1. © Jeffer, Mangels, Butler & Marmaro LLP 1 Programmatic New Source Review November 2, 2005 Malcolm C. Weiss Jeffer, Mangels, Butler & Marmaro LLP 1900 Avenue of the Stars Los Angeles, CA 80067 (310) 712-6822 mweiss@jmbm.com 3748292

2. © Jeffer, Mangels, Butler & Marmaro LLP 2 Responsible Agencies  Federal – U.S. Environmental Protection Agency (implements CAA, sets goals, national policies and regulatory framework)  State – California Air Resources Board (mobile sources, coordinate with local/federal agencies, state standards, SIP)  Local – Air Quality Management Districts (SCAQMD) (stationary sources, permitting, prohibitory rules, compliance, AQMP, MR&R)

3. © Jeffer, Mangels, Butler & Marmaro LLP 3 Clean Air Laws Overview  1970 – Fed. Clean Air Act Adopted  1977 – Major Amendment to CAA  1988 – California CAA  1990 – Major New Amendments

4. © Jeffer, Mangels, Butler & Marmaro LLP 4 1970 Clean Air Act  First major federal air legislation  U.S. EPA created (ARB created in 1967)  Earth Day - April 22, 1970

5. © Jeffer, Mangels, Butler & Marmaro LLP 5 1970 Clean Air Act (cont.)  Authority delegated to states  Establishes National Ambient Air Quality Standards (NAAQS)  State Implementation Plans required  Begins national permit programs  New Source Review (NSR)  States to meet NAAQS by 1975

6. © Jeffer, Mangels, Butler & Marmaro LLP 6 1977 CAA Amendments  Gives states more time to meet NAAQS  Expands NSR  Applicable to new sources  Major modifications at existing facilities  Review of NAAQS by 1980  Attainment and Nonattainment areas

7. © Jeffer, Mangels, Butler & Marmaro LLP 7 1977 CAA Amendments (cont.)  Basic Applicable Requirements  Prevention of Significant Deterioration of Air Quality (Part C) (“PSD”)  Plan Requirements for Nonattainment areas (Part D) (“NSR”)

8. © Jeffer, Mangels, Butler & Marmaro LLP 8 1990 CAA Amendments Overview  Title I - Attain and maintain NAAQS  Title II - Mobile sources  Title III - Hazardous air pollutants  Title IV - Control acid rain  Title V - National uniform permit system  Title VI - Stratospheric ozone protection  Title VII - Enforcement

9. © Jeffer, Mangels, Butler & Marmaro LLP 9 1990 CAA Amendments  Classifies ozone nonattainment areas – marginal, moderate, serious, severe, and extreme  Classifications trigger stringency of requirements  Extends attainment dates for extreme areas

10. © Jeffer, Mangels, Butler & Marmaro LLP 10 California Then and Now 1970  California's population is 20 million  More than 12 million vehicles  VMT is 110 billion miles 2000  California's population is 34 million  More than 23 million vehicles  VMT is 280 billion miles

11. © Jeffer, Mangels, Butler & Marmaro LLP 11 Motor Vehicle Impacts  Up to 50% of NOx and VOC (smog)  > 50% of hazardous air pollutants  90% CO in urban areas

12. © Jeffer, Mangels, Butler & Marmaro LLP 12 Air Quality Management Plan  SCAQMD  Air Quality Analysis  Overall Planning  Stationary Sources  SCAG  Transportation  Growth Management  Land Use  ARB  Mobile sources  Vehicle standards/ fuel  Consumer products  Strategies  All known control technologies  Technology forcing and incentives  Major technology breakthroughs

13. © Jeffer, Mangels, Butler & Marmaro LLP 13 Part D of Title I: Federal NSR  Permits required to construct new or modified major stationary sources  NSR and the permitting process are linked  Expanded opportunity for public comments

14. © Jeffer, Mangels, Butler & Marmaro LLP 14 Federal NSR (cont.)  New Sources - NSR is triggered only if the emissions make it a major source  Existing Sources - NSR is triggered if the modification significantly increases emissions

15. © Jeffer, Mangels, Butler & Marmaro LLP 15 Federal NSR (cont.)  Permits to Construct/Operate require that major stationary sources:  Install equipment to meet the Lowest Achievable Emission Rate (LAER)  Obtain offsets (ratios)  Demonstrate that all major sources under common ownership/control comply

16. © Jeffer, Mangels, Butler & Marmaro LLP 16 NSR Reform  Reform was urged because of the growing indication that current regulations hinder, rather than promote improvements in air quality  SCAQMD has filed a lawsuit contesting the reforms

17. © Jeffer, Mangels, Butler & Marmaro LLP 17 NSR Reform  Routine Equipment Replacement Rule (10/27/03). Equipment replacement is excluded from NSR if:  It replaces an existing process unit;  with functionally equivalent components;  the cost of the replaced is < 20% of the replacement value of the entire process unit;  the basic design of the equipment does not change; and  emissions limits not exceeded.

18. © Jeffer, Mangels, Butler & Marmaro LLP 18 Programmatic New Source Review November 2, 2005 Malcolm C. Weiss Jeffer, Mangels, Butler & Marmaro LLP 1900 Avenue of the Stars Los Angeles, CA 80067 (310) 712-6822 mweiss@jmbm.com 3748292