Background and Discussion

TTPP was established by Title VI, the “Fair and Equitable Tobacco Reform Act” (FETRA) of the American Jobs Creation Act of 2004 (Pub. L. 108-357). FETRA repealed the tobacco marketing quota and related price support programs authorized by both Title III of the Agricultural Adjustment Act of 1938 and by the Agricultural Act of 1949 and provided for payments to persons who, during a certain period or at a certain time, had been the owners of farms with tobacco quotas or had produced regulated tobacco. FETRA is funded using assessments collected from tobacco manufacturers and importers.

Under FETRA, CCC sends out quarterly notices to tobacco manufacturers and importers, informing those entities of the assessments due to CCC. Each notice also provides the entity with certain information, described at 7 CFR 1463.8. Assessments within classes of products are based on market shares, as calculated pursuant to FETRA. Prior to the issuance of this final rule, CCC had not included in its assessment notices data concerning the market share of each other manufacturer or importer for each applicable class of tobacco product even though such information is referenced in section 625 of FETRA, 7 U.S.C. 518d, specifically in section 625(d)(2)(G) of FETRA. This was because market share calculations are based on the filing by reporting parties of copies of certain tax returns filed with the U.S. Department of the Treasury (Treasury) and the Department of Homeland Security (DHS). Previously, in the preamble to a final rule published in the Federal Register on February 10, 2005 (70 FR 7007-7014), CCC explained that, after consultation with Treasury it had determined that market share data would not be included in the assessment notices because of the confidentiality provision of 26 U.S.C. 6103 regarding tax return information filed with Treasury. However, after further consultation, it has been determined that market share data may be included in the quarterly assessments without objection under section 6103 so long as the market share information supplied is limited to information supplied to CCC by those tobacco manufacturers and importers reporting to CCC. Accordingly, the TTPP regulations are changed in this final rule. Because of administrative changes that are needed, CCC does not expect routine inclusion of this data in quarterly assessment notices before the September 2008 assessments.

In addition to the change discussed above, CCC is correcting the CCC point of contact information in the definition section (7 CFR 1463.3).

These regulations are exempt from the notice and comment requirements of the Administrative Procedure Act (5 U.S.C. 553), as specified in section 642(b) of FETRA, which requires that the regulations be promulgated and administered without regard to the notice and comment provisions of section 5 of title 5 of the United States Code or the Statement of Policy of the Secretary of Agriculture effective July 24, 1971, (36 FR 13804) relating to notices of proposed rulemaking and public participation in rulemaking.

This rule has been determined to be not significant under Executive Order 12866 and has not been reviewed by the Office of Management and Budget.

This rule is not subject to the Regulatory Flexibility Act since CCC is not required to publish a notice of proposed rulemaking for this rule.

The environmental impacts of this rule have been considered in a manner consistent with the provisions of the National Environmental Policy Act of 1969 (NEPA), 42 U.S.C. 4321-4347, the regulations of the Council on Environmental Quality (40 CFR parts 1500-1508), and FSA regulations for compliance with NEPA (7 CFR part 799). The following final rule was determined to be Categorically Excluded. Therefore, no environmental assessment or environmental impact statement will be completed for this final rule.

This program is not subject to Executive Order 12372, which requires consultation with State and local officials. See the notice related to 7 CFR part 3015, subpart V, published in the Federal Register on June 24, 1983 (48 FR 29115).

This rule does not have Federalism implications that warrant the preparation of a Federalism Assessment. This rule will not have a substantial direct effect on States or their political subdivisions or on the distribution of power and responsibilities among the various levels of government.

This final rule has been reviewed under Executive Order 12988. This final rule is not retroactive and it does not preempt State or local laws, regulations, or policies unless they present an irreconcilable conflict with this rule. Before any judicial action may be brought regarding the provisions of this rule the administrative appeal provisions of 7 CFR parts 11 and 780 must be exhausted.

The title and number of the Federal assistance program as found in the Catalog of Federal Domestic Assistance, to which this rule applies, are: Commodity Loans and Purchases—10.051.

This rule contains no Federal mandates under the regulatory provisions of Title II of the Unfunded Mandates Reform Act (UMRA) for State, local, and tribal government or the private sector. In addition, CCC was not required to publish a notice of proposed rulemaking for this rule. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

Section 642(c) of FETRA requires that the Secretary use the authority in section 808 of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121) (SBREFA), which allows an agency to forgo SBREFA's usual 60-day Congressional Review delay of the effective date of a major regulation if the agency finds that there is a good cause to do so. Accordingly, this rule is effective on the date of publication in the Federal Register .

These regulations are exempt from the requirements of the Paperwork Reduction Act (44 U.S.C. Chapter 35), as specified in section 642(b) of FETRA, which provides that these regulations, which are necessary to implement FETRA, be promulgated and administered without regard to the Paperwork Reduction Act.

CCC is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

Halocarbon Laboratories, Division of Halocarbon Products Corp., 887 Kinderkamack Rd., P.O. Box 661, River Ridge, NJ 07661, has informed FDA that it has changed its name to Halocarbon Products Corp. Accordingly, the agency is amending the regulations in 21 CFR 510.600(c) to reflect these changes. FDA is also correcting the sponsor's address in the regulation.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Why is the Department promulgating this rule?

The Government Paperwork Elimination Act (GPEA 1998) requires that, when possible, Federal agencies use electronic forms, electronic filing, and electronic signatures to conduct agency business with the public. For this reason, the Department of State developed and introduced an electronic application process for nonimmigrant visas to eventually replace the current application process, which depends on a paper form (Form DS-156, and other forms when required, such as the Form DS-157 and Form DS-158). The first step was to offer an electronic visa application form (EVAF) as a voluntary alternative way of obtaining and preparing the Form DS-156. While the nonimmigrant visa applicant could obtain and prepare the Form DS-156 electronically, he or she was required to sign the Form DS-156 manually. On October 1, 2006, the EVAF was made mandatory worldwide wherever possible. Now, while the Department will continue to accept the EVAF (electronic Form DS-156) where necessary, it proposes to eventually eliminate the Form DS-156 entirely and replace it with the Form DS-160, an electronic form designed to be completed and signed electronically.

The procedure is the same for the nonimmigrant visa applicant except that he or she will not be required to print and sign a form to take to the visa interview. All information entered into the Form DS-160 will be available to the consular officer at the time of the interview, thus simplifying the process from the point of the view of the applicant. The applicant is required to sign the Form DS-160 electronically.

The applicant will be required to click on the box designated “Sign Application” found within the certification section of the application.

Photos, passports and fingerscans collected as part of the application process will identify the applicant.

By signing the Form DS-160 electronically (i.e., clicking on the “Sign Application” box), the applicant certifies that the information provided is correct.

Yes. The electronic signature (i.e., the click on the “Sign Application” box) indicates that the applicant is familiar with and intends to be bound by the statements contained in the application and has answered all questions truthfully, under penalty of perjury.

While a third party may assist the applicant in preparing the Form DS-160, the applicant must electronically sign the application himself or herself. The applicant must identify in the application any third party who has assisted in the preparation of the Form DS-160.

This regulation involves a foreign affairs function of the United States and, therefore, in accordance with 5 U.S.C. 553(a)(1), is not subject to the rule making procedures set forth at 5 U.S.C. 553.

Because this final rule is exempt from notice and comment rulemaking under 5 U.S.C. 553, it is exempt from the regulatory flexibility analysis requirements set forth at sections 603 and 604 of the Regulatory Flexibility Act (5 U.S.C. 603 and 604). Nonetheless, consistent with section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Department certifies that this rule will not have a significant economic impact on a substantial number of small entities. This regulates individual aliens who seek consideration for nonimmigrant visas and does not affect any small entities, as defined in 5 U.S.C. 601(6).

Section 202 of the Unfunded Mandates Reform Act of 1995 (UFMA), Public Law 104-4, 109 Stat. 48, 2 U.S.C. 1532, generally requires agencies to prepare a statement before proposing any rule that may result in an annual expenditure of $100 million or more by State, local, or tribal governments, or by the private sector. This rule will not result in any such expenditure, nor will it significantly or uniquely affect small governments.

This rule is not a major rule as defined by 5 U.S.C. 804, for purposes of congressional review of agency rulemaking under the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121. This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices; or adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based companies to compete with foreign-based companies in domestic and import markets.

The Department of State has reviewed this rule to ensure its consistency with the regulatory philosophy and principles set forth in Executive Order 12866 and has determined that the benefits of the proposed regulation justify its costs. The Department does not consider the rule to be an economically significant action within the scope of section 3(f)(1) of the Executive Order since it is not likely to have an annual effect on the economy of $100 million or more or to adversely affect in a material way the economy, a sector of the economy, competition, jobs, the environment, public health or safety, or state, local, or tribal governments or communities.

This regulation will not have substantial direct effects on the States, on the relationship between the national government and the States, or the distribution of power and responsibilities among the various levels of government. Nor will the rule have federalism implications warranting the application of Executive Orders No. 12372 and No. 13132.

The Department has reviewed the proposed regulations in light of sections 3(a) and 3(b)(2) of Executive Order No. 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

This rule does not impose information collection requirements under the provisions of the Paperwork Reduction Act, 44 U.S.C., Chapter 35.

Background

The final regulations that are the subject of this document are under sections 501(c)(3) and 4958 of the Internal Revenue Code.

As published, final regulations (TD 9390) contain errors that may prove to be misleading and are in need of clarification.

Paperwork Reduction Act

The collection of information contained in these final regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-1934. The collection of information in these final regulations is in § 1.1446-6(c) and (d). This information is required to determine the extent to which a partnership will consider certifications of losses and deductions in calculating the amount of withholding tax it must pay with respect to a foreign partner on the partner's allocable share of effectively connected taxable income earned by such partnership.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection of information displays a valid control number.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

On September 3, 2003, the IRS and the Treasury Department published in the Federal Register a notice of proposed rulemaking [REG-108524-00; 2003-42 IRB 869; 68 FR 52466], corrected at 68 FR 62553 (November 5, 2003) under sections 871, 1443, 1446, 1461, 1462, 1463, 6109, and 6721 of the Internal Revenue Code (Code). The regulations provide guidance for partnerships required to pay withholding tax under section 1446 of the Code (1446 tax). On May 18, 2005, the IRS and the Treasury Department issued final and temporary regulations under section 1446. The 2005 final regulations set forth the provisions of the 2003 proposed regulations in final form and the temporary regulations established a new procedure by which a partnership could consider certain partner-level deductions and losses when computing its 1446 tax. The temporary regulations generally apply to partnership taxable years beginning after the date of their issuance, but an election was provided that permitted a partnership to apply the regulations to partnership taxable years beginning after December 31, 2004, provided the partnership elected to apply the 2005 final regulations to partnership taxable years beginning after December 31, 2004. On May 18, 2005, the IRS and the Treasury Department also published in the Federal Register a notice of proposed rulemaking [REG-108524-00; 2005-1CB 1158; 70 FR 28701], under sections 1464, 6071, 6091, 6151, 6302, 6402, 6414, and 6722 of the Code to implement the section 1446 regime, as well as cross-referencing the temporary regulations under § 1.1446-6T (see 26 CFR Part 1, revised as of April 1, 2007). Written comments were received in response to the notice of proposed rulemaking, and a public hearing was held on November 16, 2005. After consideration of all the comments, the proposed regulations are adopted, as revised by this Treasury decision and the temporary regulations are removed.

Section 1446 requires a partnership to pay section 1446 tax on a foreign partner's allocable share of effectively connected taxable income (ECTI) from the partnership. The temporary regulations allow certain foreign partners to certify certain deductions and losses to a partnership to reduce the 1446 tax required to be paid by the partnership with respect to ECTI allocable to such partners. The temporary regulations also permit a nonresident alien partner to certify to the partnership that the partnership investment is (and will be) its only activity for its taxable year that gives rise to effectively connected income, gain, deduction, or loss. In that case, the partnership is not required to pay 1446 tax (or any installment of such tax) with respect to such partner if the partnership estimates that the annualized (or, in the case of a partnership completing its Form 8804 “Annual Return for Partnership Withholding Tax (Section 1446),” the actual) 1446 tax due with respect to such nonresident alien partner is less than $1,000.

The temporary regulations state that no particular form is required for the partner's certificate of deduction and losses to the partnership. However, the temporary regulations list 13 items the certificate must contain and the caption that must appear at the top of the certificate. To ensure uniformity of the certificates and to reduce the likelihood of an inadvertently omitted item causing the certificate to be defective, the IRS developed a form (Form 8804-C, “Certificate of Partner-Level Items to Reduce Section 1446 Withholding”) to be used by the partner providing a certificate to the partnership. The IRS and the Treasury Department believe that the Form 8804-C will facilitate a partner's ability to provide original and updated certificates.

1. Filing period requirement: number of years

To be eligible to provide a certificate to a partnership the temporary regulations require a partner to have timely filed (or to represent that it will timely file) a U.S. income tax return for each of its preceding four taxable years and for the taxable year during which the certificate is provided and will be considered by the partnership. The partner is also required to have timely paid (or to represent that it will timely pay) all tax shown on such returns. The final regulations clarify that only returns that report income or gain effectively connected with a U.S. trade or business or deductions or losses properly allocated and apportioned to such activities will satisfy the tax return filing requirement (for the current or relevant prior years). Accordingly, the partner may not fulfill this requirement with a U.S. income tax return that reports no items of income or gain effectively connected with a U.S. trade or business or deductions or losses properly allocated and apportioned to such activities.

Several commentators suggested reducing the temporary regulations' prior years U.S. tax return filing requirement. One commentator suggested reducing the requirement to the lesser of the two prior years or the number of years the partner has been a partner in the relevant partnership. Another commentator suggested reducing the requirement from four to two years.

The IRS and the Treasury Department believe it appropriate to require the foreign partner to have filed a certain number of returns and paid any tax relating to those returns regardless of the number of years the partner has been a member of the relevant partnership. The IRS and the Treasury Department do not believe that a reduction to two years is appropriate. Because the return for the year immediately preceding the year a partner submits a certificate to a partnership may not have been filed by the date when the certificate is submitted, reducing the prior years filing requirement to two years could result in only one return being filed by the date on which the certificate is submitted. In response to these comments, however, the IRS and the Treasury Department have determined that it is appropriate to reduce the prior years filing requirement to three years.

The IRS and the Treasury Department have also decided to modify the filing requirement of a tax return for a preceding taxable year in which the partner did not submit a certificate to any partnership, if the return has a due date (without extensions) before the beginning of the partnership taxable year for which the certificate is provided. The final regulations provide that such returns must be filed and all amounts due with such return (including interest, penalties, and additions to tax, if any) must be paid on or before the earlier of: (1) The date that is one year from the due date (without extensions) of such return; or (2) The date on which the certificate for the current taxable year is submitted to the partnership. Once a partner submits a certificate to a partnership, however, it must timely file all its subsequent years' returns (and timely pay all amounts due with the returns) to submit a certificate to a partnership in a later year. The IRS and the Treasury Department anticipate that this modified rule will permit more foreign partners to provide certificates to partnerships under the final regulations.

2. Trusts and estates

One commentator requested that the IRS and the Treasury Department explain why foreign estates and domestic or foreign trusts, other than grantor trusts, are not permitted to certify deductions and losses to partnerships. Another commentator asked that the decedent's compliance record be considered in determining whether the estate can certify deductions and losses to a partnership. The final regulations do not modify the treatment of estates and trusts. The IRS and the Treasury Department continue to believe, as stated in the preamble to the temporary regulations, that because trusts and estates are not always pure conduits for tax purposes it is difficult for a partnership to determine the taxpayer (that is, the trust, estate or beneficiary) that will pay tax on the ECTI allocated to the trust or estate. Further, a decedent's filing history may have limited relevance in predicting the estate's likely compliance.

3. Tiered partnerships

In a tiered partnership structure, a lower-tier partnership must withhold 1446 tax on ECTI allocable to an upper-tier foreign partnership that is a partner in the lower-tier partnership. However, if the upper-tier foreign partnership provides sufficient information regarding its partners to the lower-tier partnership, the lower-tier partnership may withhold 1446 tax based on the partners in the upper-tier partnership. These rules may also apply to upper-tier domestic partnerships that have foreign partners. See § 1.1446-5. Similarly, an upper-tier partnership that receives certificates of deductions and losses from its foreign partners may provide the certificates to the lower-tier partnerships.

The final regulations add several rules to ensure that deductions and losses certified to an upper-tier partnership are not taken into account by both the upper-tier partnership and a lower-tier partnership or by more than one lower-tier partnership. A new rule is also added requiring that sufficient information regarding a partner in the upper-tier partnership submitting the certificate be provided to the lower-tier partnership and then to the IRS so that the IRS can reliably associate the ECTI and the certificate with the partner in the upper-tier partnership.

1. Time lags for submission of certificates

The temporary regulations provide that the partnership may rely on the first certificate submitted by the foreign partner for a partnership taxable year only if the partnership receives the certificate at least 30 days before the installment due date or the annual Form 8804 filing due date (without regard to extensions) for the partnership taxable year for which the partner would like the certificate to be considered in computing the 1446 tax due with respect to the partner. Updated certificates may only be considered if received at least ten days before the installment due date or the Form 8804 filing date (without regard to extensions). Several commentators questioned the appropriateness of these timing requirements if the partnership is willing to rely on a certification submitted at the last moment and remits the 1446 tax installment or files the final return on a timely basis. The IRS and the Treasury Department agree with the commentators and have removed these requirements in the final regulations.

2. Resubmission of certificates

The temporary regulations require the partnership to attach a copy of any certificate, and the computation of 1446 tax due with respect to a partner, to both the Form 8813, “Partnership Withholding Tax Payment Voucher (Section 1446),” and Form 8805, “Foreign Partner's Information Statement of Section 1446 Withholding Tax,” filed with the IRS for any period for which such certificate is considered in computing the partnership's 1446 tax (or any installment of such tax). One commentator suggested that a certificate submitted with Form 8813 should not be required to be submitted with subsequent filings of Form 8813 or with Form 8805. The IRS and the Treasury Department agree with the comment regarding Form 8813. The final regulations provide that a partner's certificate need only be submitted for the first installment period for which it is considered. For subsequent installment periods for which the certificate is considered, the partnership may instead attach a list of the name, taxpayer identification number, and the amount of certified deductions of each foreign partner whose certificate was previously considered during the taxable year and whose certificate was again considered in the subject installment period. The partnership would also indicate if it was relying on the state and local taxes withheld and remitted on behalf of the partner. If the partnership is relying on the de minimis rule for the partner, the partnership would indicate that, in lieu of indicating the amount of certified deductions. However, if a partnership receives an updated certificate from a partner, that certificate must be attached with the Form 8813 for the first installment period it is considered. In all events, a partnership must attach to the Form 8813 and Form 8805, a computation of 1446 tax due with respect to such partner for all periods for which a certificate received from the partner is considered by the partnership. In addition, in all events the partnership must attach to the Form 8805 a copy of the partner's original or updated certificate, as appropriate.

3. Denying partnerships the ability to submit certificates

Consistent with the temporary regulations, the final regulations provide that upon receipt of written notification from the IRS that a foreign partner's certificate is defective, the partnership may no longer rely on the defective certificate or any other certificate submitted by the partner until the IRS notifies the partnership in writing and revokes or modifies the original notice. The final regulations provide that the IRS may also notify the partnership in writing if either a substantial portion of the certificates submitted by the partnership are defective or a substantial amount of the deductions and losses relied on by the partnership in computing its 1446 tax due are reported on one or more defective certificates. Upon receiving that notification the partnership may not rely on any certificate submitted by any partner for the partnership taxable year in which such notification is received or any subsequent partnership taxable year, until the IRS notifies the partnership again in writing and revokes or modifies the original notice.

1. Current year deductions

The temporary regulations provide that a foreign partner can only certify deductions and losses that are or will be reflected on the partner's U.S. income tax return filed (or to be filed) for a taxable year ending prior to the installment due date or Form 8804 filing date (without regard to extensions) for the partnership taxable year for which the certificate is considered. Therefore, no anticipated deduction or loss with respect to current operations may be considered. One commentator suggested that partners should be permitted to certify current year deductions to the partnership. The IRS and the Treasury Department are concerned about the uncertainty associated with fluctuations in estimates of current-year activities and therefore have not adopted this suggestion.

2. Charitable deductions

One commentator requested that partners be permitted to certify charitable contribution deductions. The IRS and the Treasury Department have not adopted this recommendation because of the difficulty a partnership would have in determining the amount of a charitable contribution deduction allowed to the foreign partner. Section 170 provides separate rules for corporations and individuals, the type of charity to which the contribution is made, and the type of property contributed to the charity. In addition, separate rules apply to determine the deduction amount in the case of charitable contribution carryover.

3. Suspended losses

One commentator raised a concern that a foreign partner could certify a passive activity loss to a partnership that conducts a different activity in which the partner materially participates. If the partnership took that loss into account it would inappropriately reduce its 1446 tax due with respect to that partner. Because on its income tax return the partner could not offset the loss against its allocable share of partnership ECTI, the partner might inappropriately each year recertify that loss to the partnership. To address that concern the final regulations clarify that a partner must identify any certified deductions and losses that are subject to special limitations at the partner level and provide information to the partnership that will allow the partnership to take into account the special limitations.

4. Net operating losses

The temporary regulations provide that a partnership may not consider a partner's net operating loss (NOL) deduction in an amount greater than 90 percent of the partner's allocable share of ECTI. Two commentators discerned that this requirement reflects a concern about the alternative minimum tax (AMT) limitation on NOL deductions and suggested the regulations should be tied to the continuing applicability of the 90 percent AMT limitation on the use of NOL carryovers. The IRS and the Treasury Department have adopted this suggestion. One commentator further suggested that if the 90 percent limitation is retained, or as long as it applies, the regulations should be clarified to explain that the limitation should be applied on a cumulative basis for each installment period. This suggestion has also been adopted. With this clarification, if the partnership's annualized income changes during the year, the NOL deduction that the partnership may take into account can increase or decrease accordingly.

1. State income taxes

One commentator suggested allowing the partnership to reduce a foreign partner's ECTI by the amount of any state and local taxes paid by the partnership on behalf of the partner with respect to the partner's allocable share of partnership income. The final regulations adopt this recommendation but provide that the partnership may only consider 90 percent of the state and local taxes withheld and remitted on behalf of the partner but only with respect to the partner's allocable share of ECTI. The partnership may consider these amounts regardless of whether the partner submits a certification of deductions and losses or of its de minimis status to the partnership for the relevant partnership taxable year.

2. Section 199 deductions

One commentator suggested allowing a partnership to consider a partner's available deduction under section 199 in determining its section 1446 tax with respect to that partner. The section 199 deduction is a percentage of the lesser of the qualified production activities income (QPAI) of the taxpayer for the taxable year or the taxpayer's taxable income or, in the case of an individual, adjusted gross income determined without regard to section 199 for the taxable year. In addition, the deduction is limited to 50 percent of the Form W-2, “Wage and Tax Statement”, wages for the taxpayer for the taxable year. Depending on a taxpayer's gross receipts and assets, there are up to three permissible methods for calculating QPAI.

In the case of a pass-through entity (such as a partnership), section 199(d)(1)(A) provides that the section 199 deduction is calculated at the partner level. A partner may be a member of more than one partnership and may engage in its own qualifying activities under section 199. The QPAI and Form W-2 wages, and any other QPAI and Form W-2 wages reported by a partnership to the partner, must be added to the partner's own calculation of QPAI and Form W-2 wages. Therefore, because of the difficulty in a partnership determining the section 199 deduction of a partner, the IRS and the Treasury Department determined it would be inappropriate to allow a partnership to consider the section 199 deduction of a partner in determining the amount of section 1446 tax to be withheld with respect to that partner.

3. Section 470 deductions

One commentator suggested that the regulations allow the partnership to consider partner-level deductions previously suspended under section 470 (limitation on deductions allocable to property used by governments or other tax-exempt entities) and relating to the partnership, when the deductions become available. Section 470 currently allows the partnership to consider these suspended partner-level deductions in determining the partner's ECTI. Therefore, there is no need to modify the regulations in response to this suggestion.

4. Tax credits

One commentator suggested that a foreign partner should be able to certify credits to the partnership and that the partnership be able to consider current-year credits in determining the amount of its 1446 tax. Section 1446 requires that a partnership pay a withholding tax on its ECTI allocable to foreign partners. It provides no authority for partnerships to consider credits in determining the amount of 1446 tax the partnership is required to withhold and pay. Therefore, this suggestion has not been adopted.

The temporary regulations provide that a partnership is not relieved from liability for 1446 tax under section 1461 or for any applicable addition to the tax, interest, or penalties if a partner's certificate is defective or the partner submits an updated certificate that increases the 1446 tax due with respect to such partner. If a certificate is determined to be defective for a reason other than the amount or character of the deductions and losses set forth on such certificate (for example, the partner failed to timely file a U.S. income tax return), then the partnership is liable for the entire 1446 tax amount under section 1461 (or any installment of such tax).

Further, under the temporary regulations, if it is determined that a certificate is defective because the actual deductions and losses available to the partner are less than the amount certified to the partnership (other than when it is determined that the partner certified the same deduction or loss to more than one partnership), the partnership is liable for 1446 tax under section 1461 (or any installment of such tax) only to the extent the amount of certified deductions and losses taken into account by the partnership is greater than the amount determined to be actually available to the partner and permitted to be used under regulations.

Similarly, if it is determined that a certificate is defective because the character of the certified deductions and losses is erroneous, the partnership is liable for 1446 tax under section 1461 (or any installment of such tax) only to the extent the actual character of the deductions and losses results in an increase in the 1446 tax due with respect to such partner.

However, the temporary regulations provide that the partnership is not liable for the addition to tax under section 6655 (as applied though § 1.1446-3) for the period during which the partnership reasonably relied on the certificate. Further, the temporary regulations provide that although a partnership is generally liable for the 1446 tax, any addition to the tax, interest, and penalties, the partnership may be relieved of some penalties in certain circumstances.

One commentator stated that reasonable reliance on a certificate should protect a partnership against liability not only under section 6655, but also for liability for the tax under section 1461, interest on the tax under section 6601, and various other penalty provisions. The IRS and the Treasury Department have not adopted this recommendation. Use of the certification procedures under § 1.1446-6 is voluntary. The foreign partner is not required to submit a certificate of deductions and losses to the partnership. Moreover, even if the partnership receives a certificate it may consider all, none or only a portion of the certified deductions and losses when calculating its payment of 1446 tax. Further, as the temporary regulations stated, the partnership may be relieved of some penalties in certain circumstances.

Among other requirements, to apply the rules of § 1.1446-6 the partnership must receive a valid certificate from the foreign partner and attach the certificate, along with the computation of 1446 tax due with respect to that partner, to certain Forms 8813 and Form 8805 filed with respect to that partner. The IRS and the Treasury Department believe that a reasonable cause standard should be applied to determine whether a partnership that failed to attach the certificate and 1446 tax computation to the relevant filing is eligible for an extension of time to comply with this requirement.

Under the reasonable cause standard, if a partnership that may otherwise rely on a partner's certificate fails to comply timely with the requirements of § 1.1446-6, the partnership is considered to have satisfied the timeliness requirement if it demonstrates, to the satisfaction of the Area Director, Field Examination, Small Business/Self-Employed or the Director, Field Operations, Large and Mid-Size Business (Director) having jurisdiction of the partnership's return for the taxable year, that such failure was due to reasonable cause and not willful neglect. Once the partnership becomes aware of the failure, the partnership must demonstrate reasonable cause and must satisfy the filing requirement by attaching the certificate and the partnership's computation of 1446 tax due with respect to that partner to an amended Form 8813 or Forms 8804 and 8805 (that amends the tax return to which the certificate and computation should have been attached). A written statement must be included that explains the reasons for the failure to comply.

In determining whether the partnership has reasonable cause, the Director shall determine whether the partnership acted reasonably and in good faith based on all the facts and circumstances. The Director shall notify the partnership in writing within 120 days of the filing if it is determined that the failure to comply was not due to reasonable cause or if additional time will be needed to make such determination. If the Director fails to notify the partnership within 120 days of the filing, the partnership shall be considered to have demonstrated to the Director that such failure was due to reasonable cause and not willful neglect.

The final regulations are effective for partnership taxable years beginning after December 31, 2007. However, any certificate submitted on or before July 28, 2008 that met the requirements of the temporary regulations shall not be considered defective solely because it does not meet the requirements of the final regulations. However, any certificate (including any updated certificates and status reports) submitted, or required to be submitted, after July 28, 2008, must comply with the requirements of these final regulations.

The final regulations make several clarifying and conforming changes to the 2005 final regulations including with respect to the calculation of installment payments of 1446 tax when a partnership considers a certificate received under § 1.1446-6 and the information that a lower-tier partnership must receive from an upper-tier partnership when the lower-tier partnerships pays 1446 tax on behalf of the partners in the upper-tier partnership. Also the prior year safe harbor provision in § 1.1446-3 was conformed with section 6655 to provide that the partnership must compute its current year 1446 tax installments based on the total 1446 tax (without regard to § 1.1446-6) as computed for the prior taxable year. These revisions are effective for partnership taxable years beginning after December 31, 2007.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. It also has been determined that section 553(b) of the Administrative Procedures Act (5 U.S.C. chapter 5) does not apply to these regulations. It is hereby certified that the collections of information contained in these regulations will not have a significant economic impact on a substantial number of small entities. This certification is based upon the fact that only a few small entities are expected to be impacted by these collections and the burden associated with such collections is estimated to be 0.5 hours. Moreover, the information collection in § 1.1446-6 and its use is voluntary. Therefore, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, the notice of proposed rulemaking preceding the final regulations was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

The principal author of these regulations is Ronald M. Gootzeit of the Office of the Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

This action will apply to applicants to the PSD construction permit program on Class I trust lands of the FCP Community.

In addition to being available in the docket, an electronic copy of this final rule is also available on the World Wide Web. Following signature by the EPA Administrator, a copy of this final rule will be posted on the EPA's New Source Review (NSR) Web site, under Regulations & Standards, at http://www.epa.gov/nsr/actions.html .

The information presented in this action is organized as follows:

The CAA provides a comprehensive structure for “protect[ing] and enhanc[ing] the quality of the Nation's air resources[.]” See section 101(b) of the CAA. The basis of the CAA's regulatory structure is the NAAQS, which specify the maximum permissible concentrations of certain pollutants in the ambient air. See section 108 and 109 of the CAA. Furthermore, Part C of Title I of the CAA provides for the prevention of significant deterioration of air quality. The PSD program sets forth procedures for the preconstruction review and permitting of new and modified major stationary sources of air pollution locating in areas meeting the NAAQS, i.e., “attainment” areas, or in areas for which there is insufficient information to classify an area as either attainment or nonattainment, i.e., “unclassifiable” areas. These areas are referred to as “PSD areas.” See section 165(a) of the CAA. “Major stationary sources” are large industrial sources which emit or have the potential to emit 250 tons per year (tpy) or more of a regulated air pollutant (100 tpy or more if the source falls in one of 28 specified categories). See 40 Code of Federal Regulations (CFR) section 52.21(b). The applicability of the PSD program to a particular source must be determined in advance of construction, and it is pollutant specific. To obtain a PSD permit, a major stationary source must install the “best available control technology” (BACT) to control emissions of regulated pollutants emitted in significant amounts. See section 165(a)(4) and section 169(3) of the CAA; 40 CFR 52.21(j). PSD permits also require the source to demonstrate that it will not contribute to a violation of the NAAQS or applicable PSD increments (the maximum allowable air quality deterioration allowed in a PSD area). See section 165(a)(3).

The CAA provides three basic classifications for PSD areas: Class I, II and III. For each classification, the PSD regulations establish the incremental amount of air quality deterioration allowed. However and in all cases, the NAAQS set the maximum allowable concentration levels of certain pollutants that may not be exceeded in a PSD area, irrespective of any increment. Increments have been established for three pollutants—Particulate Matter (PM 10 ), Sulfur Dioxide (SO 2 ) and Nitrogen Dioxide (NO 2 )—and for a variety of averaging periods, which correspond to the averaging periods for the NAAQS for those pollutants. See 40 CFR 52.21(c). Class I areas include national parks greater than 6,000 acres in size, national wilderness areas greater than 5,000 acres in size and other natural areas of special concern; the smallest increments are specified for those areas. In addition, when Congress enacted the PSD program in 1977, it provided that these areas may not be redesignated to another classification. See section 162(a) of the CAA. Class II applies to areas in which pollutant increases accompanying moderate growth are allowed. Under the 1977 amendments to the CAA, all areas, other than the mandatory Federal Class I areas were initially designated as Class II PSD areas. However, States and Tribes have the authority to redesignate Class II areas to Class I to provide additional air quality protection and some Tribes have done so. 1 Class III applies to those areas in which more air quality deterioration is considered acceptable. States and Tribes have the authority also to redesignate Class II areas to Class III to promote development, but to date; none have chosen to do so.

The CAA directs the Secretary of the Interior, or other appropriate Federal land manager, to review other Federal lands and recommend for redesignation to Class I any appropriate areas “where air quality related values (AQRVs) are important attributes of the area.” See section 164(d) of the CAA. The Act does not define AQRVs nor identify specific AQRVs other than visibility ( See section 165(d)(2)(B) of the Act), but in the legislative history to the Act, AQRVs are described as follows:

Nevertheless, Class I status is not reserved for special Federal areas alone. Section 164 of the CAA provides to States and Indian governing bodies the ultimate authority to reclassify any lands within their borders as Class I. The CAA specifies that “a State may redesignate such areas as it deems appropriate as Class I areas.” See section 164(a) of the CAA. Tribes have similar authority to redesignate “lands within the exterior boundaries of reservations.”

The procedural requirements for a Class I redesignation by a Tribe are set out in section 164(c) of the CAA and are further defined in the implementing regulations at 40 CFR 52.21(g)(4). These provisions explain the steps a Tribe needs to follow to request redesignation of reservation lands. The EPA Administrator may disapprove a redesignation request only if the Administrator finds that the proposal did not meet the procedural requirements or was inconsistent with the CAA. See 42 U.S.C. 164(b)(1)(C)(2).

The FCP Community is a federally recognized Indian Tribe recognized by a congressional Act of June 23, 1913 (38 Stat. 102). The 1913 Act provided that 11,786 acres of non-contiguous land purchased by the Federal government would be set aside for the purpose of making allotments to the Wisconsin Potawatomi Indians (which included the FCP Community). While the lands were purchased for making allotments, no allotments were ever made due to changes in Federal allotment policies. Thus, title to the land remained with the United States until 1988, when Congress passed legislation to place the land in trust for the FCP Community, and to recognize explicitly all of these lands as belonging to the FCP Community. 2 The majority of the FCP Community's reservation lands are located in Forest County, Wisconsin, with the remaining acreage located in six neighboring townships.

The FCP Community is downwind of key areas of industrial development. The reservation is located in the North Central Wisconsin Intra-State Air Quality Control Region #238. Land in the northern counties of this region is mostly forested. Lands south of Madison County in this region are mostly agricultural. Population and industry is concentrated southwest and west of the reservation, in the areas of Wausau, Stevens Point, Wisconsin Rapids, and Rhinelander. At present, Forest County itself has little industrial development, and the CAA's PSD minor source baseline date, which is the date on which the first complete application for a PSD permit is filed in a particular area, has not been triggered. Thus, at this time, there has been no PSD increment consumption in this area.

On February 14, 1995, the FCP Community submitted its formal request for redesignation to EPA's Region 5 office. FCP Community's redesignation request proposes to reclassify as Class I those trust parcels of 80 acres or more located in Forest County. See Notice of Proposed Rulemaking, 60 FR 33779 (June 29, 1995). A list of these parcels can be found in the codification section of this notice labeled Subpart YY-Wisconsin, Forest County Potawatomi Reservation (b). The FCP Community explained its reasons for requesting redesignation as follows:

Additionally, the FCP Community described the central importance of “purity” to its cultural and spiritual practices, where natural resources “must be drawn from spiritually pure natural environments. Concern about access to these resources and the ability of the environment to provide the pure resources needed to sustain Potawatomi culture occupies the thoughts and prayers of the community.” FCP Community member Jim Thunder, stated: “Today we are abusing our Mother Earth. Our air, water and soil are polluted. We are told not to eat fish out of certain streams and lakes. I pray to our creator that we look back so that we may see ahead. Let us examine our lives so that we are respectful to our fellow humans and to nature. Let us respect our children and, above all, let us live our lives in accordance with our beliefs.”  4

Finally, the FCP Community also explains that clean air is important to the Tribal enterprises and economy of the Tribe, and to the northern Wisconsin area, where recreation and tourism are a primary component of the economic base and a key projected component of economic growth for the Tribe and for the region. 5

EPA is taking final action on its evaluation of the FCP Community's Tribal Council request to redesignate certain portions of the FCP Reservation as a non-Federal Class I area under the CAA program for the prevention of significant deterioration of air quality. We have decided to approve this request. The Class I designation will result in lowering the allowable increases in ambient concentrations of PM, SO 2 , and NO X on the Reservation.

On June 29, 1995, and July 10, 1997, EPA proposed to approve a request by the FCP Community Tribal Council to redesignate lands within the FCP Community Reservation in the State of Wisconsin to Class I under EPA's regulations for prevention of significant deterioration of air quality (60 FR 33779, 62 FR 37007). The Class I designation will result in lowering the allowable increases in ambient concentrations of PM, SO 2 , and NO X on certain of the FCP Community's lands.

On December 18, 2006, EPA proposed that it would promulgate a Federal Implementation Plan (FIP) if it approves FCP Community's request, with the FIP to be implemented by EPA unless or until it is replaced by a Tribal Implementation Plan (TIP).

In this final action, we are approving FCP's Community request to redesignate certain reservation lands to Class I status. EPA finds that the FCP Community has met the applicable procedural requirements and thus its redesignation request must be approved.

However, we are amending, based on comments received, the language proposed in the December 18, 2006, rulemaking, which had stated in pertinent part the following modification to the FIP for the PSD program in Wisconsin:

First of all, the FCP Community noted that the draft language was not based on the current language for 40 CFR 52.2581, which provides:

Second, the FCP Community stated that EPA's proposed FIP language “creates ambiguity regarding whether the requirements of 40 CFR 52.21 apply to the FCP Community's Reservation.”  6 EPA intends that the requirements of 40 CFR 52.21 apply to the parcels redesignated as Class I, and has modified the proposed FIP language accordingly to remove the phrase “except as specified in paragraph (f) of this section. The revised rulemaking text is as follows:

Finally, the FCP Community has commented that the three parcels, numbers 8, 26, and 27 have been incorrectly identified either in the description of lands provided in the Tribe's letter of February 24, 1998, or in EPA's list of parcels proposed for redesignation published in the December 18, 2006, proposed rulemaking. These lands are, however, correctly identified on the December 13, 1994, S. Funk map provided by the Tribe with its redesignation request. This map was specifically reviewed by the Bureau of Indian Affairs, Minneapolis District office, which certified that the lands marked for proposed redesignation are lands held in trust for the Tribe. Letter from Robert Jaeger, Superintendent, Bureau of Indian Affairs to David Kee, Director, Region 5 Air and Radiation Division on April 16, 1998. This map has been available for public notice and comment during the pendancy of this rulemaking. Accordingly, EPA has corrected the legal description of parcel numbers 8, 26, and 27 in the list of lands redesignated to Class I pursuant to today's action.

EPA is taking this action in accordance with the requirements of section 164 of the CAA. In section 164 of the Act, Congress provides States and Tribes the ultimate authority to reclassify any lands within their borders as Class I based on the following statutory and regulatory requirements:

(1) At least one public hearing must be held in accordance with procedures established in 40 CFR 51.102. See 40 CFR 52.21(g)(2)(i).

(2) Other States, Indian Governing Bodies, and Federal Land Managers whose lands may be affected by the proposed redesignation must be notified at least 30 days prior to the public hearing. See 40 CFR 52.21(g)(2)(ii).

(3) At least 30 days prior to the Tribe's public hearing, a discussion of the reasons for the proposed redesignation including a satisfactory description and analysis of the health, environmental, economic, social and energy effects of the proposed redesignation must be prepared and made available for public inspection. See 40 CFR 52.21(g)(2)(iii).

(4) Prior to the issuance of the public notice for a proposed redesignation of an area that includes Federal lands, the Tribe must provide written notice to the appropriate Federal Land Manager and afford an adequate opportunity for the Federal Land Manager to confer with the Tribe and submit written comments and recommendations. See 40 CFR 52.21(g)(2)(iv).

(5) The proposal to redesignate has been made after consultation with the elected leadership of local and other substate general purpose governments in the area covered by the proposed redesignation. See 40 CFR 52.21(g)(2)(v).

(6) Prior to proposing the redesignation, the Indian Governing Body must consult with the State(s) in which the Reservation is located and that border the Reservation. See 40 CFR 52.21(g)(4)(ii).

(7) Following completion of the procedural steps and consultation, the Tribe submits to the Administrator a proposal to redesignate the area. See 40 CFR 52.21(g)(4).

In addition to reiterating the CAA section 164 requirements, the following discussion identifies the actions taken by the FCP Community to fulfill those requirements and clarifies our interpretation of the requirements in light of several comments we received.

1. At least one public hearing must be held in accordance with procedures established in 40 CFR 51.102. See 40 CFR 52.21(g)(2)(i).

The regulations require that a public hearing on a proposed redesignation be conducted in accordance with 40 CFR 51.102, which requires the following: A minimum of 30 days notice, “prominent advertisement” regarding the hearing in the affected area, availability of plans; notification to the EPA Administrator, local air pollution authorities, and preparation of a record of the proceedings. See 40 CFR 51.102(a)-(f).

The FCP Community held a public hearing on the proposed redesignation on September 29, 1994, at the Potawatomi Tribal Hall, in Crandon, Wisconsin. The FCP Community's redesignation request included a certification that the hearings were held in compliance with applicable notice requirements, including adequate notice to appropriate local, State and Federal entities, as well as public hearing requirements. A transcript of the hearing, notices (including copies of advertisements), letter invitations, copies of comments received, a transcript of the hearing, and response to comments was included in the FCP application for redesignation. Accordingly, EPA finds that the hearing held by the FCP Community was adequate.

2. Other States, Indian Governing Bodies, and Federal Land Managers whose lands may be affected by the proposed redesignation must be notified at least 30 days prior to the public hearing. See 40 CFR 52.21(g)(2)(ii).

The FCP Community held its public hearing on September 29, 1994. Notices of the public hearing, as well as notification of the public comment period and copies of supporting documents, were sent to dozens of governmental entities and interest groups in a letter dated August 26, 1994. Entities noticed included EPA Region 5, the States of Wisconsin and Michigan  7 (even though the lands covered by the redesignation lie wholly within Forest County, Wisconsin), the Bureau of Indian Affairs, the U.S. Fish and Wildlife Service; nine Wisconsin Tribal governments; nineteen counties and townships; local planning commissions in Wausau, Eau Claire, and Green Bay, Wisconsin; and, many other organizations. The FCP Community also published notices of the September 29, 1994, public hearing in four local newspapers, which ran between August 29, 1994 and September 1, 1994. Representatives from many of these governmental entities and organizations provided comments at the hearing or in writing. The FCP Community responded to these and other comments received from private individuals and commercial entities in its February 1995 “Responses to Common Questions and Issues in Written Comments on the Proposed Forest County Potawatomi Community PSD Class I Area Redesignation,” Technical Report at Appendix A. For a copy of this document, please visit the public docket of this rulemaking.

In light of the outreach, public notice, opportunity for comment, and information distributed by the FCP Community in preparation for making their request to EPA for redesignation, EPA finds that the FCP Community provided adequate opportunity for notice, comment, and consultation.

3. At least 30 days prior to the Tribe's public hearing, a discussion of the reasons for the proposed redesignation including a satisfactory description and analysis of the health, environmental, economic, social and energy effects of the proposed redesignation must be prepared and made available for public inspection. See 40 CFR 52.21(g)(2)(iii).

Section 164(b)(1)(A) of the CAA requires that a State or Tribe prepare for public comment a “satisfactory description and analysis of the health, environmental, economic, social, and energy effects of the proposed redesignation.” However, neither the CAA nor EPA regulations define “satisfactory description and analysis,” as that term is used in CAA section 164(b) and 40 CFR 52.21(g)(2). In construing its meaning, EPA considered Congressional intent that EPA's review of a “description and analysis” be deferential. In addition, EPA considered the question: “Satisfactory to whom?” Many commenters argued that the Tribe's request should be denied because they were unsatisfied with the level of documentation in the Tribe's application regarding economic impacts and whether the Tribe had sufficiently demonstrated that Class I redesignation would not have an adverse economic impact on surrounding areas, be they local communities, adjacent states, or states across the nation. EPA disagrees.

In enacting section 164(b), it is clear that Congress intended to entrust EPA with the authority to set a deferential standard for “satisfactory description and analysis.” Thus, EPA stated in its final rule on the Yavapai Apache Class I redesignation that: “[The use of the word “satisfactory”] in the statute and implementing regulations suggests a relatively low threshold. Congress did not dictate that the analysis be comprehensive or exhaustive. Further, the statutory language does not assign any specific weight to the consideration of health, environmental economic, social or energy effects, or suggest that one consideration should be given priority over another. * * * See “Arizona Redesignation of the Yavapai Apache Reservation to a PSD Class I Area,” 61 FR 56461-56464 (November 1, 1996).

Therefore, there is no requirement that a State or Tribe conduct a balancing test of the costs and benefits of a redesignation request, nor that the various factors to be considered in its analysis need to be balanced against one another. EPA has taken the position that the fact that no weight or priority is assigned to any particular factor, taken together with the broad redesignation discretion conferred on States and Tribes, indicates that the Tribe does not have to justify or overcome a balancing test in its redesignation request or show that a proposed redesignation will have no impact on the surrounding community.

Legal precedent clearly supports EPA's interpretation. In Nance v. EPA, 645 F.2d 701 (9th Cir. 1981), petitioners claimed that the Northern Cheyenne Tribe's analysis was inadequate in several respects. However, the Ninth circuit court rejected the claim that the Tribe was required to meet exacting analysis requirements and held that the Tribe had considered the factors identified in EPA's regulations. Nance v. EPA, 645 F.2d at 712. EPA's decision in this case was upheld under the far more exacting pre-1977 regulatory regime that expressly provided for an analysis that included consideration of growth anticipated, regional impacts, and social, environmental and economic effects as well as stricter EPA scrutiny of the analysis.

Moreover, the court found that the Tribe's decision was supported and strengthened by the policy for maintaining clean air embodied in the CAA:

In another case regarding the approval of a redesignation request, in this case for the Yavapai Apache Tribe ( See Administrator, State of Arizona v. EPA, 151 F.3d at 1211, 9th Cir. 1998, hereafter Arizona v. EPA ), the Ninth Circuit also deferred to EPA's conclusion that the existing statutory requirement of a “satisfactory description and analysis” is a relatively low threshold. The court explained that the 1977 CAA amendments to the PSD provisions, which are still in the statute, changed previous law by eliminating EPA's previous authority to override a classification by a local government on the basis that the local government did not properly weigh energy, environment, and other factors. Arizona v. EPA at 151 F.3d at 1211 (citing legislative history). Moreover, EPA's role in reviewing redesignation requests is so limited it cannot disapprove a request unless it finds that the redesignation “does not meet the procedural requirements” of the Act, CAA Section 164(b)(2); this statutory limitation provides no support for the commenters' suggestion that EPA has broad authority to review the quality of the “description and analysis” much less to disapprove a redesignation unless the description and analysis are “satisfactory.”

For those reasons, EPA finds that the FCP Community met the statutory requirement to provide a “satisfactory description and analysis.” Nevertheless, many commenters argued that the Tribe's request should be denied because they were unsatisfied with the level of documentation in the Tribe's application regarding economic impacts and whether the Tribe had sufficiently demonstrated that Class I redesignation would not have an adverse economic impact on surrounding areas, be they local communities, adjacent states, or states across the nation. 8

As discussed previously, neither the CAA nor its implementing regulations require a State or Tribe to assess the impact of a proposed redesignation on areas outside the lands proposed for redesignation, nor to demonstrate that a request for redesignation would not impact these areas. Nevertheless, the FCP Community's application for redesignation contained information to show that the Tribe had examined the existing economy of the region and analyzed the potential impact of Class I redesignation on the existing and future projected economic growth in the region, concluding that “The development of large industrial projects will very likely be effected [sic] more by economic viability, external market conditions, and other existing local environmental and land use restrictions than by the Class I redesignation.”  9

Furthermore, supplemental information submitted by the FCP Community in June 1995, contained an additional analysis showing that the anticipated (at that time) PSD caliber sources planning to construct or expand, as well as projected area economic growth, would not be adversely impacted by the proposed Class I area. The analysis concluded that “ Class I redesignation will not effect the operations of any existing industry because the PSD program only effects the development of new air pollutant sources.” Therefore, the Technical Report concluded, “The redesignation will not result in the loss of any existing jobs, nor in the “downsizing” or closing of any existing businesses. It will only require major new development projects to analyze the effects of and control the emission of air pollutants, so that the existing air quality remains clean [emphasis in original].”  10

Moreover, the Tribe prepared a Technical Report and released it for public comment in advance of its public hearing. This Technical Report examines the environmental, health, economic, social and energy effects of the proposed redesignation both on and off FCP Community reservation lands. The analysis includes a survey of present conditions and presents projected impacts of redesignation on health, employment, and natural resources, including the project impacts to aquatic, forest and wetlands ecosystems; and to fish and wildlife populations. The FCP Community's Technical Report also provides a discussion of the projected effects of redesignating the FCP Community Reservation lands to Class I and the effects of remaining Class II.

Additionally, although there is no statutory obligation to identify AQRVs prior to seeking redesignation, the FCP Community's Technical Report and a supplementary support document dated June 14, 1995, provide the FCP Community's analysis of potential impacts of the two AQRVs identified (mercury deposition and acid rain) in the context of the health, environmental, energy, economic, and social factors analysis, both for lands subject to the redesignation request, and those located outside the proposed area. The Technical Report notes in several instances that adverse impacts on AQRVs, which occur at concentrations lower than Class I increments, might pose an additional restriction on the sitting of large projects.

In conclusion, upon review of the documentation submitted by the FCP Community, EPA finds that the FCP Community has fully met the requirement in CAA section 164(b)(1)(A) and 40 CFR 52.21(g)(2)(iii) to provide a “satisfactory description and analysis of the health, environmental, economic, social, and energy effects of the proposed redesignation.”

4. Prior to the issuance of the public notice for a proposed redesignation of an area that includes Federal lands, the Tribe must provide written notice to the appropriate Federal Land Manager (FLM) and afford an adequate opportunity for the FLM to confer with the Tribe and submit written comments and recommendations. See 40 CFR 52.21(g)(2)(iv).

In addition to consultation undertaken by the FCP Community with Federal, State, and local agencies, the FCP Community consulted directly with the Bureau of Indian Affairs (BIA) regarding FLM responsibilities. After those consultations, the BIA informed the FCP Community of that Agency's support of the Class I redesignation request and that Agency's view that the Tribe would be the appropriate land manager for the lands subject to the redesignation request. 11 EPA finds, accordingly, that the Tribe has satisfied this requirement.

5. The proposal to redesignate has been made after consultation with the elected leadership of local and other substate general purpose governments in the area covered by the proposed redesignation. See 40 CFR 52.21)(g)(2)(v).

The lands covered by the proposed redesignation lie wholly within Forest County, Wisconsin, and are comprised wholly of reservation lands held in federal trust. The CAA requires notice to governmental entities “in the area covered by the proposed redesignation.” See 52.21(g)(2)(v) (emphasis added). There is no requirement, however, for a finding on what areas may be affected by a proposed redesignation or notice to such governments in such areas. As discussed in Section IV.A.1-2, the FCP Community's application contains a list of dozens of federal, state and local governmental offices which were notified of the Tribe's intended action. Additionally, the FCP Community developed a fact sheet and held a consultation session with federal, state, and local governmental representatives to further explain and hear concerns regarding the proposed action, besides the required public hearing. Further, the FCP Community received numerous comments on its proposed action, to which it prepared a response to comments document. Thus, and even while the regulation does not provide a standard for “consultation,” EPA deems the actions of the FCP Community to have provided sufficient notice and opportunity for comment.

6. Prior to proposing the redesignation, the Indian Governing Body must consult with the State(s) in which the Reservation is located and that border the Reservation. See 40 CFR 52.21(g)(4)(ii).

The FCP Community's reservation is located wholly within the State of Wisconsin. For that reason, the FCP Community included several Wisconsin offices and agencies in its notice on the proposed redesignation and public hearing, as discussed in section IV.A.1-2 above. Nevertheless, the FCP Community also provided notice of its intent to redesignate to several divisions of the Michigan Department of Environmental Quality, although the State of Michigan does not border the reservation. Both Wisconsin and Michigan provided comments on the proposed redesignation, to which the Tribe responded in its response to comments document. Thus, EPA finds that the FCP Community's consultation efforts comply with the requirement to consult with States.

7. Following completion of the procedural requirements, the Tribe submits to the Administrator a proposal to redesignate the area. See 40 CFR 52.21(g)(4).

On December 4, 1993, and by majority vote, the FCP Community General Council and the tribal governing body of the FCP Community passed a resolution to request the Administrator to redesignate the FCP Community Reservation and on February 10, 1995, the FCP Community General Council passed a resolution to submit its completed redesignation request package to EPA. The FCP Community submitted its formal request for redesignation to EPA's Region 5 office on February 14, 1995.

EPA reviewed the FCP Community's request and made a preliminary determination that the request met the applicable procedural requirements of 40 CFR 52.21(g)(4). After making this preliminary determination, EPA published a notice of proposed rulemaking in the Federal Register proposing to approve the request and announced a 120-day public comment period on the issue of whether the Tribe had met the procedural requirements. See Notice of Proposed Rulemaking, 60 FR 33779 (June 29, 1995).

However, on June 8, 1995, the Governors of Wisconsin and Michigan sent a letter to EPA objecting to EPA's proposal to grant the FCP Community request for redesignation and requested EPA to intervene. The letter also requested that EPA not finalize the proposed redesignation until further regulations were in place to address permitting on non-Federal Class I areas. On August 7, 1995, EPA published a notice cancelling the August 2, 1995, hearing and indefinitely extending the public comment period because the Governors of Wisconsin and Michigan had requested negotiations pursuant to Section 164(e) of the CAA to resolve their dispute regarding the proposed Class I request. In response to the States' requests, EPA suspended the rulemaking to address the States' concerns. See 60 FR 40139 (August 7, 1995).

In 1997, EPA published an advanced notice of proposed rulemaking to address PSD permitting in non-Federal Class I areas. 62 FR 27158 (May 16, 1997). Additionally, two public workshops were held to gather comments on the advanced proposal. 62 FR 33786 (June 23, 1997). EPA also initiated a dispute resolution process for Michigan and Wisconsin, but after 2 years of discussions, the parties had failed to reach an agreement.

Accordingly, EPA published a notice scheduling two public hearings on the proposed redesignation and setting the closing date of the public comment period for September 15, 1997. 62 FR 37007 (July 10, 1997). EPA held two public hearings on the proposed redesignation, the first on August 12, 1997, in Carter, Wisconsin, and the second on August 13, 1997, in Rhinelander, Wisconsin, with an informational meeting preceding each hearing. EPA also provided numerous opportunities for input from local governments in EPA's public notice and hearing process on the proposed rulemaking for the redesignation.

The redesignation proposal elicited numerous comments from state governments, local governments and the general public. Responses to these comments are found in the response to comments document, which is part of the record for this rulemaking. However, major comments are summarized in this notice.

Section 164(c) of the CAA provides that “Lands within the exterior boundaries of reservations of federally recognized Indian Tribes may be redesignated. * * *” 42 U.S.C. 7474(c). The PSD regulations define “Indian Reservation” as “any federally recognized reservation established by Treaty, Agreement, executive order, or act of Congress.” See 40 CFR 52.21(b)(27). The FCP Community's reservation lands are comprised of non-contiguous trust parcels comprising a total area in excess of 11,700 acres, as described in Section II.B. The FCP Community's trust holdings are primarily located in Forest County, with other parcels located in surrounding townships. In its redesignation request, the FCP Community included only those parcels of 80 acres or greater in size and located within Forest County.

Several commenters raised concerns that the area proposed for redesignation includes lands that are not within the boundaries of the FCP Indian reservation. To address these concerns, EPA sought further information from both the FCP Community and the Bureau of Indian Affairs (BIA) regarding the status of lands proposed by the FCP Community for redesignation. By letter of February 24, 1998, the FCP Community provided documents describing the parcels subject to the proposed redesignation. EPA subsequently requested an opinion from the U.S. Department of Interior (DOI) on the status of those lands, and, DOI's BIA stated as follows:

However, the FCP Community commented that the list of parcels subject to the Class I redesignation request contained errors when compared to the S. Funk map. These errors have been corrected in this action. See Section III.B. EPA's action redesignates to Class I only those lands from FCP Community's original list which have been confirmed to be held in trust for the FCP Community and, therefore, are part of FCP Community's Reservation.

Several commenters, including the FCP Community, also expressed their belief or concern that lands acquired by a Tribe or State subsequent to this redesignation request would automatically become part of the Class I area without having to follow the redesignation process in 40 CFR 52.21(g). However, EPA believes that a State or Tribe is required to submit a new redesignation request and follow all of the procedural steps to redesignate additional parcels not covered by a previous request where, as here, a Tribe has requested redesignation of specified parcels, and not its entire reservation. In addition, EPA would be required to follow the public notice and comment procedures set out by Congress in section 164(b)(2) of the CAA to review the new request prior to making its determination whether to grant the request. Therefore, any additional lands which are placed into trust for the FCP Community would require the FCP Community to submit a new redesignation request.

Some commenters also alleged that the areas proposed for redesignation were either too small or too dispersed to allow for effective air quality management as discussed in sections 162 and 164 of the CAA. EPA disagrees. As explained in the notice that resolves the dispute resolution with the State of Michigan and that is published concurrently with this final action in this Federal Register , EPA can only consider the size of an area proposed for redesignation when resolving a dispute under CAA section 164(e). Michigan raised such a dispute and EPA is resolving it in a separate notice. For reasons explained there, EPA concluded that the size of the areas requested for redesignation provides no basis for disapproval.

Several commenters asserted that EPA's consideration of a redesignation request should not be limited to whether a Tribe or State has met the procedural requirements, but rather, that EPA should also consider the substantive basis of the request, examine tribal jurisdiction, and interject its judgment as to whether the Tribe or State redesignation request is warranted by considering such factors as the potential economic impact of the redesignation. EPA disagrees. These comments urge that EPA should, to varying degrees, exceed the congressional imposed limits on EPA's review authority and suggest imposing requirements on a Tribe's redesignation request that go far beyond what the CAA provides.

EPA began administering a PSD program in 1974, before Congress promulgated statutory provisions for the PSD program in the Clean Air Act Amendments of 1977, Public Law 95-95, 91 Stat. 685 (1977 Amendments). In its early CAA implementing regulations, EPA played an active role in the review and approval of redesignation requests. See 39 FR 42510, 42515 (Dec. 5, 1974). Among other things, EPA's pre-1977 regulations authorized it to disapprove a redesignation request if a State had “arbitrarily and capriciously disregarded” anticipated growth, or the social, environmental, and economic impact of redesignation on surrounding areas. See 40 CFR 52.21(c)(3)(vi)(a)(1975); 40 CFR 52.21(c)(3)(ii)(d)(1975).

However, in the 1977 CAA Amendments, Congress minimized EPA's authority to disapprove redesignation requests. Specifically, in section 164(b)(2), Congress limited EPA's authority to disapprove a redesignation “only if [EPA] finds, after notice and opportunity for public hearing,” that the applicable “procedural requirements” of section 164 have not been met . 42 U.S.C. 7474(b)(2) [emphasis added]. By this language, Congress clearly intended to limit EPA's role to ensuring that a State or Tribe adheres to the procedural requirements of section 164(b)(2). As the House Report accompanying the 1977 Amendments stated:

EPA honored this directive when it revised its PSD regulations following the 1977 CAA Amendments. See 42 FR 57479-57480 (Nov. 3, 1977) and thus EPA “will no longer be able to base a disapproval of a proposed redesignation on a finding that the State decision was arbitrary or capricious.” Furthermore, although this language refers to States, the CAA and legislative history make clear that the discussion applies equally to tribal redesignations. See also Arizona v. EPA .

Thus, Congress has limited EPA's review of a proposed redesignation. Under section 164(c)(2) of the CAA, EPA's role is to determine whether the requesting State or Tribe followed specific procedural requirements, and to ensure that the local decision making process provides ample opportunity for interested parties to express their views. It is inappropriate for EPA to interpose superseding Federal views on the merits of the resulting State or Tribal decisions, so long as procedural rigor is assured. Thus, in the case of the FCP Community's redesignation request, EPA's review of the redesignation proposal is limited to ensuring that the FCP Community followed the prescribed statutory requirements. See Section IV.A. For those reasons, EPA concludes that comments regarding the possible economic impact of the redesignation or the merits of the Tribe's request do not provide any basis for EPA to disapprove the redesignation.

Section 164(e) of the CAA and 40 CFR 52.21(t) provide the current statutory and regulatory framework for resolving disputes between States and Tribes arising from the redesignation of an area. Section 164(e) provides that if the Governor of an affected State or the appropriate Indian Governing Body of an affected Tribe disagrees with a request for redesignation by either party, then the governor or Indian ruling body may request that EPA negotiate with the parties to resolve the dispute. Pursuant to the statute and implementing regulations, EPA is not a party to the dispute. The Administrator of EPA is by statute designated as the final arbiter of the dispute.

The statute provides that either party can ask the Administrator for a recommendation to resolve the dispute, and if the parties fail to reach an agreement during the negotiations, “the Administrator shall resolve the dispute and his determination, or the results of agreements reached through other means, shall become part of the applicable plan and shall be enforceable as part of such plan.” See section 164(e). The statute further provides that, “In resolving such disputes relating to area redesignation, the administrator shall consider the extent to which the lands involved are of sufficient size to allow effective air quality management or have air quality related values of such an area.” Section 164(e).

As previously noted in Section IV.C, section 164(b)(2) of the CAA provides a general rule which allows EPA to disapprove a redesignation request “only if [it] finds, after notice and opportunity for public hearing,” that applicable “procedural requirements” of the section are unmet. Section 164(e) of the CAA creates a limited exception to this general rule and requires EPA to consider additional factors where a State or Tribe requests that EPA enter into negotiations to resolve a State-Tribal dispute.

Section 164(e) mandates that when EPA resolves a dispute, it must “consider the extent to which the lands involved are of sufficient size to allow effective air quality management or have air quality related values of such area.” But where the parties reach agreement, the agreement becomes part of the applicable plan and the dispute is ended. Similarly, where EPA resolves a dispute in favor of the party requesting redesignation, dispute resolution is also terminated, and the only remaining question is whether the Tribe met the requirements of section 164(b)(2). EPA explained its role in the dispute resolution process as follows:

EPA received letters from the Governors of Michigan and Wisconsin, dated June 8, 1995, requesting that EPA initiate dispute resolution. Between June 1995 and July 1999, in two separate rounds of dispute resolution proceedings, the parties utilized a professional mediation service, under contract to EPA, to mediate the separate disputes between Wisconsin and the FCP Community, and between Michigan and the FCP Community.

EPA has determined that no issues raised during either dispute resolution process would provide a basis on which EPA would deny the FCP Community's request for redesignation. For this reason, EPA is treating its resolution of the disputes invoked by the States of Wisconsin and Michigan under section 164(e) of the CAA separately from its approval of the redesignation request, and is publishing them separately, but at the same time as this final action. EPA provides a complete discussion of the resolution of the intergovernmental disputes in these two separate Federal Register notices.

As noted in section IV.A, Section 164 of the CAA affords States and Tribes the right to request that EPA redesignate lands under their control. If all procedural requirements are met, EPA must approve this request. However, several commenters asserted that EPA has no authority to implement the redesignation by any mechanism but a TIP. EPA disagrees.

Before the FCP Community submitted this request for redesignation from Class II to Class I the Yavapai Apache Tribe of Arizona submitted such a request, and on October 2, 1996, EPA approved the request. The State of Arizona, within which the Yavapai Apache lands were located, had raised objections to the redesignation and requested to enter into section 164(e) dispute negotiations with the Yavapai Apache. The EPA held a meeting with the parties, but ultimately no agreement was reached. The EPA was forced to resolve the dispute, and did so by granting the redesignation request and codifying the redesignation in a FIP. 61 FR 56461 (November 1, 1996) and 61 FR 56450 (November 1, 1996). The State of Arizona continued to dispute the approval of the reservation to Class I and filed a suit before the United States Court of Appeals for the Ninth Circuit. See Arizona v. EPA . The Ninth Circuit's decision stated, among other things, that EPA had not abused its discretion by approving the Tribe's redesignation request but that EPA should have codified the Class I area in a TIP rather than a FIP, and remanded the redesignation back to the EPA regional office so that EPA could follow the appropriate procedures for promulgating the Class I area as a TIP.

On February 12, 1998, however, EPA promulgated a final rule under section 301 of the CAA entitled “Indian Tribes: Air Quality Planning and Management.” 63 FR 7254 (Feb. 12, 1998). This rule, generally referred to as the “Tribal Authority Rule” or “TAR,” discusses those provisions of the CAA for which it is appropriate to treat Indian Tribes in the same manner as States and establishes the requirements that Indian Tribes must meet if they choose to seek such treatment. The EPA also concluded with this rule that certain provisions of the CAA should not be applied to Tribes in exactly the same manner in which they were applied to States. One of those provisions was CAA 110(c)(1), which provides the Administrator with the authority to promulgate a FIP within 2 years of finding that a State plan is insufficient. 63 FR at 7265. EPA reasoned that Tribes, unlike states, “in general are in the early stages of developing air planning and implementation expertise” because the specific authority for Tribes to establish air programs was first expressly addressed in 1990. Id. at 7264-7265. Because Tribes were only recent participants in the process, EPA determined it would be inappropriate to hold them to the same deadlines and Federal oversight as the states. Id. at 7265. The EPA noted, however, that it was “not relieved of its general obligation under the CAA to ensure the protection of air quality throughout the nation, including throughout Indian country.” Id. The EPA concluded that the Agency could “act to protect the air quality pursuant to its `gap-filling' authority under the CAA as a whole” and that “section 301(d)(4) provides EPA with discretionary authority, in cases where it has determined that treatment of Tribes as identical to states is `inappropriate or administratively infeasible,' to provide for direct administration through other regulatory means.” Id.

Under that authority, EPA adopted 40 CFR 49.11, which established the framework for adoption of FIP provisions for Indian Country: “[The Administrator] [s]hall promulgate without unreasonable delay such Federal implementation plan provisions as are necessary or appropriate to protect air quality, consistent with the provisions of section 304(a) (sic 301(a)) and 301(d)(4), if a Tribe does not submit a tribal implementation plan meeting the completeness criteria of 40 CFR 51, Appendix V, or does not receive EPA approval of a submitted tribal implementation plan.” 40 CFR 49.11(a). The intent of this provision was to recognize that Tribes may not initially have the capability to implement their own delegated CAA programs and that the TAR does not relieve EPA of its general obligation under the CAA to protect air quality throughout the nation, including in Indian country. See 63 FR 7265. Therefore, the TAR established two possible routes for the codification of a Class I redesignation on Tribal lands: (1) A TIP, if one has been developed by the Tribe and approved by EPA; and (2) A FIP, if a TIP did not exist and a FIP was necessary to protect air quality.

For that reason, and consistent with the approach detailed in the TAR, the FCP Community sent a letter to Francis X. Lyons, Regional Administrator of EPA Region 5, requesting that EPA promulgate the requested redesignation of the proposed Class I area parcels in a FIP, as opposed to utilizing a TIP, because the FCP Community was continuing to build its capacity and infrastructure to run its air program and was not yet ready to submit its own TIP. On August 23, 1999, EPA sent a letter to the FCP Community agreeing that a FIP would be an appropriate option for implementing the Class I area should EPA grant the FCP Community's request. On December 18, 2006, EPA published a supplemental proposal seeking comment on the proposed codification of the FCP Community redesignation in a FIP. 71 FR 75694 (December 18, 2006). In that proposal, EPA expressed its view that, consistent with the TAR, until such time as the FCP Community develops a TIP and has it approved, EPA retains the authority to promulgate the redesignation approval in a FIP.

The PSD program is implemented in Wisconsin under an EPA approved SIP which excludes all of Indian country within the State. In the December 18, 2006 proposal, EPA explained:

For those reasons, EPA does not agree with any suggestion that promulgation of a FIP cannot be the mechanism for implementing a redesignation of tribal lands as Class I. As discussed previously in this section, the FCP Community has formally requested that EPA approve its request to redesignate certain reservation lands and has demonstrated that it has met the necessary procedural requirements. EPA's promulgation of a FIP, at the Tribe's express request because it is not yet ready to develop its own TIP, does not supplant the Indian governing body's role in making the decision to request EPA approval of the redesignation.

However, another commenter also argues that use of a FIP is inappropriate because section 164(c) of the CAA states that only the appropriate Indian governing body may redesignate reservation lands, which, the commenter suggests, leaves no role for EPA. The commenter is mistaken. Section 164 of the CAA sets out the requirements for non-federal land redesignations and clearly specifies that the decision to redesignate will be made by the appropriate State or Indian governing body following certain procedural steps, discussed in Section IV.A, and that EPA makes the decision whether to approve the redesignation. The Tribe has requested the redesignation and EPA has approved it. That is fully consistent with CAA section 164(b)(2).

Furthermore, one State commenter asserts that a FIP is inappropriate in this case because it is not needed to protect the air quality of the lands proposed for redesignation because these lands are already protected as Class II areas under the CAA. EPA does not agree. As the FCP Community's request for redesignation makes clear, the FCP Community is seeking greater protection for these lands than is presently provided under their Class II classification. Section 164(c) of the CAA provides that States and Tribes may redesignate lands of their choosing where they meet the procedural requirements for redesignation. Moreover, this State commenter argues that a FIP is inappropriate because the TAR rule addresses only “tribal air quality programs” and Class I redesignation is not such a program. EPA disagrees that the use of a FIP is inappropriate for implementation of anything except a tribal air quality program. As discussed at the beginning of this section, 40 CFR 49.11 states in pertinent part that “[The Administrator] [s]hall promulgate without unreasonable delay such Federal implementation plan provisions as are necessary or appropriate to protect air quality * * * if a Tribe does not submit a tribal implementation plan. * * *” (emphasis added). Where, as here, the FCP Community has declined to submit a TIP, a FIP is an appropriate mechanism to protect the air quality of the redesignated Class I lands.

Both Wisconsin and Michigan objected to the proposed redesignation and requested dispute resolution under section 164(e) of the CAA. To resolve the dispute with the State of Wisconsin, the FCP Community and Wisconsin entered into a Memorandum of Agreement (FCP Community—Wisconsin MOA) for implementation of the proposed Class I area in Wisconsin. The terms of the agreement are not appropriate for inclusion into the FIP, however, because they do not apply to the effects of the Class I Redesignation. Rather, the agreement establishes certain special provisions regarding the effects of the Class I redesignation on potential sources outside the redesignated area. Those provisions have been summarized by EPA as follows:

EPA takes the position that it generally will not interfere with the agreements reached between Tribes and States through the CAA's 164(e) dispute resolution process. However, to the extent that the agreement reached under the terms of the MOA allows for restricting the requirements normally associated with Class I areas as these apply to sources located outside a 10-mile radius of the redesignated reservation lands, EPA takes the position that a revision of the Wisconsin SIP will be necessary to apply this provision to potential sources located outside the boundaries of the redesignated parcels. Therefore, EPA disagrees with the State commenter who argued that a SIP cannot be used in conjunction with any aspect of a Class I rulemaking.

EPA received several comments on language to be used in the implementation plan. The FCP Community has stated that EPA has used out of date language in the proposed FIP and therefore any FIP should use the current language for 40 CFR 52.2581. EPA agrees, and this change is noted in Section III.B. The FCP Community also states that EPA's proposed FIP leaves ambiguous whether the provisions of 40 CFR 52.21 would apply to the redesignated FCP Community Reservation Class I land. EPA agrees and has modified the FIP to make clear that the provisions of the PSD program apply to the redesignated reservation lands. This change is also noted in Section III.B.

Several commenters argued that EPA should deny the FCP Community's request because if this request is granted, then other Tribes will be encouraged to seek Class I redesignation and could eventually result in a nationwide blanket of Class I areas. EPA disagrees. Any redesignation request, by either a State or Tribe will have to consider the area of impact in its technical analysis supporting the redesignation request. Furthermore, the CAA does not require a State or Tribe to project potential future redesignations or speculate about their potential, and does not allow EPA to consider the likelihood of future redesignations as a basis for a disapproval under CAA section 164(b)(2). Any future proposed redesignation will be reviewed on a fact-specific basis according to the applicable regulations.

Other commenters expressed their view that because State air programs already address air quality, there is no need for a Tribe to implement its own air program, and, additionally, tribal air programs will unfairly burden existing state air programs by duplicating or adding to existing state requirements. EPA disagrees.

EPA's authorization of State air programs does not extend to federally recognized Indian reservations, which are excluded from State SIP approvals. CAA section 164(c) expressly provides that Tribes are responsible for redesignating reservations, and that Tribes can redesignate their lands when they conclude that the redesignation is appropriate to protect Reservation air quality. See TAR, 63 FR 7254, at 7254. It is Congress, through the CAA, that has provided Tribes (and States) with the authority to redesignate certain lands and to implement programs under CAA authorities.

The CAA states that “air pollution prevention * * * and air pollution control at the source is the primary responsibility of States and local governments * * *” and that “each State shall have the primary responsibility for assuring air quality within the entire geographic area comprising such State. * * *” 42 U.S.C. 7401(a)(3) and 7407(a). States, however, are not the exclusive regulating entity under the CAA.

In the 1990 amendments to the CAA, Congress amended the CAA to add sections 110(o) and 301(d), which allow Tribes to administer many CAA programs in the same manner as States. See 59 FR 43956. EPA furthered this congressional purpose when it promulgated regulations for implementation of CAA programs by Tribes. See 63 FR 7254 (February 12, 1998). These amendments reflect Congressional recognition that Tribes should be primarily responsible for environmental regulations and decisions that impact reservation environments.

Nevertheless, redesignation of the FCP Community lands to Class I will not require the Tribe to develop any air quality regulations. Because northeastern Wisconsin is a designated Class II area and is an attainment area, PSD requirements already apply to sources there. The regulations currently in place under Wisconsin's PSD program already require the owner/operator of proposed major stationary sources locating in PSD areas to submit a permit application containing an analysis of their air quality impacts and to install “best available control technology” to control emissions. See sections 165(a) and 169(3) of the CAA. The air quality analysis must show that the proposed source will not cause or contribute to a violation of an applicable PSD increment or a NAAQS, as demonstrated by air quality modeling. See 40 CFR 52.21(c) and (d). After notice and public hearing for a proposed permit, the permitting authority reviews the permit application and determines whether the PSD permit requirements have been met.

Thus following this rulemaking granting Class I status to FCP Community reservation lands, the States of Wisconsin and Michigan will remain, for their respective lands, the permitting authorities for sources located outside the FPC Community reservation. EPA will remain the federal permitting authority for proposed sources locating within the FCP Community reservation boundaries until the FCP Community applies for and receives delegation of this authority. Until Wisconsin amends its SIP to specify how the redesignation of the Reservation as a Class I area will affect sources in Wisconsin, such sources will treat the Reservation identically to the way they would treat any other Class I area. Sources in Michigan will treat the Reservation as a Class I area as they would any other Class I area under the FIP that currently applies to Michigan, and which will not be altered by this action.

Commenters challenged the redesignation on the basis that the Reservation does not have appropriate air quality related values. EPA, however, does not believe those comments provide any basis for rejecting the redesignation request. Neither Section 164(b) of the CAA nor EPA's implementing regulations governing redesignation require a State or Tribe requesting a redesignation to demonstrate or establish that the affected lands have AQRVs, and Congress did not make AQRVs a prerequisite for redesignation of non-federal Class I areas. It is therefore unnecessary for EPA to determine what AQRVs the lands at issue might possess in order for the Agency to act on, including granting, the redesignation request. See 61 FR 56450, 56458-56459 (Nov. 1, 1996) (redesignation of Yavapai-Apache lands). While States and Tribes “may redesignate such [other] areas [within their jurisdiction] as [they] deem[] appropriate”, there is no requirement that states or Tribes identify AQRVs before proposing to redesignate an eligible area. See CAA section 164(a), 40 CFR 52.21(g)(4).

Some commenters argue against the redesignation because they believe that the economic impact of Class I redesignation would affect residential, agricultural, and small businesses and small business growth in the area or the State of Wisconsin. EPA disagrees with this comment. Analyses included in the FCP Community's Technical Report show that only large stationary sources proposing to locate in close proximity to the Reservation lands would be affected by the redesignation and regardless of whether they are in a Class II or a Class I area, such major sources are already required to obtain an air quality permit, conduct modeling analyses, and use the best available technology to control emissions under the PSD program. In terms of other businesses, the redesignation will not affect mobile emission sources such as cars because no vehicle inspection and maintenance (smog-check) programs would be required. In addition, redesignation would not limit the home use of wood-burning stoves, nor would it create restrictions on controlled forest burning, or require dirt roads to be paved to reduce dust and particulates. Thus, home and small business owners in nearby communities should not be affected by a Class I designation of Reservation lands. Furthermore and as explained in Section IV.C, economic impacts, including impacts on minor sources, are not within the scope of EPA's review when evaluating a redesignation request.

This action is not a “significant regulatory action” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under the Executive Order.

However, as part of its application package for Class I redesignation, the FCP Community prepared an analysis of the potential costs and benefits associated with this action on the affected region (Forest County and those counties bordering Forest County). This analysis directly supports a finding that the impact of the proposed redesignation would not result in an adverse annual impact to the economy of $100 million or more. See “EPA memorandum dated October 25, 2004” in the public docket for this action.

As discussed in greater detail in the memorandum, the FCP Community analysis identifies those economic sectors with the largest employment in the area. These are industry, manufacturing and trade, which together account for 46% of the jobs in the affected area. To evaluate the effect of Class I redesignation on economic expansion and future industrial plant development in the affected area, the FCP Community prepared an independent air dispersion modeling analysis to determine the air quality impacts on the Class I area from various new projects. These included a 250-ton-per-day paper mill, three different types of power plants, and a mining project.

The modeling and screening results analyzed indicate that the proposed Class I redesignation should not have major effects on economic expansion and industrial development in the region. The redesignation could restrict the sifting of large paper mills and large coal-fired powered plants to at least 10 km from the reservation, and would limit the development of multiple projects that would have an unacceptable cumulative effect on the Class I increments, but none of the known proposed developments in the region would be adversely affected.

This action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq . We are not promulgating any new paperwork requirements (e.g., monitoring, reporting, recordkeeping) as part of this final action. However, the Office of Management and Budget (OMB) has previously approved the information collection requirements contained in the existing regulations (40 CFR parts 51 and 52) under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. , and has assigned OMB control number 2060-0003, EPA ICR number 1230.20. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

This analysis included an examination of the additional regulatory burden, per regulated unit, on those sources constructing or modifying near a Class I area, and which may be required to perform a Federal Class I area analysis to determine the effect of the proposed source on AQRV inside the Class I area, and on the consumption of increment, where the baseline has been triggered. It is important to note that not all sources located near Class I areas would have to perform such monitoring; these requirements apply only when emissions from the source have the potential to impact the Class I area.

The EPA's analysis for OMB included the additional burden placed upon the regulated community as well as on State and Federal agencies. The redesignation of FCP Community lands from Class II to Class I is wholly consistent with the analysis put forth in EPA's ICR and OMB's approval and no new paperwork requirements are being promulgated with this action.

The RFA generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute 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 organizations, and small governmental jurisdictions.

For purposes of assessing the impacts of this final action on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district, or special district with a population of less than 50,000; or (3) a small organization that is any not-for-profit enterprise that is independently owned and operated and is not dominant in its field. This action does not require a regulatory flexibility analysis because it will not have a significant economic impact on a substantial number of small entities.

The EPA believes that the reclassification of the proposed area to Class I will impose virtually no additional requirements on small entities, regardless of whether they are minor sources or major sources. For small entities that are also minor sources, since at the present time the baseline concentrations for this area have not been triggered and none of the Class I increments have yet been consumed, minor emission sources are unaffected by PSD requirements. Should the Class I increments be completely consumed in the future, it is possible that some pollution control requirements would fall to minor sources. However, any such future pollution control requirements imposed on off-reservation sources would be under the jurisdiction of the states, not EPA. Therefore, EPA is not in a present or future position to directly regulate small entities and therefore is not required to conduct an RFA analysis.

For small entities that are major sources, the impact is not expected to be substantial. As demonstrated in section V.A., the requirements for demonstrating compliance with the NAAQS and PSD increments for major facilities in and surrounding Class I areas are similar to the requirements for major facilities in and surrounding Class II areas. Therefore, this action will not have a significant impact on a substantial number of small entities.

While EPA is not required to conduct an RFA analysis, as a matter of good public policy, the Agency has reviewed information on the impact of the redesignation provided by the FCP Community in its Technical Report submitted pursuant to the Tribe's request for Class I redesignation. In this document, the Tribe reviewed the potential impact of the Class I redesignation on various types of sources, concluding that impacts of the redesignation to Class I would impact only certain major stationary sources, and would impose no additional requirements on minor sources.

For example, air dispersion modeling and EPA-approved screening performed for the Tribe's TSD demonstrates that a 140 MW natural gas fired combustion turbine power plant could be constructed and operated directly adjacent to the reservation without violating any of the Class I increments. Power plants of this type produce relatively high levels of nitrogen oxides (NO X ), which are their major emissions, yet despite its direct proximity to a Class I area, such a facility would impact only a small fraction (~4%) of the allowable Class I increment for NO X . Considering that the FCP Community analysis shows that a major gas-fired power generating facility could be operated immediately next to the reservation without significant impacts, and that only very large industrial projects located within approximately 10 km of the reservation would be affected by the redesignation, it appears very unlikely that any small businesses located within 100 kilometers would produce emissions in large enough quantities to trigger the Class I restrictions.

Nevertheless, it is possible that a small business located close enough to the reservation may be a major source of criteria air pollutants. Even in that event, the PSD requirements for Class I areas would be very unlikely to impose a significant financial burden on such a small business. If it is an existing business at the time the redesignation goes into effect, it would not be subject to the PSD permitting requirements, which apply only to new stationary sources or major modifications to existing sources.

Even if the small business in question was new to the Class I area, hence subject to PSD permitting, the redesignation would still not impose additional significant financial or regulatory burdens on the small entity. As a major source of criteria air pollutants, the small business would be subject to PSD permitting regulations whether the reservation had been redesignated to Class I or had remained a Class II area, as it is now. Major stationary sources proposing to locate in any PSD area, regardless of whether it is Class II or Class I, must still conduct the same type of analyses to measure the impact of their emissions on the allowable increments and use the best available control technology to reduce their emissions and minimize adverse effects.

Should the area remain Class II, the major source would still be required to perform a modeling analysis to ensure that the Class II increments are protected in order to obtain a permit. Since a modeling analysis is required in any case, the cost of adding additional receptor points, if needed, to the modeling analysis to gather the necessary data to ensure that the Class I increments will also be protected should be relatively small. Likewise, since every major stationary source proposing to locate in a PSD area, whether it has been designated as Class I or Class II, must employ “best available control technology” to reduce emissions, proximity to a Class I area generally would not affect the level of control required to meet BACT. In short, regardless of whether they are in a Class II or a Class I area, major sources are required to obtain an air quality permit, conduct modeling analyses, and use the best available technology to control emissions under the PSD program. Thus, as a general rule, redesignation should not inflict additional control costs on a source.

Under certain circumstances a major source may be required to achieve further decreases in emissions to reduce its impact on the air quality related values of a Class I area. Such a requirement would necessitate further regulatory action by either the FCP Community or EPA, however, and the impacts of the specific requirements can be appropriately assessed at that time. Additionally, it would be very unusual for a small business to also be a major source and a substantial number of small entities should certainly not be so affected.

Several other Indian Tribes have redesignated tribal lands to Class I in other parts of the country, and their experience can provide us with some insight into the impact redesignation typically has on small entities in the vicinity. These include the Northern Cheyenne Tribe, Montana; Flathead Indian Reservation, Montana; Fort Peck Indian Reservation, Montana and the Spokane Indian Reservation, Washington, which were redesignated as Class I areas between 1977 and 1990. Thus far, there has been very little economic impact on small businesses, nearby towns, local governments or other small entities following Class I redesignation in those areas. The EPA has no reason to believe that same pattern of minimal economic impact to small businesses will not be repeated in Forest County and the surrounding counties.

Small entities that are minor sources of air pollution will not be affected at all by this action at this time. The PSD permit program does not cover minor sources and, as previously discussed, EPA does not directly regulate minor entities. The reclassification of the proposed area to Class I therefore imposes virtually no additional requirements on small entities since the baseline concentration level for Forest County has not yet been triggered and none of the PSD increments in the area have yet been consumed. The baseline concentration is the conceptual reference point or ”starting” point for determining air quality deterioration in an area subject to the PSD program. Thus, the baseline concentration is essentially the ambient air quality existing at the time the first complete PSD application is made for a major new source affecting a PSD baseline area. Since no PSD permit application triggering a baseline date has been submitted in the Forest County area, there has not been any consumption of the PSD increments in the area. Should major and minor sources of pollution consume all of the available increment in an area at some point in the future, it is possible that some pollution control requirements would then fall to minor sources, but since roughly 75% of the land in Forest County is National Forest, and there is presently very little industrial development in the area, there is likely to be little consumption of the Class I increments for some time to come.

After considering the economic impacts of this final rule on small entities, I certify that this action will not have a significant economic impact on a substantial number of small entities. This final rule will not impose any requirements on small entities that are not major sources because this action affects only major stationary sources, as defined by 40 CFR 52.21.

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year. Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives, and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted. Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

The EPA has determined that this rule does not contain a Federal mandate that may result in expenditures of $100 million or more for State, local, and tribal governments, in the aggregate, or the private sector in any one year. The redesignation would not impose significant additional financial or regulatory burdens on a new or modified source subject to the PSD permitting requirements. As a major source of criteria air pollutants, a new or modified source would be subject to PSD regulations whether the reservation had been redesignated to Class I or had remained a Class II area, as it is now. New major stationary sources proposing to locate in any PSD area, regardless of whether it is Class II or Class I, must still conduct the same type of analyses to measure the impact of their emissions on the allowable increments and use the best available control technology to reduce their emissions and minimize adverse effects. No additional permits would be required as a result of a redesignation of FCP Community reservation lands. In addition, the EPA has determined that this rule contains no regulatory requirements that might significantly or uniquely affect small governments because, as already stated in other sections of this regulatory package, the redesignation from a Class II to a Class I area would not impose additional significant financial or regulatory burdens on sources. Thus, this rule is not subject to the requirements of sections 202 and 205 of the UMRA.

Executive Order 13132, entitled “Federalism,” 64 FR 43255 (August 10, 1999), 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 section 6 of Executive Order 13132, we 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 we consult with State and local officials early in the process of developing the proposed regulation. We also may not issue a regulation that has federalism implications and that preempts State law, unless we consult with State and local officials early in the process of developing the proposed regulation.

This final rule does not have federalism implications. It 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. The rule merely implements an authority currently available to Indian Tribes to redesignate their reservation lands under the PSD program of the CAA, and does not alter the relationship or the distribution of power and responsibilities established in the CAA. Thus, Executive Order 13132 does not apply to this rule.

Although section 6 of Executive Order 13132 does not apply to this rule, EPA did consult with State and local officials in developing this rule. A summary of the concerns raised during that consultation and EPA's response to those concerns are provided in the public docket of this rulemaking.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” 65 FR 67249 (November 6, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.”

The EPA has concluded that this final rule establishes federal standards and will have tribal implications. However, it will neither impose substantial direct compliance costs on tribal governments, nor preempt Tribal law. Thus, consistent with section 3 of the Executive Order, in the process of developing this final action, EPA consulted with FCP Community tribal officials to allow them to have meaningful and timely input into its development. EPA consulted with representatives of the FCP Community prior to their submission of the redesignation request. During this consultation, EPA explained the function of the CAA's redesignation provision, differences between Class I and Class II designations, and alternatives to the proposed Class I redesignation.

The FCP Community chose to submit a request for redesignation to Class I on February 14, 1995 to further their goal of exercising control over reservation resources and to better protect the members of their community. Since the FCP Community submitted its request for redesignation, EPA has kept the FCP Community informed of its process for completing the rulemaking through written correspondence, conference calls, and face to face meetings when appropriate. Records of these communications are found in the docket for this final action. Most recently, EPA officials held consultations with the FCP Community between February and August 2007 to discuss this final action and to answer the Community's questions. Overall, EPA expects that the impact of the redesignation to Class I will be positive.

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 final rule is not subject to the Executive Order because it is not economically significant as defined in Executive Order 12866, and the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportionate effect on children. Redesignation of the identified parcels of the FCP Community Reservation to Class I status will reduce the allowable increase in ambient concentrations of various types of pollutants. The reduction of these pollutants can only be expected to better protect the health of tribal members, members of the surrounding communities, and especially children and asthmatics.

The adverse health effects of exposure to high levels of criteria air pollutants such as sulfur dioxide and fine particulate matter are well known and well documented. Sulfur dioxide, for example, is known to irritate the respiratory system. As explained in the FCP Community's Technical Support Document, exposure to high concentrations for even short periods can cause bronchial constriction and exposure to lower concentrations of sulfur dioxide for longer periods and suppresses the respiratory system's natural defenses to particles and bacteria. 13 Children and asthmatics are especially vulnerable to the adverse health effects of sulfur dioxide. 14 If the Class I redesignation is codified in a FIP, the allowable increase in ambient concentrations of sulfur dioxide after redesignation of the reservation to Class I status (on an annual arithmetic mean basis) will be one-tenth of the current Class II allowable increase in ambient concentrations, thus providing greater health protection to children from such air pollutants.

Likewise, the allowable increase in ambient concentrations of particulate matter after Class I redesignation (on an annual basis) will be approximately one-fourth of the current Class II increase. Particulate matter consists of airborne particles and aerosols ranging in size from less than 1 micrometer to more than 100 micrometers. Aside from natural sources, industrial activity can release great quantities of particulates (dust, soot, ash and other solid and liquid particles). Combustion products emitted during power generation, heating, motor vehicle use and various industrial processes are also classified as particulate matter. The vast majority (~99%) of such inhalable particulate matter is trapped in the upper respiratory tract, but the remainder enters the windpipe and the lungs, clinging to the protective mucosa. The smallest particles are deposited in the alveoli and capillaries of the lung, where they impair the exchange of oxygen and causes shortness of breath. Children, the elderly, and people with pulmonary problems and respiratory conditions (e.g., emphysema, bronchitis, asthma, or heart problems) are the most susceptible to these debilitating effects. 15 Adverse health effects from particulate matter are often cumulative and progressive, worsening as particulates gradually collect in the lungs following repeated, long-term exposure. 16

Fine particulate matter is the worst offender in that regard. Scientific studies have shown that particulate matter, especially fine particles (those particles with an aerodynamic diameter of less than 2.5 micrometers and commonly known as PM 2.5 ), are retained deep within the lung. 17 Short term exposure to such fine particulate matter can cause lung irritation and may impair immune responses. Some of the material from the particles can dissolve in the lungs, causing cell damage, and the particles themselves may consist of compounds that are toxic or which form acids when combined with moisture in the lungs. Long-term lower level exposures can cause cancer and other respiratory illnesses. Reducing the allowable increase in ambient concentrations of particulate matter by roughly 75% should thus provide greater health protection from such afflictions to children on the reservation and in the surrounding communities.

In short, the environmental health or safety risks addressed by this action do not present a disproportionate risk to children. In fact, they are expected to have a positive rather than a negative impact on children's health and the environment.

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001), because it is not a significant regulatory action under Executive Order 12866.

As noted in the proposed rule, Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

This action does not involve technical standards. Therefore, EPA did not consider the use of any voluntary consensus standards.

J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations

Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes Federal executive policy on environmental justice. Its main provision directs Federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.

EPA has determined that this final rule will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because it increases the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population.

The EPA believes that the redesignation of FCP Community lands in a FIP from Class II to Class I area should not raise any environmental justice issues since it will reduce the allowable increase in ambient concentrations of various types of pollutants. Consequently, this redesignation should result in health benefits to tribal members and members of the surrounding communities.

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 action is not a “major rule” as defined by 5 U.S.C. 804(2). Therefore, this rule will be effective May 29, 2008.

The statutory authority for this final action is provided by sections 110, 301 and 164 of the CAA as amended (42 U.S.C. 7410, 7601, and 7474) and 40 CFR part 52.

On March 5, 2008 (73 FR 11845), EPA published a notice of proposed rulemaking (NPR) for the State of Delaware. The NPR proposed approval of the provisions to control emissions from stationary generators. The formal SIP revision was submitted by the State of Delaware on November 1, 2007. Specific requirements of Delaware's regulation to control emissions from stationary generators and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

EPA is approving Regulation No. 1144—Control of Stationary Generator Emissions, as a revision to the Delaware SIP. This regulation will help ensure that the air emissions from new and existing generators do not cause or contribute to the existing air quality problems with regard to ground-level ozone and fine particulate matter, thereby adversely impacting public health, safety, and welfare.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq .);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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 action 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 action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 30, 2008. 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, pertaining to Delaware's regulation to control emissions from stationary generators, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Section 110(a)(1) of the CAA requires that states submit to EPA plans to maintain the NAAQS promulgated by EPA. EPA interprets this provision to require that areas that were maintenance areas for the 1-hour ozone NAAQS, but attainment for the 8-hour ozone NAAQS, submit a plan to demonstrate the continued maintenance of the 8-hour ozone NAAQS.

On May 20, 2005, EPA issued guidance that applies to areas that are designated unclassifiable/attainment for the 8-hour ozone standard. The purpose of this guidance is to address the maintenance requirements in section 110(a)(1) of the CAA, and to assist the States in the development of a SIP. The components from EPA's guidance include: (1) An attainment emissions inventory, which is based on actual “typical summer day” emissions of volatile organic compounds (VOCs) and nitrogen oxides (NO X ) for the 10-year maintenance period, from a base-year chosen by the State; (2) a maintenance demonstration, which demonstrates how the area will remain in compliance with the 8-hour ozone standard for a period of 10 years following the effective date of designation unclassifiable/attainment (June 15, 2004); (3) an ambient air monitoring network, which will be in continuous operation in accordance with 40 CFR part 58 to verify maintenance of the 8-hour ozone standard; (4) a contingency plan, that will ensure that in the event of a violation of the 8-hour ozone NAAQS, measures will be implemented as promptly as possible; (5) a verification of continued attainment, indicating how the State intends on tracking the progress of the maintenance plan.

On February 26, 2008 (73 FR 10201), EPA published a notice of proposed rulemaking (NPR) for the Commonwealth of Virginia. The NPR proposed approval of a 10-year maintenance plan for the White Top Mountain 1-hour ozone nonattainment area located in Smyth County, Virginia. The formal SIP revision was submitted by the Commonwealth of Virginia on August 6, 2007.

Other specific requirements of the 10-year maintenance plan under section 110(a)(1) for the White Top Mountain 1-hour ozone nonattainment area located in Smyth County, Virginia and the rationale for EPA's proposed action are explained in the NPR and will not be restated here. No public comments were received on the NPR.

Virginia has requested approval of a revision consisting of a 10-year maintenance plan under section 110(a)(1) for the White Top Mountain 1-hour ozone nonattainment area located in Smyth County, Virginia. The Virginia Department of Environmental Quality (VADEQ) 8-hour ozone maintenance plan addresses the five components of EPA's May 20, 2005 Guidance, which pertains to the maintenance requirements in section 110(a)(1) of the CAA.

In 1995, Virginia adopted legislation that provides, subject to certain conditions, for an environmental assessment (audit) “privilege” for voluntary compliance evaluations performed by a regulated entity. The legislation further addresses the relative burden of proof for parties either asserting the privilege or seeking disclosure of documents for which the privilege is claimed. Virginia's legislation also provides, subject to certain conditions, for a penalty waiver for violations of environmental laws when a regulated entity discovers such violations pursuant to a voluntary compliance evaluation and voluntarily discloses such violations to the Commonwealth and takes prompt and appropriate measures to remedy the violations. Virginia's Voluntary Environmental Assessment Privilege Law, Va. Code Sec. 10.1-1198, provides a privilege that protects from disclosure documents and information about the content of those documents that are the product of a voluntary environmental assessment. The Privilege Law does not extend to documents or information (1) that are generated or developed before the commencement of a voluntary environmental assessment; (2) that are prepared independently of the assessment process; (3) that demonstrate a clear, imminent and substantial danger to the public health or environment; or (4) that are required by law.

On January 12, 1998, the Commonwealth of Virginia Office of the Attorney General provided a legal opinion that states that the Privilege law, Va. Code Sec. 10.1-1198, precludes granting a privilege to documents and information “required by law,” including documents and information “required by Federal law to maintain program delegation, authorization or approval,” since Virginia must “enforce Federally authorized environmental programs in a manner that is no less stringent than their Federal counterparts. * * *” The opinion concludes that “[r]egarding § 10.1-1198, therefore, documents or other information needed for civil or criminal enforcement under one of these programs could not be privileged because such documents and information are essential to pursuing enforcement in a manner required by Federal law to maintain program delegation, authorization or approval.”

Virginia's Immunity law, Va. Code Sec. 10.1-1199, provides that “[t]o the extent consistent with requirements imposed by Federal law,” any person making a voluntary disclosure of information to a state agency regarding a violation of an environmental statute, regulation, permit, or administrative order is granted immunity from administrative or civil penalty. The Attorney General's January 12, 1998 opinion states that the quoted language renders this statute inapplicable to enforcement of any Federally authorized programs, since “no immunity could be afforded from administrative, civil, or criminal penalties because granting such immunity would not be consistent with Federal law, which is one of the criteria for immunity.”

Therefore, EPA has determined that Virginia's Privilege and Immunity statutes will not preclude the Commonwealth from enforcing its program consistent with the Federal requirements. In any event, because EPA has also determined that a state audit privilege and immunity law can affect only state enforcement and cannot have any impact on Federal enforcement authorities, EPA may at any time invoke its authority under the CAA, including, for example, sections 113, 167, 205, 211 or 213, to enforce the requirements or prohibitions of the state plan, independently of any state enforcement effort. In addition, citizen enforcement under section 304 of the Clean Air Act is likewise unaffected by this, or any, state audit privilege or immunity law.

EPA's review of this revision indicates that the Commonwealth of Virginia has addressed the components of a maintenance plan pursuant to EPA's May 20, 2005 guidance, and meets the requirements of section 110(a)(1) of the CAA. EPA is approving the Virginia SIP revision for White Top Mountain, Smyth County, Virginia, which was submitted on August 6, 2007.

Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq .);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq .);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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 action 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 action is not a “major rule” as defined by 5 U.S.C. 804(2).

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 June 30, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action 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 approving Virginia's SIP revision request consisting of a 10-year maintenance plan under section 110(a)(1) for the White Top Mountain 1-hour ozone nonattainment area located in Smyth County, Virginia may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

On October 19, 2007, KDAQ submitted to EPA a source-specific SIP revision requesting that the 1989 source-specific redistribution of SO 2 emission limits for TVA Paradise be revised to account for new control technology at the facility. KDAQ proposed that the TVA Paradise facility be subject to specific limits discussed below which are more stringent than Kentucky's SIP-approved KAR, requiring a 3.1 lbs/mmBTU limit. The rationale for the 1989 equivalency determination and redistribution was the lack of control measures (a scrubber) on Unit 3. TVA has now installed a wet scrubber on Unit 3, and as a result, the 1989 redistribution is no longer necessary for the facility to comply with the SIP-approved 401 KAR 61:015. At this time, Units 1 and 2 are equipped with Venturi-type limestone slurry flue gas desulfurization (FGD) scrubbers, and Unit 3 is equipped with an electrostatic precipitator and a wet limestone FGD scrubber. The facility is now able to meet (and exceed) the requirements of 401 KAR 61:015 without a unit-specific redistribution. The new SO 2 limits are: 1.2 lbs/mmBTU for all three units with a 3.1 lbs/mmBTU limit allowed at Unit 3 for a limited time for scrubber maintenance. This revision is consistent with section 110 of the Clean Air Act (CAA) because it will continue to provide for attainment and maintenance of the SO 2 NAAQS. EPA proposed this revision for approval on February 5, 2008 (73 FR 6657), and no adverse comments were received.

EPA is taking final action to approve a source-specific SIP revision submitted by KDAQ in October 2007 regarding the SO 2 emission limits for the three units at the TVA Paradise Facility. This action will supersede the 1989 source-specific SIP revision and subject TVA Paradise to emission limits of 1.2 lbs/mmBTU at Units 1, 2, and 3, except that Unit 3 may meet the limit of 3.1 lbs/mmBTU that is established in 401 KAR 61:015 during the limited times when the Unit 3 scrubber is bypassed for maintenance (not to exceed 720 operating hours in a 12-month period).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves Kentucky law as meeting Federal requirements and does not impose additional requirements beyond those imposed by Kentucky law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the Commonwealth, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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. Section 804, however, exempts from section 801 the following types of rules: rules of particular applicability; rules relating to agency management or personnel; and rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). Because this is a rule of particular applicability, EPA is not required to submit a rule report regarding this action under section 801.

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 30, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action 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).)

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

This action will apply to applicants to the PSD construction permit program on Class I trust lands of the Forest County Potawatomi Community.

1. Docket. EPA has established a docket for this action under Docket ID No. EPA-R05-OAR-2004-WI-0002. Publicly available docket materials are available either electronically in http://www.regulations.gov or in hard copy at the U.S. Environmental Protection Agency, Air Docket, in the EPA Headquarters Library, Room Number 3334 in the EPA West Building, located at 1301 Constitution Ave., NW., Washington, DC. The EPA/DC Public Reading Room hours of operation will be 8:30 a.m. to 4:30 p.m. Eastern Standard Time (EST), Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742. The docket is also available during normal business hours for public inspection and copying at the Air Programs Branch, Region 5, EPA (AR-18J), 77 West Jackson Boulevard, Chicago, Illinois 60604.

2. Electronic Access. You may access this Federal Register document electronically through the EPA Internet under the ” Federal Register ” listings at: http://www.epa.gov/fedrgstr . In addition to being available in the docket and on the EPA Federal Register Internet Web site, an electronic copy of this notice is also available on the EPA's New Source Review (NSR) Web site, under Regulations & Standards, ­at http://www.epa.gov/nsr/actions.html.

The information in this notice is organized as follows:

On February 14, 1995, the FCP Community submitted a request to the EPA to approve the redesignation of the air quality status of the FCP Community's Reservation from “Class II” to “Class I” under the CAA's PSD regulations. The area of FCP Community reservation lands that has been proposed for redesignation to Class I comprises 10,818 acres, all of which is located in Forest County, Wisconsin.

Section 164(e) of the CAA and 40 CFR 52.21(t) provide the current statutory and regulatory framework for resolving disputes between states and Tribes over redesignation of an area or for permits for new major emitting facilities that may cause or contribute to a cumulative change in air quality under the PSD program. Section 164(e) provides that if the Governor of an affected state or the appropriate Indian Governing Body of an affected Tribe disagrees with a request for redesignation by either party, then the governor or Indian ruling body may request that EPA negotiate with the parties to resolve the dispute. The statute provides that either party can ask the Administrator for a recommendation to resolve the dispute, and if the parties fail to reach an agreement during the negotiations, “the Administrator shall resolve the dispute and his determination, or the results of the agreements reached through other means, shall become part of the applicable plan and shall be enforceable as part of such plan.” Section 164(e), 42 U.S.C. 7474(e).

Similarly, if a permit is proposed to be issued for any new major emitting facility proposed for construction in any state which the Governor of an affected state or the governing body of an affected Indian Tribe determines will cause or contribute to a cumulative change in air quality in excess of that allowed within the affected state or reservation, the Governor or Tribal ruling body may invoke the same dispute resolution mechanism. States or Tribes with Class I areas cannot, however, “veto” permits that may adversely affect those areas.

In resolving a dispute, the statute directs EPA to “consider the extent to which the lands involved are of sufficient size to allow effective air quality management or have quality related values of such area.” As further discussed in the response to comments concerning the disputed issues, the CAA and its implementing regulations do not contain a minimum size requirement for area redesignation by a state or Tribe, and the size of the redesignated area is relevant only to the extent that it may impact effective air quality management or air quality related values (AQRVs). The Act does not define AQRVs nor identify specific AQRVs other than visibility ( See section 165(d)(2)(B) of the Act), but in the legislative history to the Act, AQRVs are described as follows:

Pursuant to section 164(c), 42 U.S.C. 7474(c), the FCP Community Tribal Council formally submitted a proposal to redesignate certain FCP Community reservation lands from Class II to Class I to the EPA on February 24, 1995. A Class I air quality designation provides greater protection for air resources by decreasing the increases allowed in the ambient concentrations of particulate matter, sulfur dioxide, and nitrogen oxides from any new major stationary sources or major modifications to existing sources in the vicinity. The types of facilities whose emissions could impact these lower limits are generally new or expanding large industrial sources such as electric utilities and pulp and paper mills. No new operating permits or additional controls would be required for existing sources solely as a result of a Class I designation.

Along with reducing allowable concentrations of key pollutants, Class I areas may also include AQRVs which are intended to further protect air quality. In the case of the FCP Community redesignation, the Tribe has proposed acidic and mercury deposition as the AQRVs it is seeking to protect. Because state officials were concerned about AQRVs and other issues, an intergovernmental dispute eventually developed and the parties ultimately sought dispute resolution under section 164(e).

By statute, the Agency must approve or disapprove a request for redesignation. Accordingly, on June 29, 1995, EPA published a notice in the Federal Register (FR) proposing to approve the redesignation request by the FCP Community to Class I area status. The notice provided for a 60 day public comment period. However, on June 8, 1995, the Governors of Wisconsin and Michigan sent a joint letter to EPA objecting to EPA's proposal to grant the FCP Community request for redesignation and requesting dispute resolution. The June 8 letter focused on two concerns, first, the states' perception that EPA lacked rules to handle such redesignation requests and the implementation of non-federal Class I areas, and second, that a non-federal Class I area would “significantly infringe upon the ability of our state governments to manage the natural resources of our states.”  1

To address their concerns, the Agency published a FR notice (60 FR 40139) on August 7, 1995, postponing the scheduled August 2, 1995 public hearing and extending, at the states' request, the public comment period indefinitely while the Agency attempted to negotiate with the states and respond to the issues they had raised.

As already noted, section 164(e) of the Act allows either the Governor of a state or the Indian ruling body that disagrees with a proposed redesignation to request the Administrator to enter into negotiations with the parties involved to resolve the dispute. In response to the Governors' letter, EPA contracted with a professional mediation service (RESOLVE, Inc.) to provide mediation services. During 1995, Wisconsin and the FCP Community began work toward developing a Memorandum of Understanding, and invited Michigan to participate in this process. RESOLVE discussed the case with EPA and the parties, and circulated resumes and a list of potential mediators for comment by the parties, but the parties could not agree on a mediator and none was selected.

In the meantime, in partial response to the states' request that EPA promulgate rules to address non-federal Class I areas, EPA had formed a senior workgroup to cooperatively develop options for consideration by the states and Tribes regarding roles and responsibilities of non-Federal Class I area managers. To gather public comment on different proposals, EPA published an advanced notice of proposed rulemaking (ANPR) on May 16, 1997. 62 FR 27158 (May 16, 1997). The EPA held public workshops in Chicago and Phoenix on the ANPR, and gathered testimony on the options for proposed rulemaking. 62 FR 33786 (June 23, 1997). The states had requested that EPA's action of the FCP Community Class I request be delayed until after the Agency could complete this rulemaking, but the rulemaking was not finalized. 2

From 1995 through 1997, EPA engaged in an extended correspondence with Wisconsin and Michigan regarding the proposed redesignation and how to address both states' concerns, as reflected in the record for this action.

Following nearly 2 years of discussions, however, the states and the Tribe had not reached a resolution of the issues that had been raised by the states, nor had EPA completed the public notice process on the proposed redesignation. The issues included for Michigan, in addition to the two concerns discussed above, that the Agency promulgate additional rules to implement the dispute resolution provision at CAA section 164(e), that the Agency impose its own requirement that non-federal Class I areas be limited to those exceeding 5,000 acres in size with specified “uniqueness” criteria, and that the Agency promulgate additional rules to cover all aspects of implementing the requirements of established non-federal Class I area requirements. 3

In the absence of an agreed resolution of either of the states' issues, on July 10, 1997, EPA moved to bring closure to the rulemaking process by publishing a notice for two informational meetings and two public hearings on the FCP Community's redesignation request with a public comment period to close on September 15, 1997. 62 FR 37007 (July 10, 1997). EPA held public hearings on the proposed redesignation on August 12, 1997, in Carter, Wisconsin, and August 13, 1997, in Rhinelander, Wisconsin. By the close of the public comment period, EPA had received more than 120 comments on the proposed redesignation.

On April 21, 1998  4 , Wisconsin requested that EPA reinitiate the dispute resolution process under section 164(e). In response, EPA sent letters to the State of Wisconsin, the State of Michigan, and the FCP Community requesting a meeting to begin the negotiations to resolve the dispute. EPA requested that the parties each identify its chief negotiator, and that each party submit a written list of issues that it wished to submit to the dispute resolution process. EPA, in consultation with the parties, requested RESOLVE to select a mediator, and this time, Triangle Associates, Inc., Seattle, Washington, was chosen to mediate the discussions.

EPA requested that the mediator interview each of the parties, discuss the issues submitted by each party, and structure a dispute resolution process tailored to the needs of this dispute. Following the initial interview, the Agency requested an initial meeting of all parties to agree upon a protocol, establish a list of issues appropriate for discussion under section 164(e), and plan a series of further meetings aimed at resolving the dispute.

The first dispute resolution meeting occurred on September 2, 1998, at the Region 5 offices in Chicago, Illinois. Both the States of Wisconsin and Michigan participated in this meeting, although Michigan formally announced its participation solely as an “observer.”  5 During this meeting, the states and the Tribe identified issues of concern and attempted to find areas of overlap that could potentially lead to resolution.

Following this first meeting, the parties requested that EPA examine the twenty-one issues submitted for dispute resolution to determine which would be appropriate for discussion and resolution under section 164(e) of the CAA. EPA Region 5, in consultation with EPA's headquarters offices (Office of Air and Radiation, Office of General Counsel, and Office of Air Quality Planning and Standards), by letter of November 6, 1998, ultimately submitted a list of six suitable topics for further discussion and resolution to the parties. These issues included: “(1) Whether the lands proposed for redesignation are of sufficient size to allow for effective air quality management; (2) the extent to which the lands proposed for redesignation have sufficient size to have AQRVs; (3) the off-reservation impacts of redesignation as discussed in the [FCP Community's] Technical Report; (4) the Tribe's choice of mercury deposition as an AQRV; (5) the Tribe's choice of AQRVs; and (6) the roles and responsibilities of the respective parties in the dispute resolution discussion on September 2, 1998.”  6 The Agency also informed the parties that the remaining issues were either unsuitable for discussion under the CAA section 164(e), or where wholly within EPA's purview as a decision maker under CAA section 164(b) and 164(e).

On November 16, 1998, the Tribe and the State of Wisconsin held a second dispute resolution meeting in Green Bay, Wisconsin, but the State of Michigan elected not to participate in this meeting. Following several meetings, Wisconsin and the Tribe reached an agreement that resolved their dispute.

The parties circulated the final agreement for signature, and the EPA Region 5 Regional Administrator concurred on the agreement on October 12, 1999. Consistent with CAA section 164(e), the terms of the agreement constitute the resolution of the dispute between Wisconsin and the Tribe.

However, after observing the first dispute resolution session on September 2, 1998, the State of Michigan did not participate in any of the other dispute resolution sessions between the State of Wisconsin and the FCP Community. Triangle Associates, Inc. continued to keep Michigan abreast of the dispute resolution proceedings by forwarding the minutes of each negotiating session to the state. Believing that the negotiations with Michigan had reached an impasse, on August 4, 1999, the Forest County Potawatomi Vice-Chairman contacted EPA in writing to request that the Administrator resolve the dispute with the State of Michigan under section 164(e). On December 22, 1999, the MDEQ sent a letter to EPA requesting a meeting between the FCP Community and Michigan as a continuation of the dispute resolution Michigan had invoked under section 164(e), stating that while the state still considered all of the issues it had previously raised to be unresolved, “in the interest of resolving this matter, I request that [EPA] begin a negotiation with the FCP Community and the State of Michigan, as a continuation of the dispute resolution process, and in an effort to address the comments and resolve the objections previously forwarded by the State of Michigan.”  7

On April 25, 2000, Michigan submitted a list of twelve issues for discussion in the new round of dispute negotiations, which corresponded to issues previously raised by the state. 8 On June 23, 2000, the FCP Community submitted a letter to EPA responding to Michigan's request for dispute negotiations. The EPA set up a meeting between Michigan, the FCP Community, and EPA on January 9, 2001, in Chicago, Illinois. The parties exchanged initial draft proposed principles for resolution of the dispute negotiation. After reviewing their respective proposed principles, the parties could not reach an agreement. On February 12, 2001, the FCP Community submitted a letter to EPA requesting an EPA determination to resolve the dispute and adopt the FCP Community proposal as the final determination. On February 23, 2001, EPA sent a letter to both parties requesting that they submit to EPA their positions on the dispute negotiation and their proposals for resolution. On March 16, 2001, Michigan submitted its position on the section 164(e) resolution to EPA, reiterating the two central concerns originally identified in the joint-states' letter of June 8, 1995: (1) Lack of formally promulgated rules, and (2) potential impact of Class I area on state's air program management. The letter concluded “if the EPA's final action does not impose any additional obligations upon Michigan's air program and does not subject Michigan air use permits to section 164(e) dispute resolution review, the need for Michigan to request review by the U.S. Sixth Circuit Court of Appeals of the designation of FCP Community lands may be obviated.”  9 On March 19, 2001, the FCP Community submitted its position on the section 164(e) resolution to EPA.

On February 3, 2003, the FCP Community contacted EPA to request that the Agency's actions on the rulemaking be suspended for a 90-day period to allow the Tribe to attempt a bilateral negotiation with the State of Michigan's new administration. EPA encouraged the parties to meet and offered to reinitiate the dispute resolution process with the third-party mediator should the parties request this. On February 14, 2003, MDEQ responded that it would participate in bilateral discussions, but considered these outside the scope of the CAA section 164(e) dispute resolution process. 10 These discussions failed to produce an agreement, and in November 2003, the Tribe requested that EPA move forward with the rulemaking request. 11

Although EPA provided updates for the states and Tribe on the progress of completing the rulemaking process, there was no further resolution of the issues raised by Michigan by the time EPA published the proposed FIP in December 2006.

Michigan submitted extensive comments opposing the proposed Federal Implementation Plan (FIP) and reiterating its concerns regarding the redesignation. It objected to EPA's proposal to implement the redesignation through a FIP, to the validity of the agreement between Wisconsin and the Tribe, and to approving the redesignation before completing a rulemaking proposed in August 2006. See Proposed Rule: Review of New Sources and Modifications in Indian Country, 71 FR 48696 (August 21, 2006).

However, none of these comments provide a legally supportable basis for denying the redesignation. The CAA gives EPA only a very limited role in reviewing a redesignation request. As a general rule, EPA can “disapprove the redesignation of any area only if [it] finds, after notice and opportunity for public hearing, that such redesignation does not meet the procedural requirements” in CAA section 164(b) and 40 CFR 52.21. “Once these procedural requirements are met, EPA must approve the request for redesignation.” Administrator, State of Arizona v. EPA, 151 F.3d 1205, 1211 (9th Cir. 1998), hereafter Arizona v. EPA. EPA cannot “re-weigh the effects of a proposed redesignation or second-guess a tribe's decision to redesignate its reservation lands.” Id. at 1212.

Where a neighboring state or tribe disagrees with the proposed redesignation of an area, section 164(e) provides a narrow exception to that general rule of limited EPA review. EPA believes that where there is a dispute, it must consider whether to resolve the dispute by disapproving the redesignation, based on the factors identified in 164(e). If EPA resolves the dispute in favor of the party requesting redesignation, the dispute is terminated, and the only remaining question is whether the Tribe met the procedural requirements of 164(b)(2). Because that inquiry involves only procedural adequacy, when EPA conducts that second inquiry, it cannot consider any information relating to any matter other than procedure, even if that information was considered in the dispute resolution. Consistent with that, EPA is treating this dispute resolution separately from the approval of the redesignation request and is publishing the two separately.

In resolving a dispute over redesignation under 164(e), EPA “must consider the extent to which the lands involved are of sufficient size to allow effective air quality management or have air quality related values.” Arizona v. EPA , construing CAA section 164(e). EPA recognizes that this language requires EPA to consider the size of a reservation in resolving a dispute. Consistent with that, in a previous dispute, EPA rejected a state's claim that reservation lands consisting of five noncontiguous parcels totaling 632 acres, with the smallest having 3.7594 acres should be disapproved; EPA found that the areas in question “were not too small to allow effective air quality management or to have air quality related values.” Arizona v. EPA (citing EPA finding with approval).

In this dispute, the state has not seriously argued that the lands the Tribe has requested for redesignation were too small “to allow effective air quality management or have air quality related values.” 12 Nevertheless, the statute directs EPA to consider that subject.

In its decision to grant the Class I redesignation request for the Yavapai-Apache reservation, EPA examined whether it would be difficult to perform a PSD air quality modeling analysis that assessed the impacts of a proposed source in such a situation. The EPA concluded that, based on the modeling tools available at that time, it would be relatively simple and practicable for a proposed source to project its impact on the Class I area parcels and evaluate the analysis. See 61 FR at 56457-56458. Moreover, current air quality planning and management tools have become increasingly sophisticated and refined and apply to a variety of area sizes and configurations, ranging from a single facility to large metropolitan areas. For example, EPA, in coordination with states has established nonattainment areas in states for the purpose of implementing nonattainment planning requirements for the lead National Ambient Air Quality Standards (NAAQS) that encompass areas of only a few square kilometers. See e.g., 40 CFR 81.310 and 40 CFR 81.311. Conversely, there is an ozone transport region under the CAA for the purpose of ozone nonattainment planning that spans from Maine to northern Virginia. See section 184(a) of the CAA. Thus, EPA is reluctant to establish rigid criteria regarding the geographic size, geographic orientation, or population size of a Class I area that would automatically disqualify certain Tribes (or states) from exercising the authority conferred under section 164(c) to redesignate lands within Reservations. Arizona v. EPA .

EPA believes it can evaluate the size of the lands in the proposed redesignation area based upon the Agency's experience in the Yavapai-Apache redesignation and other air quality planning requirements. EPA also notes that it is expected to use caution in reversing redesignation requests in resolving disputes. 61 FR at 56454-56455, (citing CAA Legislative History, vol 3 at 326).

The lands in this parcel are similar to the lands in Yavapai in containing noncontiguous parcels of various sizes. However, the lands here are many times larger, with a total acreage in excess of 10,000 acres, compared with the 632 acres in Yavapai, and with the smallest parcel being 80 acres, more than twenty times larger than the 3.7594 acre parcel in Yavapai. EPA recognizes the limits of fact matching, and does not believe that comparing acreage is necessarily dispositive in all cases. Nevertheless, it believes that based on both the result and the rationale in Arizona v. EPA, it has no basis for disapproving the redesignation based on size. EPA concludes that the size of the lands is not too small to allow effective air quality management or have AQRVs.

EPA must also consider whether it can consider any other factors, and, if so, how to do so. While 164(e) directs EPA to consider size in resolving a dispute, it does not mention other factors to consider, or discuss what discretion EPA may have with regard to considering other factors at all.

EPA believes that the mandatory language directing EPA to consider whether the proposed redesignation lands “are of sufficient size to allow air effective air quality management or have air quality related values” clearly establishes size as the preeminent factor in resolving disputes. EPA also believes that the references to “effective air quality management” and “air quality related values” indicates that those factors, too, may be relevant in some circumstances, to the appropriate resolution of a dispute. Thus, for example, where EPA concludes that some other factor besides size precludes effective air quality management, it may have some limited authority to resolve a dispute by disapproving a redesignation because effective air quality management is impossible.

EPA construes the reference to AQRVs in conjunction with a second use of the term in 164(e), providing that, if the parties so request, “EPA shall make a recommendation to resolve the dispute and protect the air quality related values of the land involved.” 164(e) (emphasis added). Thus, EPA believes that it has limited discretion to consider protection of AQRVs in resolving a dispute, and that in some circumstances, it may resolve a dispute by denying a redesignation where approving the redesignation would not be consistent with protecting AQRVs.

In sum, EPA has carefully considered the record in this case, and concludes it is not appropriate to deny the redesignation based on the size of the proposed area. EPA also concludes that the record does not show that the redesignation would preclude effective air quality management or be inconsistent with protecting AQRVs. EPA, therefore, resolves the dispute by rejecting the state's suggestion to deny the redesignation. EPA's approval decision is discussed in a separate notice.

EPA also notes that it does not agree with the State of Michigan comment that additional rulemaking should be proposed before EPA can resolve the dispute or approve the redesignation. The statutes that govern this decision, sections 164(b)(2) and 164(e) contain no limitations on EPA's redesignation authority of the type Michigan suggests.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

This action will apply to applicants to the Prevention of Significant Deterioration (PSD) construction permit program on Class I trust lands of the Forest County Potawatomi Community.

1. Docket. EPA has established a docket for this action under Docket ID No. EPA-R05-OAR-2004-WI-0002. Publicly available docket materials are available either electronically in http://www.regulations.gov or in hard copy at the U.S. Environmental Protection Agency, Air Docket, in the EPA Headquarters Library, Room Number 3334 in the EPA West Building, located at 1301 Constitution Ave., NW., Washington, DC. The EPA/DC Public Reading Room hours of operation will be 8:30 a.m. to 4:30 p.m. Eastern Standard Time (EST), Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742. The docket is also available during normal business hours for public inspection and copying at the Air Programs Branch, Region 5, EPA (AR-18J), 77 West Jackson Boulevard, Chicago, Illinois 60604.

2. Electronic Access. You may access this Federal Register document electronically through the EPA Internet under the Federal Register listings at: http://www.epa.gov/fedrgstr /. In addition to being available in the docket and on the EPA Federal Register Internet Web site, an electronic copy of this notice is also available on the EPA's New Source Review (NSR) Web site, under Regulations & Standards, at http://www.epa.gov/nsr/actions.html .

The information in this notice is organized as follows:

On February 14, 1995, the FCP Community submitted a request to the EPA to approve the redesignation of the air quality status of selected parcels of the FCP Community's Reservation from “Class II” to “Class I” under the CAA's PSD regulations. The area of FCP Community reservation lands that has been proposed for redesignation to Class I comprises 10,818 acres, all of which is located in Forest County, Wisconsin.

Section 164(e) of the CAA and 40 CFR 52.21(t) provide the current statutory and regulatory framework for resolving disputes between states and Tribes over redesignation of an area or for permits for new major emitting facilities that may cause or contribute to a cumulative change in air quality under the PSD program. Section 164(e) of the CAA provides that if the Governor of an affected state or the appropriate Indian Governing Body of an affected Tribe disagrees with a request for redesignation by either party, then the governor or Indian ruling body may request that EPA negotiate with the parties to resolve the dispute. Pursuant to the statute and implementing regulations, EPA is not a party to the dispute. The Administrator of EPA is, by statute, designated as the final arbitrator of the dispute. The statute provides that either party can ask the Administrator for a recommendation to resolve the dispute, and if the parties fail to reach an agreement during the negotiations, “the Administrator shall resolve the dispute and his determination, or the results of the agreements reached through other means, shall become part of the applicable plan and shall be enforceable as part of such plan.” Section 164(e), 42 U.S.C. 7474(e).

Similarly, if a permit is proposed to be issued for any new major emitting facility proposed for construction in any state, which the Governor of an affected state or the governing body of an affected Indian Tribe determines will cause or contribute to a cumulative change in air quality in excess of that allowed within the affected state or reservation, the Governor or Tribal ruling body may invoke the same dispute resolution mechanism. States or Tribes with Class I areas, however, cannot “veto” permits that may adversely affect those areas.

While EPA has authority to resolve disputes, this authority is exercised only if the parties in dispute do not reach an agreement during the dispute resolution process. A discussion of EPA's authorities to resolve disputes is found in EPA's notice resolving the dispute between the State of Michigan and the FCP Community, published in this Federal Register . Where, as here, in the case of Wisconsin and the FCP Community, the parties reached their own resolution of their issues, EPA believes that the agreement becomes part of the “applicable plan” and the dispute is ended. 42 U.S.C. 7474(e).

Pursuant to section 164(c), 42 U.S.C. 7474(c), the FCP Community Tribal Council formally submitted a proposal to redesignate certain FCP Community reservation lands from Class II to Class I to the EPA on February 24, 1995. A Class I air quality designation provides greater protection for air resources by decreasing the increases allowed in the ambient concentrations of particulate matter, sulfur dioxide, and nitrogen oxides from any new major stationary sources or major modifications to existing sources in the vicinity. The types of facilities whose emissions could impact these lower limits are generally new or expanding large industrial sources such as electric utilities and pulp and paper mills. No new operating permits or additional controls would be required for existing sources solely as a result of a Class I designation.

Along with reducing allowable concentrations of key pollutants, Class I areas may also include air quality related values (AQRV) which are intended to further protect air quality. In the case of the FCP Community redesignation, the Tribe has proposed acidic and mercury deposition as the AQRVs they are seeking to protect. Because state officials were concerned about AQRVs and other issues, an intergovernmental dispute eventually developed and the parties ultimately sought dispute resolution under section 164(e).

By statute, the Agency must approve or disapprove a request for redesignation. Accordingly, on June 29, 1995, EPA published a notice in the Federal Register (FR) proposing to approve the redesignation request by the FCP Community to Class I area status. The notice provided for a 60-day public comment period. However, on June 8, 1995, the Governors of Wisconsin and Michigan sent a letter to EPA objecting to EPA's proposal to grant the FCP Community request for redesignation and requesting dispute resolution. The June 8 letter focused on two concerns, first, the states' perception that EPA lacked rules to handle such redesignation requests and the implementation of non-federal Class I areas, and second, that a non-federal class I area would “significantly infringe upon the ability of our state governments to manage the natural resources of our states.” 1

To address their concerns, the Agency published a FR notice (60 FR 40139) on August 7, 1995, postponing the scheduled August 2, 1995 public hearing and extending at the states' request the public comment period indefinitely, while the Agency attempted to negotiate with the states and respond to the issues they had raised.

As already noted, section 164(e) of the Act allows either the Governor of a state or the Indian ruling body to request to the Administrator to enter into negotiations with the parties involved to resolve such a dispute. In response to the Governors' letter, EPA contracted with a professional mediation service (RESOLVE, Inc.) to provide mediation services. RESOLVE discussed the case with EPA and the parties, and circulated resumes and a list of potential mediators for comment by the parties.

In the meantime, EPA had formed a senior EPA workgroup to cooperatively develop options for consideration by the states and Tribes regarding roles and responsibilities of non-Federal class I area managers. To gather public comment on different proposals, EPA published an advanced notice of proposed rulemaking (ANPR) on May 16, 1997. 62 FR 27158. EPA held public workshops in Chicago and Phoenix on the ANPR, and gathered testimony on the options for proposed rulemaking. 62 FR 33786 (June 23, 1997). The ANPR was not finalized however, and no new regulations were established.

In further follow-up to the Wisconsin and Michigan Governor's letters invoking dispute resolution, EPA engaged in an extended correspondence with Wisconsin and Michigan regarding the relationship of the proposed redesignation to proposed rulemaking, which can be found in the record for this notice. Following nearly 2 years of discussions, however, the states and the Tribe had not reached a resolution of the issues that had been raised by the states, nor had EPA completed the public notice process on the proposed redesignation. Therefore, on July 10, 1997, EPA published notice for two informational meetings and public hearings on the FCP Community's redesignation request and established a close for the public comment period of September 15, 1997. 62 FR 37007 (July 10, 1997). EPA held two public hearings on the proposed redesignation on August 12, 1997, in Carter, Wisconsin, and August 13, 1997, in Rhinelander, Wisconsin, respectively. By the close of the public comment period, EPA had received more than 120 comments on the proposed redesignation.

On April 21, 1998  2 , Wisconsin requested that EPA reinitiate the dispute resolution process under section 164(e). In response, EPA sent letters to the State of Wisconsin, the State of Michigan, and the FCP Community requesting a meeting to begin the negotiations to resolve the dispute. EPA requested that the parties each identify their chief negotiator, and that each party submit a written list of issues that they wished to resolve through the dispute resolution process. EPA, in consultation with the parties, requested RESOLVE to select a mediator, and Triangle Associates, Inc., Seattle, Washington, was chosen to mediate the discussions.

Once a mutually acceptable mediator had been agreed upon, EPA requested that the mediator establish a formal process for conducting compilation of issues, organizing and structuring meetings, and communication among the parties. 3 This included interviews with each of the parties, discussions of the issues lists submitted by each party, and structuring a series of meetings. Following an initial interview, the Agency requested a meeting of all parties to agree upon a protocol, establish a list of issues appropriate for discussion under section 164(e), and plan a series of further meetings aimed at resolving the dispute.

The first dispute resolution meeting occurred on September 2, 1998, at the Region 5 offices in Chicago, Illinois. Both the States of Wisconsin and Michigan participated in this meeting, and states and Tribe each identified issues of concern and attempted to find areas of overlap that could potentially lead to resolution.

Following this first meeting, the parties requested that EPA examine the twenty-one issues submitted for dispute resolution to determine which would be appropriate for discussion and resolution under section 164(e) of the CAA. EPA Region 5, in consultation with EPA's headquarters offices (Office of Air and Radiation, Office of General Counsel, and Office of Air Quality Planning and Standards), by letter of November 6, 1998, ultimately submitted to the parties a list of six suitable topics for further discussion and resolution. These issues included: “(1) Whether the lands proposed for redesignation are of sufficient size to allow for effective air quality management; (2) the extent to which the lands proposed for redesignation have sufficient size to have air quality related values; (3) the off-reservation impacts of redesignation as discussed in the [FCP Community's] Technical Support Document; (4) the Tribe's choice of mercury deposition as an AQRV; (5) the Tribe's choice of AQRVs; and (6) the roles and responsibilities of the respective parties in the dispute resolution discussion on September 2, 1998.”  4 The Agency also informed the parties that the remaining issues were either unsuitable for discussion under the CAA section 164(e), or where wholly within EPA's purview as decision maker under CAA section 164(b) and 164(e).

On November 16, 1998, the parties held a second dispute resolution meeting in Green Bay, Wisconsin. However, the State of Michigan elected not to participate in this meeting. 5 During the second meeting, the parties discussed each of the six issues, with each party having the opportunity to raise their specific concerns. The State of Wisconsin and FCP Community exchanged ideas for achieving a mutually acceptable resolution, which addressed both parties' concerns. The parties scheduled another negotiating session for December.

On December 22, 1998, the parties met in Milwaukee, Wisconsin. As a result of further discussions which took place at this meeting, the parties developed a draft negotiation concept paper. The parties, as well as EPA, agreed to seek concurrence from their respective boards and governing bodies. The parties agreed that sufficient progress had been made towards resolving the dispute to warrant another meeting in February 1999.

The parties held another dispute resolution meeting on the FCP Community reservation in Carter, Wisconsin on February 3, 1999. During this meeting, the parties developed specific language that they wished to include in a draft agreement in principle. After review by both parties, as well as by EPA, the lead negotiators for the State of Wisconsin, the FCP Community, and EPA signed the agreement, signifying their good faith intent to seek concurrence from their respective authorities and management. EPA was not a party to the dispute, and its role was to acknowledge the parties' agreement.

Following the development of the agreement in principle document, a drafting team comprised of representatives of the parties and from EPA began developing the detailed terms of the final agreement. On April 8, 1999, the parties held a meeting to work out the language of the final agreement. After each of the parties, as well as EPA, had an opportunity to review and comment on the draft of the final agreement, the parties agreed that another drafting session would be necessary. The parties, together with EPA, held a final conference call to complete the draft final agreement on June 7, 1999.

The 1999 Memorandum of Agreement between the FCP Community and the State of Wisconsin (FCP Community-Wisconsin MOA) fully resolves the dispute between the state and the Tribe concerning the FCP Community's request for Class I redesignation of its reservation lands. The Class I Final Agreement provides a framework for establishing how the state and FCP Community will implement the Class I area under their respective authorities. The provisions of this agreement become effective upon EPA's final action to approve the FCP Community's request for Class I redesignation, as published in a separate final rule in the Federal Register . While EPA also was a signatory to this agreement, EPA's role in the process was to acknowledge the agreement entered into by the parties on their own respective authorities.

CAA section 164(e) provides that “the results of the agreements reached through other means, shall become part of the applicable plan and shall be enforceable as part of such plan.” CAA section 164(e), 42 U.S.C. 7474(e). The PSD program is implemented in Wisconsin under an EPA approved State Implementation Plan (SIP) which excludes all of Indian country within the state. The terms of the FCP Community-Wisconsin MOA do not apply to the effects of the Class I redesignation on the redesignated area, and thus are not appropriate for inclusion in the Federal Implementation Plan (FIP) EPA is issuing in a concurrent rulemaking, located in this Federal Register publication. Rather, the agreement establishes certain special provisions regarding the effects of the Class I redesignation on potential sources outside the redesignated area. These provisions will need to be implemented by revising the Wisconsin SIP and have been summarized by EPA as follows in the December 18, 2006, Federal Register proposal:

EPA takes the position that it generally will not interfere with the agreements reached between Tribes and states through the CAA's 164(e) dispute resolution process. However, to the extent that the agreement reached under the terms of the MOA allows for restricting the requirements normally associated with Class I areas, as these apply to sources located outside a 10-mile radius of the redesignated reservation lands, EPA takes the position that a revision of the Wisconsin SIP will be necessary to implement this provision to potential sources located outside boundaries of the redesignated parcels. In the absence of such modification to the Wisconsin SIP, the current PSD rules codified at 40 CFR Part 52 will apply to the FCP Community's Class I area as approved in EPA's final action published in this Federal Register .

Table of Contents I. Background II. Public Comment III. EPA Action IV. Administrative Requirements A. Executive Order 12866, Regulatory Planning and Review B. Paperwork Reduction Act C. Regulatory Flexibility Act D. Unfunded Mandates Reform Act E. Executive Order 13132, Federalism F. Executive Order 13175, Coordination With Indian Tribal Governments G. Executive Order 13045, Protection of Children From Environmental Health Risks and Safety Risks H. Executive Order 13211, Actions That Significantly Affect Energy Supply, Distribution, or Use I. National Technology Transfer and Advancement Act J. Congressional Review Act K. Petitions for Judicial Review I. Background

Throughout this document, the terms “we”, “us,” and “our” refer to U.S. EPA.

On November 16, 2007 (72 FR 64563), EPA proposed to approve requirements into the OCS Air Regulations pertaining to Santa Barbara County APCD, South Coast AQMD, and Ventura County APCD. These requirements are being promulgated in response to the submittal of rules from these California air pollution control agencies. EPA has evaluated the proposed requirements to ensure that they are rationally related to the attainment or maintenance of federal or state ambient air quality standards or Part C of title I of the Act, that they are not designed expressly to prevent exploration and development of the OCS and that they are applicable to OCS sources. 40 CFR 55.1. EPA has also evaluated the rules to ensure that they are not arbitrary or capricious. 40 CFR 55.12(e). In addition, EPA has excluded administrative or procedural rules.

Section 328(a) of the Act requires that EPA establish requirements to control air pollution from OCS sources located within 25 miles of states' seaward boundaries that are the same as onshore requirements. To comply with this statutory mandate, EPA must incorporate applicable onshore rules into part 55 as they exist onshore. This limits EPA's flexibility in deciding which requirements will be incorporated into part 55 and prevents EPA from making substantive changes to the requirements it incorporates. As a result, EPA may be incorporating rules into part 55 that do not conform to all of EPA's state implementation plan (SIP) guidance or certain requirements of the Act. Consistency updates may result in the inclusion of state or local rules or regulations into part 55, even though the same rules may ultimately be disapproved for inclusion as part of the SIP. Inclusion in the OCS rule does not imply that a rule meets the requirements of the Act for SIP approval, nor does it imply that the rule will be approved by EPA for inclusion in the SIP.

EPA's proposed action provided a 30-day public comment period. During this period, we received no comments on the proposed action.

In this document, EPA takes final action to incorporate the proposed changes into 40 CFR part 55. No changes were made to the proposed action. EPA is approving the proposed action under section 328(a)(1) of the Act, 42 U.S.C. 7627. Section 328(a) of the Act requires that EPA establish requirements to control air pollution from OCS sources located within 25 miles of states' seaward boundaries that are the same as onshore requirements. To comply with this statutory mandate, EPA must incorporate applicable onshore rules into Part 55 as they exist onshore.

Under Executive Order 12866 (58 FR 51735 (October 4, 1993)), the Agency must determine whether the regulatory action is “significant” and therefore subject to Office of Management and Budget (“OMB”) review and the requirements of the Executive Order. The Order defines “significant regulatory action” as one that is likely to result in a rule that may:

This action is not a “significant regulatory action” under the terms of Executive Order 12866 and is therefore not subject to OMB Review. This rule implements requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. These OCS rules already apply in the COA, and EPA has no evidence to suggest that these OCS rules have created an adverse material effect. As required by section 328 of the Clean Air Act, this action simply updates the existing OCS requirements to make them consistent with rules in the COA.

The OMB has approved the information collection requirements contained in 40 CFR part 55, and by extension this update to the rules, under the provisions of the Paperwork Reduction Act , 44 U.S.C. 3501 et seq. and has assigned OMB control number 2060-0249. Notice of OMB's approval of EPA Information Collection Request (“ICR”) No. 1601.06 was published in the Federal Register on March 1, 2006 (71 FR 10499-10500). The approval expires January 31, 2009.

As EPA previously indicated (70 FR 65897-65898 (November 1, 2005)), the annual public reporting and recordkeeping burden for collection of information under 40 CFR part 55 is estimated to average 549 hours per response. Burden means the total time, effort, or financial resources expended by persons to generate, maintain, retain, or disclose or provide information to or for a Federal agency. This includes the time needed to review instructions; develop, acquire, install, and utilize technology and systems for the purposes of collecting, validating, and verifying information, processing and maintaining information, and disclosing and providing information; adjust the existing ways to comply with any previously applicable instructions and requirements; train personnel to be able to respond to a collection of information; search data sources; complete and review the collection of information; and transmit or otherwise disclose the information.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9 and are identified on the form and/or instrument, if applicable. In addition, EPA is amending the table in 40 CFR part 9 of currently approved OMB control numbers for various regulations to list the regulatory citations for the information requirements contained in this final rule.

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 rule will not have a significant economic impact on a substantial number of small entities. This rule implements requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. These OCS rules already apply in the COA, and EPA has no evidence to suggest that these OCS rules have had a significant economic impact on a substantial number of small entities. As required by section 328 of the Clean Air Act, this action simply updates the existing OCS requirements to make them consistent with rules in the COA. Therefore, I certify that this action will not have a significant economic impact on a substantial number of small entities.

Title II of the Unfunded Mandates Reform Act of 1995 (“UMRA”), Public Law 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, EPA generally must prepare written statements, including a cost-benefit analysis, for proposed and final rules with “Federal mandates” that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million of more in any one year.

Before promulgating an EPA rule for which a written statement is needed, section 205 of the UMRA generally requires EPA to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows EPA to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator publishes with the final rule an explanation why that alternative was not adopted.

Before EPA establishes any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, it must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA regulatory proposals with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements.

Today's final rule contains no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments or the private sector that may result in expenditures of $100 million or more for State, local, or tribal governments, in the aggregate, or to the private sector in any one year. This rule implements requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act without the exercise of any policy discretion by EPA. These OCS rules already apply in the COA, and EPA has no evidence to suggest that these OCS rules have created an adverse material effect. As required by section 328 of the Clean Air Act, this action simply updates the existing OCS requirements to make them consistent with rules in the COA.

Executive Order 13132, entitled “Federalism” (64 FR 43255 (August 10, 1999)), 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.”

This final rule does not have federalism implications. It 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. This rule implements requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. As required by section 328 of the Clean Air Act, this rule simply updates the existing OCS rules to make them consistent with current COA requirements. This rule does not amend the existing provisions within 40 CFR part 55 enabling delegation of OCS regulations to a COA, and this rule does not require the COA to implement the OCS rules. Thus, Executive Order 13132 does not apply to this rule.

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249 (November 9, 2000)), requires EPA to develop an accountable process to ensure “meaningful and timely input by tribal officials in the development of regulatory policies that have tribal implications.” This final rule does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes and thus does not have “tribal implications,” within the meaning of Executive Order 13175. This rule implements requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. As required by section 328 of the Clean Air Act, this rule simply updates the existing OCS rules to make them consistent with current COA requirements. In addition, this rule does not impose substantial direct compliance costs on tribal governments, nor preempt tribal law. Consultation with Indian tribes is therefore not required under Executive Order 13175.

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 final rule is not subject to Executive Order 13045 because it is not economically significant as defined in Executive Order 12866. In addition, the Agency does not have reason to believe the environmental health or safety risks addressed by this action present a disproportional risk to children.

This final rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355 (May 22, 2001)) because it is not a significant regulatory action under Executive Order 12866.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable laws or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. The NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decided not to use available and applicable voluntary consensus standards.

As discussed above, this rule implements requirements specifically and explicitly set forth by the Congress in section 328 of the Clean Air Act, without the exercise of any policy discretion by EPA. As required by section 328 of the Clean Air Act, this final rule simply updates the existing OCS rules to make them consistent with current COA requirements. In the absence of a prior existing requirement for the state to use voluntary consensus standards and in light of the fact that EPA is required to make the OCS rules consistent with current COA requirements, it would be inconsistent with applicable law for EPA to use voluntary consensus standards in this action. Therefore, EPA is not considering the use of any voluntary consensus standards.

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 action is not a “major rule” as defined by 5 U.S.C. 804(2). This action will be effective May 29, 2008.

Under section 307(b)(1) of the Clean Air, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by June 30, 2008. Filing a petition for reconsideration by the Administrator of this final action does not affect the finality of this action 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))

The Federal Emergency Management Agency (FEMA) makes the final determinations listed below for the modified BFEs for each community listed. These modified elevations have been published in newspapers of local circulation and ninety (90) days have elapsed since that publication. The Assistant Administrator of the Mitigation Directorate has resolved any appeals resulting from this notification.

This final rule is issued in accordance with section 110 of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4104, and 44 CFR part 67. FEMA has developed criteria for floodplain management in floodprone areas in accordance with 44 CFR part 60.

Interested lessees and owners of real property are encouraged to review the proof Flood Insurance Study and FIRM available at the address cited below for each community. The BFEs and modified BFEs are made final in the communities listed below. Elevations at selected locations in each community are shown.

National Environmental Policy Act. This final rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Consideration. An environmental impact assessment has not been prepared.

Regulatory Flexibility Act. As flood elevation determinations are not within the scope of the Regulatory Flexibility Act, 5 U.S.C. 601-612, a regulatory flexibility analysis is not required.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This final rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This final rule meets the applicable standards of Executive Order 12988.

Regulations governing the summer flounder fishery are found at 50 CFR part 648. The regulations require annual specification of a commercial quota that is apportioned among the coastal states from North Carolina through Maine. The process to set the annual commercial quota and the percent allocated to each state are described in § 648.100.

The final rule implementing Amendment 5 to the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan, which was published on December 17, 1993 (58 FR 65936), provided a mechanism for summer flounder quota to be transferred from one state to another. Two or more states, under mutual agreement and with the concurrence of the Administrator, Northeast Region, NMFS (Regional Administrator), can transfer or combine summer flounder commercial quota under § 648.100(d). The Regional Administrator is required to consider the criteria set forth in § 648.100(d)(3) in the evaluation of requests for quota transfers or combinations.

North Carolina has agreed to transfer 28,045 lb (12,721 kg) of its 2008 commercial quota to Virginia to cover the summer flounder landings of four North Carolina vessels granted safe harbor in Virginia due to winter storm conditions between January 3 and March 31, 2008. The Regional Administrator has determined that the criteria set forth in § 648.100(d)(3) have been met. The revised quotas for calendar year 2008 are: North Carolina, 2,530,479 lb (1,147,806 kg); and Virginia, 2,015,211 lb (914,084 kg).

This action is taken under 50 CFR part 648 and is exempt from review under Executive Order 12866.

Regulations governing the GB yellowtail flounder landing limit within the U.S./Canada Management Area are found at 50 CFR 648.85(a)(3)(iv)(C) and (D). The regulations authorize vessels issued a valid limited access NE multispecies permit and fishing under a NE multispecies DAS to fish in the U.S./Canada Management Area, as defined at § 648.85(a)(1), under specific conditions. The TAC for GB yellowtail flounder for the 2008 fishing year (May 1, 2008 - April 30, 2009) was set at 1,950 mt (73 FR 16572, March 28, 2008), a 217-percent increase from the TAC for the 2007 fishing year.

The regulations at § 648.85(b)(3)(iv)(C) specify the initial GB yellowtail flounder for each fishing year at 10,000 lb (4,536 kg) per trip. The regulations at § 648.85(a)(3)(iv)(D) authorize the Regional Administrator to increase or decrease the trip limits in the U.S./Canada Management Area to prevent over-harvesting or under-harvesting the TAC allocation. Despite the substantially larger 2008 TAC for GB yellowtail flounder, projections of harvest rates in the fishery indicate that the current trip limit of 10,000 lb (4,536kg) per trip could still result in the over-harvest of the GB yellowtail flounder TAC before the end of the 2008 fishing year. The regulations at § 648.85(a)(3)(iv)(C)( 3 ) state that when 100 percent of the GB yellowtail flounder TAC is projected to be harvested, NMFS shall close the Eastern U.S./Canada Area to NE multispecies DAS vessels and prohibit all vessels from harvesting, possessing, or landing yellowtail flounder from the entire U.S./Canada Management Area. Therefore, any closure resulting from exceeding the GB yellowtail flounder TAC would unnecessarily reduce opportunities to fish for Eastern GB cod and haddock in the Eastern U.S./Canada Area. Based upon this information, NMFS is decreasing the current 10,000-lb (4,536 kg) trip limit in the U.S./Canada Management Area to 5,000 lb (2,268 kg), effective May 1, 2008, through April 30, 2009. This will allow for the fishery in the Eastern U.S./Canada Area to remain open longer and increase the opportunities to target Eastern GB cod and haddock during the 2008 fishing year. Any NE multispecies DAS vessels that have declared into the U.S./Canada Management Area, departed on a trip, and crossed the VMS demarcation line to start their trip prior to 12:01 AM on May 1, 2008, may possess and land up to 10,000 lb (4,536 kg) of GB yellowtail flounder on that trip only.

GB yellowtail flounder landings will be closely monitored through the Vessel Monitoring System (VMS) and other available information. Should 100 percent of the TAC allocation for GB yellowtail flounder be projected to be harvested, the Eastern U.S./Canada Area will close to all limited access NE multispecies DAS vessels, and all vessels will be prohibited from harvesting, possessing, or landing yellowtail flounder from the entire U.S./Canada Management Area for the remainder of the fishing year. Conversely, if the TAC is projected to be under-harvested by the end of the fishing year, in-season adjustments to increase the trip limit may be considered.

This action is authorized by 50 CFR part 648 and is exempt from review under Executive Order 12866.

Pursuant to 5 U.S.C. 553(b)(B) and (d)(3), the Assistant Administrator finds good cause to waive prior notice and opportunity for public comment, as well as the delayed effectiveness for this action, because notice, comment, and a delayed effectiveness would be impracticable and contrary to the public interest. The regulations under § 648.85(a)(3)(iv)(D) grant the Regional Administrator the authority to adjust the GB yellowtail flounder trip limit to prevent over-harvesting or under-harvesting the TAC allocation. Based upon recent projections, even though the 2008 GB yellowtail flounder TAC is substantially larger than the 2007 TAC, a trip limit of 10,000 lb (4,536 kg) would likely cause the 2008 GB yellowtail flounder TAC to be exceeded before August. These projections were not completed in sufficient time to allow for a proposed rule. Therefore, during the time necessary to provide for prior notice, opportunity for public comment, and delayed effectiveness for this action, vessels would be able to land GB yellowtail flounder at a rate which would likely result in the full harvest of the 2008 GB yellowtail flounder TAC prior to the end of the 2008 fishing year. This would necessitate the premature closure of the Eastern U.S./Canada Area and a prohibition on the retention of GB yellowtail flounder in the entire U.S./Canada Management Area, thereby preventing the Agency from meeting its obligation to ensure that full opportunity is provided to harvest the 2008 U.S./Canada Management Area TACs for GB cod, haddock, and yellowtail flounder at a level that approaches optimum yield. Further, over-harvesting the GB yellowtail TAC would result in an overage deduction in fishing year 2009, and increase economic impacts to the industry and social impacts beyond those analyzed for Amendment 13. Exceeding the 2008 TAC for GB yellowtail flounder would increase mortality of this overfished stock beyond that evaluated during the development of Amendment 13 and Framework Adjustment 42, resulting in decreased revenue for the NE multispecies fishery, increased negative economic impacts to vessels operating in the U.S./Canada Management Area, a reduced chance of achieving optimum yield in the groundfish fishery, and unnecessary delays to the rebuilding of this overfished stock.

The rate of harvest of the GB yellowtail flounder TAC in the U.S./Canada Management Area is updated weekly on the internet at http://www.nero.noaa.gov . Accordingly, the public is able to obtain information that would provide some advanced notice of a potential action to provide additional opportunities to the NE multispecies industry to fully harvest the TAC for GB yellowtail flounder, as well as Eastern GB cod and haddock, during the 2008 fishing year. Further, the potential for this action was considered and open to public comment during the development of Amendment 13 and Framework 42 to the NE Multispecies FMP. Therefore, any negative effect the waiving of public comment and delayed effectiveness may have on the public is mitigated by these factors.