"3-year average of annual 98th percentile"

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I was reading the limits on particulates, in particular the allowed number of exceedences for PM2.5 in the USA

and I stumbled upon this:

"3-year average of annual 98th percentile"

I'm not very familiar with percentile calculations, but I came here asking for help because I'm not a native English speaker and I have some trouble understanding this phrase.

What exactly does it mean? (no pun intended)

Is this limit saying that the "3-year average" value must be in the 98th percentile of the year?

(But, if that's the case, which year out of the last three?)

This is getting me so confused.

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Each year, find the value that is larger than 98% of the measurements and smaller than 2% of them. This is the 98th percentile for that year.

Once you have found the 98th percentile for each year, take the 98th percentiles you found for the three last years and compute the average of those three numbers.

That's the 3-year average of annual 98th percentiles.