[Federal Register Volume 60, Number 210 (Tuesday, October 31, 1995)]
[Proposed Rules]
[Pages 55355-55358]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-26952]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52

[CA 79-3-7211; AD-FRL-5322-1]


Clean Air Act Approval and Promulgation of New Source Review 
Implementation Plan for Mojave Desert Air Quality Management District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The EPA proposes to approve with a contingency, and disapprove 
in the alternative, Mojave Desert Air Quality Management District 
(MDAQMD) rules 1301, 1302, 1304, 1305, 1306, 1307, 1308, 1310, 1311, 
and 1312 (submitted rules) as a revision to the California State 
Implementation Plan (SIP). The State of California has submitted these 
rules for the purpose of meeting the new source review (NSR) 
requirements of the Clean Air Act, as amended in 1990 (CAA or the Act) 
for areas that have not attained the national ambient air quality 
standards (NAAQS). The submitted rules contain a number of deficiencies 
that prevent EPA from approving them as revisions to the SIP. However, 
MDAQMD has agreed to correct these deficiencies, and has sent draft 
rules (Initial Draft 3, 10/11/95--hereafter: ``proposed revisions'') to 
EPA which contain acceptable language. This proposed approval is 
therefore contingent upon MDAQMD adopting and submitting to EPA revised 
rules which correct the deficiencies identified in this document before 
EPA promulgates a final rulemaking on the submitted rules. Should 
MDAQMD fail to adopt and submit its proposed revisions, then this 
document will serve as a proposed disapproval of the submitted rules. 
If the District adopts and submits rules which differ substantially 
from those contained in its proposed revisions, then EPA will publish 
an additional notice of proposed rulemaking for public review and 
comment.

DATES: Comments on this proposed action must be received in writing by 
November 30, 1995.

ADDRESSES: To submit comments or receive additional information, please 
contact: Steve Ringer, Environmental Engineer, Air & Toxics Division 
(A-5-1), EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105. 
Copies of MDAQMD's submittal and other information are available for 
inspection during normal business hours at the following locations: (1) 
EPA Region 9, 75 Hawthorne Street, San Francisco, CA; (2) Mojave Desert 
AQMD, 15428 Civic Drive, Suite 200, Victorville, CA 92932; (3) Air 
Resources Board, 2020 ``L'' Street, Sacramento, CA 95814.

FOR FURTHER INFORMATION CONTACT: Steve Ringer at (415) 744-1260.

SUPPLEMENTARY INFORMATION: The air quality planning requirements for 
nonattainment NSR are set out in Part D of Title I of the Act. EPA has 
issued a ``General Preamble'' describing EPA's preliminary views on how 
EPA intends to review SIPs and SIP revisions submitted under part D, 
including those State submittals containing nonattainment NSR SIP 
requirements (see 57 FR 13498 (April 16, 1992) and 57 FR 18070 (April 
28, 1992)). Because EPA is describing its interpretations here only in 
broad terms, the reader should refer to the General Preamble for a more 
detailed discussion. EPA is currently developing proposed regulations 
to implement the changes under the 1990 Amendments in the NSR 
provisions in Parts C and D of Title I of the Act. EPA expects to 
propose these regulations sometime during 1995 or 1996. Upon 
promulgation of these regulations, EPA will review those NSR SIP 
submittals on which it has taken final action to determine whether 
additional SIP revisions are necessary.

Procedural Background

    The Act requires States to observe certain procedural requirements 
in developing implementation plans and plan revisions for submission to 
EPA. Section 110(a)(2) and section 110(l) of the Act provide that each 
implementation plan or revision to an implementation plan submitted by 
a State must be adopted after reasonable notice and public hearing. 
Section 172(c)(7) of the Act provides that plan provisions for 
nonattainment areas shall 

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meet the applicable provisions of Section 110(a)(2).
    The MDAQMD Governing Board held a public hearing on September 22, 
1993 to entertain public comment on the NSR implementation plan. The 
plan was adopted by the State and submitted to EPA on March 29, 1994 as 
a proposed revision to the SIP.
    The SIP revision was not reviewed by EPA within six months to 
determine completeness, and was therefore deemed complete by default. 
The submittal has since been reviewed and found to be complete but 
lacking certain requirements that would make it fully approvable. 
However, as noted above, MDAQMD has agreed to make the required changes 
and has submitted draft versions of its rules which address the 
deficiencies described below. Therefore, contingent on the submittal of 
a fully approvable SIP in the form of approved rules consistent with 
the revised rules, EPA proposes to approve the MDAQMD's nonattainment 
NSR SIP submittal. If the District fails to correct the deficiencies in 
the submitted rules, then EPA's final action will be a disapproval. If 
the District adopts and submits rules which differ substantially from 
those contained in its proposed revisions, then EPA will publish an 
additional notice of proposed rulemaking for public review and comment.

Summary of Rule Contents

    MDAQMD submitted to EPA for adoption into the applicable NSR SIP 
Rules 1301, 1302, 1304, 1305, 1306, 1307, 1308, 1310, 1311, and 1312. 
These submitted rules constitute MDAQMD's new source permitting 
regulations. Rule 1301 outlines the general requirements for 
preconstruction review of permit applications. Rule 1302 defines terms 
relating to new sources and modifications to existing sources of air 
pollution, and their regulation. Rule 1304 allows an exemption from NSR 
for a change of ownership. Rule 1305 describes the procedures for 
submittal and review of permit modifications. Rule 1306 outlines 
calculation methods for emissions increases and decreases, and for 
offset requirements. Rule 1307 contains a description of which new and 
modified sources require offsets. Rule 1308 outlines which sources are 
eligible to create offsets. Rule 1310 describes District requirements 
for completeness determinations, final action and public notice on a 
permit submittal. Rule 1311 outlines the requirements for electrical 
energy generating facilities. Rule 1312 contains an alternative siting 
analysis requirement for major new sources and modifications. The 
submitted rules are intended to replace the existing rules 1301 through 
1313, which were adopted into the San Bernardino SIP by EPA on June 9, 
1982. MDAQMD has adopted these new regulations in part to meet the 1990 
CAA Amendments and the November 15, 1992 deadline for submittal. A 
summary of the changes between the current SIP and the submitted rules 
is contained in the Technical Support Document (TSD) for this action.
    MDAQMD is currently designated as attainment or unclassifiable for 
CO, NO2, Pb, and SO2, and moderate nonattainment for 
PM10. In addition, part of the MDAQMD is designated severe 
nonattainment for ozone [40 CFR 81.305]. The CAA requirements for 
nonattainment NSR permitting are found at sections 172 and 173. With 
certain exceptions, described below, MDAQMD's submittal satisfies these 
requirements. For a detailed description of how the submitted rules and 
MDAQMD's proposed revisions meet the CAA requirements, refer to EPA's 
TSD.

Rule Deficiencies Requiring Correction

    Below is a list of the deficiencies which must be corrected for EPA 
to approve MDAQMD's NSR rules into the SIP.

Rule 1302

Actual Emissions
    The definition of ``Actual Emissions'' in the submitted rules 
should require that emissions calculations reflect actual production 
rates, the actual amount of fuel burned, actual amounts of material 
processed, and the actual hours of operation over the two years prior 
to such a determination. Emission factors should be established by 
source testing or obtained from a reliable source of emission factor 
data such as EPA's AP-42.
Major Modification
    The submitted rules do not contain this definition. Although the 
submitted definition of ``Modification'' contains much of the language 
from the definition of a major modification in 40 CFR 51.165(a)(1)(v), 
the District must define a ``Major Modification'' as any modification 
that results in a significant net emissions increase.
Modification
    The definition of ``Modification'' in the submitted rules differs 
from the published definition in 40 CFR 52.21(2)(i). The CFR defines a 
modification as a ``physical change in or change in the method of 
operation.'' The submitted rules, however, define this as ``any 
equipment or process which undergoes a physical revision.'' The rules 
should be changed to clarify that the term ``Modification'' refers to 
the change, rather than to the equipment itself.
Volatile Organic Compound
    The definition of ``Reactive Organic Compound'' in the submitted 
rules contains a list of substances exempt from regulation as ROC's 
which is inconsistent with the exemption list in 40 CFR 51.100(s). This 
discrepancy should be corrected to avoid granting ROC emission 
reduction credits, as well as requiring ROC offsets, for non-ozone-
precursor emissions. The definition in 40 CFR 51.100(s) should be 
adopted verbatim into this section.
Additional Definitions:
    In addition to the changes indicated above, it is necessary to add 
the following terms to this section: Begin Actual Construction, 
Commence Construction, Construction, Enforceable (or Federally 
Enforceable), Net Emissions Increase, Secondary Emissions, and 
Significant. These definitions should follow the language found at 40 
CFR 51.165.

Rule 1306

Calculating Emissions Changes
    This section uses a source's pre-modification potential to emit 
(PTE), rather than its pre-modification actual emissions, as the 
baseline for calculating the offset requirement for major modifications 
in nonattainment areas. This method is not acceptable unless the source 
has already offset its entire pre-modification PTE. The District must 
amend the rule to calculate the offset requirement in this case as the 
source's new PTE minus the source's pre-modification actual emissions.

Rule 1307

Determination of Offset Requirements (Non-major Facility)
    Section (B)(2)(a) overlooks the case in which a non-major facility 
undergoes a modification which is in itself major. In this case, the 
entire modification must be offset, and not, as the rule states, only 
the portion of the facility's PTE which exceeds the major source 
threshold.
Obtaining Offsets
    The submitted rules contain no provision, pursuant to section 173 
of the Act, which requires that offsets be federally enforceable prior 
to the issuance of an authority to construct 

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permit, and in effect by the time operation commences. Such provisions 
must be added.

Rule 1308

Mobile Source Emission Reductions
    EPA has not developed mobile source emission reduction crediting 
guidance. The rules should therefore include a case by case approval by 
EPA.
Mobile Source Emission Reductions
    Section (A)(3)(b) allows emissions reduction credits to be 
generated by the ``substitution and use of high occupancy vehicles for 
low occupancy vehicles.'' Due to the extreme difficulty in quantifying 
these types of emissions reductions, and in making them permanently 
enforceable, EPA cannot approve this as a means of generating offsets. 
This provision should be removed from the District's rules.
Emission Reduction Credits From Vehicle Scrappage
    In order for EPA to determine if the offsets to be generated from a 
vehicle scrappage program will be federally approvable, the details of 
the program must be submitted with this rule. Section (A)(3)(c), which 
states that these are a potential source of offsets, should either 
include these details, or reference another section or rule which 
contains the details of the program.
Interpollutant Offsets
    The use of interpollutant trading to satisfy nonattainment offset 
requirements is generally allowable only under very specific 
conditions. On April 13, 1995, the Director of EPA Region 9's Air and 
Toxics Division sent a letter to MDAQMD outlining an acceptable method 
for the use of interpollutant trading. MDAQMD should either incorporate 
this method into its NSR rules, or require case-by-case advance 
approval by EPA.
Source Eligibility
    Energy conservation projects could be an acceptable source of 
offsets, but a definition should be included to clarify what is meant 
by these. Section (A)(4) should also include a statement that these 
projects are subject to the same standards as other sources of offsets 
(i.e., the reductions must be real, enforceable, quantifiable, surplus, 
and permanent).
Intra-basin and Inter-district Offsets
    Section (D) should include the CAA section 173(c)(1) requirements 
that sources locating in a nonattainment area may only obtain offsets 
from other nonattainment areas which (A) have equal or higher 
nonattainment classification, and (B) contribute to a violation of the 
NAAQS in the nonattainment area in which the source is located.

Additional Requirements

    Surplus Requirement: The submitted rules contain insufficient 
provisions to ensure that all emission reduction credits (ERC's) used 
to satisfy the nonattainment offset requirements will be surplus. These 
provisions must be added to MDAQMD's NSR rules.
    Prior Shutdowns: The submitted rules do not prohibit the use of 
``prior shutdown'' credits as required in 40 CFR 51.165(a)(1)(xxv). 
This provision applies either when the District attainment plan has 
been disapproved, or when this plan is not yet due, but a due date 
during the creation of this plan is missed. In these cases, sources 
which seek ERC's due to a shutdown must do so at the time operation of 
the source ceases. This provision must be added to the District's 
rules.
    Class I Area Visibility Protection: The submitted rules lack the 
Class I Area visibility protection provisions of 40 CFR 51.307(b)(2) 
for any new major source or major modification, proposing to locate in 
a non-attainment area, that may have an impact on visibility in any 
mandatory Class I Federal Area. This requirement must be added to the 
District's rules.
    Applicability: The submitted rules contain no provisions which 
require NSR for a source or modification which becomes major due to a 
relaxation in a federally-enforceable limit. As described in 40 CFR 
51.165(a)(5)(ii), such sources and modifications are subject to NSR 
``as though construction had not yet commenced.'' This requirement must 
be added to the District's rules.

Proposed Action

    EPA is proposing to approve with contingencies, and to disapprove 
in the alternative, the SIP revisions submitted by MDAQMD on March 29, 
1994. Full approval as a final action on this SIP revision is 
contingent upon MDAQMD making the required changes to the submitted 
rules as listed above.
    If the specified changes to the submitted rules are not made before 
EPA's final action on this SIP revision, then EPA's final action will 
be a disapproval. If finalized, this disapproval would constitute a 
disapproval under section 179(a)(2) of the Act (see 57 FR 13566-13567). 
As provided under section 179(a), MDAQMD would have up to 18 months 
after a final SIP disapproval to correct the deficiencies that are the 
subject of the disapproval before EPA is required to impose sanctions. 
If the MDAQMD does not correct its SIP deficiencies within 18 months, 
then section 179(a)(4) requires the immediate application of sanctions. 
According to section 179(b), sanctions can take the form of a loss of 
highway funds or a two to one emissions offset ratio. Once the 
Administrator applies one of the section 179(b) sanctions, the State 
will then have an additional six months to correct any deficiencies. 
Section 179(a)(4) requires that both highway and offsets sanctions must 
be applied if any deficiencies are still not corrected after the 
additional six month period.
    EPA is requesting comments on all aspects of this proposed 
rulemaking action. Comments received by the date indicated above will 
be considered in EPA's final action.

Administrative Review

    Nothing in this action should be construed as permitting, allowing, 
or establishing a precedent for any future request for a revision to 
any SIP. Each request for revision to a SIP shall be considered 
separately in light of specific technical, economic, and environmental 
factors and in relation to relevant statutory and regulatory 
requirements.
    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
must prepare a regulatory flexibility analysis assessing the impact of 
any proposed or final rule on small entities. 5 U.S.C. 603 and 604. 
Alternatively, EPA may certify that the rule will not have a 
significant impact on a substantial number of small entities. Small 
entities include small businesses, small not-for-profit enterprises, 
and government entities with jurisdiction over populations of less than 
50,000.
    SIP approvals under section 110 and subchapter I, part D of the Act 
do not create any new requirements, but simply approve requirements 
that the State is already imposing. Therefore, because the Federal SIP-
approval does not impose any new requirements, I certify that it does 
not have a significant impact on any small entities affected. Moreover, 
due to the nature of the Federal-State relationship under the Act, 
preparation of a regulatory flexibility analysis would constitute 
Federal inquiry into the economic reasonableness of State action. The 
Act forbids EPA to base its actions concerning SIPs on such grounds. 
Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct 1976); 42 
U.S.C. 7410(a)(2). The Office of Management and Budget has exempted 
this rule from the requirements of section 6 of Executive Order 12866. 

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Unfunded Mandates

    Under Section 202 of the Unfunded Mandates Reform Act of 1995, EPA 
must prepare a budgetary impact statement to accompany any proposed or 
final rule that includes a federal mandate that may result in estimated 
costs to state, local, or tribal governments in the aggregate; or to 
the private sector, of $100 million or more. EPA has determined that 
the approval proposed in this document does not include such a federal 
mandate, as this proposed federal action would approve pre-existing 
requirements under state or local law, and would impose no new federal 
requirements. Accordingly, no additional costs to state, local, or 
tribal governments, or to the private sector, will result from this 
action.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Hydrocarbons, 
Intergovernmental relations, nitrogen dioxide, Particulate matter, 
Reporting and recordkeeping requirements, Sulfur dioxide, Volatile 
organic compounds.

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

    Dated: October 17, 1995.
Felicia Marcus,
Regional Administrator.
[FR Doc. 95-26952 Filed 10-31-95; 8:45 am]
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