Background

The regulations in “Subpart-Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-56, referred to below as the regulations) prohibit or restrict the importation of fruits and vegetables into the United States from certain parts of the world to prevent the introduction and dissemination of plant pests that are new to or not widely distributed within the United States. Section 319.56-28 of the regulations contains administrative instructions allowing the importation of tomatoes from various countries where the Mediterranean fruit fly (Medfly, Ceratitis capitata ) is present.

On August 2, 2011, we published in the Federal Register (76 FR 46209-46212, Docket No. APHIS-2011-0012) a proposal  1 to amend the regulations by allowing tomatoes from the member States of the Economic Community of West African States (ECOWAS) to be imported into the continental United States under a systems approach that would include requirements for pest exclusion at the production site, fruit fly trapping and monitoring, and procedures for packing the tomatoes. We also proposed to require the tomatoes to be accompanied by a phytosanitary certificate issued by the national plant protection organization of the exporting country with an additional declaration that the tomatoes had been produced in accordance with the proposed requirements.

We solicited comments concerning our proposal for 60 days ending October 3, 2011. We received four comments by that date. They were from members of the public and a State department of agriculture.

Two commenters opposed the importation of tomatoes from the ECOWAS without raising any issues related to the pest risk analysis or proposed rule. The remaining comments are discussed below by topic.

One commenter opposed the proposed rule, stating that the pest risk analysis (PRA) identified 10 quarantine pest species that could potentially accompany shipments of tomatoes from the ECOWAS into the continental United States and that the potential introduction of these pests, specifically the fruit flies, into the commenter's State would pose a risk to the State's agriculture.

The PRA, which includes a qualitative, pathway-initiated pest risk assessment and a risk management document, not only identifies quarantine pests that could potentially accompany shipments of fresh tomatoes from the ECOWAS, but also identifies mitigation measures that will be required for this commodity to be imported into any State in the continental United States. The mitigation measures for tomatoes from the ECOWAS have been previously evaluated and proven effective for other commodities, and we will continuously monitor the effectiveness of those mitigations with port-of-entry inspections. We do not consider it necessary to prohibit the importation of a commodity based on identification of quarantine pests that could potentially accompany consignments when proven mitigations are available for this risk and will be required as a condition of importation.

The commenter also requested additional information regarding the production site monitoring and post-harvest procedures. Specifically, the commenter asked about the frequency of Animal and Plant Health Inspection Service (APHIS) visits to production and packing facilities, the guidelines for and oversight of the packinghouse, and the corrective measures and penalties resulting from the detection of live pests.

While being used for packing tomatoes for export to the United States, the packinghouses will only be allowed to accept fruit from registered production sites. In addition, no shade trees may be grown within 10 meters of the entry door of the packinghouses, and no other fruit fly host plants may be grown within 50 meters of the entry door of the packinghouses.

After initial approval of production site by both APHIS and the national plant protection organization (NPPO) of the exporting country, APHIS may monitor the production sites if necessary; however, regular inspection of production sites by APHIS is no longer required. The NPPO of the exporting country will be responsible for monitoring the production sites monthly beginning 2 months before harvest and continuing through the end of the shipping season. The inspection of shipments at the port of entry by APHIS is sufficient to verify that the required packinghouse procedures have been followed because failure to follow these procedures will be evident by the presence of fruit flies or other quarantine pests at the point of entry.

The detection of a single fruit fly of concern inside a pest exclusionary structure (PES) starting 2 months prior to export and continuing through the duration of the harvest, or detection of a fruit fly of concern in a consignment at port of entry inspection which is traced back to a PES will result in immediate cancellation of exports from that production site until APHIS and NPPO of the exporting country have mutually determined that the risk has been properly mitigated.

With regard to other quarantine pests, the systems approach for the importation of tomatoes from ECOWAS includes the submission of a bilateral workplan to APHIS by the NPPO of each exporting country. Those workplans will include the specific corrective measures that must be taken to prevent a recurrence of the quarantine mealy bugs and moths identified in the PRA.

One commenter opposed the proposed rule and stated that the potentially negative impact on the U.S. economy, specifically small tomato producers, resulting from this action would be too great. The commenter said that APHIS should promote greater production of tomatoes by U.S. farmers and promote the purchase of tomatoes produced in the United States as the healthy choice.

The Plant Protection Act (7 U.S.C. 7701 et seq. ), the authorizing statute for APHIS' plant-health-related activities, authorizes the Secretary of Agriculture to prohibit or restrict the importation of any plant product if the Secretary determines that the prohibition or restriction is necessary to prevent the introduction of a plant pest or noxious weed into the United States. The factors cited by the commenter are not within our decisionmaking authority under the Act.

In addition, the economic analysis made available with the proposed rule noted that even when assuming imports into the United States of 20 percent of the average annual exports from ECOWAS to the rest of the world, and no displacement of tomato imports from other countries, the welfare loss for U.S. small-entity producers would be equivalent to about 0.05 percent of their average annual revenue, or about $4.00.

The commenter also mentioned the cost of controlling and monitoring the inspection and production of the commodity in another country and asked whether the cost of importing the commodity outweighs the benefits.

APHIS involvement in the inspection and monitoring of the importation of tomatoes in ECOWAS member countries is limited. Prior to the importation of the tomatoes, APHIS and the NPPO of the exporting country approve the production sites. The only other time APHIS action may be required in the exporting country is in the event of the capture of a fruit fly of concern inside a PES.

In addition, the agricultural quarantine and inspection (AQI) program provides for inspections of imported agricultural goods, products, and other articles to prevent the introduction of harmful agricultural pests and diseases. Services to directly provide these inspections or that support these inspections are known as AQI services. APHIS charges a user fee to recover the costs of providing AQI services. Therefore, much of the costs associated with the importation of tomatoes from the ECOWAS will be funded by the importers.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, without change.

This final rule has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities. The analysis is summarized below. Copies of the full analysis are available by contacting the person listed under FOR FURTHER INFORMATION CONTACT or on the Regulations.gov Web site (see ADDRESSES above for instructions for accessing Regulations.gov).

The analysis examines impacts for U.S. small entities of this final rule, which will allow fresh tomato imports from member countries of the ECOWAS. The United States has no history of importing tomatoes from these countries. We model three levels of tomato exports to the United States from ECOWAS member States: (i) 5 percent of ECOWAS average annual world exports, 2003-2008 (484 metric tons (MT)); (ii) 10 percent of ECOWAS average annual world exports, 2003-2008 (967 MT); and (iii) 20 percent of ECOWAS average annual world exports, 2003-2008 (1,934 MT). Even when assuming the largest import quantity and no displacement of tomato imports from other countries, the welfare loss for U.S. small-entity producers would be equivalent to about 0.05 percent of their average annual revenue, that is, about $4.00. While U.S. tomato producers are predominantly small, this rule will not have a significant economic impact on a substantial number of small entities.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This rule would allow tomatoes to be imported into the United States from the ECOWAS. If this rule is adopted, State and local laws and regulations regarding tomatoes imported under this rule would be preempted while the fruit is in foreign commerce. Fresh fruits are generally imported for immediate distribution and sale to the consuming public and would remain in foreign commerce until sold to the ultimate consumer. The question of when foreign commerce ceases in other cases must be addressed on a case-by-case basis. If this rule is adopted, no retroactive effect will be given to this rule, and this rule will not require administrative proceedings before parties may file suit in court challenging this rule.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq. ), the information collection or recordkeeping requirements included in this rule have been approved by the Office of Management and Budget (OMB) under OMB control number 0579-0381.

The Animal and Plant Health Inspection Service is committed to compliance 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. For information pertinent to E-Government Act compliance related to this rule, please contact Mrs. Celeste Sickles, APHIS' Information Collection Coordinator, at (301) 851-2908.

Accordingly, we amend 7 CFR part 319 as follows:

Background

The Animal and Plant Health Inspection Service (APHIS) regulations in Title 9 of the Code of Federal Regulations (CFR), parts 93, 94, and 95 (referred to below as the regulations), govern the importation into the United States of specified animals and animal products and byproducts to prevent the introduction of various animal diseases, including Newcastle disease and highly pathogenic avian influenza (HPAI).

On January 24, 2011, we published in the Federal Register (76 FR 4046-4056, Docket No. APHIS-2006-0074) an interim rule  1 that amended the regulations governing the importation into the United States of live birds, poultry, eggs for hatching, and bird and poultry products and by-products. The interim rule was effective upon publication.

Comments on the interim rule were required to be received on or before March 25, 2011. In a document published in the Federal Register on May 3, 2011 (76 FR 24793, Docket No. APHIS-2006-0074), we reopened the comment period for an additional 15 days until May 18, 2011, to allow interested persons additional time to prepare and submit comments. We received 16 comments by that date.

We are once again reopening the comment period for the interim rule and are soliciting public comment on a change we are considering to the provisions of the January 2011 interim rule.

Specifically, the interim rule amended §§ 93.101(b) and 93.205(a) to prohibit the importation into the United States of live birds or poultry that have been moved through a region identified in accordance with § 94.6(a) as a region where any form of HPAI exists. We took this action to minimize the risk of introducing HPAI into the United States through the importation of infected avians. However, several peer-reviewed scientific studies  2 have come to our attention since the publication of the interim rule establishing that pigeons (and other Columbiform species such as doves) have a very low risk of being infected by HPAI viruses and would therefore contribute little to the risk of transmission and spread of such viruses. Thus, it appears that it may not be necessary to prohibit the importation of Columbiform avians from HPAI regions provided that all other requirements in the regulations pertaining to pigeons, doves, and other poultry are followed.

Under § 93.209 of the current regulations, poultry, including Columbiform avians, offered for importation from any region of the world except Canada are required to be quarantined in an approved facility for at least 30 days after importation into the United States to determine, through inspections and testing, their freedom from communicable diseases of poultry and from exposure to such diseases. We further require in § 93.205(a) certification that live poultry, including Columbiform avians (except those from Canada), were inspected on the premises of origin immediately before the date of movement from such region and that they were then found to be free of evidence of communicable diseases of poultry. We also require that, as far as it has been possible to determine, during the 90 days prior to movement the poultry were not exposed to communicable diseases of poultry and the premises were not in any area under quarantine. Columbiform avians and other poultry must also not have been vaccinated with a vaccine for the H5 or H7 subtype of avian influenza.

Section 93.205(a) also requires that live poultry are also required to have been kept in the region from which they are offered for importation since they were hatched, or for at least 90 days immediately preceding the date of movement, that the poultry have not been moved through a region identified in accordance with § 94.6(a) of this subchapter as a region where any form of HPAI exists, and that, as far as it has been possible to determine, no case of HPAI or exotic Newcastle disease (END) occurred on the premises where such poultry were kept, or on adjoining premises, during that 90-day period.

Based on our review of the studies referred to above and the mitigations already in the regulations, we have determined that the importation of Columbiform avians from regions considered to have HPAI poses a minimal risk to the United States. Therefore, we are considering adding to the final rule following this interim rule a provision to amend § 93.205(a) of the regulations to allow the importation of Columbiform avians that have originated in or transited regions considered to have HPAI subject to the regulations. Columbiform avians and other poultry from regions considered to have END would remain prohibited from importation to the United States.

We are therefore reopening the comment period on Docket No. APHIS-2006-0074 for an additional 30 days. This action will allow interested persons additional time to prepare and submit comments on the interim rule and on the change we are considering with respect to Columbiform avians.

In 2007, Congress enacted the “Fair Treatment for Experienced Pilots Act” which became effective December 13, 2007. This legislation raised the upper age limit for pilots in part 121 from age 60 to age 65. It also required that air carriers engaged in part 121 operations evaluate the performance of 60 years old pilots, through a line check, every 6 months.

On February 14, 2012, Congress enacted the “FAA Modernization and Reform Act of 2012” (the “Act”). Section 305 of the Act removed the line check evaluation performance requirements contained in the Fair Treatment for Experienced Pilots Act.

Upon enactment of the Act, § 121.440 (d) through (f) of the Code of Federal Regulations (CFR) ceased to be effective. Section 121.440(d) requires that no certificate holder may use the services of any person as a pilot unless the certificate holder evaluates every 6 months the performance, through a line check, of each pilot who has attained 60 years of age.

Section 121.440(e) requires that no pilot who has attained 60 years of age may serve as a pilot in operations, under this part, unless the certificate holder has evaluated the pilot's performance every 6 months, through a line check.

Section 121.440(f) establishes limitations regarding the requirements in (d) and (e) that apply to the line check requirements for pilots over age 60.

The requirement that the performance of each pilot of the air carrier who has attained 60 years of age be evaluated, through a line check, every 6 months, is more restrictive than line check requirements that apply to other pilots in part 121 operations. These provisions only require that pilots-in command be evaluated, through a line check, every 12 months. With Section 305 of the Act, it was Congress' objective to impact rules governing the age limitation requirements of pilots over age 60 engaged in operations under part 121. This technical amendment aligns FAA regulations to statutory requirements which will establish the same line check requirements for all pilots in part 121 operations, regardless of age.

The Act was effective on February 14, 2012. Pending publication of this rule, the FAA has not enforced the line check requirements for pilots who have attained 60 years of age. This technical amendment conforms to the FAA's regulations as a result of the Act and is effective upon publication in the Federal Register .

A legislative mandate of this nature makes it unnecessary to provide an opportunity for notice and comment. Further, we find that good cause exists under 5 U.S.C. 553(d)(3) to make the amendment effective upon publication to minimize any possible confusion. If we do not correct the language in the CFR, we are likely to receive numerous petitions for exemption, because the published language is not consistent with the statute. Since the FAA would not have safety or policy reasons to deny the exemptions, we have included these amendments in this final rule to remove the requirements that each pilot of the air carrier who has attained 60 years of age be evaluated, through a line check, every 6 months.

In consideration of the foregoing, the Federal Aviation Administration amends Chapter I of Title 14 Code of Federal Regulations as follows:

Background

On June 6, 2006, temporary regulations under section 7874 (TD 9265, 2006-2 CB 1) were published in the Federal Register (71 FR 32437) concerning the treatment of a foreign corporation as a surrogate foreign corporation (2006 temporary regulations). A notice of proposed rulemaking (REG-112994-06) cross-referencing the 2006 temporary regulations was published in the same issue of the Federal Register (71 FR 32495, 2006-2 CB 47). On July 28, 2006, Notice 2006-70 (2006-2 CB 252) was published, announcing a modification to the effective date contained in the 2006 temporary regulations. See § 601.601(d)(2)(ii)( b ). On June 12, 2009, the 2006 temporary regulations and the related notice of proposed rulemaking were withdrawn and replaced with new temporary regulations (2009 temporary regulations), which generally applied to acquisitions completed on or after June 9, 2009. TD 9453 (74 FR 27920, 2009-2 CB 114). A notice of proposed rulemaking (REG-112994-06) cross-referencing the 2009 temporary regulations was published in the same issue of the Federal Register (74 FR 27947, 2009-2 CB 144). No public hearing was requested or held; however, comments were received. All comments are available at www.regulations.gov or upon request. After consideration of the comments received regarding whether a foreign corporation has substantial business activities in a foreign country, the Internal Revenue Service (IRS) and the Department of the Treasury (Treasury Department) have decided to issue new temporary regulations under § 1.7874-3T (2012 temporary regulations) and a new notice of proposed rulemaking that provide guidance regarding this determination. The other portions of the 2009 temporary regulations are finalized in a separate Treasury Decision published elsewhere in this issue of the Federal Register .

A foreign corporation is generally treated as a surrogate foreign corporation under section 7874(a)(2)(B) if pursuant to a plan (or a series of related transactions): (i) The foreign corporation completes after March 4, 2003, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation; (ii) after the acquisition at least 60 percent of the stock (by vote or value) of the foreign corporation is held by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation; and (iii) after the acquisition, the expanded affiliated group that includes the foreign corporation does not have substantial business activities in the foreign country (relevant foreign country) in which, or under the law of which, the foreign corporation is created or organized, when compared to the total business activities of the expanded affiliated group. Similar provisions apply if a foreign corporation acquires substantially all of the properties constituting a trade or business of a domestic partnership.

The 2006 temporary regulations provided that the determination of whether the expanded affiliated group has substantial business activities in the relevant foreign country is based on all the facts and circumstances. The 2006 temporary regulations also provided a safe harbor, which generally was satisfied if at least ten percent of the employees, assets, and sales of the expanded affiliated group were in the relevant foreign country. The 2009 temporary regulations retained the facts and circumstances general rule provided in the 2006 temporary regulations, with certain modifications, but removed the safe harbor.

The IRS and the Treasury Department received comments requesting additional guidance on the level of business activities necessary for an expanded affiliated group to have substantial business activities in the relevant foreign country. One comment suggested providing a new safe harbor, which would require a higher percentage of business activities in the relevant foreign country than was required under the safe harbor included in the 2006 temporary regulations. The comment also recommended different safe harbors depending on the extent of the expanded affiliated group's business activities in the United States.

After consideration of the comments and the underlying policies of section 7874, the IRS and the Treasury Department believe the facts and circumstances test of the 2009 temporary regulations should be replaced with a bright-line rule describing the threshold of activities required for an expanded affiliated group to have substantial business activities in the relevant foreign country. The IRS and the Treasury Department believe that such a rule will provide more certainty in applying section 7874 to particular transactions than the 2009 temporary regulations and will improve the administrability of this provision.

The 2012 temporary regulations provide that an expanded affiliated group will have substantial business activities in the relevant foreign country only if at least 25 percent of the group employees, group assets, and group income are located or derived in the relevant foreign country, determined as follows:

The 2012 temporary regulations set forth two tests, each of which must be satisfied, based on employees of members of the expanded affiliated group (group employees). The first test is calculated as the number of group employees based in the relevant foreign country divided by the total number of group employees determined on the applicable date discussed in section B.4. of this preamble. The second test is calculated as employee compensation with respect to group employees based in the relevant foreign country divided by the total employee compensation with respect to all group employees determined during the one-year testing period.

The group assets test is calculated as the value of the group assets located in the relevant foreign country divided by the total value of all group assets determined on the applicable date. The term group assets generally means tangible personal property or real property used or held for use in the active conduct of a trade or business by members of the expanded affiliated group. For this purpose, group assets include certain property rented by members of the expanded affiliated group, with the value of such rented property being deemed to be eight times the net annual rent paid or accrued with respect to such property. The IRS and the Treasury Department believe that using an eight-times multiple for this purpose is administrable and consistent with the treatment of rented property for other purposes. See, for example, Uniform Division of Income for Tax Purposes Act, §§ 10 and 11. In order to constitute group assets, such rented property must satisfy the other applicable requirements for group assets, including that the property is used or held for use in the active conduct of a trade or business.

The group income test is calculated as the group income derived in the relevant foreign country divided by the total group income determined during the one-year testing period. The term group income means gross income of members of the expanded affiliated group from transactions occurring in the ordinary course of business with customers that are not related persons. Group income is considered to be derived in a foreign country only if the customer is located in such country.

Section 7874(a)(2)(B)(iii) provides that the determination of whether the expanded affiliated group has substantial business activities is made after the acquisition. However, the IRS and the Treasury Department believe that when the acquisition occurs other than at the end of a month the factors used to determine whether the substantial business activities test is satisfied may not be readily determinable in some cases. Accordingly, the 2012 temporary regulations provide that the number of group employees and the value of group assets can be measured as of the applicable date, which is either the date on which the acquisition is completed or the last day of the month immediately preceding the month in which the acquisition is completed. The applicable date is also used to determine the testing period, which is used in computing group income and employee compensation. When the applicable date is the last day of the month immediately preceding the month in which the acquisition is completed, group employees, employee compensation, group assets, and group income consist of those items or amounts of members that comprise the expanded affiliated group determined at the close of the acquisition date.

The 2009 temporary regulations provided that for purposes of the substantial business activities test, a member of an expanded affiliated group that holds at least a ten-percent capital and profits interest in a partnership takes into account its proportionate share of all items of the partnership. The IRS and the Treasury Department believe that the policies of section 7874 are better advanced if the treatment of partnerships is made consistent with that of corporations for purposes of applying the substantial business activities test on a group basis. Accordingly, the 2012 temporary regulations provide that the items of a partnership should be taken into account for this purpose only if one or more members of the expanded affiliated group holds, in the aggregate, more than 50 percent (by value) of the interests in the partnership. The IRS and the Treasury Department further believe that, consistent with the treatment of corporations, if this ownership requirement is satisfied, then all the items of the partnership should be taken into account for this purpose.

Subject to a transition rule, the 2012 temporary regulations apply to acquisitions completed on or after June 7, 2012.

It has been determined that that these temporary regulations are not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to the 2012 temporary regulations and because the regulations do not impose a collection of information on small entities, the requirements of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Code, the 2012 temporary regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business.

The IRS and the Treasury Department are considering to what extent partners of a partnership should be treated as if they were employees solely for purposes of the two tests based on group employees, and specifically request comments on these issues. For information on how to submit comments or request a public hearing, see the section “Comments and Requests for a Public Hearing” set forth in the notice of proposed rulemaking published elsewhere in this issue of the Federal Register .

The principal authors of the 2012 temporary regulations are Mary W. Lyons and David A. Levine of the Office of Associate Chief Counsel (International). However, other personnel from the IRS and the Treasury Department participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

Background

On June 6, 2006, temporary regulations under section 7874 of the Internal Revenue Code (Code) (TD 9265, 2006-2 CB 1) were published in the Federal Register (71 FR 32437) concerning the treatment of a foreign corporation as a surrogate foreign corporation (2006 temporary regulations). A notice of proposed rulemaking (REG-112994-06) cross-referencing the 2006 temporary regulations was published in the same issue of the Federal Register (71 FR 32495). On July 28, 2006, Notice 2006-70 (2006-2 CB 252) was published, announcing a modification to the effective date contained in the 2006 temporary regulations. See § 601.601(d)(2)(ii)( b ). On June 12, 2009, the 2006 temporary regulations and the related notice of proposed rulemaking were withdrawn and replaced with new temporary regulations (2009 temporary regulations), which generally applied to acquisitions completed on or after June 9, 2009. TD 9453 (74 FR 27920, 2009-2 CB 114). A notice of proposed rulemaking (REG-112994-06) cross-referencing the 2009 temporary regulations was published in the same issue of the Federal Register (74 FR 27947, 2009-2 CB 144). No public hearing was requested or held; however, comments were received. All comments are available at www.regulations.gov or upon request. After consideration of the comments, the 2009 proposed regulations are adopted as final regulations with the modifications described in this preamble. The 2009 temporary regulations are removed. As discussed in paragraph A. of this preamble, new temporary regulations under section 7874 regarding whether a foreign corporation has substantial business activities in a foreign country, and a corresponding notice of proposed rulemaking, are published elsewhere in this issue of the Federal Register .

A foreign corporation is generally treated as a surrogate foreign corporation under section 7874(a)(2)(B) if pursuant to a plan (or a series of related transactions): (i) The foreign corporation completes after March 4, 2003, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation; (ii) after the acquisition at least 60 percent of the stock (by vote or value) of the foreign corporation is held by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation; and (iii) after the acquisition, the expanded affiliated group that includes the foreign corporation does not have substantial business activities in the foreign country (relevant foreign country) in which, or under the law of which, the foreign corporation is created or organized, when compared to the total business activities of the expanded affiliated group. Similar provisions apply if a foreign corporation acquires substantially all of the properties constituting a trade or business of a domestic partnership.

The 2006 temporary regulations provided that the determination of whether the expanded affiliated group has substantial business activities in the relevant foreign country is based on all the facts and circumstances. The 2006 temporary regulations also provided a safe harbor, which generally was satisfied if at least ten percent of the employees, assets, and sales of the expanded affiliated group were in the relevant foreign country. The 2009 temporary regulations retained the facts and circumstances general rule provided in the 2006 temporary regulations, with certain modifications, but removed the safe harbor.

Comments were received regarding the determination as to whether an expanded affiliated group has substantial business activities in a foreign country. These comments are discussed in the preamble to temporary regulations, published elsewhere in this issue of the Federal Register , that provide guidance on the substantial business activities test.

The 2009 temporary regulations generally provide that, for purposes of section 7874, an option or similar interest (together, an “option”) with respect to a corporation is treated as stock of the corporation with a value equal to the holder's claim on the equity of the corporation. For this purpose, the equity of the corporation does not include the value of any property the holder of the option would be required to provide to the corporation pursuant to the terms of the option if such option were exercised. The 2009 temporary regulations provide similar rules for an option with respect to a partnership.

A comment suggested that, subject to an anti-abuse rule, options should be ignored for purposes of section 7874. The comment asserts that this approach, consistent with the treatment of options under other Code sections, would be more administrable; the comment recognized, however, that unlike the approach taken in the 2009 temporary regulations, this approach does not properly take into account the economic interest of an option holder. Alternatively, the comment suggested that if the approach taken in the 2009 temporary regulations is retained, certain types of options (for example, publicly traded options and customary compensatory options) should be excluded from the general rule.

The Internal Revenue Service (IRS) and the Department of the Treasury (Treasury Department) believe that the claim-on-equity approach in the 2009 temporary regulations is preferable to disregarding options subject to an anti-avoidance rule. The IRS and the Treasury Department believe this approach most properly reflects the economics of the transaction and is not easily manipulated. Moreover, the IRS and the Treasury Department believe that the simplicity of uniformly treating all types of options outweighs the benefits of excluding, or providing other special rules for, certain types of options. Accordingly, the claim-on-equity approach provided in the 2009 temporary regulations is retained, with certain modifications, in these final regulations.

Certain portions of section 7874 also look to the voting power of stock. For example, one of the requirements for a foreign corporation to be treated as a surrogate foreign corporation is that, after the acquisition, at least 60 percent of the stock (by vote or value) of the entity is held, in the case of an acquisition with respect to a domestic corporation, by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation. Section 7874(a)(2)(B)(ii). As discussed in section B.1. of this preamble, however, the 2009 temporary regulations only address options with respect to the amount of stock treated as held by value; they do not address the effect of options on voting power.

A comment suggested that if the general approach of the 2009 temporary regulations is retained, the effect options have on voting power, if any, should be addressed. Specifically, the comment suggested that options could be treated as: (i) Not having voting power; (ii) having voting power corresponding to the number of shares the value of which equals the claim on equity; or (iii) having voting power corresponding to the number of shares that would be obtained upon exercise of the option.

In response to this comment, the final regulations provide that for purposes of determining the voting power of stock under section 7874, an option will be treated as exercised if a principal purpose of the issuance or acquisition of the option is to avoid treating the foreign corporation as a surrogate foreign corporation. In all other cases, options are not taken into account for purposes of determining the voting power of stock under section 7874.

A comment requested clarification that if an option is treated as stock under the claim-on-equity approach, then the ownership percentages of shareholders are reduced. The IRS and the Treasury Department believe that the value of stock inherently reflects the existence of options that have a claim on equity. Therefore, no adjustment to the value of stock under the regulations is necessary. For example, if the stock of a foreign corporation has an aggregate value of $100x (which reflects the existence of options) and there is a single option outstanding with a claim on equity of $10x with respect to the foreign corporation, then under the regulations the total value of the stock of the foreign corporation is treated as $110x for purposes of section 7874. An example in the regulations is modified to clarify this result.

The 2009 temporary regulations provide that, with respect to a foreign corporation, the general option rule does not apply if a principal purpose of the issuance or acquisition of the option is to avoid the foreign corporation being treated as a surrogate foreign corporation. The 2009 temporary regulations do not contain a similar rule with respect to domestic corporations or domestic partnerships.

A comment questioned why the anti-abuse rule only applies to foreign corporations and noted that avoidance concerns may equally be present with options in domestic corporations or partnerships. Accordingly, the comment suggested that the anti-abuse rule be extended to apply to options with respect to domestic corporations and domestic partnerships. The IRS and the Treasury Department agree with this comment. As a result, the final regulations modify the anti-abuse rule such that it applies to options with respect to all corporations and partnerships, domestic or foreign.

Another comment suggested that the regulations include special rules to take into account certain types of options, such as options subject to vesting and nontransferable options. In response to this comment, the final regulations provide that the claim-on-equity approach does not apply if, at the time of the acquisition, the probability that the option will be exercised is remote.

The final regulations clarify that the rules addressing options also apply for purposes of determining the membership of an expanded affiliated group under section 7874(c)(1). In addition, the text of the final regulations is clarified to provide that a claim on equity equals the value of the stock or partnership interest that may be acquired pursuant to the option, less the exercise price (but in no case is a claim on equity less than zero).

The 2009 temporary regulations provide that, for purposes of section 7874, if immediately prior to the first date properties are acquired as part of an acquisition described in section 7874(a)(2)(B)(i), a domestic corporation is in a title 11 or similar case (as defined in section 368(a)(3)), or the liabilities of the domestic corporation exceed the value of its assets, then any claim by a creditor against the domestic corporation shall be treated as stock of the domestic corporation. A similar rule applies with respect to a domestic partnership, or a foreign partnership that owns stock of a domestic corporation.

A comment was received stating that, in certain cases, the creditors should be viewed as purchasers of the insolvent entity's assets and, as a result, the transaction should not be subject to section 7874. The comment further stated that applying section 7874 to such creditors could provide third-party bidders for the entity's assets an undue advantage over existing creditors because such bidders would not be subject to section 7874. Accordingly, the comment suggested that the insolvency rule be modified to only apply where creditors acquire the insolvent entity's debt pursuant to a plan to acquire its stock or assets.

The IRS and the Treasury Department believe that, for purposes of section 7874, the creditors of an insolvent entity should be considered the equity holders of the entity. Furthermore, the IRS and the Treasury Department do not believe that insolvent entities should be treated more favorably than other entities under section 7874. Accordingly, this comment is not adopted.

The 2009 temporary regulations generally provide that if, pursuant to a plan (or series of related transactions), a foreign corporation completes two or more acquisitions described in section 7874(a)(2)(B)(i) involving domestic corporations or partnerships (domestic entities) then, for purposes of section 7874(a)(2)(B)(ii), the acquisitions are treated as a single acquisition and the domestic entities are treated as a single domestic entity.

Section 7874(c)(2)(A) and § 1.7874-1 provide special rules for determining ownership under section 7874(a)(2)(B)(ii) for stock held by members of the expanded affiliated group that includes the foreign corporation. Section 7874(c)(2)(B) provides that stock of the foreign corporation that is sold in a public offering related to the acquisition described in section 7874(a)(2)(B)(i) is not taken into account for purposes of determining ownership under section 7874(a)(2)(B)(ii).

A comment requested clarification as to the application of section 7874(c)(2)(A) and § 1.7874-1 when acquisitions of two or more domestic entities are treated as a single domestic entity under the 2009 temporary regulations. The IRS and the Treasury Department are studying the manner in which § 1.7874-1 should interact with various rules under section 7874, including the rules in section 7874(c)(2)(B), § 1.7874-2(e), and Notice 2009-78 (2009-2 CB 452) (determination of the ownership fraction when stock is issued in exchange for certain types of property). See § 601.601(d)(2)(ii)( b ). Accordingly, no change has been made to this regulation, but the IRS and the Treasury Department request comments regarding the interaction of § 1.7874-1 and other rules under section 7874 related to the ownership fraction.

The final regulations clarify that an acquisition by a corporation of its stock from another corporation or a partnership is an acquisition of the transferor's properties for purposes of section 7874(a)(2)(B)(i). This rule applies even though, for Federal tax purposes, the acquired stock no longer exists after the transaction. Thus, for example, if a domestic corporation that holds stock in a foreign corporation merges into the foreign corporation, the foreign corporation is, for purposes of section 7874(a)(2)(B)(i), treated as acquiring properties of the domestic corporation in the form of the foreign corporation's stock.

These final regulations apply to acquisitions completed on or after June 7, 2012.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866. Therefore, a regulatory assessment is not required. It has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. Chapter 5) does not apply to this regulation and because the regulation does not impose a collection of information on small entities, the requirements of the Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) do not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

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

Accordingly, 26 CFR part 1 is amended as follows:

The owner of the bridge, the City of Boston, requested this temporary deviation. The P.J. McArdle Bridge, across the Chelsea River at mile 0.3, between Chelsea and East Boston, Massachusetts, has a vertical clearance in the closed position of 21 feet at mean high water and 30 feet at mean low water. The bridge opens on signal as required by 33 CFR 117.593. The waterway is transited by commercial users, tankers, tug and barge units.

This temporary deviation allows the P.J. McArdle Bridge to remain in the closed position from 8 a.m. through 5 p.m. on June 16, 2012. Vessels able to pass under the closed draw may do so at any time. Waterway users were advised of the requested bridge closure period and offered no objection.

In accordance with 33 CFR 117.35(e), the bridge must return to its regular operating schedule immediately at the end of the designated time period. This deviation from the operating regulations is authorized under 33 CFR 117.35.

The Coast Guard will enforce the safety zone listed in 33 CFR 165.160 on the specified dates and times as indicated in Table 1 below. If the event is delayed by inclement weather, the regulation will be enforced on the rain date indicated in Table 1 below. These regulations were published in the Federal Register on November 9, 2011 (76 FR 69614).

Under the provisions of 33 CFR 165.160, a vessel may not enter the regulated area unless given express permission from the COTP or the designated representative. Spectator vessels may transit outside the regulated area but may not anchor, block, loiter in, or impede the transit of other vessels. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

This notice is issued under authority of 33 CFR 165.160(a) and 5 U.S.C. 552(a). In addition to this notice in the Federal Register , the Coast Guard will provide mariners with advanced notification of enforcement periods via the Local Notice to Mariners and marine information broadcasts. If the COTP determines that the regulated area need not be enforced for the full duration stated in this notice, a Broadcast Notice to Mariners may be used to grant general permission to enter the regulated area.

The Coast Guard is issuing this temporary final rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b) (B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because sufficient information about the event was not received in time to publish a NPRM followed by a final rule before the effective date, thus making the publication of a NPRM impractical. The Coast Guard received the information about the event on May 3, 2012. Any delay encountered in this regulation's effective date by publishing a NPRM would be contrary to public interest, since immediate action is needed to provide for the safety of life and property on navigable waters from the hazards associated with fireworks including unexpected detonation and burning debris.

The event sponsor advised that the event is in correlation with the graduation ceremony of the United States Merchant Marine Academy, where the graduating class, faculty, and family members are anticipating this event taking place as scheduled, therefore the sponsor is unable to cancel or delay the event date. In addition, any change to the date of the event would cause economic hardship on the event sponsor, negatively impacting other activities being held in conjunction with the event.

Under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making this rule effective less than 30 days after publication in the Federal Register . The rule must become effective on the date specified in order to provide for the safety of spectators and vessels operating in the area near this event. Delaying the effective date of this rule would be contrary to the public interest and would expose spectators, vessels to the hazards associated with the fireworks event. Also a delay or cancellation of the fireworks event in order to allow for the publication in the Federal Register is contrary to the public's interest in having this event occur as scheduled.

The legal basis for this rule is 33 U.S.C. 1231; 46 U.S.C Chapter 701, 3306, 3703; 50 U.S.C. 191, 195; 33 CFR 1.05-1, 6.04-1, 6.04-6, 160.5; Public Law 107-295, 116 Stat. 2064; Department of Homeland Security Delegation No. 0170.1.

This temporary safety zone is necessary to ensure the safety of spectators and vessels from hazards associated with the fireworks display. The safety zone will be enforced starting at 9:00 p.m. which is a half hour before the launch time in order to ensure the barge can safely get in position. The fireworks launch will begin at 9:30 p.m. and last for approximately 8 minutes. The zone will continue to be enforced for 30 minutes after the display as a cool down for the barge, to ensure the safe movement as it transits back to homeport.

This rule establishes a temporary safety zone on the waters of Long Island Sound in the vicinity of Kings Point, NY. All persons and vessels shall comply with the instructions of the COTP New York or the designated representative during the enforcement of the temporary safety zone. Entering into, transiting through, or anchoring within the temporary safety zone is prohibited unless authorized by the COTP New York, or the designated representative.

Based on the inherent hazards associated with fireworks, the Captain of the Port (COTP) New York has determined that fireworks launches in close proximity to water crafts pose a significant risk to public safety and property. The combination of increased number of recreational vessels, congested waterways, darkness punctuated by bright flashes of light, and debris especially burning debris falling on passing or spectator vessels has the potential to result in serious injuries or fatalities. This temporary safety zone will restrict vessels from a portion of the Long Island Sound around the location of the fireworks launch platform before, during, and immediately after the fireworks display.

The Coast Guard determined that this regulated area will not have a significant impact on vessel traffic due to its temporary nature and limited size and the fact that vessels are allowed to transit the navigable waters outside of the regulated area.

Advanced public notifications will also be made to the local maritime community through appropriate means, which will include, but is not limited to, the Local Notice to Mariners as well as Broadcast Notice to Mariners.

We developed this rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.

The Coast Guard's implementation of this temporary safety zone will be of short duration and is designed to minimize the impact to vessel traffic on the navigable waters. This temporary safety zone will only be enforced for approximately 70 minutes. Due to the location, vessels will be able to transit around the zone in a safe manner.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, as amended, requires federal agencies to consider the potential impact of regulations on small entities during rulemaking. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

This rule will affect the following entities, some of which may be small entities: The owners and operators of vessels intending to transit or anchor in a portion of the navigable waters in the vicinity of the marine event during the effective period.

This safety zone would not have a significant economic impact on a substantial number of small entities for the following reasons: This rule will be in effect for 68 minutes; late at night when vessel traffic is low. Vessel traffic could pass safely around the safety zone. Before the effective period, the Coast Guard will issue maritime advisories widely available to users of the waterway.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT , above.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect 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. We have analyzed this rule under that Order and determined that this rule does not have implications for federalism.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INTFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule will not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and does not create an environmental risk to health or risk to safety that may disproportionately affect children.

This rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it 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.

This action is not a “significant energy action” under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use.

This rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves establishment of a temporary safety zone. This rule is categorically excluded from further review under paragraph 34(g) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES . We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 165 as follows:

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

Minnesota submitted its regional haze plan on December 30, 2009, a draft supplement on January 5, 2012, and a final supplement on May 8, 2012. This plan is intended to address regional haze requirements for the first implementation period, which extends through July 31, 2018. These requirements are given in CAA section 169A, and are implemented in the Regional Haze Rule (RHR) as codified at 40 CFR 51.308. This rule was promulgated on July 1, 1999 (64 FR 35713), and subsequently amended on July 6, 2005 (70 FR 39156), and on October 16, 2006 (70 FR 60631). The July 6, 2005, rule provides guidance on provisions related to BART.

EPA proposed approval of the Minnesota regional haze plan on January 25, 2012 (77 FR 3681). The proposed rule described the nature of the regional haze problem and the statutory and regulatory background for EPA's review of Minnesota's regional haze plan. The proposed rule described the regional haze plan requirements including requirements for mandating BART, consultation with other states in establishing goals representing reasonable further progress in mitigating anthropogenic visibility impairment, and adoption of limitations as necessary to implement a long term strategy for reducing visibility impairment.

EPA received comments on several elements of the Minnesota regional plan, including comments on the BART determinations for both the electric generating units (EGUs) and the taconite facilities.

In response to its proposed rulemaking, EPA received comments from ArcelorMittal Minorca Mine, Incorporated (ArcelorMittal), Cliffs Natural Resources (Cliffs), Earthjustice, Fresh Energy, the Fond du Lac Band of Lake Superior Chippewa (Fond du Lac), National Park Service (NPS), Xcel Energy, and many citizens. Earthjustice commented on behalf of the National Parks Conservation Association (NPCA), the Minnesota Center for Environmental Advocacy, the Friends of the Boundary Waters Wilderness, Voyageurs National Park Association, and the Sierra Club. Fresh Energy is a Saint Paul, Minnesota based nonprofit organization that focuses on the development of clean energy policy. ArcelorMittal and Cliffs operate taconite facilities, while Xcel Energy operates EGUs in Minnesota. The Fond du Lac Band is a tribe based in Cloquet, Minnesota. The comments are included in the docket, EPA-R05-OAR-2010-0037. The following discussion provides a summary of the comments and provides EPA's responses.

Comment: Several commenters, including Earthjustice, Fond du Lac, and Fresh Energy, urged that EPA not allow participation in the Cross-State Air Pollution Rule (CSAPR) to serve as a substitute for meeting the requirements for source-by-source BART for EGUs. These commenters believe that reliance on CSAPR fails to meet the CAA requirements for BART, and have asserted that EPA's determination that CSAPR is better than BART is flawed both as a national rule and as applied to Minnesota.

Response: EPA disagrees with the commenters. The requirements for a BART alternative program, specific to trading programs in 40 CFR 51.308(e)(2), state that “such an emissions trading program or other alternative measure must achieve greater reasonable progress than would be achieved through the installation and operation of BART.” EPA has also completed an analysis and proposed CSAPR as an alternative to BART for EGUs located in the CSAPR states, which include Minnesota (76 FR 82219, December 30, 2011). In finalizing that rule on May 30, 2012, EPA responded to similar comments in the context of that rulemaking.

Comment: Several commenters stated that the emissions controls for the EGUs are inadequate and that EPA should require stricter emission limits.

Response: In a final rule signed on May 30, 2012, EPA finalized its determination that CSAPR is an alternative program to source-specific BART for EGUs. This finding allows states to substitute participation in the CSAPR program for source-specific BART. Minnesota has elected to use CSAPR as an alternative to BART for sulfur dioxide (SO 2 ) and oxides of nitrogen (NO X ) emissions from its subject EGUs, as it is allowed to do. EPA is approving the CSAPR as an alternative means of satisfying the BART requirement for pertinent pollutants for Minnesota's EGUs.

Comment: Several commenters considered the emissions controls required for the taconite facilities to be inadequate and urged EPA to require stricter emission limits.

Response: Since proposing approval of Minnesota's regional haze plan, including the BART limits for taconite facilities, EPA has learned of control technology with the potential for further emission reductions from taconite facilities. EPA is now in the process of determining new BART emission limits for the BART-subject units at the taconite facilities. Therefore, EPA is deferring action on the proposed BART emission limits for the taconite facilities while proceeding with final approval of the other plan elements.

Comment: EPA received comments from a substantial number of citizens urging that EPA protect the air quality at Boundary Waters Canoe Wilderness, Isle Royale National Park, and Voyageurs National Park.

Response: EPA is committed to the goal of the regional haze program, that is, to achieve natural visibility conditions at mandatory Federal Class I areas by 2064. EPA is acting on the Minnesota regional haze plan for the first implementation period, which extends through July 31, 2018. Subsequent implementation periods are each for approximately 10 years. Future emission reductions will be evaluated by Minnesota and EPA during the midcourse review of Minnesota's regional haze plan and in future implementation periods. These further emission reductions in the future will result in better air quality. Minnesota has already developed its Northeast Minnesota Plan, which sets a target for the combined NO X and SO 2 emissions in a six county area not to exceed 66,894 tons per year through 2018.

Comment: Earthjustice commented that the Sherco plant has been certified to impair visibility by the Department of Interior. Sherco is among the biggest contributors to visibility impairment in the state. The commenter believes that EPA needs to establish BART limits for Sherco that comply with Federal requirements.

Response: RAVI involves separate requirements from the requirements for regional haze, to be met on a different timetable. In a separate action, which will be subject to public notice and comment, EPA will respond to the RAVI certification for Sherco. See the discussion on planned EPA actions in Section III.

Comment: A citizen commenter stated that EPA should not approve a plan that is not acceptable to the Federal land managers (FLMs). EPA should give due weight to the views of the FLMs.

Response: EPA has provided multiple opportunities for consultation on the Minnesota regional haze plan with the FLMs, and has evaluated and responded to, FLM comments on the draft plan, the final plan, and our proposed approval. EPA has given careful consideration to the comments from the FLMs on the Minnesota regional haze plan. EPA has agreed with many of the comments made by the FLMs and, correspondingly, has worked with the state to make appropriate revisions to the SIP. Nevertheless, final responsibility for approving or disapproving the plan solely belongs to EPA.

Comment: Earthjustice, Cliffs, ArcelorMittal, and several citizens commented that EPA could not have adequately considered public comments made to Minnesota during the comment period for its regional haze plan supplement as EPA issued its proposed rule prior to the state finalizing the supplement. Plainly, according to Earthjustice, the public comment period was not considered meaningful by Minnesota given that it had already decided to submit the supplement to EPA and EPA had already proposed approval, thereby frustrating the very goal of public process.

Response: As stated in the proposed rule, EPA proposed to approve Minnesota's SIP addressing regional haze for the first implementation period provided it adopted and submitted administrative orders consistent with its proposed orders. Minnesota submitted its regional haze plan supplement on May 8, 2012, with the final administrative orders. The state had a public comment period prior to finalizing its supplement. EPA also held a public comment period on the proposed rule. EPA uses the process, known as parallel processing, when a final action is warranted on a more expedited schedule than would be achieved if EPA waits for the state to finalize its submission. The criteria for parallel processing are given in section 2.3 of appendix V to 40 CFR part 51. Further discussion of this procedure is provided in the rulemaking promulgating appendix V, published in final on February 16, 1990, at 55 FR 5824. In this approach, EPA applies a premise that the final state submission will be sufficiently similar to the draft submission such that no significant issues are expected to arise in the final submission that were not included in EPA's proposed action on the draft submission. In cases where this premise holds true, the public has adequate opportunity to comment on the pertinent issues, and a more efficient and more expeditious rulemaking is achieved. In cases where this premise does not hold true, EPA will issue a subsequent proposed rule to solicit comment on issues that it did not anticipate in its initial proposed action. By this means, everyone has an opportunity to comment on pertinent issues, as mandated under Federal law. In the specific case of the Minnesota regional haze plan, based on comments received on the proposed rule, EPA has changed what it is approving in the final rule. Thus, this process did not preclude EPA from receiving new information that affected its final action. Further, Minnesota supplemented the regional plan it submitted on December 30, 2009. The supplement updated the BART determinations for the EGUs and taconite facilities as well as the Northeast Minnesota Plan. All other elements of the regional haze plan have not been changed since being finalized in December 2009.

Comment: The Fond du Lac tribe and several citizens commented on plans to expand certain existing taconite facilities in northeastern Minnesota. New taconite facilities are also being planned in northeastern Minnesota. The commenters noted that the proximity of the state's six taconite facilities to Class I areas, along with the magnitude of their emissions of haze-causing pollutants and the potential new sources, makes northeastern Minnesota an area of concern with regard to visibility.

Response: EPA is approving the Northeast Minnesota Plan as part of the Minnesota regional haze plan. The Northeast Minnesota Plan is written to restrict the total combined SO 2 and NO X emissions from a six county area. Minnesota will consider the Northeast Minnesota Plan emission targets before it issues permits for new and expanding sources. There are also best available control technology requirements for new or expanding sources (that exceed certain emissions criteria) to ensure sources use the appropriate emission control technology. Minnesota will submit an updated regional haze plan for each approximately 10-year implementation period. These plans will include state updates to its long term strategy to plan and implement visibility protection. Further tracking of changes in visibility over time at its Class I areas will be provided in midcourse reviews required during each 10-year progress review. EPA is confident that the state's Northeast Minnesota Plan, the requirements on new sources, and the mandated updates to the regional haze plan will adequately address potential visibility impairment from new or expanded sources.

Comment: Earthjustice commented that EPA should issue a Minnesota regional haze plan that ensures clean air in the Boundary Water Canoe Wilderness Area and Isle Royale and Voyageurs National Parks. Earthjustice believes that EPA should not approve the state's plan and should promulgate a replacement plan that more fully improves visibility.

Response: EPA's evaluation of the Minnesota regional haze plan led to the conclusion that many plan elements can be approved in accordance with the requirements of the RHR, and thus EPA has finalized its approval of those elements in this rule. As noted, EPA is not acting on the BART emission limits for taconite facilities. EPA is evaluating the appropriate emission controls for the taconite facilities. Once that is determined, EPA will go through a public notice and comment rulemaking on the BART emission limits for taconite facilities. When those BART emission limits are finalized, that will complete approval of the regional haze plan for the first implementation period.

Comment: Earthjustice commented that Minnesota has failed to demonstrate that it is unreasonable to achieve the Uniform Rate of Progress (URP). Minnesota will not attain natural visibility by 2064. Minnesota has proposed a reasonable progress goal (RPG) that will attain natural visibility conditions in Boundary Waters in 2093 and in Voyageurs in 2177. The state will consider the reductions that would be necessary to achieve the URP and demonstrate why such reductions are unreasonable.

Response: EPA's Reasonable Progress Guidance states that the URP is not a presumptive target for the RPG. The state followed the proper approach in setting its RPGs through 2018. Minnesota considered the four factors established in section 169A of the CAA and in EPA's RHR at 40 CFR 51.308(d)(1)(i)(A). The factors are considered when selecting the RPGs for the best and worst days for each Class I area. Minnesota considered the costs of compliance, the time needed for compliance, the energy and non-air quality environmental impacts, and the remaining useful life of the facility. Minnesota also investigated additional control options. It investigated additional SO 2 and NO X control on EGUs, SO 2 and NO X control on industrial boilers, NO X control from turbines, and mobile source NO X reductions. The visibility improvement at issue here is the visibility improvement for the first implementation period, which extends until July 31, 2018. New control programs in the future that reduce emissions may be implemented, which would hasten visibility improvement and possibly yield an earlier year to achieve natural conditions. Minnesota will include any additional control measures it finds reasonable along with any additional measures implemented by contributing states in the next implementation period. For the first implementation period, EPA finds adequate Minnesota's assessment of reasonable measures for its long term strategy.

Comment: Earthjustice commented that Minnesota's 2009 source-specific BART determinations are wholly inadequate, because Minnesota failed to engage in a proper five-factor analysis as required by the BART guidance. The BART guidance provides a methodology that assures a careful and detailed analysis of the criteria as well as consistency within the regional haze program. Further, Earthjustice made specific comments on the BART determinations for the North Shore Mining—Silver Bay, Sherco, Minnesota Power—Taconite Harbor, Minnesota Power—Boswell, and Rochester—Silver Lake.

Response: Minnesota has elected in its supplement to use CSAPR participation in place of the source-specific BART determinations submitted in 2009, supplemented by the submission of limits for Sherco. EPA has determined in a final rule signed on May 30, 2012, that CSAPR is an alternative program to source-specific BART. Therefore, it is acceptable for Minnesota to substitute participation in the CSAPR trading programs for source-specific BART determinations it had originally submitted for the EGUs. Thus, aside from the limits for Sherco, the original BART determinations for the EGUs are thus replaced and no longer at issue. As for Sherco, EPA in this rulemaking is not evaluating whether the submitted limits would represent BART on a source-specific basis. Instead, EPA views the limits for Sherco as an enhancement that make the Minnesota's submission more stringent than it would be if it simply relied on CSAPR to address EGU BART requirements. EPA notes that while this finding applies to BART requirements with respect to regional haze, EPA is separately evaluating the RAVI BART requirement as it applies to Sherco. EPA will consider the comments on the BART determination for Sherco during this process.

Comment: Earthjustice commented that the taconite facilities in Northern Minnesota, due to their discrete location and the size of this industry, have not been subject to many of the control requirements that have been imposed on other industrial sectors, such as power plants, cement kilns, or refineries. The taconite industry is responsible for a significant share of visibility impairment in Boundary Waters and Voyageurs, due to their proximity to the Class I areas and high NO X and SO 2 emissions. Earthjustice commented that these facilities should be subject to adequate BART determinations and controls, and that neither Minnesota's 2009 regional haze plan submission nor the plan supplement provide for valid BART determinations that will result in any real reductions in pollution coming from taconite facilities.

Earthjustice further commented that “Minnesota has not done proper BART analyses for the taconite facilities and therefore the emission limits require no real pollution reductions and do not satisfy BART requirements.” Earthjustice further asserted that Minnesota failed to conduct an adequate BART determination and rejected potential control technologies without an adequate explanation. Earthjustice commented that selective catalytic reduction (SCR) must be considered for controlling NO X at taconite facilities and that low NO X burners must be considered the absolute minimum NO X control at taconite facilities.

Response: In response to this and other similar comments, EPA is reevaluating the emission controls that are warranted to satisfy the BART requirements at the taconite facilities in Michigan and Minnesota.

Comment: Earthjustice commented that because Minnesota calculated emission limits at a 99% confidence limit, on a 30-day rolling average, it is unlikely that pollution reduction will be achieved.

Response: EPA's reevaluation of the taconite facility emission limits will include a reassessment of appropriate statistics to use in determining the appropriate limits.

Comment: Earthjustice echoed comments made by the NPS to EPA that the taconite facilities are major causes of visibility impairment in several Class I areas. Earthjustice (as well as NPS) further commented that US Steel recently installed modern emission monitoring systems and has proposed to install, or has already installed, emission controls for SO 2, NO X , and mercury. Data from US Steel's Minntac facility demonstrate that low NO X burners are economically achieving 70% reductions of NO X at the facility. In its comments, Earthjustice encouraged Minnesota and EPA to apply this data to require taconite facilities to meet lower emission limits that reflect the capabilities of available technology.

Response: In light of this comment and related new information, EPA is reviewing the control technology proposed for the taconite facilities. EPA is also studying potential controls for each facility. Once this review is complete, EPA will propose a rule with the appropriate controls for those units of taconite facilities that are subject to BART. Thus, EPA is not taking final action on the taconite BART limits of the Minnesota regional haze plan.

Comment: Earthjustice commented that it does not agree that CSAPR is better than source-specific BART in Minnesota. Earthjustice commented that the U.S. Forest Service analysis (January 13, 2012 letter) shows that the predicted effect of CSAPR in 2014 is an increase in emissions over 2012 actual emissions and above what Minnesota proposed as source-specific BART and what FLMs proposed as source-specific BART. Earthjustice asserts that source-specific BART to be far superior to CSAPR.

Response: This comment pertains to a separate rulemaking where EPA proposed CSAPR as an alternative program to source-specific BART for EGUS in the CSAPR region. The rulemaking was made on May 30, 2012. A complete response to this and similar comments is provided in that rule and the associated response to comments document.

Comment: In its comments, Xcel Energy agrees with EPA's conclusion that, if implemented, CSAPR will achieve greater environmental improvement than BART. Based on the emission reductions already achieved on Xcel's units, including emission controls installed on Sherco Units 1 and 2, and the broad reductions that will be achieved if CSAPR is implemented in Minnesota, Xcel Energy concludes that compliance with CSAPR is superior to unit specific requirements under section 169A. Nonetheless, because of the uncertain status of EPA's rulemakings and challenges to the CSAPR, Xcel Energy believes it is premature to rely solely on CSAPR for meeting BART requirement in Minnesota. In its comments, Xcel Energy urged Minnesota and EPA to eliminate the risks associated with one or more of these rules not proceeding by approving both the source-specific BART determinations and the BART alternative compliance option. If the alternative option could not go forward for any reason, the Minnesota regional haze plan would still contain the source-specific BART limits that source could use to satisfy their BART obligations without requiring Minnesota and EPA to undertake further SIP revisions. Xcel Energy asserts that Minnesota's BART determination is fully approvable, because Minnesota's December 2009 determination for Sherco Units 1 and 2 fully satisfies all applicable BART requirements. Xcel Energy believes that the BART determination for these units should be retained.

Response: EPA proposed approving CSAPR participation as a BART alternative for SO 2 and NO X emissions from EGUs. Minnesota requested in its supplement to the regional haze plan to use the CSAPR participation as an alternative to the previously submitted source specific BART determination for EGUs. Thus, EPA did not propose approving source-specific BART determinations for the EGUs. EPA nevertheless believes that it can take final action to approve the new limits for Sherco units 1 and 2, as set in the May 2, 2012, administrative order, as a SIP strengthening measure. First, EPA received numerous comments urging substantial tightening of the limits for this plant, and even the source requested EPA approval of the tightened emission limits. In that respect, this final action may be considered to be in response to public comments. Second, EPA's action reflects a limited evaluation of the administrative order, evaluating only whether approving the order would result in a more stringent SIP. Although the order includes a statement that the state and the company find the limits to represent BART, EPA has not evaluated whether these limits would represent BART on a source-specific basis. EPA is expressly not rulemaking on this question. While the administrative order that EPA is approving states the opinion of Xcel Energy and Minnesota that the limits represent BART, EPA's approval of the administrative order should not be construed as rendering any EPA opinion as to whether the limits would satisfy BART on a source-specific basis. Third, EPA intends to act in the future concerning the BART requirements that apply to Sherco as it has been certified as a source of RAVI. Rulemaking on that matter will provide an opportunity for public comment on the appropriate limits for Sherco.

Comment: Xcel Energy commented on its Metropolitan Emission Reduction Program projects, toward which Xcel Energy has invested one billion dollars to modernize and reduce emissions from three coal-fired generating stations, reducing NO X and SO 2 emissions from those plants by approximately 90%. Xcel Energy's customers are paying for these reductions and the reductions are key to environmental progress in Minnesota. Xcel Energy further commented that it has installed the pollution controls for NO X indicated by Minnesota's BART determination for Sherco. Furthermore, Xcel Energy is moving forward with the upgrades to its scrubbers to reduce SO 2 emissions from Sherco. Xcel Energy asserts that these projects achieve substantial improvements in visibility.

Response: Reductions in NO X and SO 2 emissions from Minnesota EGUs will aid the state in improving visibility. The emission reductions will also provide health benefits resulting from the improved air quality. EPA acknowledges the emission reductions resulting from these investments and EPA is approving the limits submitted by Minnesota as strengthening the SIP. Nevertheless, EPA plans further rulemaking to address whether this plant has addressed its RAVI obligations.

Comment: In its comments, Xcel Energy asserts that it relied on EPA's statements in the proposed rule that requirements of the RAVI regulations, potentially applicable to Sherco, are not being addressed in the proposed rule. Xcel Energy has reviewed the RAVI regulations and seeks to reserve the right to comment to EPA on the interpretation of the RAVI requirements. Xcel Energy also noted that RAVI involves different analyses and applies different BART guidelines. Further, Xcel Energy commented that given that almost ten years have passed since the modeling baseline was developed for the Minnesota regional haze plan and emissions have declined significantly in the interim, EPA will need to commence a new RAVI analysis and implementation planning process for Minnesota.

Response: EPA has decided to address the RAVI BART emission requirements for Sherco separately from the regional haze program elements. EPA will offer a comment period during the Sherco RAVI BART rulemaking. Xcel Energy and other interested parties will be able to comment on the RAVI BART determination for Sherco at that time. During subsequent rulemaking on RAVI, EPA will take steps to solicit any further information that Xcel Energy wishes to provide for purposes of determining BART under RAVI.

Comment: In its comments, ArcelorMittal expresses its concern that EPA published its January 25, 2010, proposed rule before Minnesota had completed its public comment period and Citizens' Board meeting on the regional haze plan supplement.

Response: EPA's rulemaking is premised on Minnesota submitting a final supplement that is sufficiently similar to its proposed supplement such that the proposed rule provides adequate notice for comments. In fact, the final supplement does not propose any new issues, and therefore, EPA believes that its rulemaking on Minnesota's plan provided sufficient opportunity for public comment on the relevant issues to merit EPA granting final approval with respect to most SIP elements without requiring an amended proposed rule. Note, however, that on the issues most likely of concern to ArcelorMittal, that is BART for taconite plants, EPA plans further rulemaking with further opportunity for ArcelorMittal and other interested parties to comment.

Comment: ArcelorMittal commented that it worked extensively with Minnesota to gather the data necessary to propose appropriate BART limits for the taconite industry. ArcelorMittal commented that there is still significant work to be done to generate appropriate numeric BART limits for the taconite industry. It urged EPA to postpone action on Minnesota's SIP to give the state more time to fully evaluate the appropriate emission limits for the taconite industry and to extend the Federal comment period to allow a reasonable period of time for the public to comment.

Response: EPA agrees that more effort is needed to set apposite BART limits for the taconite facilities. EPA is studying potential controls for each taconite facility. Once this review is complete, EPA will propose a rule requiring the appropriate controls for the units subject to BART at the taconite facilities. There will be an opportunity for public comment during the rulemaking process.

Comment: Cliffs commented that it has worked extensively with Minnesota for the purpose of developing BART limits for the taconite industry. Cliffs commented that although Minnesota has identified BART determinations, developed and implemented administrative orders to gather emission information, and has proposed numeric emission limits, there is still significant work to be done to generate appropriate numeric limits for the taconite industry. Cliffs requested that Minnesota receive an opportunity to complete its SIP process before EPA proposed a Federal implementation plan (FIP) for applicable facilities in the taconite industry in Minnesota.

Response: EPA is evaluating the BART determinations for the taconite facilities in light of new information. EPA agrees that considerable work remains in determining the correct BART limits. EPA will continue to work with Minnesota in determining the correct limits. Once that is resolved, EPA and Minnesota will select the appropriate course of action for setting the final BART limits for taconite facilities.

Comment: Cliffs commented that it is inappropriate to approve Minnesota's SIP before all public comments have been submitted and considered, and asserts that EPA offered no indication as to how this parallel processing can comply with the procedural requirements of the CAA, the Administrative Procedures Act, and Minnesota law.

Response: Appendix V to 40 CFR part 51 provides relevant guidance on the completeness of SIP submittals. Section 2.3 of this appendix outlines the criteria for parallel processing. Further discussion of this procedure is provided in the rulemaking promulgating appendix V, published in final on February 16, 1990, at 55 FR 5824. That rulemaking addresses in more detail how parallel processing is consistent with the CAA and the Administrative Procedures Act. In the parallel process, EPA presumes that the final state submission will be sufficiently similar to the draft submission such that no significant issues would be expected to arise in the final submission that had not already been raised in the proposed rule. Where the premise is correct, the public has adequate opportunity to comment on the pertinent issues, and a more efficient and more expeditious rulemaking is achieved. Where the premise is not correct, EPA will issue a subsequent proposed rule to solicit comment on those issues that were not included in the initial proposed action. By this process, commenters are provided an opportunity to comment on all pertinent issues, as mandated under Federal law.

In this particular case, EPA believed that the circumstances warranted parallel processing. EPA anticipated a final state regional haze plan supplement similar to the proposed supplement, such that a parallel processing approach would provide the public with an opportunity for comment on the pertinent issues. EPA followed this process in order to expedite action on Minnesota's plan. However, several of the comments that EPA received have led EPA to believe that more effective emission control at taconite plants is warranted. EPA intends to issue another proposed rule on emission limits for taconite plants to provide the public the opportunity to comment on EPA's revised views regarding taconite facility emission controls. Therefore, the commenter's concern about having an adequate opportunity to comment on EPA's proposed action on a final state submission is fully addressed.

Comment: In its comments, Cliffs asserts that the numeric limits that were included in the proposed Administrative Orders for the Cliffs' facilities in Minnesota's supplement were erroneously derived and do not reflect the application of BART. Cliffs asserts that alternate product lines, fuel flexibility, and other considerations must be included in developing numeric limits that Cliffs will be required to meet on a continuous basis.

Response: EPA is considering new information on the BART emission limits for taconite facilities. EPA will issue a subsequent proposed rule before taking final action on the emission limits for taconite facilities. EPA will consider information from Cliffs regarding its taconite facilities before taking final action.

Comment: In its comment letter, Cliffs states as follows,

Throughout this document, whenever “we,” “us,” or “our” is used, we mean EPA. On October 17, 2011, the Maryland Department of the Environment (MDE) submitted a formal revision (#11-07) to its State Implementation Plan (SIP). The SIP revision consists of the addition of an exemption from preconstruction permitting requirements for insignificant sources of volatile organic compounds (VOC's).

Regulation .10 under COMAR 26.11.02 (Permits, Approvals, and Registration) contains exemptions for certain sources that are not required to obtain approvals or permits to construct prior to the construction or modification of the affected source. Specifically, COMAR 26.11.02.10X (as it currently exists in the Maryland SIP) provides such an exemption for sources that emit less than one (1) ton per year (tpy) of each pollutant which is a Class II toxic air pollutant, or a pollutant for which there is a federal ambient air quality standard. Regulation .10X also provides such an exemption for sources that emit less than one (1) pound per day of a Class I toxic air pollutant. Maryland's proposed revisions add sources of VOC's to the list of sources eligible for the 1 tpy exemption under section .10X. Additionally, the revisions clarify that the thresholds for exemption apply to a source's “pre-control potential-to-emit.”

The revisions to COMAR 26.11.02.10X were effective in Maryland on August 11, 2011. The MDE submitted them to EPA for approval into the SIP on October 17, 2011. EPA's review of the SIP submittal finds the revisions consistent with CAA requirements.

EPA is approving MDE's October 17, 2011 SIP submittal. EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of today's Federal Register, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on August 13, 2012 without further notice unless EPA receives adverse comment by July 12, 2012. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time.

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).

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 August 13, 2012. 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. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking.

This action pertaining to permit to construct exemptions under Maryland's NSR program may not be challenged later in proceedings to enforce its requirements. ( See section 307(b)(2) of the CAA.)

40 CFR part 52 is amended as follows:

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

EPA is issuing two separate and independent determinations for the Baltimore area related to implementation of anti-backsliding requirements for the 1-hour ozone NAAQS. 1

Pursuant to EPA's authority to ensure implementation of 1-hour ozone anti-backsliding requirements and section 301 of the Clean Air Act (CAA), EPA is determining that complete, quality-assured and certified data for 2003-2005 show that the Baltimore area previously failed to attain the 1-hour ozone standard by its applicable November 15, 2005 attainment deadline.

EPA is determining that the Baltimore area is currently attaining the 1-hour ozone standard. EPA's determination is based on the most recent three-year periods of complete, quality-assured and certified data, 2008-2010 and continuing in 2009-2011. Moreover, complete, quality-assured and certified data show that the Baltimore area has attained the 1-hour ozone standard since the 2006-2008 monitoring period and for every three-year period since that time. Pursuant to EPA's interpretation, as set forth in its Clean Data Policy  2 and the cases and regulations that embody it, EPA has determined that the Baltimore area is no longer obliged to submit and implement the 1-hour ozone contingency measure requirement of CAA section 172(c)(9).

In order to determine the area's air quality status for purposes of this action, EPA reviewed ozone monitoring air quality data from the states, in accordance with 40 CFR 50.9, 40 CFR part 50 appendix H, and EPA policy and guidance, as well as data processing, data rounding and data completeness requirements. EPA's review of the air quality data and related rationale for these determinations are explained in the Notice of Proposed Rulemaking (NPR) published in the Federal Register on February 1, 2012 (77 FR 4940) (hereafter “the NPR for this action” or “the February 1, 2012 NPR”) and will not be restated here.

The Baltimore area is composed of Baltimore, Carroll, Harford and Howard Counties and the City of Baltimore. 3 The 1-hour ozone standard designations were established by EPA following the enactment of the 1990 Amendments to the CAA. See 56 FR 56694, November 6, 1991. Each area of the country that was designated nonattainment for the 1-hour ozone NAAQS was classified by operation of law as marginal, moderate, serious, severe, or extreme depending on the severity of the area's air quality problem. ( See CAA sections 107(d)(1)(C) and 181(a)). The Baltimore area was designated nonattainment under the 1-hour ozone NAAQS and classified as severe-15, with an applicable attainment date of November 15, 2005.

On July 18, 1997, (62 FR 38856), EPA promulgated a new, more protective standard for ozone based on eight-hour average concentrations (the “1997 eight-hour ozone NAAQS”). EPA designated and classified most areas of the country under the eight-hour ozone NAAQS in an April 30, 2004 final rule (69 FR 23858). In this April 30, 2004 final rule EPA designated the Baltimore area nonattainment under the 1997 eight-hour ozone NAAQS and classified the area as moderate. 4

On April 30, 2004 (69 FR 23951), EPA also issued a final rule entitled “Final Rule To Implement The 8-hour Ozone National Ambient Air Quality Standard—Phase 1,” referred to as the Phase 1 Rule. Among other matters, this rule revoked the 1-hour ozone NAAQS in most areas of the country, effective June 15, 2005. ( See 40 CFR 50.9(b); 69 FR at 23996; and 70 FR 44470 (August 3, 2005)). The Phase 1 Rule also set forth how anti-backsliding principles will ensure continued progress toward attainment of the eight-hour ozone NAAQS by identifying which 1-hour ozone requirements remain applicable in an area after revocation of the 1-hour ozone NAAQS.

Although EPA revoked the 1-hour ozone standard (effective June 15, 2005), eight-hour ozone nonattainment areas remain subject to certain 1-hour anti-backsliding requirements based on their 1-hour ozone classification. Initially, EPA's Phase 1 rule to address the transition from the 1-hour to the eight-hour ozone standard did not include 1-hour nonattainment area contingency measures or major source penalty fee programs among the measures retained as 1-hour ozone anti-backsliding requirements. However, on December 23, 2006, the United States Court of Appeals for the District of Columbia Circuit determined that EPA should not have excluded these requirements (and certain others not relevant here) from its anti-backsliding requirements. South Coast Air Quality Management District v. EPA, 5 472 F.3d 882 (D.C. Cir. 2006), reh'g denied 489 F.3d 1245 (clarifying that the vacatur was limited to the issues on which the court granted the petitions for review). Thus, the Court vacated the provisions that excluded these requirements. As a result, states must continue to meet the obligations for 1-hour ozone NAAQS contingency measures. On May 14, 2012 (77 FR 28424), EPA issued a final rule that, among other things, removed the vacated provisions of 40 CFR 51.905(e) and addressed the anti-backsliding requirement for contingency measures for failure to attain or make reasonable further progress toward attainment of the 1-hour ozone standard. See 74 FR 2936, January 16, 2009 (proposed rule); 74 FR 7027, February 12, 2009 (notice of public hearing and extension of comment period); and 77 FR 28424, May 14, 2012. On February 1, 2012, EPA proposed the determinations that are the subject of this final rulemaking action. 6

We received comments from the Sierra Club, which opposed aspects of both actions and contended that the proposed rule was incomplete. Below, EPA summarizes those comments and sets forth EPA's responses.

Comment 1: The commenter claimed that a finding that Baltimore has attained since 2008 is premature because monitored data for years since 2008 are for years that are not reflective of the historic trend of emissions. In support of their position, the commenter cite Draft Inventory of U.S. Greenhouse Gas Emissions and Sinks, 1990-2010, (February 2012) to support the proposition that reductions in emissions of NO X and VOC  7 in 2008 and 2009 are due in part to nonpermanent reductions in electricity demand and other emissions related activities resulting from the economic recession. The commenter also noted that the same draft inventory stated that CO 2 emissions rose by 3.7 percent—the largest increase in a 21 year period—which should correlate to increasing NO X and VOC emissions from all sectors as well. The commenter contends that EPA is required in this rulemaking to further determine that the emissions decreases were due to pollution controls and not the economic downturn and cited section 107(d)(3)(E)(iii) of the CAA, which states: “The Administrator determines that the improvement in air quality is due to permanent and enforceable reductions in emissions resulting from implementation of the applicable implementation plan and applicable Federal air pollutant control regulations and other permanent and enforceable reductions.” The commenter argues that EPA is precluded here from making a determination of attainment based on monitored air quality, unless EPA makes an additional analysis and determination that air quality is due to permanent and enforceable reductions from enforceable limits and control measures.

Response 1: EPA disagrees with the comment. EPA's determination of attainment in this final rule is properly based on monitored air quality, and it complies with the statutory and regulatory procedures that govern the making of a determination of attainment for the purposes of comparison to the 1-hour NAAQS. See 40 CFR 50.9 and Appendix H. This determination is by definition solely focused on monitored air quality concentrations and does not involve an assessment of causes for those concentrations. Thus it is separate and independent of the inquiry into the origins of the reduced monitored ambient concentrations. The commenter conflates EPA's obligations when making a determination of attainment, which is based solely on monitored air quality concentrations, with separate and additional obligations that apply only when EPA is evaluating a request to redesignate an area from nonattainment to attainment—a process that is not being undertaken here. The statutory provision cited by commenter, section 107(d)(3)(E)(iii) of the CAA, applies only in the context of a redesignation request, and explicitly lists specific criteria that must be met for redesignation, which are separate from and in addition to the criteria that must be met when making a determination of attainment.

In the quite different context of a redesignation, section 107(d)(3)(E)(iii) of the CAA requires EPA to determine, among other things, that attainment of a NAAQS resulted from permanent and enforceable emissions reductions under the applicable SIP and Federal rules. Section 107(d)(3(E)(i) of the CAA lists a determination of attainment as an independent factor, separate and apart from the other criteria for approving a redesignation request. Section 107(d)(3)(E)(iii) of the CAA applies only when EPA proposes to redesignate an area from nonattainment of a NAAQS to attainment. In our February 1, 2012 NPR, EPA did not propose to redesignate the Baltimore area to attainment of the 1-hour ozone NAAQS. Moreover, after revocation of the 1-hour ozone NAAQS in 2005, EPA no longer redesignates areas to attainment of the 1-hour ozone NAAQS. Nor as the commenter claimed, did EPA propose to “reclassify” the Baltimore area. 8 Instead, the February 1, 2012 NPR proposed only to determine that the Baltimore area has attained the 1-hour ozone NAAQS based upon quality-assured and certified data for each consecutive 3-year period from 2006 to 2008 and through 2008 to 2010. EPA also proposed to determine that the area continues to attain during the most recent 3-year period for which data are available, 2009-2011, based upon data available for 2011. As EPA notes elsewhere in its responses to comments, these 2011 data have now been certified and quality-assured, and thus establish that the area continues in attainment for the 1-hour ozone standard. In accordance with the statute and EPA's regulations, EPA's determination of attainment is based solely upon monitored air quality data which establish that the area's air quality has attained the revoked 1-hour ozone NAAQS. EPA's determination therefore meets regulatory requirements for the clearly defined purpose for which it is made. The commenter's concerns and contentions, therefore, are inaccurate, and do not in any way detract from the sound basis for EPA's final determination that Baltimore has attained the 1-hour ozone standard.

Comment 2: The commenter urges the importance of showing that the improvement in air quality is not due to the economic downturn is important because the air quality data indicate that the Baltimore area is at the upper limit of what can be considered attainment (3.1 expected exceedances over 2009 to 2011) under the 1-hour ozone NAAQS. The commenter suggests that the air quality improvement and continued attainment may be due to economic factors and not to pollution controls and argues that the Baltimore area may quickly slip back into nonattainment as the economy recovers, and that any “redesignation of the area to attainment will not be valid.”

Response 2: EPA disagrees with the comment. As set forth in EPA's response to Comment 1, as is appropriate, EPA here is making only a determination of attainment for the 1-hour ozone standard based on monitored air quality. EPA is not redesignating the area to attainment for that standard—nor could the Agency do so, in view of the fact that the 1-hour ozone standard has been revoked since 2005. EPA's clearly defined determination of attainment here is consistent with the regulations that apply, and is based upon three years of complete, quality-assured monitoring data. For each NAAQS, EPA establishes through regulation procedures for the requisite level (in this case 0.12 ppm  9 ), form (averaging periods, etc.) and, minimum data quality and handling conventions necessary to distinguish compliance from noncompliance. Although the 1-hour ozone NAAQS as promulgated in 40 CFR 50.9 includes no discussion of specific rounding conventions regarding rounding measured ambient air quality data or the expected number of exceedances for a year or over a consecutive three year period, our publicly articulated position and the approach long since universally adopted by the air quality management community is that the interpretation of the 1-hour ozone standard requires rounding ambient air quality data consistent with the stated level of the standard. Section 1.0 of Appendix H to 40 CFR part 50 explains how to determine when the expected number of days per calendar year with maximum hourly average concentrations above 0.12 ppm is equal to or less than 1. Section 1.0 of Appendix H refers to “Guideline for Interpretation of Ozone Air Quality Standards”  10 for an “expanded discussion of these procedures and associated examples.” In section 2.1—Interpretation of Expected Number, this “Guideline for Interpretation of Ozone Air Quality Standards” says as long as “this arithmetic average remains `less than or equal to 1' the area is in compliance. As far as rounding conventions are concerned, it suffices to carry one decimal place when computing the average.” In the 1990 amendments to the CAA, Congress expressly recognized the continuing validity of EPA guidance. See generally, H Comm. Rep. 101-490 pp. 197, 232 (1990) (House Energy and Commerce Committee Report). Under EPA regulations, a sum of 3.1 expected exceedances over a consecutive 3-year period complies with the standard because the average is 3.1 divided by 3 or 1.0333 * * * that when rounded to carry one decimal place is 1.0 which does not exceed 1. The fractional value of the amount of expected exceedances arises due to missed monitoring days and derives from calculations pursuant to Appendix H to 40 CFR part 50. The form of the standard itself in terms of average number of “expected exceedances” is grounded in statistical considerations because the term “expected exceedances” is a statistical term. See section 2.0 of “Guideline for Interpretation of Ozone Air Quality Standards.” This fractional part of “expected exceedances” for a year or for a consecutive 3-year period arises from the calculation required using the procedures of Appendix H to 40 CFR part 50 to account for the number of days for which no valid data difference between the required number of required monitoring days in the year and the actual number of days with valid data with an allowance for the number of days a state may assume to be less than the standard level. These calculations were provided in Appendix A to “Technical Support Document—Determination of Failure to Attain by 2005 and Determination of Attainment by 2008 for the 1-Hour Ozone National Ambient Air Quality Standards in the Baltimore Nonattainment Area in Maryland. 11 ” Thus, the form of the 1-hour ozone NAAQS restricts the level of uncertainty, in the form of missed monitoring data as expressed, in the case of the 2011 data for one monitor, as 3.1 expected exceedances over a three-year period.

This fractional number is not an indication that the area is not attaining the standard, but rather takes into consideration and accounts for missing data. Moreover, EPA determines whether the area is in attainment through the procedures and definitions supplied in the regulations and under long standing interpretations. EPA does not distinguish degrees of attainment. Once an area's monitored concentrations show that it is below the level of concentrations defined as “attainment” of the standard, EPA considers the area to be in attainment of that standard.

Comment 3: The comments assert that EPA cannot determine that the Baltimore area is attaining the 1-hour ozone NAAQS for the period 2009 to 2011 unless and until EPA has determined the 2011 data meet the data quality standards of 40 CFR 50.9 and Appendix H for use in compliance determinations. The commenter stated that the data for 2011 reflect 209 out of 214 required monitoring days, with “three days assumed less than the standard,” and contends that EPA must show that the missing days are not contributing to nonattainment for 2009-2011, according to the applicable calculation methods.

Response 3: EPA agrees that a determination of attainment of the revoked 1-hour ozone standard should be consistent with relevant regulatory requirements. EPA has determined that the 2011 data meet the quality assurance and certification requirements for use to determine compliance with the 1-hour ozone NAAQS through 2011. In making a determination of attainment, EPA relies on the most recent three years of complete, quality-assured data, and also reviews subsequent data that become available and that suggest consistency with continued attainment. On February 1, 2012 (77 FR 4940), EPA proposed a determination that the Baltimore area has attained the 1-hour ozone NAAQS, and included data showing that the area had attained the standard since 2008. Although at that point the 2011 data had not yet been certified by the State of Maryland, the data for prior years had been previously certified and showed continuous attainment, and available data for 2011 were consistent with continued attainment. On April 12, 2012, the Maryland Department of the Environment certified the 2011 air quality monitoring data for ozone as complete and quality-assured. EPA has reviewed the certified 2011 1-hour ozone monitoring data and determined that the certified 2011 data matches and is the same as that used to support the February 1, 2012 NPR. Because data for 2011 have now have been certified as complete and quality-assured, this final rule determining that the Baltimore area is attaining the 1-hour ozone NAAQS is based upon the most recent three years of complete, quality-assured, certified air quality monitoring data for 2009 to 2011. As discussed in the previous response, the form of the 1-hour ozone NAAQS and Appendix H to 40 CFR part 50 (which contains the interpretation and procedures to calculate the number of expected exceedances for a year) account for any days for which valid data are missing. For this reason, EPA can determine the Baltimore area is attaining the 1-hour ozone NAAQS now that the 2011 data have been certified.

Comment 4: The comments asserted that the 2008 1-hour ozone data for the Edgewood monitor is missing as evinced by an Ozone Monitor Report 2008 obtained from EPA's Web page http://www.epa.gov/airdata/ad_rep_mon.html. Thus, the comments assert EPA needs to provide these data and verify that there actually were no values at the Edgewood monitor in 2008 above the 125 ppb level, and EPA needs to explain why the 2008 1-hour data for Edgewood, which is the critical monitoring data for determining attainment, is missing from its Web page. The comments expressed concern that the 8-hour averages are also very high which suggests that there may have been 1-hour levels above 125 ppb.

Response 4: In response to this comment, EPA re-checked the 2008 1-hour ozone monitoring data for the Edgewood monitor (AQS ID number 24-025-1001). Although the 2008 data were complete and available through the portal EPA uses to access AQS, EPA learned that the data for 2008 had not been completely available through the public portal access. The 2008 1-hour ozone air quality data were and are recorded in EPA's Air Quality Data (AQS) system, which is EPA's official repository for air quality data to be used for determinations of compliance with a NAAQS. In preparation for the February 1, 2012 NPR, on March 3, 2011, EPA viewed and retrieved the data in AQS for the 2008 (as well as the 2004 through 2007, and 2009 through 2010 years) ozone air quality data, and used this data in the compliance calculations for the proposed rule. 12 These calculations were provided in the Technical Support Document (TSD)—“Determination of Failure to Attain by 2005 and Determination of Attainment by 2008 for the 1-Hour Ozone National Ambient Air Quality Standards in the Baltimore Nonattainment Area in Maryland,” dated January 26, 2012” for the proposed rule. See docket item EPA-R03-OAR-2011-0680-0008. 13 After receiving the Sierra Club's comment on this issue, EPA re-checked and downloaded a “Monitor values Report” dated April 16, 2012, for the same 2008 data for the Edgewood monitoring site via the public access portal of “Air Data Mart.”  14 From an examination of this April 16, 2012 “Monitor Values Report,” EPA learned that all the data for the ozone monitors in Harford County could not be accessed through that portal and that in fact the 2008 data were in AQS. The April 16, 2012 “Monitor Values Report” indicated that there were 4850 “observations” (data points) in AQS for the Edgewood monitoring site which equals the same number of observations as for the 202 valid days of monitoring data for the Edgewood monitor in 2008 used in the compliance calculations prepared for the February 1, 2012 NPR. 15 16 Upon investigation EPA determined that there was a minor fault in the Air Data Mart public access portal system and has corrected the problem. EPA has verified that the complete 2008 data can now be accessed via the “Air Data Mart.” On May 1, 2012, EPA retrieved a copy from the “Air Data Mart” and placed a copy of the output which displays the 2008 data in the docket for this action. 17 EPA has verified that the 2008 data for the Edgewood monitor now available through the “Air Data Mart” portal do not affect its determination of attainment for the area during any period that included 2008 data because the data available on May 1, 2012 via the “Air Data Mart” portal is the same as that EPA obtained on March 3, 2011 for use in the compliance calculations prepared for the February 1, 2012 NPR. These data values were thus considered by EPA and do not affect EPA's determinations for any attainment period that included the 2008 data. Moreover, EPA has also determined here that the area is attaining the standard for the most recent three years of complete, quality-assured data, 2009-2011. EPA's determination for this most recent period does not include or require reliance upon any data for 2008.

EPA recognizes that, for the 1997 ozone NAAQS, the 8-hour ozone values in the Baltimore area exceed that NAAQS, and EPA has taken action accordingly:

1. On February 1, 2012, EPA determined that the Baltimore 1997 8-hour moderate ozone nonattainment area had failed to attain the 1997 8-hour NAAQS by its applicable attainment date, and the Baltimore area was reclassified as a serious ozone nonattainment area. 18 See 77 FR 4901, February 1, 2012.

2. On April 30, 2012, the EPA Administrator signed a final rule that designated areas as nonattainment or attainment for 2008 ozone NAAQS, which is codified at 40 CFR 50.15. The Baltimore, MD area was included as a nonattainment area. See 77 FR 30088 at 30127, May 21, 2012.

Comment 1: The comments express support for EPA's statement that the Baltimore area's failure to attain by its statutory 1-hour attainment date of November 15, 2005 bears on obligations with respect to two 1-hour ozone anti-backsliding requirements whose implementation would be triggered by a finding of failure to attain: contingency measures for failure to attain and section 185 major stationary source fee programs. However, the commenter disagrees with the proposed rule's discussion of the effect of the determination on these 1-hour ozone anti-backsliding requirements. Specifically, the commenter criticizes EPA's statements below:

1. “If this determination [of current 1-hour attainment of ozone NAAQS] is finalized, then even if EPA finalizes its proposed determination that the area failed to attain the 1-hour ozone standard by the 2005 deadline, it will not result in any 1-hour ozone contingency measure obligations for the area.” See 77 FR 4940 at 4943.

2. “A final determination of failure to attain by the area's 1-hour attainment date would trigger the 1-hour anti-backsliding obligation to implement the penalty fee program under section[s] 182(d)(3)[,] 182(f) and 185, unless that obligation is terminated.” See 77 FR 4940 at 4943.

The comments assert that under the South Coast decision EPA is obligated to enforce contingency and fee measures in areas that fail to attain the 1-hour ozone NAAQS by their attainment dates and is not authorized to release the area from its contingency obligations or to terminate the obligation to pay the section 185 and other fees

With respect to the section 185 fee requirement, the commenter states that the Baltimore area failed to attain by November 15, 2005, and that the Baltimore area did not receive an extension of its attainment date (section 181 (a)(5) of the CAA). The commenter contends that therefore the area is subject to 185 fees on its major sources of VOCs and NOx for the time period 2005-2008.

Response 1: First, we wish to emphasize, as EPA stated in its proposal, that the purpose of this rulemaking notice is to make specific air quality determinations regarding whether the Baltimore area attained the revoked 1-hour ozone standard. While EPA's proposal stated that these determinations bear on 1-hour anti-backsliding requirements for contingency measures and CAA section 185 penalty fees, this notice does not attempt to address or resolve all the implementation issues regarding those requirements. Thus, Sierra Club's position that EPA's specific rulemakings on air quality determinations must also include resolutions of all anti-backsliding implementation issues that may flow from them is incorrect. While EPA recognizes that the anti-backsliding requirements for 1-hour ozone contingency measures and section 185 fees are linked to the determination of failure to meet the attainment deadline for that standard, EPA's rulemakings here regarding those determinations do not, and are not required to, dispose of all implementation issues for those requirements or for others, such as those raised in Sierra Club's comments regarding milestones and additional planning.

Nevertheless, EPA sets forth below its views on points raised by the commenter. First, with respect to contingency measures, EPA believes that, as EPA explains in its response below in the context of the requirement for section 185 penalty fees, it is EPA's final determination that the area failed to attain by its attainment date that triggers the requirement to implement these. Since EPA is also finalizing here its determination that the area is currently attaining the 1-hour ozone standard, the obligation to submit or implement any measures is suspended. This would be the case, moreover, even if the obligation for contingency measures had been triggered at an earlier date because the purpose of nonattainment contingency measures for failure to attain is to provide for progress towards attainment. Once attainment has been reached, this purpose is satisfied. EPA's Clean Data Policy and the many Courts which have upheld it, including National Resources Defense Council v. EPA, 571 F.3d 1249 (D.C. Cir. 2009), support this rationale. 19 Contrary to commenter's complaint, EPA is not here unlawfully refusing to effectuate the anti-backsliding requirement for contingency measures. Nor is EPA unlawfully releasing the area from its anti-backsliding obligation with respect to contingency measures. To the contrary, EPA is following the long-established legal path to determining that the contingency measure requirement has been satisfied by a determination, after notice-and-comment rulemaking, of attainment of the 1-hour ozone standard. In making the determination that the area failed to attain the 1-hour ozone standard by its applicable attainment date, and concurrently making the determination that the area has been attaining the 1-hour ozone standard since 2008, and that it continues to attain that standard, EPA is enforcing the anti-backsliding requirement. The Baltimore area is not backsliding on the 1-hour ozone standard; as EPA has determined, the Baltimore area has attained that standard, and continues to attain it.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

On July 18, 1997 (62 FR 38856), EPA promulgated an 8-hour ozone standard of 0.08 parts per million (ppm). EPA published a final rule designating and classifying areas under the 1997 8-hour ozone NAAQS on April 30, 2004 (69 FR 23857). In that rulemaking, the St. Louis area was designated as nonattainment for the 1997 8-hour ozone standard and classified as a moderate nonattainment area under subpart 2 of the CAA.

On May 26, 2010, IEPA requested redesignation of the Illinois portion of the St. Louis area to attainment of the 1997 8-hour ozone standard based on ozone data for the period of 2007-2009. On September 16, 2011, IEPA supplemented the original ozone redesignation request, revising the mobile source emission estimates using EPA's on-road mobile source emissions model, MOVES, and extending the demonstration of maintenance of the ozone standard through 2025, with new MVEBs, but without relying on emission reductions resulting from implementation of EPA's Clean Air Interstate Rule (CAIR) or Cross-State Air Pollution Rule (CSAPR).

On June 9, 2011 (76 FR 33647), EPA issued a final rulemaking determining that the entire St. Louis, MO-IL area has attained the 1997 8-hour ozone NAAQS based on three years of complete, quality-assured ozone data for the period of 2008-2010. 1

On December 22, 2011 (76 FR 79579), EPA issued a rulemaking action proposing to approve Illinois' request to redesignate the Illinois portion of the St. Louis area to attainment of the 1997 8-hour ozone standard, as well as proposing to approve Illinois' maintenance plan for the area, Volatile Organic Compound (VOC) and nitrogen oxides (NO X ) MVEBs, and VOC and NO X emissions inventories. This proposed rulemaking sets forth the basis for determining that Illinois' redesignation request meets the CAA requirements for redesignation to attainment for the 1997 8-hour ozone NAAQS. Air quality monitoring data in the St. Louis area for 2007-2009, 2008-2010, and 2009-2011 show that this area is currently attaining the 1997 8-hour ozone NAAQS.

The primary background for today's action is contained in EPA's December 22, 2011, proposal to approve Illinois' redesignation request, and in EPA's June 9, 2011, final rulemaking determining that the area has attained the 1997 8-hour ozone NAAQS, based on complete, quality-assured monitoring data for 2008-2010, and continuing through 2011. In these rulemakings, we noted that under EPA regulations at 40 CFR 50.10 and 40 CFR part 50, appendix I, the 1997 8-hour ozone standard is attained when the 3-year average of the annual fourth highest daily maximum 8-hour average ozone concentrations is less than or equal to 0.08 ppm at all ozone monitoring sites in the area. See 69 FR 23857 (April 30, 2004) for further information. To support the redesignation of the area to attainment of the NAAQS, the ozone data must be complete for the three attainment years. The data completeness requirement is met when the 3-year average of days with valid ambient monitoring data is greater than 90 percent, and no single year has less than 75 percent data completeness, as determined in accordance with appendix I of 40 CFR part 50. Under the CAA, EPA may redesignate a nonattainment area to attainment if sufficient, complete, quality-assured data are available demonstrating that the area has attained the standard and if the state meets the other CAA redesignation requirements specified in section 107(d)(E) and section 175A.

The December 22, 2011, proposed redesignation rulemaking provides a detailed discussion of how Illinois' ozone redesignation request meets the CAA requirements for redesignation of the Illinois portion of the St. Louis area. With the final approval of its VOC and NO X emissions inventories, Illinois has met all applicable CAA requirements for redesignation to attainment for the 1997 8-hour ozone NAAQS. Air quality monitoring in the St. Louis area for 2009-2011 shows that this area continues to attain the 1997 8-hour ozone NAAQS. Illinois has demonstrated that attainment of the 1997 8-hour ozone NAAQS will be maintained through 2025 with or without the implementation of CAIR or CSAPR. In addition, modeling conducted by EPA during the CSAPR rulemaking demonstrates that in both 2012 and 2014, even without taking into account reductions associated solely with CAIR or CSAPR, the counties in the St. Louis MO-IL nonattainment area will have air quality that attains the 1997 ozone NAAQS. Finally, Illinois has adopted 2008 and 2025 MVEBs that are supported by Illinois' ozone maintenance demonstration and adopted ozone maintenance plan.

EPA initially provided a 30-day comment period for the December 22, 2011, proposed rule. On January 20, 2012, EPA extended the comment period for an additional 30 days. During the comment period, we received comments from one individual representing the Sierra Club. These comments are summarized and addressed below.

Comment 1: The commenter contends that it is inappropriate to redesignate the Illinois portion of the St. Louis nonattainment area to attainment of the 1997 8-hour ozone standard when EPA intends to designate the St. Louis area as nonattainment under the 2008 8-hour ozone standard, yet the EPA is illegally delaying the implementation of the 2008 8-hour ozone standard.

Response 1: On May 21, 2012 EPA published its designations for the 2008 standard. 77 FR 30088, 30116. EPA designated the St. Louis-St. Charles-Farmington, MO-IL area as nonattainment, with a classification of marginal. The area's status with respect to the 2008 standard, however, does not affect or prevent redesignation of the area to attainment for the 1997 standard. The 1997 standard currently remains in effect, and thus EPA continues to evaluate the area's designation status with respect to that standard. Until the 1997 8-hour ozone standard is revoked, it remains in effect and independent of the 2008 8-hour ozone standard, and EPA continues to evaluate and act upon states' requests for redesignation with respect to the 1997 standard.

EPA has in the past continued to redesignate areas under existing standards even after the adoption of new standards for the same pollutant. After adopting the 1997 8-hour ozone standard, EPA continued to redesignate areas for the 1-hour ozone standard until that standard was revoked. See, for example, Cincinnati, Ohio redesignation, 70 FR 35946 (June 21, 2005). Subsequent to the adoption of the 2008 8-hour ozone standard, EPA has continued to redesignate for the 1997 8-hour ozone standard those areas attaining that ozone standard and otherwise meeting redesignation requirements. See, for example, Detroit, Michigan redesignation, 74 FR 30950 (June 29, 2009); Clearfield and Indiana Counties, Pennsylvania redesignation, 74 FR 11674 (March 19, 2009); Kewaunee County, Wisconsin redesignation 73 FR 29436 (May 21, 2008), and Door and Manitowoc Counties, Wisconsin redesignation, 75 FR 39635 (July 12, 2010).

Comment 2: The commenter states that the Jerseyville, Nilwood, Maryville, Wood River, and East St. Louis ozone monitors all show upward trends in the annual fourth highest daily maximum 8-hour ozone concentrations over the 2009-2011 three year period.

Response 2: The CAA sets forth the criteria for redesignating a nonattainment area to attainment. Section 107(d)(3)(E) provides for approval of a redesignation request if, among other things, the Administrator determines that the area has attained the applicable NAAQS. A determination that an area has attained the standard is based on a review of monitored air quality data that meet regulatory quality-assurance requirements for the specific purpose of comparison to the NAAQS. See 40 CFR part 50.10 and appendix I and 40 CFR part 58. A determination of attainment for ozone is based on a 3-year average of data, and does not consider monitoring data trends or statistical analyses as criteria for determining attainment in evaluating a redesignation request. As discussed in detail in the proposed rule, the St. Louis area has monitored attainment of the 1997 8-hour ozone standard. See 76 FR 79582-79583 (December 22, 2011).

Furthermore, EPA considers data collected over a 3-year period for determining attainment, but not for statistically determining a “trend.” It is expected that there will be year-to-year variations in ozone concentrations due to meteorological influences. A review of annual fourth highest daily maximum 8-hour ozone concentrations and design values over a longer time period, from 2001 (designations under the 1997 8-hour ozone standard was based on air quality monitoring data from 2001-2003) through 2011, shows an overall downward trend at each of the monitors. Moreover, in its maintenance demonstration the State has shown that the 1997 8-hour ozone standard can be maintained in the area through 2025.

Comment 3 General: The commenter contends that, to demonstrate that the observed improvement in ozone air quality is due to the implementation of permanent air quality controls, EPA has relied on several emission control programs that are not permanent and enforceable. The commenter sets out several specific points to support this contention, which are discussed below in 3a-3d.

Response 3 General: It is not necessary for every change in emissions between the nonattainment year and the attainment year to be permanent and enforceable. Rather, the improvement in air quality necessary for the area to attain the relevant NAAQS must be reasonably attributable to permanent and enforceable reductions in emissions. As discussed in the proposed rule at 76 FR 79586-79588 (December 22, 2011), Illinois and upwind areas have implemented a number of permanent and enforceable regulatory control measures which have reduced emissions and resulted in a corresponding improvement in air quality.

Comment 3a: The commenter contends that EPA cannot rely on the implementation of CSAPR, which has been stayed by court order. The commenter objects to EPA claims that IEPA has met its obligation under section 110(a)(2)(D), in part, via emission control programs established through CSAPR, and also objects to inclusion of CSAPR as a potential contingency measure in Illinois' ozone maintenance plan. In addition, EPA credits Illinois with NO X emission reduction in upwind areas that are projected to result from the implementation of CSAPR. Since CSAPR was stayed by the United States Court of Appeals for the District of Columbia Circuit on December 30, 2011, CSAPR is not enforceable. In addition, CSAPR cannot be assumed to be permanent because EPA cannot conclude that CSAPR will survive the litigation challenge to be subsequently decided by the court. Further, any attempt by EPA to claim it will replace CSAPR is of no moment because courts have repeatedly told EPA that it cannot use the promise of future action to meet current emission control requirements. See, e.g., Sierra Club v. EPA, 356 F.3d 296, 298 (DC Cir. 2004).

Response 3a: Illinois has not relied on CSAPR to demonstrate that attainment was due to permanent and enforceable emissions reductions or to demonstrate that it will maintain the standard. While we did note in the proposal that emissions reductions resulting from the implementation of CSAPR would aid in maintenance of the standard, that statement did not provide the basis for our action. Further, contrary to the commenter's assertion, EPA did not credit Illinois with NO X emissions reductions from the implementation of CSAPR, nor did the State take credit for any such emissions reductions when demonstrating maintenance.

In addition, modeling performed by EPA during the CSAPR rulemaking process also demonstrates that the counties in the St. Louis MO-IL ozone nonattainment area will have ozone levels below the 1997 8-hour standard in both 2012 and 2014 without emission reductions from CSAPR or CAIR, with the highest average value for any monitor in the area projected to be 79.6 ppb. See “Air Quality Modeling Final Rule Technical Support Document,” App. B, B-10, B-11, and B-18, which can be found at http://www.epa.gov/crossstaterule/pdfs/AQModeling.pdf. Ozone modeling performed by the Lake Michigan Air Directors Consortium also concludes that the St. Louis area will be able to maintain the ozone standard throughout the maintenance period without considering emission reductions from implementation of the CAIR or CSAPR. 2

Although Illinois did list the “Clean Air Transport Rule, after promulgation by USEPA” as a possible contingency measure in the maintenance plan, this measure is only one of many that may be selected should the contingency plan be triggered. EPA has concluded, in its consideration of the maintenance plan contingency measures, that there are other contingency measures sufficient to satisfy the requirements of 175A, without consideration of CSAPR.

The commenter also claims that EPA relies, in part, on emission control programs established through CSAPR to determine that IEPA has met its obligation under section 110(a)(2)(D). Section 110(a)(2)(D) of the CAA requires that SIPs contain measures to prevent sources in a state from significantly contributing to air quality problems in another state. While EPA noted in the proposed rule that programs such as the NO X SIP Call, CAIR, and CSAPR were established to address transport of air pollutants, we also clearly stated that the section 110(a)(2)(D) requirements for a state are not linked with a particular nonattainment area's designation and classification. Further, EPA concludes that the requirements linked with a particular nonattainment area's designation and classification are the relevant measures to evaluate in reviewing a redesignation request. Therefore, because the section 110(a)(2)(D) requirements apply to a state regardless of the designation of any one particular area in the state, EPA further concludes that these requirements should not be construed to be applicable requirements for purposes of redesignation. EPA is not taking any action, in this rulemaking, to determine whether the State of Illinois has satisfied the requirements of 110(a)(2)(D) with respect to the 1997 ozone NAAQS.

Comment 3b: The commenter asserts that EPA erred in concluding that emission reductions resulting from regulations developed in response to the NO X SIP Call are permanent and enforceable. The commenter asserts that the NO X SIP Call cannot satisfy a requirement that requires reductions to be permanent and enforceable because this program has been replaced and therefore effectively no longer exists. The commenter also asserts that because the NO X SIP Call is a cap-and-trade program no actual reductions are required from the emission sources in the St. Louis nonattainment area. The commenter argues that to the extent any reductions were once required, they could have happened only in areas downwind that have little to no impact on the St. Louis area nonattainment. Finally the commenter asserts that the DC Circuit Court of Appeals recently held that EPA cannot use cap-and-trade programs to satisfy an area-specific statutory mandate. See NRDC v. EPA, 571 F.3d 1245, 1257 (DC Cir. 2009).

Response 3b: EPA disagrees with the commenter's position that emission reductions associated with the NO X SIP Call cannot be considered to be permanent and enforceable. The commenter's first argument—that the reductions are not permanent and enforceable because the NO X SIP Call has been replaced—is based on a misunderstanding of the relationship between CAIR and the NO X SIP Call. While the CAIR ozone-season trading program replaced the ozone-season NO X trading program developed in the NO X SIP Call (70 FR 25290), nothing in CAIR relieved states of their NO X SIP Call obligations. In fact, in the preamble to CAIR, EPA emphasized that the states and certain units covered by the NO X SIP Call but not CAIR must still satisfy the requirements of the NO X SIP Call. EPA provided guidance regarding how such states could meet these obligations. 3 In no way did EPA suggest states could disregard their NO X SIP Call obligations. (70 FR 25290). For NO X SIP Call states, the CAIR NO X ozone season program provides a way to continue to meet the NO X SIP Call obligations for electric generating units (EGUs) and large non-electric generating units (nonEGUs). In addition, the anti-backsliding provisions of 40 CFR 51.905(f) specifically provide that the provisions of the NO X SIP Call, including the statewide NO X emission budgets, continue to apply. In sum, the requirements of the NO X SIP Call remain in force. They are permanent and enforceable as are state regulations developed to implement the requirements of the NO X SIP Call.

EPA also disagrees with the commenter's second argument—that the reductions associated with the NO X SIP Call cannot be considered permanent and enforceable because the NO X SIP Call is a trading program. There is no support for the commenter's argument that EPA must ignore all reductions achieved by the NO X SIP Call simply because the mechanism used to achieve the reductions is an emissions trading program. As a general matter, trading programs establish mandatory caps on emissions and permanently reduce the total emissions allowed by sources subject to the programs. The emission caps and associated controls are enforced through the associated SIP rules or Federal Implementation Plans (FIPs). Any purchase of allowances and increase in emissions by a utility necessitates a corresponding sale of allowances and reduction in emissions by another utility. Given the regional nature of ozone, the emission reductions will have an air quality benefit that will compensate, at least in part, for the impact of any emission increase.

In addition, the case cited by the commenter, NRDC v. EPA, 571 F.3d 1245 (DC Cir. 2009), does not support the commenter's position. That case addressed EPA's determination that the nonattainment Reasonably Available Control Technology (RACT) requirement was satisfied by the NO X SIP Call trading program. The court held that because EPA had not demonstrated that the trading program would result in sufficient reductions within a nonattainment area, its determination that the program satisfied RACT (a nonattainment area requirement) was not supported. Id. 1256-58. The court explicitly noted that EPA might be able to reinstate the provision providing that compliance with the NO X SIP Call satisfies NO X RACT for EGUs for particular nonattainment areas if, upon conducting a technical analysis, it could demonstrate that the NO X SIP Call results in greater emissions reductions in a nonattainment area than would be achieved if RACT-level controls were installed in that area. Id. at 1258. In this case, EPA's comparison of emissions in 2002 and 2008 in this rulemaking necessarily looked only at changes in emissions “in the nonattainment area.” As such, the commenter's reliance on NRDC v. EPA is misplaced.

Comment 3c: The commenter contends that the Illinois State rules are not permanent and enforceable. The commenter asserts that Illinois' consumer products and Architectural and Industrial Maintenance Coatings (AIM) rules are not permanent and enforceable components of the Illinois SIP. The commenter contends that these rules have only been adopted by the State, and that EPA has not yet approved them into the Illinois SIP. The commenter claims that, until they are approved by EPA and incorporated into the SIP, they cannot be relied upon for the purposes of redesignation to attainment of the standard. The commenter claims that for EPA to rely on these rules for the redesignation, it must approve them into the SIP in conjunction with the redesignation.

Response 3c: It is not necessary for every change in emissions between the nonattainment year and the attainment year to be permanent and enforceable. Rather, the improvement in air quality necessary for the area to attain must be reasonably attributable to permanent and enforceable reductions in emissions. As discussed in the proposed rule at 76 FR 79586-79588 (December 22, 2011), Illinois and upwind areas have implemented a number of permanent and enforceable regulatory control measures which have reduced emissions and resulted in a corresponding improvement in air quality sufficient to demonstrate attainment and maintenance. Even if EPA does not finalize action on the Illinois consumer products and AIM rules before completing action on the redesignation, these emissions reductions are not necessary to demonstrate that the improvement in air quality is reasonably attributable to permanent and enforceable reductions in emissions. It should be noted, however, that EPA proposed to approve the Illinois consumer products and AIM rules on October 27, 2011, at 76 FR 66663. EPA received no comments on the proposal and we are currently in the process of finalizing action on the rules.

Comment 3d: The commenter asserts that the use of 2008 air quality data is inappropriate to demonstrate that the attainment of the 1997 8-hour ozone standard is due to the implementation of permanent and enforceable emission reductions. EPA documented the changes in emissions between 2002 and 2008 to demonstrate that the observed ozone air quality improvement is due to permanent and enforceable emissions reduction during this period. The commenter claims that this is unacceptable for a number of reasons.

First, the commenter asserts that EPA has done nothing to connect the emissions and air quality impacts, and EPA has not conducted analyses to prove that emission reductions between 2002 and 2008 have led to reduced ozone concentrations and attainment of the 1997 8-hour ozone standard.

Second, the commenter argues that using a single attainment year, 2008, is arbitrary because the impact of cap-and-trade emission control programs, such as the NO X SIP Call and CSAPR, can cause emissions to vary over time as sources buy, sell, and trade emission allowances.

Third, the commenter claims that the choice of 2008 is further problematic because 2008 was the beginning of a large economic recession. The commenter contends that this resulted in decreased electricity demand, decreased automobile, truck and shipping traffic, and decreased factory production. The commenter objects to EPA's conclusion that monitored changes in ozone levels between 2002 and 2008 were due to the implementation of permanent and enforceable emission controls rather than to changes in meteorology, economic conditions, or temporary or voluntary (not enforceable) emissions reductions. The commenter contends that EPA has not provided an analysis showing that the recession was not the cause of the 2002-2008 emission reduction and observed air quality improvement.

Finally, the commenter claims that EPA has not shown that the 2008 emissions inventory reflects permanent and enforceable emission reductions occurring between 2002 and 2008, and states that the 2008 emissions inventory appears to be the “actual” or the “projected” emissions from an unidentified group of sources. The commenter argues that there is a significant difference between what sources actually emit and what sources are allowed to emit, and that the IEPA and EPA have incorrectly assumed allowable emissions are equal to actual emissions.

Response 3d: EPA's conclusion here is fully supported by the facts and applicable legal criteria. EPA's longstanding practice and policy  4 provides for states to demonstrate permanent and enforceable emissions reductions by comparing nonattainment area emissions occurring during the nonattainment period (represented by emissions during one of the years during the 3-year nonattainment period on which the area's nonattainment designated was based, 5 in this case 2002) with emissions in the area during the attainment period (represented by emissions during one of the 3 attainment years, in this case 2008, which is included in the 3-year period, 2007-2009, that the State used to show attainment with 1997 8-hour ozone standard). A determination that an area has attained the 1997 8-hour ozone standard is based on an objective review of air quality data in accordance with 40 CFR 50.10 and part 50, appendix I, based on 3 complete, consecutive calendar years of quality-assured air quality monitoring data. In the State's redesignation request, Illinois considered data for the 2007-2009 time period to demonstrate attainment. In EPA's determination of attainment and proposed approval of the redesignation request, EPA considered data for the 2008-2010 time period, which was the most recent quality-assured, certified data available. See 76 FR 33647 (June 9, 2011), 76 FR 79582-79583 (December 22, 2011). In this final rulemaking, EPA is also considering continued attainment based on complete, quality-assured certified data for 2009-2011. Therefore, selecting 2008 as a representative attainment year, and comparing emissions for this year to those for a representative year during the nonattainment period, 2002, is an appropriate and long-established approach that demonstrates the occurrence of emission reductions in the area between the years of nonattainment and attainment. These reductions therefore, can be seen to account for the observed air quality improvement.

With respect to the commenter's assertion that EPA has conducted no analyses to prove that emission reductions between 2002 and 2008 led to reduced ozone concentrations, as noted above, comparing emissions for a representative nonattainment year to emissions for a representative attainment year is consistent with longstanding practice and EPA policy for making such a demonstration. The CAA does not specifically require the use of modeling in making any such demonstration and it has not been the general practice to do so.

EPA disagrees with the commenter's contention that using a single attainment year is arbitrary due to year-to-year variations in emissions levels resulting from cap-and-trade programs. As a general matter, trading programs establish mandatory caps on emissions and permanently reduce the total emissions allowed by sources subject to the programs. The emission caps and associated controls are enforced through the associated SIP rules or FIPs. Any purchase of allowances and increase in emissions by a utility necessitates a corresponding sale of allowances and reduction in emissions by another utility. Given the regional nature of ozone, the emission reduction will have an air quality benefit that will compensate, at least in part, for the impact of any emission increase.

With respect to NO X SIP Call reductions within the St. Louis area, there is no evidence of significant temporal variation in emissions levels. In fact, actual emissions from NO X SIP Call sources in the St. Louis area have not varied much from year-to-year over the 2003-2011 time period. The largest emitters in the St. Louis area that are covered by the NO X SIP Call are operating near full capacity. Even if all of the large EGUs and large nonEGUs begin emitting at full capacity, emissions would not increase significantly. Further, these sources do not have the type of emissions controls that can simply be “shut off.”

While the commenter expressed concerns that an economic downturn was responsible for the improvement in air quality, the commenter has made no demonstration that the reduction in emissions and observed improvement in air quality is due to an economic recession, changes in meteorology, or temporary or voluntary emissions reductions. Also, as noted previously, the CAA does not require modeling to make any such demonstration.

Finally, longstanding practice and EPA policy support the use of actual emissions when demonstrating permanent and enforceable emissions reductions. Actual emissions are more reflective of emissions that in reality contribute to monitored ozone concentrations. Sources seldom, if ever, emit at maximum allowable levels and assuming that all sources operate at maximum capacity at the same time would grossly overestimate emissions levels. For this reason EPA believes actual emissions are the appropriate emissions to consider when comparing nonattainment year emissions with attainment year emissions.

Comment 4: The commenter claims that EPA has not conducted an adequate analysis of the effect that redesignation to attainment will have on attainment and maintenance of other NAAQS under section 110(l) of the CAA. The commenter asserts that EPA has failed to conduct an adequate analysis of the ozone redesignation impacts with respect to the 1997 annual fine particulate (PM 2.5 ) NAAQS, the 2006 24-hour PM 2.5 NAAQS, the 1-hour NO X (NO 2 ) NAAQS, the 1-hour sulfur dioxide (SO 2 ) NAAQS, and the 2008 8-hour ozone NAAQS.

Response 4: Section 110(l) provides in part: “The Administrator shall not approve a revision of a plan if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress * * *, or any other applicable requirement of this chapter.” As a general matter, EPA must and does consider section 110(l) requirements for every SIP revision, including whether the revision would “interfere with” any applicable requirement. See, e.g., 70 FR 53, 57 (January 3, 2005); 70 FR 17029, 17033 (April 4, 2005); 70 FR 28429, 28431 (May 18, 2005); and 70 FR 58119, 58134 (October 5, 2005). The Illinois redesignation request and maintenance plan for the 1997 8-hour ozone standard neither revises nor removes any existing emissions limit for any NAAQS, nor does it alter any existing control requirements. On that basis, EPA concludes that the redesignation will not interfere with attainment or maintenance of any of these air quality standards. The commenter does not provide any information in its comment to indicate that approval of this redesignation would have any impact on the area's ability to comply with the 1997 annual PM 2.5 NAAQS, the 2006 24-hour PM 2.5 NAAQS, the 1-hour NO 2 NAAQS, the 1-hour SO 2 NAAQS, or the 2008 8-hour ozone NAAQS. In fact, the maintenance plan provided with the State's submission demonstrates a decline in ozone precursor emissions over the timeframe of the initial maintenance period. As a result, the redesignation does not relax any existing rules or limits, nor will the redesignation alter the status quo air quality. 6 The commenter has not explained why the redesignation might interfere with attainment of any standard or with satisfaction of any other requirement, and EPA finds no basis under section 110(l) for EPA to disapprove the SIP revision at issue or to disapprove the requested redesignation.

Comment 5a: The commenter asserts that the 2002 emissions inventory that EPA is proposing to approve as meeting the emission inventory requirement of section 182(a)(1) of the CAA is inadequate and EPA cannot approve this emissions inventory. The commenter notes that the emissions inventory is 10 years old. In addition, the commenter states that portions of the emissions inventory were estimated, as opposed to being actual emissions, and claims that EPA has not included a “comprehensive” emissions inventory in the docket, EPA has only included a summary of the emissions inventory. The commenter asserts that EPA must place a comprehensive emissions inventory, which includes information for each point source, in the docket to allow the public to review the inventory and comment on it.

Response 5a: Illinois developed a 2002 comprehensive inventory to meet the requirement of section 182(a)(1) of the CAA in accordance with EPA's November 18, 2002, policy memorandum from Lydia N. Wegman entitled “2002 Base Year Emission Inventory SIP Planning: 8-hr Ozone, PM 2.5 and Regional Haze Programs,” and EPA's policy Phase 2 ozone implementation rule published on November 29, 2005 (70 FR 71612, 71664). EPA notes that Illinois submitted the 2002 inventory on June 21, 2006, and at that time, 2002 was the most current emissions inventory available for the nonattainment area.

The commenter observes that portions of the emissions inventory were estimated. This is entirely consistent with accepted EPA procedures for emissions inventory development procedures. It is common practice, and consistent with EPA emissions inventory guidance, for states to estimate emissions for any given year using related activity factors or to project emissions based on information from prior years and associated activity growth factors. See “Emissions Inventory Guidance for Implementation of Ozone and Particulate Matter National Ambient Air Quality Standards (NAAQS) and Regional Haze Regulations,” dated August 2005. For mobile sources, it is standard and accepted practice for states to estimate emissions using an EPA- approved emissions model coupled with the output of a transportation model, which provides traffic levels by roadway and activity type. The commenter provided no information or specific details that show that the 2002 inventory was inaccurate.

With respect to the commenter's concern regarding the availability of the emissions inventory submittal in the docket, we acknowledge that the inventory was unintentionally omitted from the electronic docket at www.regulations.gov . However, the document was available to the public in hard copy at the EPA Region 5 office, and had the commenter contacted the Region, the inventory could have been provided. The inventory has since been added to the electronic docket.

While we believe the 2002 inventory submitted by the State meets the inventory requirements of both section 182(a)(1) and section 172(c)(3) of the CAA, EPA notes that the State also submitted a comprehensive 2008 emissions inventory to serve as the attainment year inventory as part of the maintenance plan. EPA's longstanding view, as set forth in the September 4, 1992 memorandom from John Calcagni entitled “Procedures for Processing Requests to Redesignate Areas to Attainment” (Calcagni memorandum) is that the “requirements for an emission inventory [under section 172(c) or 182(a)(1)] will be satisfied by the inventory requirements of the maintenance plan.” See Calcagni memorandum at 6.

When preparing the comprehensive 2008 emissions inventory, Illinois compiled point source information from the 2008 annual emissions reports submitted to IEPA by sources and EPA's Clean Air Markets Division database for electric utilities. Area source emissions were calculated using the most recently available methodologies and emissions factors from EPA along with activity data (population, employment, fuel use, etc.) specific to 2008. Non-road mobile source emissions were calculated using EPA's NONROAD emissions model. In addition, emissions estimates were calculated for commercial marine vessels, aircraft, and railroads, three non-road categories not included in the NONROAD model. On-road mobile source emissions were calculated using EPA's MOVES emissions model with 2008 Vehicle Miles Traveled (VMT) data provided by Illinois Department of Transportation (IDOT).

Therefore, in actuality, the State has more than satisfied the CAA inventory requirements by its submittal of two inventories that meet the applicable emissions inventory requirement.

Comment 5b: The commenter asserts that emissions calculations for on-road mobile sources fail to consider the use of gasoline containing up to 15 volume percent ethanol (E15).

Response 5b: In 2010 and 2011, EPA granted partial waivers for use of E15 in model year (MY) 2001 and newer light-duty motor vehicles (75 FR 68094 and 76 FR 4662). As discussed in the waiver decisions, there may be some small emission impacts from the use of E15. E15 is expected to cause a small immediate emissions increase in NO X emissions. However, due to its lower volatility than the E10 currently in-use, its use is also expected to result in lower evaporative emissions. Other possible emissions impacts may be from the misfueling of E15 in vehicles or engines for which its use is not approved, i.e., MY2000 and older motor vehicles, heavy-duty engines and vehicles, motorcycles and all nonroad engines, vehicles, and equipment. EPA has promulgated a separate rule dealing specifically with the mitigation of misfueling to reduce the potential emissions impacts from misfueling (76 FR 44406).

However, the E15 partial waivers do not require that E15 be made or sold and it is unclear if and to what extent E15 may even be used in Illinois. Even if E15 is introduced into commerce in Illinois, considering the likely small and offsetting direction of the emission impacts, the limited set of motor vehicles approved for its use, and the measures required to mitigate misfueling, EPA believes that any potential emission impacts of E15 will be less than the maintenance plan safety margin by which Illinois shows maintenance.

Comment 6: The commenter contends that EPA cannot approve the ozone redesignation because Illinois' VOC RACT rules have not been approved in conjunction with the approval of the ozone redesignation. The commenter pointed to EPA's statement in the proposed approval of the redesignation that it would take action on Illinois' VOC RACT rules in a separate rulemaking. The commenter states that approval “in a separate rule” is not approval “in conjunction” with rulemaking on a redesignation, and that this would be a departure from EPA's previous practice of approving needed SIP revisions in the same final rule as a redesignation. The commenter also points to the Sixth Circuit Court of Appeals decision in Wall v. EPA, in which the Court stated that “the EPA abused its discretion when it determined that it could redesignate the Cincinnati metropolitan area as achieving attainment before Ohio had fully adopted all RACT rules of Part D, Subpart 2 of the CAA.” Wall v. EPA, 265 F.3d 426,442 (6th Cir. 2001). The commenter claims that RACT measures must be contained in SIPs submitted with respect to redesignation requests.

Response 6: EPA disagrees with the commenter's position that VOC RACT rules must be approved in the same final rule as the redesignation. The commenter's contention is without basis in either the law or common sense. EPA acknowledged in its proposed redesignation at 76 FR 79585, that approval of IEPA's VOC RACT submittal is a prerequisite for approval of the redesignation of the Illinois portion of the St. Louis area to attainment of the 1997 8-hour ozone standard. This simply requires that EPA approve the VOC RACT rules on or before finalizing approval of the redesignation. EPA approved the Illinois VOC RACT submittal on March 23, 2012 (77 FR 16940). Therefore, this prerequisite to redesignation has been met.

Comment 7: The commenter contends that EPA cannot approve the State's ozone redesignation request because the State and EPA have not satisfied all part D requirements. The specific points of contention raised by the commenter are discussed separately below.

Comment 7a: The commenter disagrees with EPA's conclusion that an area can be redesignated to attainment of a NAAQS regardless of the status of the State's SIP relative to the requirements of section 110(a)(2) of the CAA. The commenter argues that EPA's position does not make sense given that the State's infrastructure SIP will apply to the “former” nonattainment area once it is redesignated to attainment. To the commenter, it is clear that Congress wanted to ensure that there is a valid infrastructure SIP in place to protect areas that are being redesignated to attainment.

Response 7a: EPA stands by its position that section 110 elements that are not connected with nonattainment plan submissions and not linked with an area's attainment status are not applicable requirements for purposes of redesignation. A state remains subject to these requirements after an area is redesignated to attainment. We conclude that only the section 110 and part D requirements which are linked with a particular area's designation and classification are the relevant measures which we may consider in evaluating a redesignation request. This approach is consistent with EPA's existing policy on applicability of conformity and oxygenated fuels requirements for redesignation purposes, as well as with section 184 ozone transport requirements. See Reading, Pennsylvania, proposed and final rulemakings (61 FR 53174-53176, October 10, 1996), (62 FR 24826, May 7, 1997); Cleveland-Akron-Lorain, Ohio, final rulemaking (61 FR 20458, May 7, 1996); and Tampa, Florida, final rulemaking (60 FR 62748, December 7, 1995). See also the discussion on this issue in the Cincinnati, Ohio ozone redesignation (65 FR 37890, June 19, 2000), and in the Pittsburgh, Pennsylvania ozone redesignation (66 FR 50399, October 19, 2001), and in the St. Louis 1-hour ozone redesignation 68 FR 25418, 25426-27 (May 12, 2003). Both the 6th and 7th Circuits have agreed that the CAA provides EPA with leeway to determine what is an “applicable requirement” for purposes of redesignation. Sierra Club v. EPA, 375 F.3d 537 (7th Cir. 2004). See Wall v. EPA, 265 F.3d 426 (6th Cir. 2001), upholding EPA's interpretation of “applicable requirements” with respect to conformity.

In any event, on July 13, 2011, EPA approved elements of the Illinois submittal to meet the infrastructure requirements of sections 110(a)(1) and (2) of the CAA for the 1997 8-hour ozone standard. See 76 FR 41075. Specifically, EPA approved the following infrastructure elements: emission limits and other control measures, ambient air quality monitoring and data system, enforcement of SIP measures, interstate and international pollution abatement, adequate resources, stationary source monitoring system, emergency power, future SIP revisions, consultation with government officials, public notification, air quality modeling and data, permitting fees, and consultation and participation by affected local entities. Also note that Federally promulgated Prevention of Significant Deterioration (PSD) rules are in place in Illinois. For all these reasons, EPA concludes that the SIP elements applicable for purposes of redesignation have been approved by EPA.

Comment 7b: The commenter contends that EPA cannot redesignate the Illinois portion of the St. Louis nonattainment area to attainment of the 1997 8-hour ozone standard because section 172(c) of the CAA requires SIPs to include a Reasonable Further Progress (RFP) plan, an ozone attainment demonstration, contingency measures, nonattainment New Source Review (NSR) rules, and Reasonably Available Control Measures (RACM)/RACT rules and EPA has not approved these items into the SIP for the Illinois portion of the St. Louis ozone nonattainment area. The commenter disagrees with EPA's conclusions that these CAA requirements are no longer applicable to an area after it has achieved attainment of the NAAQS. In addition, the commenter disagrees with EPA's conclusion that, for an ozone nonattainment area, the CAA section 172(c)(3) SIP requirement for a comprehensive, accurate, and current emissions inventory is superseded by the section 182(a)(1) emission inventory requirement. Therefore, the commenter believes that the EPA has not adequately addressed this SIP requirement when it concludes that Illinois has met all SIP requirements applicable to the Illinois portion of the St. Louis ozone nonattainment area for purposes of redesignation to attainment of the 1997 8-hour ozone standard.

Response 7b: Under EPA's Clean Data regulation, 40 CFR 51.918 (1997 8-hour ozone), an EPA rulemaking determination that an area is attaining the relevant standard suspends the area's obligations to submit an attainment demonstration, RACM, RFP, contingency measures, and other planning requirements related to attainment for as long as the area continues to attain. See 70 FR 71702 (November 29, 2005). This regulation, which embodies EPA's interpretation under its “Clean Data Policy,” has been upheld by the DC Circuit. NRDC v. EPA, 571 F.3d 1245 (DC Cir. 2009). 7

Because EPA determined that the St. Louis area has attained the 1997 8-hour ozone standard (see 76 FR 33647, June 9, 2011) and because the area continues to meet that standard, the State is not currently obligated to submit an attainment demonstration, RACM, RFP, contingency measures, and other planning requirements related to attainment.

In addition, in the context of redesignations, EPA has interpreted requirements related to attainment as not applicable for purposes of redesignation. For example, in the General Preamble for implementation of Title 1 of the CAA 1990 amendments EPA stated that:

With respect to the RACT requirement, EPA approved the Illinois VOC RACT submittal on March 23, 2012 (77 FR 16940), and granted Illinois a waiver from the requirement to submit RACT rules under section 182(f) of the CAA on February 22, 2011 (76 FR 9655).

With respect to emissions inventories, by meeting the section 182(a)(1) emission inventory requirement, the State has also met the section 172(c)(3) requirement for a comprehensive, accurate, and current emissions inventory. Further, redesignation policy states that emissions inventory requirements of section 172(c) of the CAA are satisfied by the inventory requirements of the maintenance plan. See the Calcagni memorandum at 6.

With respect to the nonattainment NSR requirement, the issue is moot because EPA has approved the Illinois nonattainment NSR SIP. Nonetheless, since PSD requirements will apply after redesignation, areas being redesignated need not comply with the requirement that a part D NSR program be approved prior to redesignation, provided that the area demonstrates maintenance of the NAAQS without a part D NSR program. A more detailed rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994, entitled, “Part D New Source Review Requirements for Areas Requesting Redesignation to Attainment” (Nichols memorandum). Illinois has demonstrated that the St. Louis area will be able to maintain the 1997 8-hour ozone standard without a part D NSR program in effect; therefore, the State need not have a fully approved part D NSR program prior to approval of the redesignation request. This issue is discussed in greater detail below in response to Comment 7d. Upon redesignation, the PSD program will apply. See Greenbaum v. EPA, 370 F.3d 527, 536 (6th Cir. 2004) (“It would make little sense for [part D NSR] to be included in the post-attainment SIP, as the Clean Air Act * * * explicitly states that attainment area SIPs must include a PSD program.”)

Comment 7c: With further regard to contingency measure requirements of the CAA, the commenter contends that EPA is incorrect to conclude that contingency measures are inapplicable once an area reaches attainment of the NAAQS. The commenter asserts that contingency measures must be in place so that, if an area monitor shows a violation of the NAAQS in the future, that violation of the NAAQS is quickly addressed, minimizing the number of people that will be harmed by air quality levels above the NAAQS.

Response 7c: As set forth in detail in Response 7b, the nonattainment area contingency measure requirements of section 172(c)(9) are directed at ensuring RFP and attainment by the applicable date. These nonattainment area requirements no longer apply after an area has attained the standard and the area has been redesignated to attainment. Under section 175A of the CAA, maintenance plans must contain contingency provisions, “as deemed necessary by the Administrator,” and it is these contingency measures that apply to the area after redesignation to attainment. Illinois included such provisions in its maintenance plan which EPA is approving in this action.

Comment 7d: The commenter, although acknowledging that EPA has certified that it has approved Illinois' nonattainment NSR rules, takes issue with EPA's related conclusion that an area being redesignated to attainment of a NAAQS need not have fully approved part D NSR rules, since PSD requirements of the CAA would apply after redesignation to attainment. The commenter contends that this EPA conclusion was explicitly rejected by the Court in Greenbaum v. EPA, 370 F.3d 527, 534 (6th Cir. 2004). The commenter asserts that without an approved NSR program, there can be no redesignation to attainment of the NAAQS. The commenter believes that this is true, because if a redesignated area violates the NAAQS in the future, all provisions that are contained in the state's nonattainment SIP, including NSR rules, would need to become applicable again.

Response 7d: Part D NSR would not be retained in the SIP as a section 175A(d) contingency measure. As clearly stated in the Nichols memorandum, “EPA believes it is reasonable to interpret `measure,' as used in section 175A(d), not to include part D NSR.” Congress used the undefined term “measure” differently in different provisions of the CAA, which indicates that the term is susceptible to more than one interpretation and that EPA has the discretion to interpret it in a reasonable manner in the context of section 175A. See Greenbaum v. United States EPA, 370 F. 3d 527, 535-38 (6th Cir. 2004). (Court “find[s] persuasive the EPA's argument that the very nature of the NSR permit program supports its interpretation that it is not intended to be a contingency measure pursuant to section 175A(d).”) It is reasonable to interpret “measure” to exclude part D NSR in this context because PSD, a program that is the corollary of part D NSR for attainment areas, goes into effect in lieu of part D NSR upon redesignation. PSD requires that new sources demonstrate that emissions from their construction and operation will not cause or contribute to a violation of any NAAQS or PSD increment. The State has demonstrated that the area will be able to maintain the standard without part D NSR in effect, and the State's PSD program will become effective in the area upon redesignation to attainment. See the rationale set forth at length in the Nichols Memorandum. See also the discussions of why full approval and retention of NSR is not required in redesignation actions in the following redesignation rulemakings: 60 FR 12459, 12467-12468 (March 7, 1995) (Redesignation of Detroit, MI); 61 FR 20458, 20469-20470 (May 7, 1996) (Cleveland-Akron-Lorrain, OH); 66 FR 53665, 53669 (October 23, 2001) (Louisville, KY); 61 FR 31831, 31836-31837 (June 21, 1996) (Grand Rapids, MI). Contrary to the commenter's assertion, the Greenbaum court declined to reach the issue of whether full approval of a part D NSR program is required prior to redesignation. See Greenbaum, 370 F. 3d at 534-35.

Comment 8: The commenter generally asserts that Illinois lacks a fully approved maintenance plan complying with the requirements of section 175A of the CAA. The commenter's specific arguments supporting this assertion follow.

Comment 8a(1): The commenter asserts that the contingency measures contained in Illinois' maintenance plan do not provide for prompt correction of violations of the 1997 8-hour ozone standard. The commenter believes that neither the “Level I” nor the “Level II” response occurs on a prompt schedule as required by section 175A of the CAA, and that several of the potential contingency measures are inappropriate, inadequate, or unacceptably vague. The commenter notes that after the determination of a Level I trigger  8 event, Illinois has committed to adopt needed emission control measures within 18 months and has committed to implement the adopted emission control measures within 24 months after adoption. The commenter also notes that after the determination of a Level II trigger  9 event, the maintenance plan contains no specific emission control commitments, but that Illinois will work with Missouri to conduct a study to determine the causes of the ozone standard violation and the emission control measures necessary to mitigate the air quality problem, with implementation of adopted emission controls to occur within 18 months of the determination of the Level II event. The commenter contends that the implementation schedules for the Level I and II triggers are unacceptably long and not in keeping with the prompt response timing required by section 175A of the CAA.

Response 8a(1): The commenter overlooks the provisions of the CAA applicable to contingency measures. Section 175(A(d) provides that “[e]ach plan revision submitted under this section shall contain such contingency provisions as the Administrator deems necessary to assure that the state will promptly correct any violation of the standard which occurs after the redesignation of the area as an attainment area.” (emphasis added). Thus Congress gave EPA discretion to evaluate and determine the contingency measures EPA “deems necessary” to assure that the state will promptly correct any subsequent violation. EPA has long exercised this discretion in its rulemakings on section 175A contingency measures in redesignation maintenance plans, allowing as contingency measures commitments to adopt and implement in lieu of fully adopted contingency measures, and finding that implementation within 18 months of a violation complies with the requirements of section 175A. See recent redesignations, e.g. Indianapolis, IN PM 2.5 annual standard (76 FR 59512), Lake and Porter Counties, IN 8-hour ozone standard (75 FR 12090), and Northwest Indiana PM 2.5 annual standard (76 FR 59600). Section 175A does not establish any deadlines for implementation of contingency measures after redesignation to attainment. It also provides far more latitude than does section 172(c)(9), which applies to a different set of contingency measures applicable to nonattainment areas. Section 172(c)(9) contingency measures must “take effect * * * without further action by the State or [EPA].” By contrast, section 175A confers upon EPA the discretion to determine what constitutes adequate assurance, and thus permits EPA to take into account the need of a state to assess, adopt and implement contingency measures if and when a violation occurs after an area's redesignation to attainment. Therefore, in accordance with the discretion accorded it by statute, EPA may allow reasonable time for states to analyze data and address the causes and appropriate means of remedying a violation. In assessing what “promptly” means in this context, EPA also may take into account time for adopting and implementation of the appropriate measure. In the case of the St. Louis area, EPA reasonably concluded that, 18 months constitutes a timeline consistent with prompt correction of a potential monitored violation. This timeframe also conforms with EPA's many prior rulemakings on acceptable schedules for implementing section 175A contingency measures as noted above.

Comment 8a(2): The commenter contends that several of Illinois' contingency measures, “NO X RACT” and “Broader geographic applicability of existing measures,” are too vague. The commenter asserts that the vagueness of these contingency measures provides no evidence that the maintenance plan will provide enough emission controls to correct ozone standard violations.

Response 8a(2): As discussed above in response to Comment 8a (1), the CAA does not specify the requisite nature, scope, specificity, or number of contingency measures to be included in a maintenance plan under section 175A. It is for EPA to determine whether the State has given adequate assurance that it can promptly correct a violation. Illinois has submitted contingency measures that EPA deems adequate. They have committed to remedy a future violation, and have included measures to address potential violations from a range of sources and a timeline for promptly completing adoption and implementation. The State has identified measures that are sufficiently specific but which allow for latitude in potential scope. This will enable the State to address a range of potential sources and differing degrees and types of violations. EPA believes that the contingency measures set forth in the submittal, combined with the State's commitment to an expeditious timeline and process for implementation, provide assurance that the State will promptly correct a future potential violation. Given the uncertainty as to timing, degree and nature of any future violation, EPA believes that the contingency measures set forth adequately balance the need for flexibility in the scope and type of measure to be implemented with the need for expeditious state action.

Comment 8a(3): The commenter contends that several of the potential contingency emission control measures are inappropriate or inadequate. The commenter states that several of the contingency emission control measures, including the Tier 2 vehicle emission standards, low sulfur fuel standards, heavy duty diesel standards, and low sulfur diesel standards are Federal emission control measures that EPA is already implementing. The commenter contends that EPA cannot both credit these emission control measures with existing emission reductions and allow IEPA to include them as potential contingency measures in the ozone maintenance plan. The commenter states that this approach would amount to double counting the effects of these emission control measures.

Response 8a(3): As discussed above in response to Comment 8a(2), the CAA does not specify the requisite nature, scope, specificity, or number of contingency measures to be included in a maintenance plan under section 175A. EPA has considered that the maintenance plan includes adequate state contingency measures, and that these are sufficient for the purpose of maintenance. EPA considers that the state measures themselves constitute adequate contingency measures, and that the Federal measures included also bolster maintenance to the extent that they provide reductions that were not counted in the maintenance plan's demonstration as explained below.

EPA also disagrees with the commenter's contention that EPA is double counting emissions reductions. The fact that some emissions reductions may have already been realized by a control measure does not prevent the control measure from resulting in greater reductions in future years. Further, as stated in the proposed rule (76 FR 79591), “[t]o qualify as a contingency measure, emissions reductions from that measure must not be factored into the emissions projections used in the maintenance plan.” This prevents possible double counting of emissions reductions during the maintenance period. Should the contingency plan be triggered, the state would be required to choose a contingency measure that meets this criterion. Any control measure listed in the contingency plan that fails to meet this criterion would not be considered to be an eligible contingency measure at that time and the state would be required to choose one that does.

Comment 8b: The commenter asserts that EPA, in assessing the adequacy of Illinois' ozone maintenance demonstration, has credited the state with NO X emission reductions in upwind areas that are the products of the NO X SIP call and CSAPR. These rules develop cap-and-trade programs that the commenter argues cannot satisfy the maintenance plan requirement. In addition, CSAPR has been stayed by the Court and may not be relied upon to provide NO X emission reductions.

Response 8b: As discussed in Response 3b, EPA disagrees with the commenter's position that emission reductions associated with the NO X SIP Call cannot be considered to be permanent and enforceable simply because they result from an emissions trading program. In addition, as discussed in Response 3a, Illinois has not relied on CSAPR to demonstrate attainment or maintenance of the standard.

Comment 8c: The commenter contends that Illinois' maintenance plan fails to consider additional emissions expected to occur from the Prairie State electrical power plant, which is currently under construction. This power plant is expected to commence operation during the ozone maintenance period. This power plant is expected to be a major source of NO X emissions. The commenter asserts that EPA cannot presume that, because the Prairie State power plant has obtained a PSD source permit, it will not cause or contribute to a violation of the 1997 8-hour ozone standard. EPA must review the PSD record and include the relevant portions in the administrative record for this ozone redesignation rulemaking.

Response 8c: Neither the CAA nor EPA redesignation policy requires that EPA review and take into consideration construction permits as a criterion for redesignation. Consistent with EPA's redesignation policy as articulated in the September 4, 1992, Calcagni memorandum, the State demonstrated maintenance of the standard by showing that future emissions in the area will not exceed the level of emissions in the attainment inventory for the area. The Prairie State power plant under construction is located in Washington County, which is not part of the St. Louis area. Thus emissions from this facility do not factor into the attainment or maintenance inventories for the area. EPA, in its proposed redesignation and elsewhere in our responses to comments in this final rule, has addressed and considered issues pertaining to the potential impact of emissions from outside the St. Louis area on the area's maintenance of the 1997 ozone standard.

Finally, under title I, part C of the CAA, the PSD preconstruction permit program requires an air quality analysis to demonstrate that emissions from construction or operation of a proposed major stationary source or major modification will not cause or contribute to a violation of any applicable NAAQS or PSD increment. CAA section 165(a)(3); see also 40 CFR 51.166(k) (providing that the owner or operator of a proposed source or modification “shall demonstrate that allowable emissions increases from the proposed source or modification, in conjunction with all other applicable emissions increases or reduction * * * would not cause or contribute to air pollution in violation of” any NAAQS or PSD increment). Therefore, the effect of the emissions from a proposed source on the maintenance of the NAAQS is addressed through the PSD permitting program before the facility is authorized to build and operate. Neither the CAA nor EPA policy require EPA to include the record from an independent PSD proceeding in the record for a redesignation action or to reopen permitting issues as part of a redesignation action. In addition, the commenter has not provided data indicating that the Prairie State plant will cause or contribute to a NAAQS or increment violation in the St. Louis area.

Comment 9: The commenter asserts that EPA has not accounted for the effects of weather in its modeling. The commenter notes that EPA's analysis of Illinois' ozone redesignation request is devoid of weather-adjusted considerations of ambient ozone levels. For this reason, this commenter believes that EPA cannot approve Illinois' ozone redesignation request. In addition, the commenter believes that EPA has erred in not considering the impacts that climate change will have on future ozone formation during the maintenance period.

Response 9: A determination that an area has attained the 1997 8-hour ozone standard is based on a review of monitored air quality data that meets regulatory requirements for purposes of comparison to the NAAQS, and it is not derived from modeling. An area is considered to be in attainment of the 1997 8-hour ozone standard if the 3-year average of the fourth highest daily maximum 8-hour average ozone concentrations measured at each monitor within an area over each year does not exceed 0.084 ppm. Three years of air quality data are used to allow for year-to-year variations in meteorology. As discussed in detail in the proposed rule, the St. Louis area is monitoring attainment of the 1997 8-hour ozone standard. See 76 FR 79582-79583 (December 22, 2011).

In addition, a maintenance demonstration need not be based on modeling. See Wall v. EPA, 265 F.3d 426 (6th Cir. 2001), Sierra Club v. EPA, 375 F. 3d 537 (7th Cir. 2004). See also 66 FR 53094, 53099-53100 (October 19, 2001), and 68 FR 25413, 25430-25432 (May 12, 2003). EPA policy and longstanding practice allows states to demonstrate maintenance by preparing an attainment emissions inventory corresponding to the period during which the area monitored attainment and to project maintenance by showing that future emissions are projected to remain below this level for the next ten years. See Calcagni memorandum. Holding emissions at or below the level of attainment is adequate to reasonably assure continued maintenance of the standard. See 65 FR 37879, 37888 (June 19, 2000). Since the St. Louis action is not based on modeling, EPA concludes that weather related impacts, including climate change, on modeling are not relevant. Impacts of weather on monitored data are accounted for by the three years of data used for the attainment determination.

EPA is approving a request from the State of Illinois to redesignate the Illinois portion of the St. Louis, MO-IL area to attainment of the 1997 8-hour ozone standard. EPA is also taking several other related actions. EPA is approving, as a revision to the Illinois SIP, the State's plan for maintaining the 1997 8-hour ozone standard through 2025 in the area. EPA is approving the 2002 emissions inventory as meeting the comprehensive emissions inventory requirement of the CAA for the Illinois portion of the St. Louis area. Finally, EPA finds adequate and is approving the State's 2008 and 2025 MVEBs for the Illinois portion of the St. Louis area.

In accordance with 5 U.S.C. 553(d), EPA finds there is good cause for these actions to become effective immediately upon publication. This is because a delayed effective date is unnecessary due to the nature of a redesignation to attainment, which relieves the area from certain CAA requirements that would otherwise apply to it. The immediate effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “grants or recognizes an exemption or relieves a restriction,” and section 553(d)(3) which allows an effective date less than 30 days after publication “as otherwise provided by the agency for good cause found and published with the rule.” The purpose of the 30 day waiting period prescribed in section 553(d) is to give affected parties a reasonable time to adjust their behavior and prepare before the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's rule relieves the state of planning requirements for this 8-hour ozone nonattainment area. For these reasons, EPA finds good cause under 5 U.S.C. 553(d)(3) for these actions to become effective on the date of publication of these actions.

Under the CAA, redesignation of an area to attainment and the accompanying approval of a maintenance plan under section 107(d)(3)(E) are actions that affect the status of a geographical area and do not impose any additional regulatory requirements on sources beyond those imposed by state law. A redesignation to attainment does not in and of itself create any new requirements, but rather results in the applicability of requirements contained in the CAA for areas that have been redesignated to attainment. Moreover, 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. These actions do not impose additional requirements beyond those imposed by state law and the CAA. For that reason, these actions:

• Are 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);

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

• Are 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. );

• Do 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);

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

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

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

• Are 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

• Do 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 August 13, 2012. 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).)

I. Glossary of Terms and Abbreviations

The following are abbreviations of terms used in final rule:

Regulated Entities. Entities regulated by this action primarily are fossil fuel-fired boilers, turbines, and combined cycle units that serve generators that produce electricity for sale or cogenerate electricity for sale and steam. Regulated categories and entities include:

In addition to being available in the docket, an electronic copy of this final rule will also be available on the World Wide Web. Following signature by the EPA Administrator, a copy of this action will be posted on the transport rule Web site http://www.epa.gov/airtransport.

In this action, EPA is revising specific aspects of the Transport Rule promulgated by EPA on July 6, 2011 (76 FR 48208, Aug. 2, 2011) (the July 6, 2011 final rule). Specifically, EPA is revising the 2012 and 2014 state budgets for Arkansas, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, New York, Nebraska, Ohio, Oklahoma, South Carolina, and Texas, revising the new unit set-asides for Arkansas, Louisiana, and Missouri, and making associated changes to variability limits. 1 EPA originally proposed the Transport Rule on July 6, 2010, (75 FR 45210) and subsequently issued three related notices of data availability (NODAs). The first NODA, published on September 1, 2010, addressed updates to power sector modeling and data (75 FR 53613). The second NODA, published on October 27, 2010, addressed updates to emissions inventory data (75 FR 66055). The third NODA, published on January 7, 2011, addressed the data basis for unit-level allowance allocation methodologies (76 FR 1109). EPA then finalized the Transport Rule on July 6, 2011 (76 FR 48208).

After the final Transport Rule was published, EPA identified discrepancies in certain data assumptions that affected the calculation of a few states' budgets and new unit set-asides in the July 6, 2011, final rule; as a result, on October 14, 2011, EPA published proposed revisions to Transport Rule state budgets in Florida, Louisiana, Michigan, Mississippi, Nebraska, New Jersey, New York, Texas, and Wisconsin, as well as new unit set-asides in Arkansas and Texas (76 FR 63860). In that October 14, 2011, proposal, EPA provided an additional opportunity for commenters to identify information, not previously made available to the agency, that might support similar revisions to Transport Rule state budgets or new unit set-asides in addition to those specifically identified in that proposal (76 FR 63868).

After reviewing comments received on the October 14, 2011 proposal, EPA published three actions on February 21, 2012. First, the Agency issued a final rule addressing the revisions specifically identified in the October 14, 2011, proposal (77 FR 10324). Second, the Agency issued a direct final rule that would have made a set of similar revisions on the basis of new information supplied by commenters responding to the October 14, 2011, proposal (77 FR 10342). Specifically, the direct final included revisions to the 2012 and 2014 state budgets for Arkansas, Georgia, Indiana, Kansas, Louisiana, Mississippi, Missouri, New York, Nebraska, Ohio, Oklahoma, South Carolina, and Texas, and revisions to the new unit set-asides for Arkansas, Louisiana, and Missouri. Third, EPA published a parallel proposal that proposed the adjustments made in the direct final rule. (77 FR 10350) EPA indicated that if it received adverse comment, it would withdraw the relevant portions of that rule and address all relevant comments received in any subsequent rule taking final action based on the parallel proposal.

EPA received adverse comment on the February 21, 2012, direct final rule and the parallel proposal, and thus has taken a separate action to withdraw the direct final rule May 16, 2012. (77 FR 28785). EPA has reviewed all of the comments received and is now taking final action on the revisions that were proposed in the February 21, 2012, parallel proposal. See section IV of this preamble for a discussion of the Agency's response to general comments on this action. See section V of this preamble for a discussion of the specific revisions being made in this final rule as well as the corresponding Response to Comments document contained in the docket for this action.

Tables III-1 through III-6 below summarize the state budgets, new unit set-asides, Indian country new-unit set-asides, and variability limits for all states covered by the Transport Rule, reflecting all of the revisions finalized in this action as well as those revisions included in a previous final rule published on February 21, 2012 (77 FR 10324).

I. Executive Summary

The purpose of this rule is to eliminate the reporting requirement for Driver-Vehicle Inspection Reports (DVIR) for intermodal equipment (IME), if the driver has neither found nor has been made aware of any defects in the IME. The rule also eliminates the recordkeeping requirement for intermodal equipment providers (IEPs) to retain DVIRs that do not indicate IME defects. The FMCSA estimates annual time and costs savings of 1.636 million hours and $54 million dollars. This rule is part of the effort of the U.S. Department of Transportation to implement Executive Order 13563.

Anyone is able to search the electronic form of all comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review the U.S. Department of Transportation's (DOT) Privacy Act system of records notice for the DOT Federal Docket Management System (FDMS) in the Federal Register published on January 17, 2008 (73 FR 3316) at http://edocket.access.gpo.gov/2008/pdf/E8-785.pdf.

Although intermodal cargo containers move by ship and/or by rail, the trip generally begins and ends on chassis trailers (on IME) for transportation by highway. These trailers fall under FMCSA's safety jurisdiction. At issue in this final rule is the requirement that drivers complete DVIRs, which note the existence or absence of defects or deficiencies in IME. The final rule eliminates the requirement that drivers complete DVIRs when they have no defects or deficiencies to report.

This final rule is based on the authority of the Motor Carrier Act of 1935 (1935 Act) and the Motor Carrier Safety Act of 1984 (1984 Act), both of which are broadly discretionary, and the specific mandates of section 4118 of the Safe, Accountable, Flexible, Efficient Transportation Equity Act; a Legacy for Users (SAFETEA-LU) (Pub. L. 109-59, 119 Stat. 1144, at 1729, August 10, 2005, codified at 49 U.S.C. 31151).

The 1935 Act provides that the Secretary of Transportation (Secretary) may prescribe requirements for

• Qualifications and maximum hours of service of employees of, and safety of operation and equipment of, a motor carrier (49 U.S.C. 31502(b)(1)), and

• Qualifications and maximum hours of service of employees of, and standards of equipment of, a motor private carrier, when needed to promote safety of operation (49 U.S.C. 31502(b)(2)).

The 1984 Act authorizes the Secretary to regulate drivers, motor carriers, and vehicle equipment. Codified at 49 U.S.C. 31136(a), section 206(a) of the 1984 Act requires the Secretary to publish regulations on motor vehicle safety. Specifically, the Act sets forth minimum safety standards to ensure that: (1) Commercial motor vehicles (CMVs) are maintained, equipped, loaded, and operated safely (49 U.S.C. 31136(a)(1)); (2) the responsibilities imposed on operators of CMVs do not impair their ability to operate the vehicles safely (49 U.S.C. 31136(a)(2)); (3) the physical condition of CMV operators is adequate to enable them to operate the vehicles safely (49 U.S.C. 31136(a)(3)); and (4) the operation of CMVs does not have a deleterious effect on the physical condition of the operators (49 U.S.C. 31136(a)(4)). Section 211 of the 1984 Act also grants the Secretary broad power in carrying out motor carrier safety statutes and regulations to “prescribe recordkeeping and reporting requirements” and to “perform other acts the Secretary considers appropriate” (49 U.S.C. 31133(a)(8) and (10)).

This rule implements, in part, the Administrator's delegated authority under Section 206(a)(1) of the 1984 Act to ensure that CMVs are maintained, equipped, loaded and operated safely and also exercises the broad recordkeeping and implementation authority under Section 211. The other subsections of Section 206(a) do not apply because this final rule only addresses CMV equipment.

Section 4118 of SAFETEA-LU, entitled “Roadability,” requires the Secretary to issue regulations “to ensure that intermodal equipment used to transport intermodal containers is safe and systematically maintained.” Codified at 49 U.S.C. 31151(a)(3), it specifies a minimum of 14 items to be included in those regulations. It also authorizes Departmental employees designated by the Secretary to inspect IME and make copies of related maintenance and repair records (49 U.S.C. 31151(b)). Any IME that fails to comply with applicable Federal safety regulations may be placed out of service (OOS) by Departmental or other Federal, State, or government officials designated by the Secretary until the necessary repairs have been made (49 U.S.C. 31151(c)). Also included is a provision preempting inconsistent State, local, or tribal requirements that relate to CMV safety, but providing that preemption of a State periodic chassis inspection requirement that was in effect on January 1, 2005 may be waived upon application by the State if the Secretary finds the State requirement is as effective as the Federal requirement and does not unduly burden interstate commerce (49 U.S.C. 31151(d) and (e)).

FMCSA published a final rule on December 17, 2008 (73 FR 76794), implementing the SAFETEA-LU requirements. That rule requires IEPs to register and file with FMCSA an IEP Identification Report (Form MCS-150C); establish a systematic inspection, repair, and maintenance program in order to provide IME that is in safe and proper operating condition; maintain documentation of their maintenance program; and provide a means to respond effectively to driver and motor carrier reports about intermodal chassis mechanical defects and deficiencies. The regulations also require IEPs to mark each intermodal chassis offered for transportation in interstate commerce with a DOT identification number. For the first time, these regulations made IEPs subject to the FMCSRs, and called for shared safety responsibility among IEPs, motor carriers, and drivers. Additionally, FMCSA adopted inspection requirements for motor carriers and drivers operating IME.

Section 4118 of SAFETEA-LU amended 49 U.S.C. chapter 311 to require that the Secretary establish a program ensuring that IME used to transport intermodal containers is safe and systematically maintained (49 U.S.C. 31151). Among other things, the statute called for the Secretary to mandate “a process by which a driver or motor carrier transporting intermodal equipment is required to report to the intermodal equipment provider or the providers' designated agent any actual damage or defect in the intermodal equipment of which the driver or motor carrier is aware at the time the intermodal equipment is returned to the intermodal equipment provider or the provider's designated agent” (49 U.S.C. 31151(a)(3)(L)). FMCSA's December 17, 2008 rule (73 FR 76794) satisfied this requirement.

The 2008 rule included a new § 390.42, which prescribed the responsibilities of drivers and motor carriers when operating IME. Section 390.42(b) required the driver or motor carrier to report any damage to or deficiencies in certain IME parts and accessories at the time the equipment is returned to the IEP.

Importantly, FMCSA did not propose any changes to § 396.11(b), “Report content,” which requires—for both non-IME and IME—that “If no defect or deficiency is discovered by or reported to the driver, the report shall so indicate.” This requirement to prepare a DVIR, even in the absence of equipment defects or deficiencies (hereafter a “no-defect DVIR”), has been in the safety regulations since 1952 (17 FR 4422, 4452, May 15, 1952). 1 In the 2008 final rule, the Agency added language in the new § 390.42(b) and § 396.12(b)(4) to clarify that “if no damage, defects, or deficiencies are discovered by the driver, the report shall so indicate.” This was done to make the new rules for IEPs consistent with § 396.11(b).

On October 27, 2009, OCEMA petitioned FMCSA for a partial extension of the compliance date for §§ 396.9(d), 396.11(a)(2), 396.12(a), 396.12(c), and 396.12(d). These provisions include the process for delivering the DVIR and acting on defects or deficiencies reported. FMCSA granted the petition. In a final rule published on December 29, 2009, FMCSA extended the compliance date for these provisions from December 17, 2009, to June 30, 2010 (74 FR 68703).

On March 31, 2010, OCEMA and IICL jointly filed a petition for rulemaking to rescind the part of § 390.42(b) that required drivers to file no-defect DVIRs with IEPs on IME they are returning. OCEMA and IICL requested that FMCSA delete the sentence “if no damage, defects, or deficiencies are discovered by the driver, the report shall so indicate.”

FMCSA granted the petition for rulemaking on July 30, 2010. Because FMCSA had previously extended the compliance date to June 30, 2010, (74 FR 68703), FMCSA published a final rule on August 20, 2010 that extended the compliance date for § 390.42(b) to June 30, 2011 (75 FR 51419). On May 20, 2011, FMCSA published a notice further extending the compliance date, to June 30, 2012 (76 FR 29169).

The petitioners presented four arguments supporting their request:

1. SAFETEA-LU requires DVIRs only for known damage or defects. Congress could have added a requirement to file no-defect DVIRs but did not do so.

2. There is significant risk that a large volume of no-defect DVIRs could overwhelm the small proportion (4 percent) of DVIRs that contain damage or defects.

3. Data transmission, processing, and storage requirements for no-defect DVIRs could add significant unnecessary costs to intermodal operations without providing offsetting benefits.

4. Submission of no-defect DVIRs contributes to driver productivity losses in the form of congestion and delay at intermodal facilities.

The Agency published an NPRM on June 7, 2011 (75 FR 32906) proposing changes to §§ 390.42(b), 396.11(b), and 396.12(b)(4) that would eliminate the requirement to file no-defect DVIRs.

In addition to seeking general comments on the NPRM:

1. FMCSA sought comment on the Petitioners' and FMCSA's estimates of the costs and time burden associated with no-defect DVIRs. The Petitioners estimated a time burden of 3 minutes, whereas the FMCSA's information collection (IC) request statement referenced in the 2008 final rule estimated a burden of 2 minutes 35 seconds.

2. FMCSA sought comment on the Petitioners' statement that IEPs incur a $0.02 transaction cost to retrieve the USDOT number through an electronic database, which Petitioners asserted is necessary for IME identification and completion of no-defect DVIR processing. FMCSA asked for clarification of the Petitioner's statement, because the Agency's December 29, 2009, technical amendment (74 FR 68703), mandated that no fee would be charged to outside users.

3. Finally, FMCSA asked the following questions about how DVIRs are handled:

The Agency received comments from five organizations: the Association of American Railroads (AAR), IICL, Intermodal Association of North America (IANA), Intermodal Motor Carriers Conference (IMCC) of the American Trucking Associations (ATA), and OCEMA. All commenters stated they supported FMCSA's proposed revisions of §§ 390.42(b), 396.11(b), and 396.12(b)(4).

In response to FMCSA's question concerning procedures for filing and maintaining DVIRs, IANA described several types of DVIR collection processes. These processes ranged from manual submission of hard-copy paperwork to unassisted electronic data interchange (EDI) transmissions. IANA added that the different nature of these processes contributes to the variation in time burden and would make an exact assessment difficult. IANA also described the comprehensive electronic “virtual pre-gate” and at-gate procedures, which allow for reporting and processing of DVIRs via a web portal, interactive voice response system, or EDI and transmittals of files in various formats. IANA noted that its program offers IEPs and motor carriers electronic DVIR retention and recordkeeping features that go beyond FMCSA's requirements. IANA stated that, although it does not possess empirical data to validate petitioners' OCEMA and IICL's 3-minute estimate, its discussions with its Motor Carrier Division confirm the validity of this estimate.

OCEMA estimated that the actual time it takes to file a DVIR could vary between 1 and 5 minutes, depending upon the DVIR process, its format, and the driver's familiarity and comfort level with the process. OCEMA stated it believes that 3 minutes is a reasonable estimate, although possibly a low one. OCEMA also stated that the majority of the intermodal industry appears to have adopted either IANA's system, DVIR.Intermodal.org, or another DVIR system available through Chassis.com. OCEMA added that if a defect or damage is noted on a DVIR, that information is sent to the intermodal facility, the chassis pool manager, and often to the terminal operator, to initiate a corrective action. In some cases, the terminal places a hold on the unit of IME to keep it from leaving the facility until maintenance personnel release it.

IICL stated that its members agreed with FMCSA's analyses.

FMCSA Response: FMCSA believes that IME DVIRs are no more complex than DVIRs for other CMV equipment, and therefore that it has opted to use its estimate of two minutes and thirty-five seconds rather than the 3 minutes mentioned by the petitioners.

With respect to the cost estimate, IANA and OCEMA clarified that the $0.02 fee per DVIR is a transaction fee that IEPs and other users incur to offset DVIR processing costs. They emphasize that it is not a Global Intermodal Equipment Registry (GIER) user fee. OCEMA noted that, to its knowledge, direct public web-portal access to the GIER database is free to the public.

FMCSA Response: FMCSA acknowledges IANA's and OCEMA's clarification. This is consistent with the Agency's position that there should not be an outside user fee associated with database access.

In response to the request for examples of specific incidents in which handling a large volume of no-defect DVIRs interfered with handling defect DVIRs, OCEMA stated that it was not able to identify specific incidents, but noted that there had been only a limited time period when defect DVIRs were required. OCEMA added that increased reporting would likely generate more reports containing errors, greatly increase the data flows through operational processes, and increase burdens associated with report storage and retrieval.

IANA stated that its system accepts both defect and no-defect DVIRs and separates them automatically. OCEMA added that Chassis.com also accepts both defect and no-defect DVIRs.

FMCSA Response: The information confirmed the Agency's understanding of many of the processes, as well as providing clarifying details.

With respect to the percentage of no-defect DVIRs received, IANA stated that it received 98.8 percent no-defect DVIRs for the period December 17, 2009 through July 30, 2010. During the following 2 months, the total number of DVIRs IANA processed declined by 51 percent, with the no-defect DVIR proportion remaining at 98.8 percent. IANA also stated that from August 20, 2010 through June 30, 2011, as a result of FMCSA's extension of the compliance date for no-defect DVIR reporting, no-defect DVIRs were not submitted or processed, and there is no relevant statistical information available on the ratio of no-defect to defect DVIRs.

OCEMA stated that 98 percent of DVIRs received by its subsidiary, Consolidated Chassis Management, identified no defects.

FMCSA Response: FMCSA has received different industry estimates of the percentage of no-defect DVIRs. To ensure a conservative estimate of the reduction in costs and paperwork burdens, FMCSA will continue to use 95 percent as the estimated proportion of DVIRs that do not identify defects. Filing DVIRs on only the roughly 5 percent of IME with defects will focus attention on the IME that needs it—rather than the 95 percent with no defects. This change in procedure should streamline the process by providing IEPs only that information they need to act on.

ATA IMCC contends that a written driver pre-trip report documenting the condition of the IME offered for interchange is necessary for FMCSA to measure compliance with the IME regulations effectively. IMCC believes that a lack of documentation on pre-trip equipment conditions prevents the facility operator or other party responsible for IME maintenance from evaluating its processes and making necessary changes.

FMCSA Response: Although it is outside the scope of this particular rulemaking, the Agency notes that Section 4118 of SAFETEA-LU did include requirements for drivers to conduct an inspection “as part of the Federal requirement in effect on the date of enactment of this Act”—that is, a pre-trip inspection. In its comments to the December 2006 NPRM, ATA and other commenters recommend that FMCSA adopt the industry inspection procedures by requiring the same list of inspection items as set forth in Exhibit A of the Uniform Intermodal Interchange and Facility Access Agreement (UIIA). Even though the Federal requirement that it refers to, codified at 49 CFR 392.7, does not include a requirement for a pre-trip inspection document, the Agency understands that it has been customary for drivers to use that checklist. Although there are differences between the UIIA and the requirements of 49 CFR Part 393, the Agency stated in the preamble to the December 2008 final rule, “To the extent that the contents of any other inspection checklist are compatible with it, and do not otherwise conflict with FMCSR requirements, IEPs and motor carriers may continue to use them.” (73 FR 76794, at 76803). In addition, the FMCSA does not have any data to suggest that adding such a requirement to the FMCSRs would provide safety benefits.

All commenters expressed support for eliminating the requirement to file no-defect DVIRs, which they viewed as an unnecessary administrative burden. AAR noted, “Rarely does an agency have an opportunity to eliminate a paperwork requirement that clearly serves no useful purpose. This is one such occasion. AAR applauds FMCSA for initiating this proceeding.”

The Agency emphasizes that this rule does not change a driver's obligation to assess the condition of IME at the end of a workday to determine whether the IME has defects or deficiencies that could affect operational safety. Although FMCSA is removing the requirement to complete a DVIR if the driver finds no defects in the IME and none have been reported to the driver, he or she must still inspect the IME to make this determination.

FMCSA also points out that § 390.40(i) requires IEPs to develop and implement procedures to repair any equipment damage, defects, or deficiencies identified as part of a pre-trip inspection or replace the equipment prior to the driver's departure. It is in the IEPs'—and drivers'—best interests for IME defects to be identified and remedied before the IME is next tendered. If drivers submit DVIRs when they note IME defects or deficiencies, they can be remedied without delaying the next driver who receives the equipment.

This rule does not affect requirements governing the inspection and completion of DVIRs for power units. Drivers also must continue to complete no-defect DVIRs on chassis that are owned or leased by the motor carrier.

FMCSA makes the changes proposed in the NPRM eliminating the no-defect DVIR filing requirement. FMCSA revises § 390.42(b) by deleting the sentence, “If no damage, defects, or deficiencies are discovered by the driver, the report shall so indicate.” Conforming changes are made in §§ 396.11(b) and 396.12(b)(4).

This rule does not change the IEPs' obligation under § 390.40(c) to systematically inspect, repair, and maintain—or cause to be systematically inspected, repaired and maintained—all IME intended for interchange with a motor carrier. Nor does it alter the IEPs' responsibility under § 390.40(d) to provide IME intended for interchange that is in safe and proper operating condition.

This rule includes editorial changes to § 396.11(a) and (b). The content from § 396.11(a), (b), and (d) has been re-organized for clarity and includes a revised paragraph § 396.11(a). Paragraph (b) has been rewritten, for clarity, into four subparagraphs: § 396.11(b)(1), (2), (3), and (4). Also for clarity and to conform to contemporary regulatory citation style, the individual items listed in § 396.11(a)(1) and (b)(1) are given paragraph designations. The Agency also revises the authority citations for 49 CFR parts 390 and 396 to correct statutory references and eliminate references that are either erroneous or unnecessary.

FMCSA has determined that this action meets the criteria for a “significant regulatory action” as specified in Executive Order 12866, as supplemented by Executive Order 13563 issued by the President on January 18, 2011 (76 FR 3821) and within the meaning of the Department of Transportation regulatory policies and procedures (44 FR 11034, February 26, 1979). The Department expects this rule to generate cost savings in the form of reduced paperwork burdens. Due to other existing inspection requirements, the Department does not believe that this rule will result in reduced safety.

The rule removes the requirement for drivers to submit DVIRs when they do not have IME defects or deficiencies to report. The only impact of this rule is to alleviate a portion of the paperwork burden for CMV drivers, which in monetary terms does not warrant a full regulatory analysis.

Approximately 40 million items of IME are in-gated each year. Of those, approximately 95 percent of DVIRs do not note defects. Therefore, for each of these 38 million units of no-defect IME (40 million × .95 = 38 million), a DVIR would not have to be completed. Filling out a no-defect DVIR is estimated to take 2.5 minutes and reviewing and signing a DVIR is estimated to take 5 seconds when no defects are noted. For a total of 2 minutes and 35 seconds in time savings if these reports are not required when no-defects are noted. This amounts to a time savings of 1.636 million hours annually (38 million units × 155 seconds per IME/3600 seconds/hour). As this burden falls on drivers, the value of this time can be monetized using the prevailing wage for truck drivers. We use the median annual wage for BLS occupation category 53-3032 Heavy and Tractor-Trailer Truck Drivers from the May 2011 Occupational Employment and Wages report, the most recent available. The median wage for truck drivers from this report is $18.24 per hour, which we inflate by 52 percent to account for fringe benefits and 27 percent to account for overhead. This produces a total loaded hourly time value of $33, rounded to the nearest dollar (the exact amount is $32.65). The estimated costs savings is $1.42 per transaction (155 seconds × $33 per hour/3600 seconds per hour = $1.42). The total savings annually amount to $54 (38 million units of IME × $1.42 per eliminated report = $54 million rounded to the nearest $100,000).

FMCSA emphasizes that this rule does not change two related requirements concerning IME safety. It does not change a driver's obligation to assess the condition of IME at the end of a workday to determine whether the IME has defects or deficiencies that could affect operational safety. In addition, § 390.40(i) requires IEPs to develop and implement procedures to repair any equipment damage, defects, or deficiencies identified as part of a pre-trip inspection or replace the equipment prior to the driver's departure. Because there are multiple opportunities for IME to be inspected for potential safety defects, the Agency does not believe that the implementation of this rule would lead to an increase in safety risk.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires Federal agencies to determine whether rules could have a significant economic impact on a substantial number of small entities. This rule will grant regulatory relief to IEPs, which include 108 entities consisting of steamship lines, railroads, and chassis pool operators. In its 2008 final rule, the Agency confirmed that all IEPs are either foreign-owned or otherwise do not meet the criteria for small business designation as defined by the Small Business Administration (73 FR 76816, December 17, 2008). Consequently, I certify that this action would not have a significant economic impact on a substantial number of small entities.

This rulemaking does not impose an unfunded Federal mandate, as defined by the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1532, et seq. ), that will result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector of $143.1 million (which is the value of $100 million in 2010 after adjusting for inflation) or more in any 1 year.

This action meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

FMCSA analyzed this action under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. FMCSA determined that this rulemaking does not pose an environmental risk to health or safety that may affect children disproportionately.

This rulemaking does not effect a taking of private property or otherwise have takings implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

A rulemaking has implications for Federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on State or local governments. FMCSA analyzed this action in accordance with Executive Order 13132. The rule will not have a substantial direct effect on States or local governments, nor will it limit the policymaking discretion of States. Nothing in this rulemaking will preempt any State law or regulation.

The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this action.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires FMCSA to consider the impact of paperwork and other information collection burdens imposed on the public. This rule will result in a reduction of burden hours for the “Inspection, Repair, and Maintenance” information collection (IC) request, OMB control number 2126-0003. In this IC, the burden associated with DVIRs is calculated as a CMV driver activity without regard to the commodity or type of trailer, such as IME, that they are hauling. The current burden estimate was based on 4,679,682 CMVs generating 1,249,168,107 DVIRs per year. Those calculations also estimate that 95 percent of DVIRs do not note defects. The Agency will continue to use this estimate, rather than using the petitioners' estimate of 96 percent for IME DVIRs. The petitioners estimate that about 40 million IME in-gates requiring a DVIR occur each year (400,000 units of IME, 100 in-gates per unit of IME per year).

This IC includes all tasks related to inspection, repair, and maintenance, including two distinct driver tasks related to DVIRs: (1) Filling out a DVIR (IC2) and reviewing and signing a DVIR (IC6). Filling out a DVIR (IC2) is estimated to take 2.5 minutes and (2) reviewing and signing a DVIR (IC6) is estimated to take 5 seconds when no defects are noted. As noted above, approximately 40 million of the total 1.25 billion DVIRs completed by the industry are for IME. This rule results in a reduction of 1.583 million hours for IC2 (40 million IEP DVIR × 95 percent no defect rate × 150 seconds per DVIR ÷ 3600 seconds per hour) and 0.053 million hours for IC6 (40 million IEP DVIR × 95 percent no defect rate × 5 seconds per DVIR ÷ 3600 seconds per hour). The currently approved burden estimate for this entire IC is 59,729,888 hours, and the new burden estimate is 58,093,888 hours: a total burden reduction of 1.636 million hours per year. As this burden falls on drivers, the value of this time can be monetized using the prevailing wage for truck drivers. We use the median annual wage for BLS occupation category 53-3032 Heavy and Tractor-Trailer Truck Drivers from the May 2011 Occupational Employment and Wages report, the most recent available. The median wage for truck drivers from this report is $18.24 per hour, which we inflate by 52 percent to account for fringe benefits and 27 percent to account for overhead. This produces a total loaded hourly time value of $33, rounded to the nearest dollar (the exact amount is $32.65). Multiplying this figure by the burden hour reduction estimate of 1.636 million hours produces a monetized time cost savings of $53,988,000, or roughly $54 million.

FMCSA analyzed this final rule for the purpose of the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq. ) and determined under our environmental procedures Order 5610.1, issued March 1, 2004 (69 FR 9680), that this action does not have any effect on the quality of the environment. Therefore, this final rule is categorically excluded from further analysis and documentation in an environmental assessment or environmental impact statement under FMCSA Order 5610.1, paragraph 6(bb) of Appendix 2. The Categorical Exclusion under paragraph 6(y)(6) relates to “regulations concerning vehicle operation safety standards,” such as the driver-vehicle inspection reports addressed by this rulemaking. A Categorical Exclusion determination is available for inspection or copying in the Regulations.gov Web site listed under ADDRESSES.

FMCSA also analyzed this action under section 176(c) of the Clean Air Act (CAA), as amended (42 U.S.C. 7401 et seq. ), and implementing regulations promulgated by the Environmental Protection Agency. Approval of this action is exempt from the CAA's general conformity requirement since it does not affect direct or indirect emissions of criteria pollutants.

In addition to the NEPA requirements to examine impacts on air quality, the CAA requires FMCSA to analyze the potential impact of its actions on air quality and to ensure that FMCSA actions conform to State and local air quality implementation plans. The additional contributions to air emissions are expected to fall within the CAA de minimis standards and are not expected to be subject to the Environmental Protection Agency's General Conformity Rule (40 CFR parts 51 and 93).

FMCSA analyzed this action under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. FMCSA determined that it is not a “significant energy action” under that Executive Order because it is not economically significant and is not likely to have an adverse effect on the supply, distribution, or use of energy.

In consideration of the foregoing, FMCSA amends 49 CFR chapter III, subchapter B, as follows:

NMFS manages the groundfish fishery in the BSAI exclusive economic zone according to the Fishery Management Plan for Groundfish of the Bering Sea and Aleutian Islands Management Area (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The 2012 Pacific cod total allowable catch (TAC) allocated to AFA trawl catcher/processors in the BSAI is 5,361 metric tons (mt) as established by the final 2012 and 2013 harvest specifications for groundfish in the BSAI (77 FR 10669, February 23, 2012).

In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2012 Pacific cod TAC allocated to AFA trawl catcher/processors in the BSAI will be taken as incidental catch in the directed fishing for other species. Therefore, the Regional Administrator is establishing a directed fishing allowance of 0 mt and in accordance with § 679.20(d)(1)(iii), finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific cod by AFA trawl catcher/processors in the BSAI.

After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

This action responds to the best available information recently obtained from the fishery. The Acting Assistant Administrator for Fisheries, NOAA, (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of directed fishing for Pacific cod by AFA trawl catcher/processors in the BSAI. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of June 6, 2012.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.20 and is exempt from review under Executive Order 12866.