Approval and Promulgation of Implementation Plans; California State Implementation Plan Revision, El Dorado County Air Pollution Control District

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

EPA is finalizing three actions proposed in the Federal Register on October 5, 1999 concerning rules from the El Dorado County Air Pollution Control District (EDCAPCD). This final action will incorporate Rules 501, 520, 524, and 525 into the Federally approved State Implementation Plan (SIP). Today's action also will rescind 36 rules from the SIP. The intended effect of approving these rules is to regulate permitting of stationary sources in accordance with the requirements of the Act, as amended in 1990. EPA is finalizing the approval of these revisions into the California SIP under provisions of the Clean Air Act (CAA) regarding EPA action on SIP submittals, SIPs for national primary and secondary ambient air quality standards and plan requirements for nonattainment areas. EPA is also finalizing a limited approval and limited disapproval of Rule 523 under CAA provisions regarding EPA action on SIP submittals and general rulemaking authority because these revisions, while strengthening the SIP, also do not fully meet the CAA provisions regarding plan submissions and requirements for nonattainment areas. As a result of this limited disapproval, EPA will be required to impose highway funding or emission offset sanctions under the CAA unless the State submits and EPA approves corrections to the identified deficiencies within 18 months of the effective date of this disapproval. Moreover, EPA will be required to promulgate a Federal implementation plan (FIP) unless the deficiencies are corrected within 24 months of the effective date of this disapproval.

EFFECTIVE DATE:

This action is effective on March 3, 2000.

ADDRESSES:

Copies of the rule(s) and EPA's evaluation report for each rule are available for public inspection at EPA's Region IX office during normal business hours. Copies of the submitted rule(s) are available for inspection at the following locations:

(1) EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105;

(2) California Air Resources Board, 2020 L Street, Sacramento, CA 95814;

(3) El Dorado County Air Pollution Control District, 2850 Fairlane Ct., Bldg. C, Placerville, CA 95667-4100.

FOR FURTHER INFORMATION CONTACT:

Roger Kohn, Permits Office (AIR-3), Air Division, US Environmental Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901, Telephone: (415) 744-1238, E-mail: kohn.roger@epa.gov.

SUPPLEMENTARY INFORMATION:

I. Rules Incorporated into EDCAPCD SIP

II. Background

III. Response to Public Comments

IV. EPA Action

V. Administrative Requirements

A. Executive Order 12866

B. Executive Order 13132

C. Executive Order 13045

D. Executive Order 13084

E. Regulatory Flexibility Act

F. Unfunded Mandates

G. Submission to Congress and the Comptroller General

H. National Technology Transfer and Advancement Act

I. Petitions for Judicial Review

I. Rules Incorporated into EDCAPCD SIP

The rules being approved into the California SIP include: EDCAPCD Rules 501 (General Permit Requirements), 520 (Enhanced Monitoring and Compliance Certification), 524 (Emission Reduction Credits), and 525 (Priority Reserve). EPA is also granting limited approval (and limited disapproval) to EDCAPCD Rule 523. These rules were submitted by the California Air Resources Board to EPA on May 24, 1994 (Rules 501, 523, 524, and 525) and October 13, 1995 (Rule 520).

II. Background

On October 5, 1999 in 64 FR 53973, EPA proposed to approve Rules 501, 520, 524, and 525 into the California SIP, and to rescind 36 rules from the SIP. EPA also proposed to grant limited approval (and limited disapproval) to Rule 523. A detailed discussion of the background for each of the above rules is provided in the proposed rule cited above.

EPA has evaluated the above rules for consistency with the requirements of the CAA and EPA regulations and EPA interpretation of these requirements as expressed in the various EPA policy guidance documents referenced in the proposed rule cited above. EPA has found that the rules meet the applicable EPA requirements, with the exception of four deficiencies in Rule 523. A detailed discussion of the rule provisions and evaluations, including the Rule 523 deficiencies, has been provided in the proposed rule and in the technical support document (TSD), dated September 16, 1999, which is available at EPA's Region IX office.

III. Response to Public Comments

A 30-day public comment period, which ended on November 4, 1999, was provided in 64 FR 18858. EPA received one comment letter on the proposed rulemaking, from EDCAPCD. The comments have been evaluated by EPA and a summary of the comments and EPA's responses are set forth below.

Comment: EDCAPCD agrees to change the offset ratio for emission reductions that occur at a source that is within a 15 mile radius and within the District to 1.3 to 1.0.

Response: EPA and EDCAPCD are in agreement on the necessity to revise Rule 523 to meet the offset ratio requirement of section 182(d)(2) of the CAA.

Comment: EDCAPCD contends that the offset requirements in Rule 523 are more stringent than CAA requirements. The District believes that by requiring a source to offset emission increases down to the trigger level once cumulative emission changes at the source exceed specific trigger levels, the rule achieves more emission reductions than the CAA and EPA regulations require. EDCAPCD submitted a hypothetical example to document this claim.

Response: The District and EPA use different methodologies to determine if offsets are required, and if so, how many. District Rule 523 establishes offset trigger levels and requires sources, once they have exceeded these levels, to offset all future increases in potential to emit down to the trigger level. The EPA method determines offset applicability on a per project basis by subtracting a source's pre-modification actual emissions from its post-modification potential to emit (while accounting for other creditable and contemporaneous emissions increases and decreases). If the resulting emission increase triggers offsets, the source must provide offsets for the entire amount of the emission increase. EPA agrees that in most cases, Rule 523 offset requirements are more stringent than CAA requirements. However, there is one scenario in which the rule is less stringent than the CAA: new major sources. An example of this would be a new 100 ton per year (tpy) NO_X source proposing to locate in the county. The CAA requires that such a source offset all emissions, i.e., 100 tpy. However, according to the offset provisions of Rule 523, the new source would have to offset down to the trigger level of 7500 lb./quarter or 85 tpy, which is 15 tpy less than the federal requirement.

In order to address this limited approval issue, the District must revise Rule 523 to require that new major sources offset the total amount of their potential to emit, i.e., down to zero.

Comment: The District's BACT definition is more stringent than EPA's because it does not require that a rule containing an emission limit or control technique be in a state implementation plan to qualify as BACT. The definition is more inclusive and thus more stringent than what EPA requires.

Response: The District BACT definition does not explicitly include the most stringent emissions limit contained in any SIP, which is part of the EPA definition of Lowest Achievable Emission Rate (California BACT). However, EDCAPCD has clarified in writing that the District interprets the BACT definition to include the SIP provision (see letters dated November 1, 1999 and November 29, 1999 from EDCAPCD to EPA, contained in the docket for this rulemaking). As a result, EPA agrees that this limited approval issue has been satisfied, and is not requiring the District to modify the BACT definition in Rule 523. Nevertheless, in order to clarify the definition, EPA encourages the District to revise the rule to make the SIP requirement an explicit part of the BACT definition.

Comment: The District cannot remove or change the offset exemption in Rule 523 because it is mandated by California Health and Safety Code 42301.2.

Response: EPA understands that EDCAPCD is in a difficult position because it appears that state law may conflict with the Clean Air Act with respect to this exemption. Nevertheless, EPA cannot approve a rule provision into the SIP that conflicts with the Act. EPA is willing to work with EDCAPCD and the State of California to help resolve this deficiency. However, the deficiency must be addressed before EPA can grant full approval to Rule 523.

Comment: EDCAPCD questions EPA's authority to regulate interprecursor offset trading. Since there are no provisions addressing interprecursor offsets in the CAA or EPA regulations, EPA has no authority to regulate them. In addition, case-by-case EPA approval for trades would be a long, burdensome process.

Response: Section 173(c)(1) of the CAA requires that new or modified stationary sources offset emission increases of a given pollutant with reductions of the same pollutant. Since the CAA doesn't explicitly authorize interprecursor trading, a strict interpretation of the Act would prohibit air districts from allowing this practice at all in NSR rules.

Recent EPA policy has allowed interprecursor trading, particularly among ozone precursors in ozone nonattainment areas, if certain criteria are met. Consistent with this policy, the District has two possible ways to address this limited disapproval issue when it revises Rule 523. One way is to include rule language requiring written EPA concurrence for each proposed interprecursor trade. Alternatively, the District could produce a technical justification for various interprecursor offset ratios, and then revise Rule 523 to include those ratios. In this scenario, rule language requiring case-by-case EPA concurrence would not be necessary. Since the CAA does not explicitly authorize interprecursor trading, EPA's policy is to require Agency concurrence for such trades, either on a case-by-case or one time only basis if appropriate ratios are established by rule.

With respect to the amount of time required for EPA to concur on a specific trade in the case-by-case scenario, EPA would have to make its determination during the comment period provided for the draft permit. This would not delay the permit issuance process.

IV. EPA Action

EPA is finalizing this action to approve Rules 501, 520, 524, and 525 for inclusion into the California SIP, to rescind 36 rules from the SIP, and to amend 40 CFR 52.232 to delete an obsolete requirement. EPA is approving the submittal under section 110(k)(3) as meeting the requirements of section 110(a) and parts C and D of the CAA. This approval action will incorporate these rules into the Federally approved SIP. The intended effect of approving these rules is to regulate stationary sources in accordance with the requirements of the CAA.

EPA is also finalizing a limited approval and a limited disapproval of Rule 523. The limited approval of this rule is being finalized under section 110(k)(3) in light of EPA's authority pursuant to section 301(a) to adopt regulations necessary to further air quality by strengthening the SIP. The approval is limited in the sense that the rule strengthens the SIP. However, the rule does not meet the section 182(a)(2)(A) CAA requirement because of the rule deficiencies which were discussed in the proposed rulemaking. Thus, in order to strengthen the SIP, EPA is granting limited approval of Rule 523 under sections 110(k)(3) and 301(a) of the CAA. This action approves the rule into the SIP as a federally enforceable rule.

At the same time, EPA is finalizing the limited disapproval of Rule 523 because it contains deficiencies that have not been corrected as required by section 182(a)(2)(A) of the CAA, and, as such, the rule does not fully meet the requirements of part D of the Act. As stated in the proposed rule, upon the effective date of this final rule, the 18 month clock for sanctions and the 24 month FIP clock will begin. If the State does not submit the required corrections and EPA does not approve the submittal within 18 months of the effective date of the final rule, either the highway sanction or the offset sanction will be imposed at the 18 month mark. It should be noted that the rule covered by this Federal Register has been adopted by EDCAPCD and is currently in effect in the District. EPA's limited disapproval action will not prevent EDCAPCD or EPA from enforcing the rule.

V. Administrative Requirements

A. Executive Order 12866

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, entitled “Regulatory Planning and Review.”

B. Executive Order 13132

Executive Order 13132, Federalism (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612, Federalism and 12875, Enhancing the Intergovernmental Partnership. Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.

This final rule will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132. Thus, the requirements of section 6 of the Executive Order do not apply to this rule.

C. Executive Order 13045

Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866, and (2) Concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency.

This rule is not subject to Executive Order 13045 because it does not involve decisions intended to mitigate environmental health or safety risks.

D. Executive Order 13084

Under Executive Order 13084, Consultation and Coordination with Indian Tribal Governments, EPA may not issue a regulation that is not required by statute, that significantly affects or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments. If the mandate is unfunded, EPA must provide to the Office of Management and Budget, in a separately identified section of the preamble to the rule, a description of the extent of EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation.

In addition, Executive Order 13084 requires EPA to develop an effective process permitting elected and other representatives of Indian tribal governments “to provide meaningful and timely input in the development of regulatory policies on matters that significantly or uniquely affect their communities.” Today's rule does not significantly or uniquely affect the communities of Indian tribal governments. Accordingly, the requirements of section 3(b) of Executive Order 13084 do not apply to this rule.

E. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions.

This final rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

F. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated annual costs to State, local, or tribal governments in the aggregate; or to private sector, of $100 million or more. Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule.

EPA has determined that the approval action promulgated does not include a Federal mandate that may result in estimated annual costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action approves pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

G. Submission to Congress and the Comptroller General

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This rule is not a “major” rule as defined by 5 U.S.C. 804(2).

H. National Technology Transfer and Advancement Act

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical.

The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS.

I. Petitions for Judicial Review

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 3, 2000. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Part 52, chapter I, title 40 of the Code of Federal Regulations is amended as follows:

PART 52—[AMENDED]

1. The authority citation for part 52 continues to read as follows:

Authority: 42 U.S.C. 7401 et seq.

Subpart F—California

2. Section 52.220 is amended by adding paragraphs (c)(103)(xiii)(B), (c)(119)(i)(C), (c)(120)(i)(B), (c)(138)(ii)(D), (c)(197)(i)(E), and (c)(225)(i)(C)( 3)to read as follows: