[Federal Register Volume 59, Number 7 (Tuesday, January 11, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-551]


[[Page Unknown]]

[Federal Register: January 11, 1994]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[FRL-4822-4]
RIN 2060-AD10

 

Criteria for Exercising Discretionary Sanctions Under Title I of 
the Clean Air Act

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: This rulemaking sets forth criteria that EPA must consider 
when exercising its discretionary authority to impose sanctions on a 
statewide basis pursuant to the Clean Air Act as amended in 1990 (Act). 
If EPA makes one of the findings of State implementation plan (SIP) 
deficiency described in the Act, EPA may impose an emissions offset or 
highway funding sanction on any portion of the State that the 
Administrator determines is reasonable and appropriate for the purpose 
of ensuring that the requirements of the Act relating to plans are met. 
This rulemaking establishes the criteria EPA shall use in exercising 
its discretionary authority during the 24-month period following a 
finding of a plan deficiency to ensure that these sanctions are not 
applied on a statewide basis when one or more political subdivisions 
are principally responsible for such deficiency. In addition, EPA 
describes the discretionary sanctions provision and EPA's anticipated 
application of these sanctions ``at any time'' after the Agency makes a 
finding.

EFFECTIVE DATE: This rule will be effective February 10, 1994.

ADDRESSES: Materials relevant to this rulemaking are contained in 
Docket No. A-91-66. A reasonable fee may be charged for copying docket 
materials. The Docket is located at the following address and may be 
inspected from 8:30 a.m. until noon and from 1:30 p.m. until 3:30 p.m., 
Monday through Friday: Room M-1500 (LE-131), Waterside Mall, 401 M 
Street SW., Washington, DC 20640.

FOR FURTHER INFORMATION CONTACT: Ted Creekmore, U.S. EPA, MD-15, 
Research Triangle Park, North Carolina 27711, (919) 541-5699.

SUPPLEMENTARY INFORMATION:

I. Overview

    The EPA is promulgating criteria under section 110(m) of the Act to 
ensure that, during the 24-month period following a finding, 
disapproval, or determination (hereinafter ``finding'') referred to in 
section 179(a), sanctions pursuant to section 110(m) are not applied on 
a statewide basis where one or more political subdivisions are 
principally responsible for such deficiency. Thus, these criteria apply 
only in the limited circumstance in which EPA is considering the 
imposition of statewide sanctions under section 110(m) within 24 months 
after the Agency makes a section 179(a) finding.
    On September 28, 1992 (57 FR 44534), EPA proposed criteria that EPA 
will use to determine if sanctions imposed pursuant to section 110(m) 
of the Act may not be applied statewide. The preamble to the proposed 
rule contains a detailed discussion of the background of the Act, of 
the proposed criteria, and of the provisions of section 179 and section 
110(m) (see 57 FR 44534-44535).
    New Sec. 52.30(c) of the rule provides five criteria that EPA will 
use to determine if sanctions imposed pursuant to section 110(m) may 
not be imposed statewide. If at least one political subdivision meets 
all five of the criteria, then that political subdivision will be 
considered principally responsible, and EPA will not impose sanctions 
on a statewide basis. Rather, EPA will impose sanctions only on the 
areas of the State for which EPA determines it is reasonable and 
appropriate to impose sanctions. If all of the criteria are not met by 
at least one political subdivision, then no political subdivision is 
principally responsible, and EPA will use its discretion to determine 
whether to apply statewide sanctions. However, if EPA, using its 
discretion, initially determines that less-than-statewide sanctions 
should be applied, the Agency will not need to consider the criteria; 
EPA will impose sanctions on those political subdivisions the Agency 
has determined to be reasonable and appropriate. Such decisions will be 
made on a case-by-case basis and each action will be subject to the 
notice-and-comment rulemaking procedures of the Administrative 
Procedure Act.1
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    \1\As noted in EPA's proposed rule, the Agency will follow 
notice-and-comment rulemaking in every instance that EPA anticipates 
imposing section 110(m) sanctions (57 FR 44534, September 28, 1992). 
In each rulemaking action, the public will have an opportunity to 
comment on the proposed geographic scope of the sanctions, the 
timing of the sanctions, and the order in which the two available 
sanctions will be imposed. To the extent the public has commented on 
these issues as a general matter in this rulemaking action, EPA has 
responded by suggesting that the issue is more appropriately raised 
in independent rulemaking actions in which section 110(m) sanctions 
are proposed.
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    In the final rule, EPA has changed four provisions from the 
proposal based on comments received regarding specific details of the 
regulatory text. They are as follows:
    1. In Sec. 52.30(a)(2), the definition of ``required activity'' was 
revised in two ways. First, the phrase ``may include, but is not 
limited to'' was deleted from the definition. Second, the phrase 
``adequate SIP or SIP element'' is replaced by the phrase ``plan or 
plan item.'' These two changes were made in order to follow more 
clearly the language of section 110(m). Since section 110(m) refers 
only to actions required with respect to a ``plan or plan item,'' EPA 
agrees that the phrase ``may include, but is not limited to'' is 
unnecessary because it appears to imply EPA has authority to impose 
sanctions with respect to findings other than those for a plan or plan 
item. Furthermore, since section 110(m) uses the phrase ``plan or plan 
item,'' EPA believes it would be more consistent to use that phrase in 
the regulatory language rather than the phrase ``adequate SIP or SIP 
element.''
    2. The terms ``plan or plan items'' are added to the definitions 
section of the rule, Sec. 52.30(a)(4), and are defined as follows: 
``For purposes of Sec. 52.30, the terms `plan' or `plan item' mean an 
implementation plan or portion of an implementation plan or action 
needed to prepare such plan required by the Act, as amended in 1990, or 
in response to a SIP Call under section 110(k)(5) of the amended Act.''
    3. In Sec. 52.30(c), ``criteria,'' as defined in the proposal, 
provides: ``The EPA will use the following five criteria, all of which 
must be met, to determine whether a political subdivision is 
principally responsible for the deficiency.'' This section is clarified 
by revising it to read as follows: ``For the purposes of this 
provision, EPA will consider a political subdivision to be principally 
responsible for the deficiency on which a section 179(a) finding is 
based, if all five of the following criteria are met.'' Thus, the rule 
clarifies that all five criteria are to be met, not merely used by EPA 
to determine how sanctions will be imposed.
    4. In its proposed rule, Sec. 52.30(d)(1), EPA provides: ``If all 
of the criteria in paragraph (c) of this section have been met through 
the action or inaction of the `same' political subdivision, EPA will 
not impose sanctions on a statewide basis.'' Although no comments were 
received from the public on this language, a review by the Agency 
suggested that the phrase ``same political subdivision'' may be 
confusing. By including that language in the rule, EPA was attempting 
to indicate that one political subdivision must meet all five of the 
criteria before EPA's authority to impose sanctions on a statewide 
basis would be constrained (see 57 FR 44536). For example, if a State 
has two nonattainment areas and a rule, which was past due under the 
Act, was not yet adopted and submitted to EPA for either area, EPA 
would look at each nonattainment area independently to determine 
whether the five criteria were met. If the first three criteria were 
met by one nonattainment area and the last two by the second 
nonattainment area, then EPA's authority to impose statewide sanctions 
would not be constrained. However, if one nonattainment area met all 
five of the criteria, EPA could not impose statewide sanctions based on 
the finding for that area. The EPA is replacing the word same with the 
word one in the rule in order to alleviate any confusion. This 
provision will be implemented in accordance with the interpretation 
above.

II. Background

    In general, the preamble to the proposed rule notes that the Act 
contains two sanctions provisions:
    1. Section 110(m),2 provides the Administrator with discretion 
to impose sanctions at any time on any portion of the State that she 
determines is reasonable and appropriate;
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    \2\42 U.S.C. section 7410(m).
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    2. Section 179(a)3 requires the Administrator to impose 
sanctions after specific timeframes if the deficiencies on which the 
sanctions are based are not corrected.4

    \3\42 U.S.C. section 7509(a).
    \4\It is necessary, for clarity's sake, to understand that 
section 179(a) performs two very distinct functions: it defines 
several types of findings, and requires EPA to impose sanctions if 
one of these findings has been made. Section 179(a) (1) through (4) 
sets forth the four types of findings which may lead to the 
imposition of a sanction. The introduction and latter part of 
section 179(a) mandate that at least one sanction must be imposed 18 
months after a finding has been made with respect to certain types 
of plans if the deficiency is not corrected.

This rulemaking considers the application of sanctions under section 
110(m). However, because section 110(m) and section 179 are 
interrelated, the preamble to the proposed rulemaking discussed 
sanctions under section 179 (a) and (b) in order to clarify what is 
required by section 110(m).
    The specific types of sanctions which may be imposed under section 
110(m), or must be imposed under section 179(a), are listed in section 
179(b). The two sanctions provided are a highway funding sanction and a 
2:1 offset sanction. These two sanctions are described in more detail 
in the preamble to the proposed rule (see 57 FR 44535).
    Section 179(b) sanctions may be applied pursuant to section 110(m) 
when the Administrator makes a finding under section 179(a) (1) through 
(4), provided that the Agency has followed all procedural requirements 
for imposing a sanction. The Administrator has no authority under 
section 110(m), nor any mandatory duty under section 179(a), to impose 
sanctions until she has made a finding. The types of findings provided 
under section 179(a) are discussed in more detail in the preamble to 
the proposed rule (see 57 FR 44535).
    Section 110(m) may be divided into two distinct parts (see 57 FR 
44535). The first part of section 110(m) contains four distinct 
elements:
    1. The timing of the imposition of section 110(m) sanctions;
    2. The availability under section 110(m) of the sanctions listed in 
section 179(b);
    3. The reference to a finding, disapproval, or determination under 
section 179(a) (1) through (4); and
    4. The geographic scope of application of sanctions under section 
110(m).

The second part requires the Administrator to propose criteria to be 
used when considering the application of sanctions on a statewide basis 
under section 110(m) within 24 months of a section 179(a) finding. 
Although not central to the purpose of this rulemaking, EPA presented a 
detailed discussion of the four elements referred to in the first part 
of section 110(m) in the proposed rule. The purpose was to explain how 
sections 110(m) and 179 provisions are interrelated. As shall be 
evident in the ``Response to Comments'' section, the preamble language 
discussing these four elements was the basis for numerous comments. The 
criteria, which are the basis of this action, seemed to generate 
significantly fewer comments.

III. Development of Criteria

    The second sentence of section 110(m) requires the Agency to 
establish criteria that EPA must apply if the Agency considers applying 
sanctions under section 110(m) on a statewide basis within 24 months of 
a section 179(a) finding. These criteria should enable EPA to determine 
when a political subdivision,5 rather than the entire State, is 
principally responsible for a section 179(a) deficiency. Where the 
political subdivision is principally responsible, EPA may not impose 
sanctions on a statewide basis.
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    \5\In Sec. 52.30(a)(1), EPA defines the term political 
subdivision as ``* * * the representative body that is responsible 
for adopting and/or implementing air pollution controls for one, or 
any combination of one or more of the following: city, town, 
borough, county, parish, district, or any other geographical 
subdivision created by, or pursuant to, Federal or State law. This 
will include any agency designated under section 174, 42 U.S.C., 
section 7504, by the State to carry out the air planning 
responsibilities under part D.''
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    The EPA recognizes that an understanding of the term ``principal 
responsibility'' was integral to the development of the criteria. The 
preamble to the proposed rule contains a detailed discussion on how a 
political subdivision may be held ``principally responsible'' for a 
section 179(a) failure when the EPA recognizes that the States have 
primary responsibility for meeting the requirements of the Act (see 57 
FR 44535-36). The EPA believes that the criteria promulgated today will 
clearly indicate when the political subdivision carries the principal 
burden of carrying out an activity.
    The EPA is promulgating five criteria (summarized below) that it 
believes will enable a determination of when a State has relinquished 
its primary control over an activity to a political subdivision and the 
political subdivision has failed to perform that required activity. The 
EPA believes that the political subdivision is principally responsible 
when the political subdivision:
    1. Has the legal authority to perform the required activity;
    2. Has traditionally performed, or has been delegated the 
responsibility to perform, the required activity;
    3. Has received, where appropriate, adequate funding or authority 
to obtain funding from the State to perform the required activity;
    4. Has agreed to perform (and has not revoked that agreement) or is 
required to accept responsibility for performing the required activity; 
and
    5. Has failed to perform the required activity.
    If one or more political subdivisions each meet all five of the 
criteria, EPA will consider those subdivisions principally responsible, 
and EPA may impose sanctions only on those political subdivisions and 
on other areas (short of the entire State) for which the Agency 
determines reasonable and appropriate. The EPA would not impose 
sanctions statewide. However, if all of the criteria have not been met 
by at least one political subdivision, EPA will use its discretion to 
determine whether to apply sanctions on a statewide basis.
    These five criteria are intended to be applicable to SIP failures 
relating to stationary, area, and mobile sources. The EPA believes that 
the criteria developed here will enable it to successfully determine 
when a political subdivision is principally responsible for a 
deficiency.

IV. Limits of This Rulemaking

    Nothing in the Act precludes EPA from applying sanctions pursuant 
to section 110(m), without examining the criteria, if the Agency elects 
to impose a sanction on a less-than-statewide basis or where EPA 
imposes statewide sanctions more than 24 months after a finding. 
Furthermore, this rulemaking does not affect the situation where each 
of a group of political subdivisions, whose combined area comprises the 
entire State, suffer a deficiency. The EPA could impose a sanction on 
each of those political subdivisions as an independent area without 
applying the criteria, even though this may appear to be a statewide 
sanction. All decisions to impose section 110(m) sanctions will be made 
on a case-by-case basis, and will be subject to notice-and-comment 
rulemaking.
    This rule is not intended to identify which sanction EPA will apply 
in a particular circumstance, nor the type of deficiency for which EPA 
might use its discretion to apply sanctions. Furthermore, it is not 
intended to describe the notice and comment procedures EPA will 
ultimately use to impose a sanction pursuant to section 110(m).

V. Response to Comments

    The EPA received comments from 15 sources including business 
associations, and Federal, State and local government entities. The 
following section provides a summary of the responses to major 
comments.

A. The EPA's Interpretation of the Statutory Requirements of Section 
110(m)

    Under this category, the commenters expressed concern with respect 
to the timing of sanctions and the application of sanctions beyond a 
nonattainment area. Although, as stated before, these issues are not 
central to the criteria being promulgated, EPA has responded to these 
comments below.
1. Imposition of Sanctions Earlier Than 18 Months
    Comment. The Illinois EPA (IEPA) and the Virginia Department of 
Transportation (DOT) believe section 110(m) does not give EPA the 
authority to impose sanctions earlier than 18 months after a finding 
under section 179. These commenters believe it is incorrect to impose 
any sanctions during the 18-month period immediately following a 
finding because section 179 clearly states that EPA may not impose 
sanctions if the deficiency is corrected within 18 months. The IEPA 
believes Congress included this 18-month period in recognition of the 
magnitude of the State's responsibilities under the Act as well as the 
time involved in the legislative and rulemaking processes. Also, the 
Illinois DOT states that because section 179 is the more detailed 
sanctions provision, under established principles of statutory 
construction and interpretation, it must prevail over section 110(m).
    The IEPA suggests that if EPA determined to impose sanctions 
earlier than the 18-month period specified in section 179, EPA should 
develop specific criteria for when these early sanctions will be 
imposed, and provide notice and opportunity for potentially affected 
parties to comment prior to imposing sanctions. The IEPA also indicates 
that these criteria are necessary to avoid placing industries that are 
located in States that meet deadlines in a timely manner at a 
competitive disadvantage.
    Response. Section 110(m) provides that the Administrator ``* * * 
may apply any of the sanctions listed in section 179(b) (at any time or 
at any time after) the Administrator makes a finding. * * *'' under 
section 179(a). This language plainly authorizes sanctions without 
regard to a waiting period after a finding is made.
    The EPA believes that section 179 is phrased to require sanctions 
after 18 months not, as the commenters say, to prohibit sanctions 
before 18 months. Section 179 states ``for any implementation plan or 
plan revision required under this part (or required in response to a 
finding of substantial inadequacy as described in section 110(k)(5)), 
if the Administrator [makes a finding], unless such deficiency has been 
corrected within 18 months after the finding * * * one of the sanctions 
referred to in subparagraph (b) shall apply. * * *'' This provision 
mandatorily imposes sanctions at 18 months if the deficiency has not 
been corrected, but does not prohibit sanctions earlier. Because 
section 179 does not prohibit the earlier application of sanctions, it 
does not conflict with section 110(m), which provides that sanctions 
may be imposed earlier than 18 months. Therefore, there is not a 
statutory construction issue of whether section 179 needs to prevail 
over section 110(m).
    Regarding the request by the IEPA that EPA develop specific 
criteria for when an early sanction will be imposed, the EPA does not 
believe such criteria are statutorily required; however, since EPA will 
provide the public with an opportunity to comment on any sanction 
action under section 110(m) through notice-and-comment rulemaking prior 
to imposition of the sanctions, the public will have the opportunity to 
comment on EPA's rationale for the application of sanctions earlier 
than 18-months following the finding. Although EPA does not intend to 
develop specific criteria, Section A(4) of this preamble provides 
further discussion on application of sanctions earlier than 18-months 
following a finding.
    As to IEPA's concern about competitive disadvantage, imposition of 
sanctions under section 110(m) should benefit sources located in those 
areas that make timely submittal of plans and plan revisions. Rather 
than delaying sanctions until 18 months after a finding, under section 
110(m) sanctions may be applied much earlier than 18 months. Therefore, 
delinquent areas may be burdened much sooner than the 18-month period 
under section 179. Imposition of section 110(m) sanctions should 
inhibit any advantage achieved through delayed submittal of required 
plans and revisions.
2. Application of Sanctions Beyond Nonattainment Areas Comment
    Five commenters believe highway sanctions should not be imposed 
outside of a nonattainment area. The Texas DOT, New York DOT, Illinois 
DOT and IEPA are concerned that EPA has not extended the nonattainment 
limitations of section 179 (a) and (b) to the imposition of sanctions 
under section 110(m). These commenters indicate that sanctions should 
apply only to nonattainment areas. The Virginia DOT believes that 
section 110(m) sanctions should not extend beyond a nonattainment area, 
except in extreme cases (such as where lack of good faith exists) and 
after a 24-month correction period has passed.
    The New York DOT and IEPA believe that EPA's position regarding the 
geographic applicability of offset and highway sanctions is 
inconsistent, and that the reasoning that is applied to make the offset 
sanction applicable to a specific area should benefit the highway 
sanction as well. The IEPA feels that section 110(m) refers to the 
section 179(b) sanctions without exempting the Administrator from 
complying with the geographic limitations specified in section 179(b).
    The Illinois DOT comments that section 110(m) allows EPA to 
sanction an area less than a whole nonattainment area if a unit of 
local government is really to blame.
    The New York and Illinois DOT also state that since the statute is 
clear and understandable on its face, no reference to legislative 
history is required or allowed. The Illinois DOT believes that section 
110(m) should be viewed in conjunction with section 179(b)(1), and if 
Congress had not meant to limit the use of highway funding sanctions to 
nonattainment areas, it would not have placed that limitation in 
section 179(b). The Illinois DOT comments that Congressman Anderson had 
prefaced his remarks as expressing the intent of only four members of 
the House Public Works and Transportation Committee. The commenter 
noted that in May 1990 the House Energy and Commerce Committee sent out 
a version of the Amendments with no limit in section 179(b) on the area 
for sanctions (see H. Rep. No. 140, 101st Cong., 2d Sess., Part 1). The 
House Public Works Committee responded with a report of its own at that 
time amending section 110(m) and repeating almost the same words quoted 
by EPA in the proposed rulemaking. Congressman Anderson's words may 
have been on the point then, but they did not agree with the language 
of section 179(b) the way it was finally passed by Congress.
    Also, the Illinois DOT cites the House Conference Committee Report 
which accompanied the final version of the Act as evidence that 
sanctions are to be limited to nonattainment areas [H. Rep. No. 952, 
101st Cong., 2d Sess. 335-6; Cong. Rec. H13101, 13197; Oct. 26, 1990; 
1990 U.S. Code Cong. & Adm. News 3385, 3867-8 (Discussing imposition of 
sanctions ``* * * in an area that fails to prepare or implement a plan 
to attain air quality Pstandards. * * *'')].
    Response. To address the concerns of all five commenters, EPA 
believes that section 110(m) and section 179, although interrelated, do 
set up two distinct sanctions processes. In general, section 179 
provides for mandatory sanctions with respect to failures under part D 
(in general, the nonattainment area provisions). As provided in the 
proposed rule, section 179 focuses on nonattainment areas in several 
respects (see 57 FR 44536-37). First, the general introductory language 
of section 179(a) provides that sanctions must be imposed for a failure 
with respect to ``* * * any implementation plan or plan revision 
required under this Ppart. * * *'' The provision is referring to part D 
of title I, the portion of the Act dealing with nonattainment area 
requirements. While some part D requirements may also apply to 
attainment areas in limited circumstances, the primary focus of part D 
is nonattainment areas. Second, the highway sanction language expressly 
limits the application of sanctions under section 179(a) to 
nonattainment areas. Finally, the offset sanction requires new or 
modified sources in complying with the requirements of section 173 to 
increase their offsets to 2:1. Typically, only sources in nonattainment 
areas need to comply with section 173 and, therefore, in most instances 
the offset sanction will only affect sources in nonattainment areas. 
For the above reasons, EPA believes that section 179(a) does not 
require statewide imposition of sanctions.
    On the other hand, section 110(m) clearly provides for the 
imposition of sanctions beyond nonattainment areas. The express 
language of section 110(m) provides that the Administrator may impose 
sanctions on ``* * * any portion of the State the Administrator 
determines reasonable and Pappropriate. * * *'' Beyond that, section 
110(m) provides for the discretionary imposition of sanctions for a 
finding that an area has failed to meet any requirement with respect to 
any ``plan or plan item'' under the Act. Such requirements could apply 
to nonattainment, attainment, or unclassified areas. Although section 
110(m) refers to the sanctions established in section 179(b), there is 
no language stating that the geographical limitations in section 179 
override section 110(m)'s express authorization for sanctions on any 
part of the State that EPA determines reasonable and appropriate. 
Section 110(m) refers only to the sanctions themselves, not the 
accompanying limitations. For the above reasons, EPA believes that 
section 110(m) does establish its own geographic scope.
    The Virginia DOT suggests that EPA should limit application of 
section 110(m) sanctions beyond the nonattainment area to circumstances 
where there is a lack of good faith. While EPA may take good faith into 
consideration in determining the geographic scope of section 110(m) 
sanctions, EPA does not agree that it should establish lack of good 
faith as a prerequisite for imposition of section 110(m) sanctions 
beyond the nonattainment area.
    With respect to the comment of Illinois DOT that EPA can sanction 
less than an entire nonattainment area, the Agency agrees that under 
section 110(m)'s broad grant of authority for the imposition of 
discretionary sanctions, EPA may select an area smaller than the 
nonattainment area.
    The IEPA comments that EPA is treating the geographic limitations 
of the highway and offset sanctions differently and that EPA should say 
that highway sanctions are also limited in scope. The EPA disagrees. 
First, we believe that both sanctions may be imposed on any portion of 
the State. However, by its method of application, the offset sanction 
will only have effect in those areas that must apply the emission 
offset requirements of section 173. Therefore, the offset sanction 
would have no effect in certain areas. The highway sanction is not 
self-limiting; therefore, it will have a broader effect.
    Second, the EPA did not rely on legislative history to override 
statutory language, but rather to support statutory language that 
grants EPA discretion to apply sanctions to other than nonattainment 
areas. The Illinois DOT bases its argument that the legislative history 
does not support the imposition of sanctions beyond the nonattainment 
area on an assumption that section 110(m) does not provide an 
independent grant of authority to impose sanctions. However, the Act 
does provide two separate grants of sanction authority with different 
geographic scopes; this is supported by the language of the Act, as 
described above, and by the legislative authority. The language from H. 
Conf. Rep. No. 101-952 that references the imposition of sanctions on 
an area that fails to attain the air quality standard appears to refer 
to the imposition of sanctions under section 179 because it discusses 
the required imposition of sanctions. The language cited by EPA in the 
preamble to the proposed rule addresses a different grant of statutory 
authority to impose sanctions, namely, that authority under section 
110(m). In addition, Illinois DOT cites H. Rep. No. 101-490, which 
clearly provides that EPA may impose sanctions beyond nonattainment 
areas by stating that EPA ``* * * is empowered to apply sanctions to 
any portion of a State.'' The committee goes on to clarify how it 
believes EPA should use this broad grant of authority, indicating that 
EPA should impose sanctions on the governmental entity that is 
``primarily responsible,'' and noting that a State legislature's 
failure to adopt an inspection/maintenance program is a circumstance 
where statewide sanctions are appropriate.
3. Section 110(m) Does Not Establish Independent Authority to Sanction
    Comment. The Virginia DOT believes section 179 is the basis for 
imposing sanctions and is not superseded by section 110(m). 
Furthermore, the Virginia DOT comments that section 110(m) expands on 
section 179 by requiring that an additional minimum 6-month grace 
period must be observed after the initial 18-month period (i.e., 24 
months) before sanctions may be imposed on a statewide basis where a 
political subdivision is principally responsible for the deficiency. 
The City of Chicago comments that EPA's proposed imposition of 
statewide sanctions under section 110(m) as an alternative to section 
179 would vitiate section 179. Once EPA determines none of the 
political subdivisions meet the criteria, and thus the entire State is 
principally responsible for a section 179(a) deficiency, EPA is bound 
by the requirements of section 179.
    Response. The EPA agrees that sanctions cannot be imposed statewide 
within the first 24 months following a finding where a political 
subdivision is found principally responsible for the deficiency. 
However, EPA disagrees that section 179 provides the sole authority for 
imposing sanctions and, in doing so, allows for the imposition of 
statewide sanctions. As discussed in the response to Comment 2 above, 
section 179 does not refer to the imposition of statewide sanctions 
and, in fact, focuses on the imposition of sanctions in nonattainment 
areas. In fact, the EPA believes the reference to statewide sanctions 
under section 110(m) makes it clear that section 110(m) establishes a 
different authority to sanction States and that statewide sanctions are 
not required under section 179. Section 110(m) provides that statewide 
sanctions shall not be applied within 24 months of the time a finding 
is made if a political subdivision is principally responsible for the 
deficiency; this provision means that statewide sanctions may be 
imposed earlier than 24 months if no political subdivision is found 
principally responsible. If section 179 required statewide sanctions 
after 18 months, it would be contrary to the section 110(m) provision 
that sanctions shall not apply within the 24 months following the 
finding if a political subdivision is principally responsible for the 
deficiency. Therefore, EPA believes that its ability to impose 
statewide sanctions during the 24-month period following a finding is 
based on a determination under section 110(m) that a political 
subdivision is not principally responsible for the deficiency.
    Section 110(m) does not vitiate section 179 because section 179 
sanctions are not statewide but are imposed on the specific area for 
which the deficiency arises, in most instances nonattainment areas. As 
stated previously, section 179 mandates that sanctions be imposed 18 
months after a finding is made. While the imposition of sanctions 
earlier under section 110(m) could remove the need to impose sanctions 
under section 179 sanctions in that area, section 179 has continued 
force and effect in areas where section 110(m) sanctions are not 
imposed. The EPA does not believe that imposition of sanctions under 
section 110(m) conflicts with section 179 sanctions. Application of 
sanctions earlier than 18 months is not inconsistent because EPA 
believes the purpose of section 179 was to ensure that EPA did not 
delay sanctions beyond the periods prescribed in that action.
4. Regulatory Limitation on Early Imposition of Sanctions
    Comment. The United States Department of Transportation (U.S. DOT) 
recommends adding a statement to the rule that EPA expects to impose 
sanctions on a statewide basis earlier than 18 months only in limited 
circumstances, after notice-and-comment rulemaking.
    Response. This statement was not in the proposed rule and EPA 
believes it should not be included in the final rule. The EPA stated in 
the preamble to the proposed rule that it would only apply sanctions 
early in ``unusual circumstances where the State has indicated explicit 
resistance to working to resolve a plan deficiency'' (see 57 FR 44534). 
The final rule revises this preamble language because EPA believes the 
term ``unusual circumstances'' provides little guidance as to when EPA 
intended to use its discretionary sanction authority.
    While EPA does not intend to use the section 110(m) authority in 
all situations where a finding is made, the Agency needs to ascertain 
that it has the flexibility to use this option when necessary. In order 
to develop some plans or plan items, States must perform certain steps 
that EPA can track to determine whether the State will meet deadlines 
in the Act. When a State believes that EPA can impose sanctions only 
after a deadline is missed and 18 months have gone by, then there is 
little incentive for the State to take the necessary actions to 
complete authorization and implementation of politically-difficult 
rules and regulations. The EPA needs to maintain its flexibility to 
respond rapidly to situations where it appears a State will not meet a 
deadline, and to assure the State that it does not, in fact, have an 
extended grace period for noncompliance. The certainty and swiftness of 
imposition of the Act's penalties are critical to timely completion of 
the SIP's. Consequently, the revised language, clarifies EPA's position 
concerning when discretionary sanctions may be appropriate while 
retaining EPA's flexibility to use such sanctions to ensure compliance 
with the Act. Thus, EPA will exercise section 110(m) sanctions earlier 
than 18 months only in cases where:
    1. The State has indicated an explicit resistance to resolving a 
plan or program deficiency or to making a required plan or program 
submittal; or
    2. Where special circumstances, particular program needs, or time 
constraints dictate the need for use of such sanctions.
    Thus, the rule retains the Administrator's discretion to apply 
sanctions at any time after a finding is made; however, EPA will 
provide notice and opportunity for comment on the basis for all section 
110(m) actions.

B. EPA Discretion to Determine the ``Reasonable and Appropriate'' Area 
for Imposition of Sanctions

    1. Comment. The City of Chicago believes the discretion in 
Sec. 52.30(d)--that if the criteria are met EPA may impose sanctions on 
a less than statewide basis to the area it determines is reasonable and 
appropriate--was not Congress' intent in enacting section 110(m). The 
City of Chicago believes EPA's only discretion is whether to apply 
sanctions to political subdivisions that meet the criteria. Thus, the 
City of Chicago believes EPA has no basis to apply sanctions when the 
criteria are not met (i.e., to apply sanctions to political 
subdivisions that were thought to be principally responsible, but did 
not meet the criteria, and to any other surrounding political 
subdivisions EPA determines is reasonable and appropriate) and that to 
apply sanctions to these areas is arbitrary and capricious.
    Response. Section 110(m) states that sanctions may be applied to 
any portion of the State the Administrator determines reasonable and 
appropriate, with one exception. If one or more political subdivisions 
are principally responsible for the deficiency, sanctions may not be 
applied statewide. Therefore, if the criteria are met, i.e., a 
political subdivision is principally responsible, then EPA may not 
impose sanctions on a statewide basis. However, if no political 
subdivision is principally responsible, the text of section 110(m) 
expressly authorizes EPA to move forward and impose sanctions on a 
statewide basis. The EPA would make a determination, however, 
concerning what area of the State for which sanctions would be 
reasonable and appropriate. Furthermore, EPA is not required to 
establish criteria to determine the area of the State for which it is 
reasonable and appropriate to apply sanctions under section 110(m).
    2. Comment. Four commenters, New York DOT, the Orange County 
Transportation Authority (OCTA), the City of Chicago, and the U.S. DOT, 
requested clarification of how EPA will determine the ``reasonable and 
appropriate'' area to apply sanctions. The City of Chicago and the U.S. 
DOT assert that the statute requires such clarification. The New York 
DOT believes that the lack of adequate guidance on what area is 
``reasonable and appropriate'' will create confusion and continual 
uncertainty on the part of States as well as Federal agencies. The New 
York DOT suggests that the prime consideration should be whether a good 
faith effort has been made to bring the nonattainment area into 
compliance. The New York DOT believes that if this issue is not 
addressed in this rulemaking, it should be the subject of another 
rulemaking.
    The OCTA cites the example of California, which consists of several 
regional authorities, which, in turn, each consist of several local 
jurisdictions. The OCTA is concerned about how EPA would impose 
sanctions in the case where a regional authority contains several local 
jurisdictions and where a local authority failed to do everything 
mandated by a regional plan. The commenter believes it would be more 
reasonable and appropriate to apply sanctions to the single local 
jurisdiction, not the regional authority. In addition to assuring that 
the State does not suffer sanctions if one political subdivision is 
principally responsible for the deficiency, the commenter suggests that 
EPA assure that regions within a State would not be subject to 
sanctions if one or more local jurisdictions is/are principally 
responsible for the deficiency.
    The U.S. DOT comments that in situations where a nonattainment area 
contains multiple political subdivisions, none of which are principally 
responsible according to the five criteria, the rule must clarify how 
EPA will determine whether to apply sanctions to the specific 
responsible political subdivision(s) rather than the entire 
nonattainment area.
    The City of Chicago and U.S. DOT assert that the statutory mandate 
to promulgate criteria is not limited to the determination of principal 
responsibility. These commenters argue that EPA must also develop 
criteria to determine when the imposition of sanctions would be 
reasonable and appropriate, and the criteria should be sufficient to 
put potentially affected political subdivisions on notice of the 
activities or agreements which may put them at risk of sanctions.
    Response. Section 110(m) specifically provides that EPA may impose 
sanctions on any part of the State that EPA deems is reasonable and 
appropriate. Section 110(m) then requires that EPA ``* * * establish 
criteria for exercising (this) authority * * * to ensure that * * * 
such sanctions are not applied on a statewide basis where one or more 
political subdivisions covered by the applicable implementation plan 
are principally responsible for such deficiency.'' The EPA believes 
this language strictly limits the required development of criteria to 
those necessary to determine if a political subdivision is principally 
responsible for the deficiency. There is no requirement that the 
criteria must guide EPA's further decision of which area is 
``reasonable and appropriate'' for the imposition of sanctions. At this 
time, EPA does not have experience with imposing these sanctions and, 
therefore, does not want to constrain the Agency in the exercise of 
this discretion. The variety of circumstances would make it difficult 
to develop criteria that would be applicable in every instance. As to 
the comments of the City of Chicago and the U.S. DOT that EPA needs to 
establish criteria for when it will impose sanctions under section 
110(m), EPA does not believe that such criteria are mandated. The 
public will have an opportunity to comment on EPA's determination of 
the area on which it will impose sanctions and the timing of sanctions 
during each specific section 110(m) rulemaking action.

C. Selection and Design of Criteria

    Under this category, the commenters focused their particular 
concerns on the sanction criteria.
    1. Comment. The OCTA suggests that the rule clarify that all five 
criteria are to be met, not merely used, by EPA to determine if a 
subdivision is principally responsible for the deficiency. The OCTA 
suggests the following language: ``Criteria. The EPA will use the 
following five criteria, all of which must be met, to determine whether 
a political subdivision is principally responsible for the 
deficiency.''
    Response. The EPA agrees with this comment but determined that 
language other than that suggested would be clearer. Therefore, EPA has 
revised Sec. 52.30(d)(1) to read as follows: ``For the purposes of this 
action, EPA will consider a political subdivision to be principally 
responsible for the deficiency on which a section 179(a) finding is 
based, if all five of the following criteria are met.''
    2. Comment. The New York DOT comments that the necessity for all 
five criteria to be met is overly strict and biased toward imposition 
of sanctions statewide, and it may be difficult to establish that all 
five have been met. Therefore, the New York DOT suggests that only a 
majority (three out of five) be met.
    Response. The EPA believes all five criteria are needed to 
determine whether a political subdivision is principally responsible. 
The EPA sees no compelling reason to weaken this requirement. In 
addition, the failure to determine that one or more areas are 
principally responsible does not presuppose the imposition of statewide 
sanctions; the EPA must determine that the area sanctioned is the 
reasonable and appropriate area.
    3. Comment. The U.S. DOT requests clarification of what State 
actions are necessary to provide adequate legal authority under the 
proposed Criterion 1. Criterion 1 states that the State must provide 
adequate legal authority to a political subdivision to perform the 
required activity.
    Response. The EPA does not believe that there is a single distinct 
definition of the term ``legal authority.'' What constitutes adequate 
legal authority may vary from State to State. This should be handled on 
a case-by-case basis.
    4. Comment. The New York DOT comments that under the proposed 
Criterion 2 [Sec. 52.30(c)(2)], there must be a very clear agreement in 
the SIP or some other document as to which functions are to be 
performed by which agencies. For example, functions traditionally 
performed by local agencies may not be performed that way under the 
Intermodal Surface Transportation Efficiency Act (ISTEA).
    Response. The EPA agrees with the commenter and encourages States 
to develop clear agreements as to which functions are being performed 
by which agencies. Note in particular that section 174 of the Act 
requires States to jointly review and update, as necessary, their 
planning procedures that were in effect before the Act was amended in 
1990 or to develop new procedures as appropriate. In preparing such 
procedures, State and local elected officials must determine which 
elements of a revised SIP will be developed, adopted, and implemented 
by the State, and which elements will be carried out by local or 
regional entities. The EPA has provided guidance on this and other 
section 174 requirements in a document entitled ``1992 Transportation 
and Air Quality Planning Guidelines'' (July 1992, EPA 420/R-92-001). 
The EPA will work with the State and the political subdivision to 
ascertain if this criterion has been met. In addition, any comments 
raised as to this issue during the rulemaking process on a specific 
section 110(m) action will be properly considered by EPA.
    5. Comment. Concerning Criterion 4 [Sec. 52.30(c)(4)], the U.S. DOT 
also comments there should be a provision included to provide against 
``State failure.'' If a local agency cancels an agreement to perform a 
certain function, it might leave the State without the time or 
resources to perform the function. Thus, the State, instead of the 
local agency, would become principally responsible. The U.S. DOT 
believes it would be inappropriate to apply statewide sanctions in such 
a case.
    Response. If the local agency cancels its agreement to perform a 
function, EPA would take this into consideration when determining 
whether the political subdivision is principally responsible in causing 
the deficiency. Moreover, this factor may be considered in determining 
the area to which it is reasonable and appropriate to apply sanctions. 
The EPA can consider all factors in determining what area is reasonable 
and appropriate.
    6. Comment. The Massachusetts DOT believes the rule should contain 
a specific provision for State consultation in determining principal 
responsibility because many factors such as regional demographic 
trends, changing local traffic patterns, and land-use decisions in 
adjoining areas have a larger impact on emissions than institutional 
arrangements for air quality planning. The proposed criteria may be the 
best way to evaluate whether the State or the political subdivision is 
solely responsible for the emissions requirements, but it may not be 
relevant in targeting the actual source of the problem or in defining 
solutions.
    Response. To the extent it determines appropriate, EPA will consult 
with the State when evaluating the criteria under section 110(m). In 
any event, the State will have adequate opportunity to raise any such 
concerns in the comment period following the notice of proposed 
rulemaking for imposition of section 110(m) sanctions.

D. Other Relevant Comments

    1. Comment. The State of Vermont comments that it is the only State 
in attainment with the ozone national ambient air quality standards and 
also located within the Northeast Ozone Transport Region. Vermont 
requests clarification in the rule of whether attainment status or 
inclusion in the ozone transport region (OTR) is the deciding factor 
with respect to applicability of these rules.
    Response. Neither attainment status nor inclusion in the OTR is the 
deciding factor. Under section 110(m), EPA may impose sanctions on a 
statewide basis or on any area of the State deemed reasonable and 
appropriate based on the failure of the State or a political 
subdivision of the State to meet a requirement of the Act with respect 
to a plan or plan element. If a requirement is applicable to a 
political subdivision of the State, EPA will determine whether that 
political subdivision was principally responsible for the failure, 
using the criteria established in this rulemaking. The EPA's ability to 
use the section 110(m) sanctions is not limited to nonattainment areas 
or areas that must meet the title I, part D nonattainment requirements.
    2. Comment. The City of Chicago comments that the term ``required 
activity'' contravenes the definition of required activity in section 
179 and permits EPA to sanction entities without providing any prior 
notice that EPA considers a particular action to be sanctionable. The 
City of Chicago also comments that since section 110(m) incorporates 
section 179(a), EPA is not permitted to create a second, conflicting 
definition. Furthermore, the proposed definition does not identify 
covered activities, and it does not give entities prior notice of 
sanctionable activities. Finally, the City of Chicago is concerned 
about the ambiguity of the definition and that it may mean EPA is 
expanding the definition from section 179(a).
    Response. Section 179(a) does not define required activity. Rather, 
EPA believes this introductory phrase under section 179(a) refers to 
submittals required under part D of the Act. The four general 
categories of activities listed in section 179(a) are the four possible 
types of State failure with respect to the required activities under 
part D. The types of failure are not synonymous with required 
activities under the introductory language of section 179(a). Finally, 
the City of Chicago contends that the definition of ``required 
activity'' is too open-ended because of the language ``may include, but 
is not limited to.''
    The EPA interprets the term ``required activity'' for purposes of 
section 110(m) in a manner similar to that for section 179(a); however, 
EPA recognizes that for section 110(m), ``required activity'' refers to 
any plan or plan item requirement under the Act, not just those 
required under part D. Finally, EPA agrees that the language ``may 
include, but is not limited to'' may provide broader authority than 
that granted under section 110(m). Therefore, EPA has changed the 
definition in the final rule to provide: ``The term `required activity' 
refers to the submission of a plan or plan item or the implementation 
of a plan or plan item under the Clean Air Act.''
    3. Comment. The OCTA and the U.S. DOT request clarification of the 
term ``political subdivision.'' Both commenters appear concerned about 
whether EPA in making a determination of ``principal responsibility'' 
may consider less than the entire nonattainment area. The OCTA notes 
that California has several regional authorities that each are composed 
of numerous local jurisdictions. These local jurisdictions often have 
the responsibility for ``adopting and implementing air pollution 
controls.''
    Response. The definition of ``political subdivision'' set forth in 
Sec. 52.30(a)(1) includes all types of governmental entities, including 
local jurisdictions. The EPA could sanction less than an entire 
nonattainment area based on a determination that a local jurisdiction 
was principally responsible for the deficiency on which the sanction is 
based.
    4. Comment. The OCTA comments that the proposed rule should include 
a definition of ``plan item.'' The OCTA notes that section 110(m) reads 
in part ``* * * in relation to any plan or plan item (as that term is 
defined by the Administrator). * * *'' The OCTA cites the example of 
the California SIP, which is partially composed of regional plans. Some 
regional plans require local jurisdictions to take certain actions, 
which to the commenter appear to be plan items.
    Response. As discussed earlier, to make this clearer, EPA replaces 
the phrase ``adequate SIP or SIP element'' under Sec. 52.30(a)(2) with 
the phrase ``plan or plan item.'' Although EPA interpreted the phrase 
``adequate SIP or SIP element'' to essentially mean the same as the 
phrase ``plan or plan item,'' this replacement is more consistent with 
the language of section 110(m) which refers to ``plan or plan item.'' 
``Plan and plan item'' are also defined under Sec. 52.30(a)(4).

E. Comments on Policy Stated In Preamble to Proposed Rule

1. Choice of Sanctions
    Comment. The Texas DOT, the Chemical Manufacturers Association 
(CMA), and the Northwest Indiana Regional Planning Commission (NIRPC) 
asked EPA to identify which sanction will be applied for various types 
of SIP deficiencies. These commenters all state that the sanction 
should be tied to the underlying deficiency. For example, the 
commenters state that highway sanctions should only be applied when 
there is a SIP deficiency relative to mobile sources and the offset 
sanction where the deficiency is relative to stationary sources. The 
CMA recommends adding extra language to the rule as follows: ``The EPA 
will assess the nature of the deficiencies and take this into account 
when determining which sanction to apply.''
    The NIRPC further asserts that only those projects which have the 
potential for increasing emissions should be targeted; withholding 
highway funds which may correct a problem is inappropriate.
    Response. The type of sanction to be applied and the selection 
procedure are not part of this rulemaking. Sanction determinations will 
be made on a case-by-case basis. The EPA will go through notice-and-
comment rulemaking on selection and imposition of sanctions under 
section 110(m). The notice will propose for comment which sanctions or 
sanction will be applied. In addition, the Act sets forth those 
projects exempted from the highway funding restrictions. The EPA will 
act consistently with the requirements of the Act in imposing the 
highway funding restrictions.
2. Impact of Rule on Title 23 Funds
    Comment. The American Public Transit Association is concerned about 
how EPA's sanction determination process could affect the process and 
procedures of transferring flexible funds (i.e., certain title 23 
program funds) from highway to transit purposes. The Southeastern 
Pennsylvania Transportation Authority requests clarification of how any 
imposed restrictions on highway funds would affect funds previously 
flexed to transit as provided for in the ISTEA.
    Response. This rulemaking is not intended to address how the 
highway sanctions will be implemented. The EPA is in the process of 
developing procedures with the U.S. DOT to provide for the coordinated 
implementation of the highway sanction. The EPA and the U.S. DOT will 
develop procedures consistent with the specifications in section 
179(b).
3. Authority to Sanction For Failure to Implement
    Comment. The Massachusetts DOT comments that EPA's authority to 
sanction a State if ``* * * a requirement of an approved plan is not 
being implemented is too broad, given the large number of agencies, 
regulatory authorities, and group interests which can prevent a planned 
project from being implemented.'' Instead, a State's good faith effort 
to implement an approved project should be identified as an exception 
to this policy.
    Response. The types of findings that may lead to the imposition of 
sanctions are specified in the Act; they are not being developed by 
this rulemaking. Therefore, once a finding of failure to implement a 
plan has been made, section 179(a) requires that the 18-month mandatory 
sanctions clock begins. Furthermore, any finding made under section 
179(a) provides EPA with discretion to impose sanctions under section 
110(m).
4. Clarification of Offset Sanction
    Comment. The Massachusetts DOT requests clarification of the 
requirement for a 2:1 emissions reduction from existing sources to 
offset emissions from major new facilities. The Massachusetts DOT 
believes it is not reasonable to require reductions from existing, 
older or congested facilities before major new improvements are made.
    Response. The procedure by which facilities offset emissions is not 
the subject of this rulemaking. Those issues must be resolved in 
regulations adopted by the State pursuant to the requirements of 
section 173.

VI. Miscellaneous

A. Relationship to Permit Program

    The Act includes specific sanctions provisions for permitting 
requirements in section 502(d) and (i), 42 U.S.C., 7661a(d) and (i). 
The section 110(m) sanctions procedure does not apply with respect to 
findings regarding permit program failures.

B. Executive Order 12866

    Under Executive Order 12866, (58 FR 51735, October 4, 1993) the 
Agency must determine whether the regulatory action is ``significant'' 
and therefore subject to OMB review and the requirements of the 
Executive Order. The Order defines ``significant regulatory action'' as 
one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, productivity, 
competition, jobs, the environment, public health or safety, or State, 
local, or tribal governments or communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Pursuant to the terms of Executive Order 12866, OMB has notified 
EPA that this action is a ``significant regulatory action'' within the 
meaning of the Executive Order. For this reason, this action was 
submitted to OMB for review. Changes made in response to OMB 
suggestions or recommendations will be documented in the public record.

C. Regulatory Flexibility Act

    Pursuant to the provisions of 5 U.S.C 605(b), the Administrator 
hereby certifies that the attached rule will not have a significant 
economic impact on a substantial number of small entities. Since the 
rule requires EPA to consider criteria before applying sanctions on a 
statewide basis, it potentially could result in a reduced burden on 
small entities.

D. Paperwork Reduction Act

    This proposed rule does not contain any information collection 
requirements subject to review by OMB under the Paperwork Reduction Act 
of 1980, 44 U.S.C. 3501, et seq.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Ozone, Carbon 
monoxide, Nitrogen oxides, Sulfur dioxide, PM-10, Sanctions.

    Dated: December 29, 1993.
Carol M. Browner,
Administrator.
    40 CFR part 52 is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATIONS PLANS

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

    Authority: 42 U.S.C. 7401-7671q.

    2. Part 52 is amended by adding a new Sec. 52.30 to subpart A to 
read as follows:


Sec. 52.30  Criteria for limiting application of sanctions under 
section 110(m) of the Clean Air Act on a statewide basis.

    (a) Definitions. For the purpose of this section:
    (1) The term ``political subdivision'' refers to the representative 
body that is responsible for adopting and/or implementing air pollution 
controls for one, or any combination of one or more of the following: 
city, town, borough, county, parish, district, or any other 
geographical subdivision created by, or pursuant to, Federal or State 
law. This will include any agency designated under section 174, 42 
U.S.C. 7504, by the State to carry out the air planning 
responsibilities under part D.
    (2) The term ``required activity'' means the submission of a plan 
or plan item, or the implementation of a plan or plan item.
    (3) The term ``deficiency'' means the failure to perform a required 
activity as defined in paragraph (a)(2) of this section.
    (4) For purposes of Sec. 52.30, the terms ``plan'' or ``plan item'' 
mean an implementation plan or portion of an implementation plan or 
action needed to prepare such plan required by the Clean Air Act, as 
amended in 1990, or in response to a SIP call issued pursuant to 
section 110(k)(5) of the Act.
    (b) Sanctions. During the 24 months after a finding, determination, 
or disapproval under section 179(a) of the Clean Air Act is made, EPA 
will not impose sanctions under section 110(m) of the Act on a 
statewide basis if the Administrator finds that one or more political 
subdivisions of the State are principally responsible for the 
deficiency on which the finding, disapproval, or determination as 
provided under section 179(a)(1) through (4) is based.
    (c) Criteria. For the purposes of this provision, EPA will consider 
a political subdivision to be principally responsible for the 
deficiency on which a section 179(a) finding is based, if all five of 
the following criteria are met.
    (1) The State has provided adequate legal authority to a political 
subdivision to perform the required activity.
    (2) The required activity is one which has traditionally been 
performed by the local political subdivision, or the responsibility for 
performing the required activity has been delegated to the political 
subdivision.
    (3) The State has provided adequate funding or authority to obtain 
funding (when funding is necessary to carry out the required activity) 
to the political subdivision to perform the required activity.
    (4) The political subdivision has agreed to perform (and has not 
revoked that agreement), or is required by State law to accept 
responsibility for performing, the required activity.
    (5) The political subdivision has failed to perform the required 
activity.
    (d) Imposition of sanctions. (1) If all of the criteria in 
paragraph (c) of this section have been met through the action or 
inaction of one political subdivision, EPA will not impose sanctions on 
a statewide basis.
    (2) If not all of the criteria in paragraph (c) of this section 
have been met through the action or inaction of one political 
subdivision, EPA will determine the area for which it is reasonable and 
appropriate to apply sanctions.
[FR Doc. 94-551 Filed 1-10-94; 8:45 am]
BILLING CODE 6560-50-P