, new agricultural sources with actual emissions at or above the "50%" threshold will be subject to permits. If the source also triggers federal NSR, the source will be required to use BACT, and possibly provide offsets (see Section III (a) (1), above). Some districts are required under the California Clean Air Act to have additional, local NSR provisions. Most districts in this situation have a consolidated rule for federal and local NSR. In these districts, a new agricultural source that reaches the "50%" threshold may be subject to local NSR requirements, including new source emission controls and possibly offsets, as determined by the local rules. The applicability of NSR and the timelines for application submittal and processing will be determined under the local rules. In most air districts, the sources will have to obtain permits before initiating construction or installation.

If neither federal nor local NSR applies, the source would not be subject to new source emission controls or offsets, but there may be emission control requirements under other local prohibitory rules (see paragraph 4, below).

Permits will not be required for new agricultural sources when actual emissions are expected to be less than one-half the major source threshold, unless the district board has made certain findings in a public hearing (see paragraph (c) (4), below).

4) How existing prohibitory rules may apply: Local air districts have rules other than permitting rules. The rules are adopted to directly reduce the air pollution emitted from a specified group of sources to which a particular rule applies, whether the source is new or already existing. These rules generally prohibit emission of one or more pollutants above the levels in the rule, or under certain conditions, or they prohibit the operation of a source without the use of specified controls, fuels, or other emission reduction techniques. For this reason, they are called "prohibitory" rules. An example would be the prohibition against operating a gasoline dispensing system that pumps more than a specified amount of gas each month without approved vapor recovery equipment. Another example would be a prohibition against releasing particulate matter emissions in such a way that the emissions plume exceeds a specified opacity limit.

Prohibitory rules apply to both new and existing sources. Sometimes they have different requirements for different classes of sources, such as older sources or sources that only experience limit use, but not always. Some of these already existing prohibitory rules may specifically exempt or exclude agricultural operations, but many do not. For example, in some districts, prohibitory rules apply only to sources that require permits. If a prohibitory rule does not specifically exempt agricultural operations, and an agricultural source has equipment, or employs a practice, that is otherwise within the scope of the rule, then the rule applies and the source will have to comply with it. If the source will need additional time to comply, the source can apply for a temporary "variance" from the requirement. Variance requests are heard by the district’s Hearing Board and before one can be granted, the Hearing Board must make certain findings that are specified in state law. Variances are granted for a finite period, and variances cannot be granted to avoid the requirement to obtain a permit.

Air districts have been reviewing their existing prohibitory rules to identify rules that will apply to agricultural sources, now that the permit exemption has been removed. A district may find that some of these rules need to be amended, either to add or remove exemptions for agricultural sources, or to revise requirements. Any changes to a prohibitory rule have to be made through a public hearing and approved by the district’s governing board. Almost all prohibitory rules are also included in the SIP, and therefore undergo a federal review as well. This means that changes can take considerable time and resources. Each district will determine which, if any, existing prohibitory rules should be changed, based on the way the local rules are written, the impacts of changing or not changing a rule, and the resources available. If a district plans to change a rule to exempt agricultural sources, the source may be able to obtain a variance from those requirements until the change is effective. If, on the other hand, a district plans to change a rule to include agricultural sources, the sources can participate in the rule development process and the rule, once changed, would provide a reasonable compliance period. Good communication between the district and the potentially affected sources will help clarify how existing prohibitory rules apply. 

5) The findings a district board must make to exempt larger sources: After reviewing local air quality problems, and the nature and contribution of agricultural sources to those problems, a district may determine that it does not need to permit some of the agricultural sources that exceed the "50%" threshold. The district cannot exempt sources from federal permitting under Title I and Title V, however, so the group of sources to which this might apply are those that havepotential emissions smaller than the major source threshold, and actual emission larger than half that level. Although the bill does not specifically require regulatory action, such an exemption would have to be included in whatever rule governs the permitting of agricultural sources in order for it to have effect. The bill does specify that before it exempts any of these sources, the district board must make specific findings, in a public hearing. The findings are listed below, and all three of the findings must be made before an exemption can be granted. However, the findings do not need to be made for each source individually; it can be made for a group of sources all at once, provided that the findings apply to all sources within the group. 

•  The source is required to obtain a permit under another provision of the bill because it is a large Confined Animal Facility (see Sections I(a) and V). This means that other types of agricultural sources (i.e., field or tree crops) that exceed the "50%" threshold cannot be exempted from permits. Further, any large CAF that would be exempted under this provision must have a permit as required for large CAFs, so this provision does not provide an exemption from permits altogether.
•  The permit is unnecessary to impose or enforce reductions in emissions that cause or contribute to the violation of a state or federal ambient air quality standard. This essentially means that the district board must find that there are no emission reduction requirements that apply to the source (or group of sources), and that none need be imposed in order to reach attainment of air quality state and federal ambient standards. Alternatively, the district board could find that requirements do apply, or may need to be imposed, but that a permit is not necessary to impose or enforce these requirements.
•  The requirement to obtain a permit would impose a burden on the source (or group of sources) that is significantly more burdensome than the burden faced by other similar sources that are required to obtain permits. Similar, in this case, could mean that the magnitude and types of emissions are the same, the types of equipment used are the same, and/or certain business aspects (such as whether the source meets the criteria to be considered a "small business") are the same. Once the "similar" sources are identified, in order to make the finding, the district board would have to compare the resources needed for the sources to obtain a permit, and show that the burden is significantly greater for the agricultural source(s). 

c) Sources whose actual emissions are less than 50% of the major source threshold:

The bill directs air districts to exempt from permits those agricultural sources that are below the "50%" threshold (see Appendix C for thresholds), unless the district board makes certain findings. For this provision, the bill specifies that "actual" emissions be the basis for applicability, and that "fugitive dust" be excluded from applicability calculations (for more detail on this, see the explanations in Section III (b), above).

1) How existing agricultural sources are affected: A source that can show, using historical data and/or an analysis of reasonably foreseeable operating scenarios that its emissions will not exceed the "50%" threshold does not need to apply for a permit, as long as its potential to emit does not reach the threshold for "major source" (see Section I (c)). The exemption only applies for as long as the actual emissions and potential emissions remain below their respective thresholds, however (actual : "50%", and potential : major source). It is important to note that even if the actual emissions remain below the "50%" threshold, the sources potential to emit (i.e., capacity) may exceed "major source" thresholds. Some districts have existing regulatory frameworks to address this discrepancy, but if the district does not, then a Title V permit would be required and a local permit would not.

Once physical or operational changes result in actual emissions above the "50%" threshold, the source must apply for a local permit, and local NSR may apply to the changes. The changes may also cause the potential to emit to exceed "major source" thresholds, in which case Title V permits would be required and federal NSR may apply to the changes as well.

2) How new agricultural sources are affected: As explained in Section III(b), above, it is more difficult to establish "actual" emission levels for a new source, and in some cases this means that "actual" and "potential" are the same. Any new source that demonstrates its emissions are below the applicable thresholds will not be required to obtain permits. Again, because the local "50%" threshold is based on actual emissions, and the federal "major source" threshold is based on potential to emit, they function separately and it is possible to be exempt from one but not exempt from the other.

3) How existing prohibitory rules may apply: A more complete discussion of prohibitory rules is provided in Section III (b) (4), above. The important consideration for sources exempt from permits is that some prohibitory rules apply even if permits are not required. In fact, unless the rule states otherwise, it generally applies regardless of whether the source is also required to obtain a permit. Local districts are working to identify prohibitory rules that will now apply to agricultural sources. It is important that lists of these rules be made available to the agricultural community, but sources should also check with their local district to make sure they know what their requirements are.

4) The findings a district board must make to permit smaller sources: After reviewing local air quality problems, and the nature and contribution of agricultural sources to those problems, a district may determine that it needs to permit some of the agricultural sources that are below the "50%" threshold. Before it can do this, the district board must make certain findings in a public hearing. Although the bill does not specifically require the threshold change to be incorporated in a rule, for practical reasons permitting thresholds are generally incorporated into the permitting rule. The bill does specify that all of the following findings be made, however:

• The source is not subject to other permit requirements for large Confined Animal Facilities as specified in other provisions of the bill (see Sections I (a) and V). This means that district board may set lower permitting thresholds for agricultural sources that do not involve confined animals (such as field and tree crops); it may also set lower thresholds for CAF operations that are not defined as "large" by the state Air Resources Board (again, see Section V).
• The permit is necessary to impose or enforce reductions of air pollutants that cause or contribute to a violation of a state or federal ambient air quality standard. To make this finding, the district board would have to show that a permit is necessary to enforce the emission reduction requirements of existing rules, or that a permit is necessary to help the district develop or enforce new emission reduction requirements. In either case, the emission reduction requirements must address emissions that cause or contribute to a violation of state or federal ambient air quality standard.
• The requirement to obtain a permit would not impose a burden that is significantly larger than the burden placed on other similar sources that are required to obtain permits. Similar, in this case, could mean that the magnitude and types of emissions are the same, the types of equipment used are the same, and/or certain business aspects (such as whether the source meets the criteria to be considered a "small business") are the same. Once the "similar" sources are identified, in order to make the finding, the district board would have to compare the resources needed for the sources to obtain a permit, and show that the burden is not significantly greater for the agricultural source(s). 

d) Sources whose emissions are de minimis

The bill allows districts to exempt from permits and other requirements of the bill any agricultural sources whose emissions of nitrogen oxides, volatile orgranic compounds, and particulates are each less than one ton per year. The bill does not specify the basis for evaluating the emissions. In order to be consistent with other exemption criteria, the districts believe this determination should be based on actual emissions. The bill also does not specify that the exemption be included in a regulation, but it does require a public hearing to make the finding that emissions are de minimis. For practical reasons, a district choosing to allow this exemption is likely to implement it through the applicable permitting rule.

e) Sources that implement all listed mitigations

The bill allows districts to adopt a rule that exempts from permits and other requirements any source that mitigates its emissions from all of the types of activities and equipment listed in the bill. This list includes:

•  Removing all internal combustion engines used in the production of crops or the raising of fowl or animals (except an engine that is used to propel implements of husbandry) at the source, and replacing them with engines that meet or exceed the most stringent standards adopted by the state board and the U.S. EPA.
•  Reducing or mitigating emissions from all agricultural activities, including (but not limited to) tilling, discing, cultivation, the raising of livestock and fowl, and similar activities, to a level that the district determines does not cause or contribute to a violation of a state or federal ambient air quality standard, a toxic air contaminant standard, or other air limitation.
•  Reducing or mitigating all emissions from any farm equipment, underground petroleum fuel tanks, or other similar equipment used in agricultural activities to a level that the district determines does not cause or contribute to a violation of a state or federal ambient air quality standard, a toxic air contaminant standard, or other air limitation.

The bill specifically states that this exemption must be adopted as a program, which means it is a regulatory action. Because the bill also states that nothing in the bill can relieve a source of the requirement to obtain federal permits, this exemption does not apply to federal NSR or to Title V. 

f) Summary and Timing

The primary considerations for most sources to determine their permitting requirements will be how their emissions (actual and potential) compare to permitting thresholds (local and federal). The schematic below shows how SB 700 sets forth basic permitting requirements. This does not include the exemptions for de minimis or fully mitigated emissions. It also does not include the permit requirements that apply specifically to Confined Animal Facilities. Most importantly, it does not reflect the discretion districts have to set other thresholds under SB 700 as well as under federal and state statutes, except by marking with an asterisk (see * in chart below) the circumstances where that is possible. It is also important to remember that thresholds will vary from district to district based on the attainment status of the district, and NSR thresholds are different.

As stated previously, the bill does not specify timing for general permitting; while there are no deadlines, there is also no grace period. In cases where local rules need to be amended, or new rules adopted in order to implement the general permitting requirements of SB 700, the district should move expeditiously with the necessary rule adoption.

Within the framework of applicable local rules, new sources and modifications to existing sources need permits before construction.

Existing sources that require Title V permits have one year to submit their application and the district has a maximum of three years to process all applications submitted, under the federal Title V program. Air Districts intend to expedite their review to the degree feasible, however districts may adopt rules to require Title V applications sooner, so they can begin processing them in a timely manner. For existing sources that do not need federal permits, the district may adopt a schedule for them to apply under a loss-of-exemption status which can shield them from enforcement action for failure to have a permit. If no loss-of-exemption schedule is adopted, existing sources should file applications as soon as they can, to minimize the potential for enforcement. Districts will process permit applications according to their local rules and procedures.

IV. Emissions control in federal nonattainment areas for PM10

The bill requires a district to adopt by regulation a set of measures to reduce emissions from agricultural sources, if the district does not meet any of the federal ambient air quality standards for particulate matter. The requirement applies in areas that have been designated as "serious" or "moderate" nonattainment by January 1, 2004. The San Joaquin Valley APCD and the South Coast AQMD were both designated "serious" as of that date. Imperial County APCD, the Mojave Desert AQMD, and Sacramento County are designated "moderate" nonattainment. The Great Basin AQMD (with Inyo, Mono, and Alpine counties) has three sub-regions that are designated "moderate" nonattainment and one sub-region that is designated "serious." The situation there is unique in that the air quality is heavily influenced by episodic wind-blown dust from dry lake beds.

a) Serious PM Nonattainment Areas

The bill establishes requirements for the local district to adopt a regulatory program, including the degree of emissions mitigation it must contain, the schedule for program adoption, and procedural requirements to ensure that standards for agricultural engines are commensurate with engine standards for other source categories. For emissions mitigation and the adoption schedule, the bill states the following:

Each district that is designated as a serious federal nonattainment area for an applicable ambient air quality standard for particulate matter as of January 1, 2004, shall adopt, implement, and submit for inclusion in the state implementation plan, a rule or regulation requiring best available control measures (BACM) for sources for which those measures are applicable and best available retrofit control technology (BARCT) for sources for which that technology is applicable for agricultural practices, including, but not limited to, tilling, discing, cultivation, and raising of animals, and for fugitive emissions from those agricultural practices, in a manner similar to other source categories but the earliest feasible date, but not later than January 1, 2006. The rule or regulation shall also include BACM and BARCT to reduce precursor emissions in a manner commensurate to other source categories that the district shows cause or contribute to a violation of an ambient air quality standard. Each district that is subject to this subdivision shall comply with the following schedule with respect to the rule or regulation imposing BACM or BARCT:

•  On or before September 1, 2004, notice and hold at least one public workshop for the purpose of accepting public testimony on the proposed rule or regulation.
•  On or before July 1, 2005, adopt the final rule or regulation at a noticed public hearing.
•  On or before January 1, 2006, commence implementation of the rule or regulation.

b) Moderate PM Nonattainment Areas

By the earliest feasible date, but no later than January 1, 2007, each district that is designated a moderate nonattainment area for an applicable ambient air quality standard for particulate matter as of January 1, 2004, shall adopt and implement control measures necessary to reduce emissions from agricultural practices, including but not limited to, tilling discing, cultivation, and raising of animals, and from fugitive emissions in a manner similar to other source categories from the activities by the earliest feasible date. Control measures adopted and implemented pursuant to this section shall also be implemented by the district to reduce precursor emissions in a manner commensurate to other source categories that the district shows cause or contribute to a violation of an ambient air quality standard.

A district is not required to implement the above control measures if it determines in a public hearing that agricultural practices do not significantly cause or contribute to a violation of state or federal standards.

c) Best Available Control Measures (BACM)

Air pollution control programs address both traditional and non-traditional types of sources. Traditional types of sources generally include industrial and commercial operations where the pollution is emitted from an exhaust pipe or stack, or the entire area is in some way enclosed so that emissions can be collected and treated. In other words, the emissions are generally not "fugitive", although fugitive emissions also occur at traditional sources and are subject to mitigation strategies. Non-traditional types of sources would include such agricultural activities as discing, tilling, and travel on unpaved roads, where the pollutant of concern is the fugitive dust emitted when the soil is disturbed. Certain activities associated with raising animals would also be considered non-traditional. The concept of "Best Available Control Measures" or "BACM" was developed to characterize a higher standard of mitigation from non-traditional sources in areas with serious particulate nonattainment problems. The term is defined in federal regulations, and in order for a mitigation measure to be approved as "BACM" by EPA, it must meet several specific tests. Both the San Joaquin Valley and the South Coast air districts have developed rules to implement BACM, including requirements for minimizing dust at construction sites, the planting and stabilizing of exposed soils, and enclosing storage of dry materials, as well as other mitigation strategies. These rules are also being updated under SB 700 and other requirements.

d) Best Available Retrofit Control Technology (BARCT)

This is term characterizes a standard of emissions control from existing, traditional sources. Under federal air pollution programs for traditional sources, different levels of control are expected of new sources (best available) and existing sources (reasonably available), with the understanding that there are more options available at greater cost-effectiveness when a source is being designed, than there are after it is built, especially if it was built a long time ago. California law established an intermediate level of control that is the "best available" for "retrofit" to existing sources, recognizing that the state’s air pollution problems may demand more effective pollution control than what is usually considered "reasonably available." Local air districts have adopted many rules to implement BARCT, including particulate control efficiency standards and limitations on exhaust pollutants such as nitrogen oxides, or technology-based requirements that dictate the use of particular control device or something that is equally effective.

e) Precursor Emissions

This section of the bill specifically requires that "precursor" emissions be controlled. Emissions are considered "precursor" if they react with other pollutants to form the pollutant of concern. For example, ozone is a pollutant of concern but it is rarely emitted directly; nitrogen oxides react with many organic gases to form ozone in the presence of sunlight. So the air districts regulate the nitrogen oxides and the organic gases to reduce the formation of ozone. Nitrogen oxides also react with ammonia to form fine particles, and several size fractions of particles in the air are considered pollutants of concern, so nitrogen oxides and ammonia are "precursor" pollutants to particulate matter. Other commonly emitted pollutants can react to form particulate matter as well, such as sulfur compounds and certain organic gases, and these would also be considered "precursor" pollutants for particulate matter. The local district use emissions inventory information, meteorology, and computer models to determine which pollutants need to be reduced by how much in order for the air quality to improve.

f) Procedures for Regulating Engines

The bill contains provisions designed to ensure that engines at agricultural operations are regulated in the same way that engines are regulated when they are associated with other types of operations. The district has to evaluate certain aspects of the regulation and ensure that these aspects are "commensurate" or "similar" to regulations for engines at other sources. The aspects to be considered include:

•  Engine size and duration of use
•  Degree of emissions control
•  Cost effectiveness of emissions control

The bill also requires that the district prioritize the adoption of control measures under this section to ensure that the most cost effective measures are adopted first, unless the district finds a different order is necessary. A different order can be justified if it is needed for reasons of enforceability, technological feasibility, or the willingness of the public to accept the measure, or if the different order of adoption is needed to expeditiously attain or maintain attainment of an ambient air quality standard. 

V. Permits & Emissions Mitigation for large CAFs

Confined Animal Facilities, whether defined as "large" or not, are subject to the general permitting thresholds and requirements described in Section III, including permits for existing sources [and] permits for new or modified sources. SB 700 sets out additional requirements for "large" Confined Animal Facilities, however, and those additional requirements are described below.

Basically, the bill requires the state Air Resources Board to establish a definition for "large" CAFs. It requires districts to adopt rules that require "large" CAFs to obtain permits and to implement emissions mitigation. The degree of mitigation required is based on the district’s federal classification for ozone attainment. Districts that attain the federal ozone standards may be excused from adopting these rules if they make a showing that agricultural sources in the district are not causing or contributing to a violation of a state or federal ambient air quality standard.

a) Defining "large" CAF

SB 700 requires ARB to review all available scientific information, including but not limited to emissions factors for CAFs, and the effect of those facilities on air quality in the basin and other relevant scientific information, and develop a definition for the source category of "large" CAF. The definition must be adopted in a public hearing, and the hearing must occur on or before July 1, 2005.

This means the ARB has to consider the emissions from CAFs and how those emissions affect attainment and maintenance of ambient air quality standards in air basins. An air basin is an area, usually large, where the air mixes and generally stays, although there is transport of pollution between air basins. Air districts are grouped into air basins for the purpose of planning and implementing plans to reach attainment; there are 14 air basins in California. In considering the relationship between emissions from CAFs and air quality in the air basin, ARB may find that CAFs play a different role in the air quality problem in different air basins.

The bill does not specify what basis should be used for the definition of "large" CAF. The definition of "large" could be based on tons of emissions or numbers of animals, or some other factor that the ARB determines is representative of the impact of the CAFs on air quality. The definition could, like the definition of "major source," vary between air districts, or between air basins, to reflect the differing severity of the air quality problems in the region. If this type of definition is used, the thresholds are likely to be lower in areas with more severe problems, and higher in areas where the air quality is better. On the other hand, ARB could follow the hazardous air pollutant model and choose a single definition for the entire state.

If the definition established by ARB includes CAFs whose emissions are less than one half the major source threshold in the district, the district may permit them only if it makes specified findings with respect to need and burden (see Section III (b) (5), above). 

b) Permit Requirements and Schedule for "large" CAFs

The bill requires air districts to adopt a regulation that requires any CAF that meets the definition of "large" established by the ARB to obtain a permit from the district. The districts must adopt the regulation and submit it for inclusion into the SIP by July 1, 2006, unless the district is designated "attainment" for the federal ozone standard. The regulation must do all of the following:

· Require that applications be submitted within six months of district adoption of the regulation.
Application Due Date

· Require the application to include the information the district determines is necessary to prepare an emissions inventory of all the air pollutants (including fugitive emissions) emitted from the CAF, and an emissions mitigation plan (see paragraph (c), below).
Application Content

· Provide a public comment period of at least 30 days on the draft permit, before the district takes final action.
Public Comment on Permit

· Require the district to take final action to approve or deny the application within six months after the district determines it is complete.
Deadline for Final Action

· Establish a compliance schedule for the owner or operator of the CAF to implement the mitigation plan, as approved by the district and contained in the permit, that is no longer than one year after permit approval.
Plan Implementation

· Establish a permit review cycle that is no longer than three years, and require the district to review permit and update it to reflect changes in the operation, or to include or remove mitigation measures based on changes in the feasibility of such measures. These updates are to the permit not theregulation and do not need to be submitted to the SIP.
Permit Review & Updating

These are fairly standard rule elements. In plain language, they mean the district will adopt a regulation that specifies how mitigation requirements will be determined, and how permits will be required, submitted, reviewed, issued, and complied with. This process specifically provides for input by people who will be affected by the regulation, or who are interested in what it does, and it further allows people to review and comment on draft permits. Finally, the bill requires that permits be reviewed periodically after they have been issued, and that the mitigation measures in them be adjusted to reflect improvements in technology or procedures, or other changes that affect feasibility.

c) Emissions Mitigation for "large" CAFs

The bill establishes a procedure to require emissions mitigation for "large" CAFs. Rather than establish a single rule that requires the same set of mitigation measures for all the facilities in the category, however, it provides for a more tailored, case-by-case review. Under this approach, the owner or operator reviews the operation and proposes a strategy to reduce emissions "to the extent feasible." The bill provides some benchmarks for how high the standard is, based on the air quality in the area. It also provides for a clearinghouse of information on available mitigation measures (see Section VI, below) that an owner or operator can refer to for ideas.

The bill specifies that in areas with "extreme" or "severe" ozone problems (i.e., the San Joaquin Valley, the South Coast, and the Sacramento region), a "best available" for existing sources is the degree of mitigation required. This standard of mitigation is reviewed in Section IV (d), above. In areas with "serious" or "moderate" ozone problems (see Appendix C), the mitigation should include measures that are "reasonably available." The primary difference between the two levels is the extent to which measures have already been demonstrated in practice, and the cost of implementing the measures. No specific standard of control is required in areas that attain the federal ozone standard, although it is reasonable to infer that the standard would not have to be higher than "reasonably available" unless otherwise determined by the local district.

When a proposed plan is submitted to the district, the district reviews the plan and determines if it includes the required degree of mitigation. In doing this, the district will consider measures listed in the clearinghouse, measures identified in other plans, the size and nature of the facility, any unique circumstances that may affect feasibility and cost, and other appropriate factors. If the plan does not seem to include the required degree of mitigation, the owner or operator will have an opportunity to provide additional data and/or mitigation, and the district may identify specific measures that need to be included. Before the final plan is approved as part of the CAF’s permit, there is an opportunity for the public to review and comment on the plan. If the owner or operator disagrees with the final decision of the district, an appeal can be brought before the district’s hearing board. 

d) Procedures to Assess Other Impacts of Rulemaking:

The bill specifies procedures for the air districts to follow to evaluate and "make a good faith effort" to minimize the adverse impacts of rulemaking activities. The district has to consider:

•  the number and type of sources affected 
•  the nature and quantity of emissions
•  the potential for reductions in emissions
•  the range of probable costs
•  the availability and cost-effectiveness of alternatives
•  the technical and practical feasibility
•  additional information that is submitted to the district board

Before the regulation can be approved, the district’s governing board has to review the staff’s evaluation of adverse impacts and the efforts made to minimize them, in a public hearing.

e) Areas that Attain the federal Ozone Standard

The bill recognizes that areas that are designated "attainment" for the federal ozone standard face different circumstances than those that do not attain the standard. It does not require these districts to submit their rules for approval into the SIP, because the SIP is a compilation of rules adopted for the purpose of reaching attainment.

The bill also allows areas that already attain the federal ozone standard to make a demonstration that "large" CAFs do not cause or contribute to a violation of an ambient air quality standard, and therefore it is not necessary to adopt the regulation to permit them and mitigate their emissions. This demonstration is likely to include a review of ambient air quality data (including the nature and timing of elevated pollutant levels), and analysis of the local emissions inventory (including identification of the major contributors to elevated pollutant levels). Areas that may be able to make this demonstration include areas where elevated pollutant levels are the result of overwhelming transport from other regions, mountain areas where there are no "large" CAFs, or areas where violations of ambient standards are limited to the particulate standards and are clearly caused by wintertime combustion of wood for residential heating. This is not a complete list, however, and other areas may be able to make the demonstration as well.

Air districts with similar air quality and emission inventories may be able to collaborate on a demonstration to share their resources, and the ARB has agreed to work with these districts in developing the demonstration.

VI. Mitigation Clearinghouse

The bill calls for a clearinghouse of mitigation measures or strategies available for agricultural sources. It assigns the task of creating and maintaining the clearinghouse to the California Air Pollution Control Officers Association, or CAPCOA, with a deadline of January 1, 2005. The bill lists several specific areas that should be included in the clearinghouse, as follows:

•  Operations that create fugitive dust emissions, including but not limited to, discing, tilling, material handling and storage, and travel on unpaved roads.
•  Confined animal facilities.
•  Internal combustion engines used in agricultural operations.
•  Other equipment, operations, or activities associated with the growing of crops or the raising of fowl or animals, that emit, or cause to be emitted, any regulated air pollutant, or any precursor to any air pollutant.

The clearinghouse is intended to assist in the development of the rules and plans required in the bill. It can also be used by permitting agencies when a new agricultural source triggers New Source Review, or by anyone running an agricultural operation who wishes to minimize air pollution in order to be a good neighbor. 

Source: CAPCOA Web Site -  http://www.capcoa.org/sb_700.htm

Info at ARB web site: http://www.arb.ca.gov/planning/agriculture/agriculture.htm

The San Joaquin Valley Unified Air Pollution Control District: www.valleyair.org/
Current focus is on the San Joaquin Valley as they have some of the largest Ag operations in California and an "extreme category" air pollution problem - agricultural activities are significant contributors to the problem. The SJVUAPCD covers eight counties including San Joaquin, Stanislaus, Merced, Madera, Fresno, Kings, Tulare and the valley portion of Kern.