[Federal Register Volume 61, Number 213 (Friday, November 1, 1996)]
[Rules and Regulations]
[Pages 56450-56461]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-27848]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[AZ 58-1-7131-b]
[FRL-5634-5]


Redesignation of the Yavapai-Apache Reservation to a PSD Class I 
Area; State of Arizona; Dispute Resolution

AGENCY: Environmental Protection Agency (EPA).

ACTION: Announcement of dispute resolution.

-----------------------------------------------------------------------

SUMMARY: The purpose of this action is to announce the EPA's resolution 
of an intergovernmental dispute over a request by the Yavapai-Apache 
Tribal Council to redesignate the Yavapai-Apache Reservation (``the 
Reservation'') as a non-Federal Class I area under the Clean Air Act 
program for prevention of significant deterioration of air quality. On 
August 22, 1994 the Governor of Arizona raised concerns about EPA's 
proposal to approve the request of the Yavapai-Apache Tribe to 
redesignate its Reservation as a Class I area and asked EPA to initiate 
the intergovernmental dispute resolution process provided for in 
section 164(e) of the Clean Air Act. The State and the Tribe were 
unable to reach an agreement concerning the redesignation. Section 
164(e) of the Clean Air Act provides that EPA must therefore resolve 
the dispute. After fully considering the concerns raised by the State 
of Arizona, EPA declines in these particular circumstances to 
disapprove the Tribe's decision to limit the amount of air quality 
deterioration allowed within its Reservation. Therefore, as described 
in a final rulemaking notice also published in today's Federal 
Register, EPA is finalizing its proposed decision to redesignate the 
Yavapai-Apache Reservation as a non-Federal Class I area. The Class I 
designation will result in lowering the allowable increases in ambient 
concentrations of particulate matter, sulfur dioxide, and nitrogen 
dioxide within the Reservation.

EFFECTIVE DATE: December 2, 1996.

ADDRESSES: The public docket for this notice, which includes additional 
information related to this decision and relevant materials submitted 
to EPA, is available for public inspection and copying during normal 
business hours. Please contact the EPA official listed below at the 
given address. A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: Jessica Gaylord, Air and Toxics 
Division (A-5-1), U.S. EPA Region 9, 75 Hawthorne Street, San 
Francisco, CA 94105-3901, (415) 744-1290. An electronic copy of this 
Federal Register notice and other pertinent information is available on 
the World Wide Web at this Internet address: http://www.epa.gov/
region09/air/yavapai/

SUPPLEMENTARY INFORMATION:

I. Summary of Final Rule Approving Yavapai-Apache Tribe's Request 
for Redesignation

    Elsewhere in today's Federal Register EPA has published a final 
rulemaking notice granting the Yavapai-Apache Tribe's request to 
redesignate its reservation as a Class I area under the Clean Air Act 
(CAA) program for the prevention of significant deterioration of

[[Page 56451]]

air quality (PSD). The final rulemaking notice contains a discussion of 
the following: (1) The PSD program and PSD area classifications; (2) 
the PSD redesignation requirements; (3) the PSD class I redesignation 
request submitted to EPA by the Tribe and the public process 
accompanying EPA's review of the request; (4) the statutory and 
regulatory limits on the scope of EPA's review; and (5) EPA's response 
to public comments on EPA's proposed approval of the request, including 
concerns about the potential impacts of the redesignation on areas 
outside the reservation. While some aspects of the final rulemaking 
notice are reiterated here, the reader is referred to the notice for a 
more detailed discussion.
    As explained in EPA's final rulemaking notice approving the 
redesignation, section 164(b)(2) of the CAA provides that EPA may 
disapprove a State or Tribal redesignation request only if it finds, 
after notice and public hearing, that the redesignation does not 
conform with the applicable procedural requirements. See also 40 CFR 
52.21(g)(5). However, section 164(e) of the CAA also calls for EPA to 
consider ``the extent to which the lands involved are of sufficient 
size to allow effective air quality management or have air quality 
related values of such an area'' in the narrow context where EPA is 
resolving intergovernmental disputes relating to a PSD area 
redesignation.
    As explained in EPA's notice of final rulemaking, EPA's review of 
the Tribe's request in light of the public comments revealed no 
procedural error by the Tribe. In this notice, EPA examines the issues 
raised by the State of Arizona and the Tribe in their intergovernmental 
dispute, including the specific factors EPA is required to consider in 
resolving intergovernmental disputes relating to redesignations. For 
the reasons described below, EPA declines in these particular 
circumstances to disapprove the Tribe's decision to limit the amount of 
air quality deterioration allowed within its Reservation. Accordingly, 
in the notice of final rulemaking also published in today's Federal 
Register, EPA announces its approval of the Tribe's Class I 
redesignation request.

II. Statutory and Regulatory Background

A. Description of the PSD Program: PSD Area Classifications, 
Redesignations and Permit Requirements

    The PSD program applies to areas designated ``attainment'' or 
``unclassifiable'' under section 107 of the CAA relative to EPA's 
national ambient air quality standards (NAAQS). See section 161 of the 
CAA. Attainment areas are areas that meet the NAAQS and unclassifiable 
areas are areas that cannot be determined on the basis of available 
information as meeting or not meeting the NAAQS. See section 
107(d)(1)(A) of the CAA. These areas are referred to as ``PSD areas.''
    PSD areas are further categorized as Classes I, II or III. The 
classification of an area determines the amount or ``increment'' of air 
quality deterioration that is allowed over a baseline level. Class I 
areas have the smallest increments and therefore allow the least amount 
of air quality deterioration. Conversely, Class III areas have the 
largest air quality increments and allow the greatest degradation. 
EPA's PSD regulations establish the incremental amount of air quality 
deterioration that is allowed for particulate matter, sulfur dioxide 
and nitrogen dioxide in Class I, II and III areas. See 40 CFR 52.21(c). 
In all instances, the NAAQS represent the overarching ceiling that may 
not be exceeded in a PSD area, notwithstanding any increment.
    When Congress enacted a statutory PSD program in the 1977 
amendments to the Clean Air Act it provided that specified Federal 
lands, including certain national parks and wilderness areas, must be 
designated as Class I areas and may not be redesignated to another 
classification. See section 162(a) of the CAA. These areas are called 
mandatory Federal Class I areas. The statute also carried forward as 
Class I areas any areas redesignated as Class I under EPA's pre-1977 
PSD regulations. The Northern Cheyenne reservation was a redesignated 
Class I area affected by this provision. See Nance v. EPA, 645 F.2d 701 
(9th Cir. 1981), cert. denied, Crow Tribe of Indians v. EPA, 454 U.S. 
1081 (1981).
    In the 1977 amendments to the Clean Air Act, Congress provided that 
all other PSD areas of the country would be designated as Class II 
areas. See section 162(b) of the CAA. At the same time, Congress gave 
States and Indian Tribes broad authority to redesignate Class II areas 
as Class I. See section 164 of the CAA.
    Section 164(c) of the CAA expressly provides for PSD area 
redesignations by Federally recognized Indian Tribes:

    Lands within the exterior boundaries of reservations of 
federally recognized Indian tribes may be redesignated only by the 
appropriate Indian governing body.

The Department of the Interior periodically publishes a list of Tribes 
officially recognized by the Federal government. See 60 FR 9250 
(February 16, 1995) (identifying Yavapai-Apache Nation of the Camp 
Verde Reservation, Arizona).
    The Clean Air Act establishes a narrow role for EPA in reviewing 
State and Tribal PSD redesignations, providing for EPA disapproval of 
redesignation requests only if EPA finds that the procedural 
requirements applicable to redesignations have not been met. See 
section 164(b)(2) of the CAA. Accordingly, EPA's implementing 
regulations provide that EPA ``shall disapprove, within 90 days of 
submission, a proposed redesignation of any area only if [it] finds, 
after notice and opportunity for public hearing, that such 
redesignation does not meet the procedural requirements of [40 CFR 
52.21(g)].'' See 40 CFR 52.21(g)(5). EPA's final rulemaking notice 
approving the Tribe's redesignation request published elsewhere in 
today's Federal Register examines in detail the procedural 
requirements, EPA's review role and related issues.
    The EPA has previously approved Class I redesignation requests for 
the Northern Cheyenne Indian Reservation, the Flathead Indian 
Reservation, the Fort Peck Indian Reservation and the Spokane Indian 
Reservation. See 40 CFR 52.1382(c) and 52.2497.
    The PSD program is implemented through a preconstruction review 
permit program. The permit program applies only to major stationary 
sources located in PSD areas. In general, a major stationary source is 
a large stationary source that has the potential to emit 250 tons per 
year of a regulated air pollutant or, for a certain set of specifically 
listed source categories (e.g., iron and steel mill plants, etc.), 100 
tons per year of a regulated air pollutant. See 40 CFR 52.21(b)(1).
    In broad overview, the PSD program calls for the owners and 
operators of proposed major stationary sources locating in PSD areas to 
submit a permit application containing an analysis of their air quality 
impacts and to install ``best available control technology.'' See 
sections 165(a) and 169(3) of the CAA. The air quality analysis, 
performed using air quality modeling, must show that the proposed 
source will not cause or contribute to an exceedance of an applicable 
PSD increment, over a baseline concentration, or a NAAQS. See 40 CFR 
52.21(c) and (d). The permitting authority reviews the permit 
application and determines whether in its informed judgment, after 
notice and public hearing, the PSD permit requirements have been met.

[[Page 56452]]

B. Yavapai-Apache Tribe Request To Redesignate Its Reservation From 
Class II to Class I

    On December 17, 1993, the Yavapai-Apache Tribal Council (``the 
Tribal Council'' or ``the Tribe'') submitted to EPA a request to 
redesignate the Yavapai-Apache Reservation from Class II to Class I. 
The Tribe's submittal explains that its redesignation request is to 
protect its air quality for its citizens:

    The Yavapai-Apache Tribe desires to maintain high quality air 
standards for its citizens by redesignating Reservation lands as a 
Class I Clean Air area.

See Yavapai-Apache Tribe Air Quality Redesignation Plan, Sept. 1993 at 
p. 1.
    The Yavapai-Apache Reservation is located in the Verde Valley, in 
the State of Arizona. The Reservation is comprised of five land parcels 
which total approximately 635 acres. The Tribe's redesignation request 
includes its entire Reservation. Maps of the Reservation are included 
as appendices to the Tribe's September 1993 Air Quality Redesignation 
Plan, which is available as part of the public docket identified at the 
beginning of this notice.
    The Reservation is approximately 90 miles north of Phoenix in the 
Verde Valley of central Arizona. The Verde Valley is situated near the 
``red rock'' country of Sedona and Oak Creek Canyon. Nearby national 
forests include the Coconino National Forest, the Kaibab National 
Forest and the Prescott National Forest. The Montezuma Castle, 
Montezuma Well and Tuzigoot National Monuments are located within the 
Verde Valley in the vicinity of the Reservation. In addition, the 
Sycamore Canyon Wilderness Area, designated a mandatory Federal Class I 
area under the CAA, is located a few miles north of the Town of 
Clarkdale. See 40 CFR 81.403.
    EPA reviewed the Tribe's redesignation request and preliminarily 
determined that it met the applicable procedural requirements of 40 CFR 
52.21(g)(4). On April 18, 1994, EPA published a notice of proposed 
rulemaking in the Federal Register proposing to approve the request and 
announced a 30-day period to receive public comments. See 59 FR 18346.
    At the request of the Town of Clarkdale, located near the Clarkdale 
parcel of the Reservation, EPA held a public hearing on the proposed 
redesignation on June 22, 1994. EPA's public hearing notice indicated 
that EPA would allow until July 6, 1994 for the submittal of written 
comments. In order to facilitate public understanding about EPA's 
proposed action, EPA began the public hearing with an explanation of 
the Class I redesignation process and the PSD program.
    Following the public hearing, the Town of Clarkdale requested an 
extension of the public comment period. On July 20, 1994, EPA published 
a Federal Register notice announcing an extension of the public comment 
period, providing the public until August 22, 1994 to submit written 
comments. See 59 FR 37018-19.
    At the conclusion of the extended comment period, the Governor of 
Arizona submitted an August 22, 1994 letter to EPA requesting EPA to 
initiate dispute resolution pursuant to section 164(e) of the CAA. See 
Letter from Fife Symington, Governor of Arizona, to Carol M. Browner, 
EPA Administrator.

III. The Intergovernmental Dispute

A. Background

    In broad overview, section 164(e) of the CAA provides a mechanism 
for States and Tribes to resolve intergovernmental disagreements about 
a PSD area redesignation or proposed permit. Specifically, section 
164(e) provides in relation to PSD redesignations that if a State 
affected by the redesignation of an area by an Indian tribe or an 
Indian tribe affected by the redesignation of an area by a State 
disagrees with such redesignation, the Governor or Indian ruling body 
may request EPA to enter into negotiations with the governments 
involved to resolve the dispute. The statute calls for EPA to resolve 
the dispute if the governments involved do not reach agreement. 
Further, section 164(e) provides that in resolving disputes related to 
an area redesignation, EPA must ``consider the extent to which the 
lands involved are of sufficient size to allow effective air quality 
management or have air quality related values of such an area.'' See 
also 40 CFR 52.21(t).

B. Concerns Raised by State and Tribe

    In the discussion below, EPA has summarized the concerns that have 
been raised by the State and Tribe. Because the State was raising 
objections to the Tribe's redesignation request and because EPA has 
ultimately decided to approve the request, the summary below 
particularly focuses on the concerns raised by the State. Additional 
information about EPA meetings with State and Tribal representatives is 
contained in the public docket identified at the beginning of this 
notice.
    The Governor of Arizona's August 22, 1994 letter indicated that he 
was concerned that ``[t]he effects of the proposed redesignation are 
not apparent to all of the stakeholders, and confusion exists about the 
potential impacts of the Agency's proposed action.'' The Governor 
indicated that he was requesting EPA to initiate the dispute resolution 
process so that ``the effects of the proposed action can be better 
understood and outstanding concerns addressed for the benefit of all 
stakeholders.'' See Letter from Fife Symington, Governor of Arizona, to 
Carol M. Browner, EPA Administrator.
    In an October 6, 1994 letter EPA asked the State to elaborate the 
bases for its dispute, to help EPA facilitate resolution of the 
disagreement. See Letter from John C. Wise, EPA Deputy Regional 
Administrator, to Fife Symington, Governor of Arizona. In the letter, 
EPA also offered to meet with the State to discuss options for 
additional public outreach to address the State's concern that the 
effects of the proposed redesignation were not understood by all of the 
stakeholders.
    The Governor's December 5, 1994 reply indicated that ``[t]he 
purpose of invoking the dispute resolution is to raise the issues of 
whether the Yavapai-Apache Reservation is of sufficient size to allow 
effective air quality management or have air quality-related values.'' 
See Letter from Fife Symington, Governor of Arizona, to Felicia Marcus, 
EPA Regional Administrator. The State's reply also referred to October 
20, 1993 comments submitted by a State official during the Tribe's 
public comment period. The October 20, 1993 letter raised the following 
concerns:

    The proposed [Yavapai-Apache Tribe Air Quality Redesignation] 
Plan points out that the Reservation is comprised of five small, 
scattered land parcels totaling 635 acres in the Verde Valley, 
ranging in size from almost four to 458 acres, and located over a 
range of approximately 30 miles. Reservation lands are separated by 
relatively long distances and a variety of land ownership as well as 
development patterns.
    Considering the size and dispersed nature of the Reservation 
lands, the [Arizona] Department [of Environmental Quality] has 
concluded that redesignation of the Reservation to Class I status 
would not necessarily result in effective air quality management. 
Section 165 of the CAA prescribes the type of analysis which must be 
conducted prior to the issuance of permits for Prevention of 
Significant Deterioration in Class I areas. The Department has 
concluded that it would be neither realistic nor practicable to 
apply those requirements to all Reservation lands while 
distinguishing those lands from surrounding Class II areas, which 
would be subject to different air quality limitations.

See Letter from Edward Z. Fox, Director of the Arizona Department of 
Environmental Quality, to Theodore

[[Page 56453]]

Smith, Sr., Chairman of the Yavapai-Apache Tribe.
    The Tribe responded to the State's comments regarding the size of 
the Reservation in the December 7, 1993 letter to EPA requesting 
redesignation to Class I, as follows:

    However, no where does the writer cite a law or regulation which 
requires Class I areas to be a certain size, but rather the 
regulations merely call for the EPA Administrator to consider the 
extent to which the lands involved are of sufficient size. The U.S. 
Congress, in passing the Clean Air Act, could not have intended that 
only larger areas could receive clean air designations while smaller 
areas must suffer from a lack of clean air. This is especially true 
since Congress included in the Clean Air Act an explicit provision 
for Indian Tribes to request redesignations and since Congress knew 
that Indian Reservations would clearly vary in size.

See Letter from Theodore Smith, Sr., Chairman of the Yavapai-Apache 
Tribe, to Matt Haber, EPA Region 9.
    On January 12, 1995, EPA held a series of meetings in the Phoenix 
area with representatives of the State and Tribe to facilitate 
resolution of the dispute. EPA first met separately with 
representatives of the State and Tribe, to allow each to express its 
concerns in a non-adversarial setting, and then the two parties met 
without EPA officials. Subsequently, EPA officials held a joint meeting 
with representatives of the State and Tribe. In the joint meeting, 
which was transcribed, representatives of both parties described their 
concerns, summarized below.
    Representatives of the State expressed concern about impacts 
outside of the reservation:

    The impact of the redesignation is significant with regard to 
areas outside of the Indian territory, Indian lands. And because of 
that, it has an impact which certainly was unforeseen or 
unanticipated by the non-Indian residents of the Verde Valley.
    The redesignation will have significant impacts on future growth 
and growth trends, business trends, job opportunities in the Verde 
Valley, and in a way which may or may not impact the ability to 
manage the area for air quality values or to effectively manage the 
area for air quality purposes. It is because of this what I consider 
to be [the] extraterritorial effect of the redesignation from the 
Tribe onto state and county and local lands that we believe the 
redesignation to be inappropriate.

See January 12, 1995 EPA Dispute Resolution Proceedings, Transcript at 
p. 7 (hereafter ``Transcript'').\1\
---------------------------------------------------------------------------

    \1\ A copy of the transcript is included in the public docket 
for this action, identified at the beginning of this notice.
---------------------------------------------------------------------------

    The State also described its belief that in addressing the dispute 
EPA is required to consider ``whether the area can be effectively 
managed for air quality values, meaning the redesignated area, which is 
the Tribal lands, or whether there are air quality related values on 
the Reservation that need to be protected.'' See Trans. at ps. 7-8. The 
State indicated that it believed the answer to both questions to be no 
and therefore it is inappropriate for the Tribe unilaterally to seek 
the redesignation:

    It is our opinion that in both of those situations the answer is 
no. And because of that, we believe that the health and effect of 
the--All the residents of the Verde Valley, Tribal or non-Tribal 
need to be protected, but be protected holistically, not one side 
dictating to the other. And we believe that this redesignation is 
indeed a dictation from one side to the other.

See Trans. at p. 8.
    The State also raised concerns that the reservation consists of 
separate parcels and that in the State's view it was untenable and 
unworkable to manage air quality off of the disperse land parcels:

    It is a Reservation that is made up of five individual parcels 
spread out through the--five or six individual parcels throughout 
the Verde Valley. * * *
 * * * * *
    * * * [G]iven what I believe to be a very untenable and 
unworkable arrangement with regard to trying to manage air quality 
off of these dispersed pieces of Indian land, we think the 
designation is not appropriate.

See Trans. at ps. 7 & 9.
    The State also objected to the redesignation because the 
redesignation would not address the Tribe's concern about existing 
health and welfare problems:

    And so to the extent that there are current problems with the 
health and welfare of the Tribal members, those issues don't get 
resolved in this process anyway and they will have to be resolved 
otherwise in some other form.

See Trans. at p. 8.
    The Tribe stated that it had followed and met all of the procedural 
requirements that apply to a Tribal class I redesignation. See Trans. 
at p. 9. The Tribe indicated that it was concerned about the health and 
welfare of its members:

    While the Tribe respects the views of everyone, the Tribe holds 
the health and welfare of its members at a premium.

See Trans. at p. 13.
    Further, the Tribe suggested that the concerns about off 
reservation impacts were based on misinformation and that the 
redesignation would not preclude economic development off the 
reservation:

    Some people have said that the Class I status would affect 
automobile emission standards or affect their ability to burn wood 
in their fireplaces, others have said that the Class I status would, 
quote, affect all development in the Verde Valley. Statements like 
these have no basis in fact. Economic development can still happen.

See Trans. at p. 13.
    The Tribe recounted the process its redesignation has been subject 
to, as follows: (1) On September 11, 1993 the Tribal Council 
unanimously approved the air quality redesignation request and the 
description and analysis of its effects; (2) on October 21, 1993, the 
Tribe held a public hearing on the Reservation at which 43 people 
including 37 non-Indians voiced support for the redesignation and no 
one opposed it; (3) in December 1993 the Tribe submitted its 
redesignation request to EPA; (4) on April 18, 1994 EPA published a 
Federal Register notice proposing to approve the redesignation; (5) on 
May 18, 1994 the public comment period ended; (6) on May 20, 1994, EPA 
reopened the process and decided to hold an EPA sponsored public 
hearing in Arizona; (7) on June 22, 1994, EPA conducted a second public 
hearing on the reservation--at which 40 people provided comments, 
including at least 20 non-Indians, in support of the Tribe's request 
and five people opposed the request--and extended the public comment 
period for an additional two weeks; (8) on July 6, 1994 the extended 
public comment period concluded; (9) on July 20, 1994 EPA published 
another Federal Register notice extending the public comment period 
again; and (10) on August 22, 1994 the public comment period ended and 
that same day the Governor of Arizona sent a letter to EPA requesting 
this dispute resolution process. See Trans. at ps. 9-11.
    The Tribe expressed concern about the length of time that had 
passed in arranging a meeting with the State to explore a resolution of 
the dispute:

    For over four months now, the Tribe has been patiently waiting 
for the State to agree to even attend the dispute resolution 
proceedings.

See Trans. at p. 11.
    The Tribe expressed concern about the length of time that elapsed 
before the State provided a list of reasons for disagreeing with the 
redesignation:

    On October 6th, 1994, the EPA formally requested from the 
Governor a list or outline of his reasons for disagreeing with the 
Tribe's proposal. That request was made to produce the document 
within one week. Two months later, on December 5th, 1994, the 
Governor finally responded with a one-page letter simply stating 
that the issue was whether the Yavapai-Apache Reservation was of

[[Page 56454]]

sufficient size to allow effective air quality management [or have 
air quality related values].

See Trans. at p. 11
    After hearing the concerns expressed by the State and Tribe, EPA 
attempted to explore whether there was common ground for a resolution. 
See Trans. at p. 13. EPA adjourned the meeting when neither party 
expressed an interest in further discussion. See Trans. at p. 15. EPA 
subsequently encouraged the Tribe and the State to jointly meet again 
to further explore possible resolution of the dispute. The parties, 
however, declined.

IV. EPA's Resolution of the Intergovernmental Dispute

A. Introduction

    Because the State and Tribe were unable to reach agreement, section 
164(e) of the CAA calls for EPA to resolve the dispute. As noted, 
section 164(b)(2) of the CAA provides that EPA may disapprove a 
redesignation request submitted by a State or Tribe only if EPA finds, 
after notice and public hearing, that the redesignation does not meet 
the applicable procedural requirements. See also 40 CFR 52.21(g)(5). As 
explained below, these statutory and regulatory provisions and their 
associated legislative and administrative history indicate that so long 
as the prescribed procedures for public input and involvement are 
followed, EPA is to give States and Tribes broad latitude in deciding 
what PSD classification is appropriate for lands within their 
respective jurisdictions.
1. Statutory and Regulatory Background
    EPA's pre-1977 PSD regulations authorized EPA to disapprove an area 
redesignation request if EPA determined that the State or Tribe 
proffering the request acted arbitrarily and capriciously in 
considering certain factors. See 39 FR 42510, 42515 (Dec. 5, 1974). In 
the 1977 Clean Air Act amendments Congress adopted major changes to the 
CAA, including a PSD regime to supplant EPA's pre-1977 administrative 
program. EPA's current regulations implement section 164(b)(2) of the 
CAA, adopted with the 1977 Clean Air Act amendments, by providing for 
disapproval of a State or Tribal redesignation only if EPA finds, after 
notice and opportunity for public hearing, that the request does not 
meet the applicable procedural requirements. EPA's regulations also 
reflect the limited EPA review role by calling for EPA to make this 
determination within 90 days of submission of a redesignation request. 
See 40 CFR 52.21(g)(5).
    The legislative history associated with Congress's adoption of the 
1977 PSD program indicates that Congress deliberately intended to 
curtail EPA's authority to disapprove a redesignation request under its 
pre-1977 regulations, giving States and Tribes greater discretion in 
this area:

    The intended purpose of [the congressional PSD program] are * * 
* (3) to delete the current EPA regulations and to substitute a 
system which gives a greater role to the States[, Tribal 2,] 
and local governments and which restricts the Federal Government in 
the following ways: * * * (b) By eliminating the authority which the 
Administrator has under current EPA regulations to override a 
State's [or Tribe's] classification of an area on the ground that 
the State [or Tribe] improperly weighed energy, environment, and 
other factors.

    \2\ The statute and the legislative history make it clear that 
the references to State redesignation authority in the legislative 
history apply equally to redesignations by Tribes. See, e.g., S. 
Rep. No. 127, 95th Cong., 1st Sess. 9 (1977) reprinted in 1977 CAAA 
Legislative History, vol. 3 at 1383.
---------------------------------------------------------------------------

See H.R. Rep. No. 294, 95th Cong., 1st Sess. 7-8 (1977) reprinted in 
Senate Comm. on the Environment and Public Works, 95th Cong., 2d Sess., 
A Legislative History of the Clean Air Act Amendments of 1977, vol. 4 
at 2474-75 (1978) (hereafter ``1977 CAAA Legislative History''); see 
also 1977 CAAA Legislative History, vol. 3 at 373 (colloquy between 
Senators Garn and Muskie, during the Senate's consideration of the 
Conference report, about the types of procedural error that might 
trigger a disapproval).
    Thus, Congress adopted the statutory provisions governing EPA's 
review of State and Tribal redesignation requests to limit the scope of 
Federal review. Under the current provisions, EPA's role is to 
determine whether the requesting State or Tribe followed specific 
procedural requirements, to ensure that the local decisionmaking 
process provides ample opportunity for interested parties to express 
their views. While EPA must ensure procedural rigor, it is generally 
inappropriate for EPA to interpose superseding Federal views on the 
merits of the resulting State or Tribal decisions. See, e.g., H.R. Rep. 
No. 294 at 146-47 (1977) reprinted in 1977 CAAA Legislative History, 
vol. 4 at 2613-14. The limited Federal review applies to both State and 
Tribal redesignation requests and therefore would apply to EPA's review 
of objections to a State's redesignation request.
    In this instance, EPA examined the Yavapai-Apache Tribe's decision 
to limit the amount of air quality deterioration within its Reservation 
in light of significant comments and concluded that the redesignation 
request is the product of a decision-making process that comports with 
procedural requirements. The reader is referred to the notice approving 
the Tribe's redesignation request, also published in today's Federal 
Register. The notice contains a detailed discussion of these issues.
    At the same time that section 164(b)(2) provides that EPA may 
disapprove a redesignation request only if it determines that the 
requesting State or Tribe has committed a procedural error, section 
164(e) of the CAA calls for EPA to consider ``the extent to which the 
lands involved are of sufficient size to allow effective air quality 
management or have air quality related values of such an area'' in 
resolving intergovernmental disputes about a PSD area redesignation. 
EPA's regulations implementing section 164(e) simply repeat this 
language and do not provide additional regulatory guidance. See 40 CFR 
52.21(t).
    However, the legislative history accompanying the adoption of 
section 164(e) is pertinent, specifically indicating that the 
intergovernmental dispute resolution provision was not intended to 
encroach on Indian sovereignty. During the House of Representatives' 
consideration of the Conference Committee report, Congressman Rogers, 
Chairman of the House Subcommittee on Health and the Environment and 
one of the conferees, admonished that EPA's review of Tribal 
redesignations in resolving intergovernmental disputes should be 
exercised with utmost caution and that EPA should reverse a Tribal 
determination only under the most serious circumstances:

    The conference bill provides that both States and Indian tribes 
will continue to have the power they now have to redesignate their 
lands to a new air quality classification. In cases where another 
State may object to such classification, and when the two 
jurisdictions cannot amicably come to agreement, the Administrator 
is granted the power to review the redesignation. But it is intended 
that the Administrator's review of such determinations by tribal 
governments be exercised with utmost caution to avoid unnecessarily 
substituting his judgment for that of the tribe. The concept of 
Indian sovereignty over reservation lands is a critical one, not 
only to native Americans, but to the Government of the United 
States. A fundamental incident of that sovereignty is control over 
the use of their air resources. Some statutes, I imagine, have 
encroached upon Indian sovereignty, eroding treaty rights negotiated 
at an earlier time. This is not such a bill, for the Administrator 
should reverse the determination made by an Indian

[[Page 56455]]

governing body to reclassify its land, only under the most serious 
circumstances.

See 1977 CAAA Legislative History, vol. 3 at 326.
    Federal and Agency Tribal policies direct EPA to respect Tribal 
sovereignty. For example, on January 24, 1983, President Reagan issued 
a Federal Indian Policy, reaffirming and calling for implementation of 
President Nixon's 1970 national policy of self-determination for Indian 
Tribes as well as the ensuing 1975 Indian Self-Determination and 
Education Assistance Act. The Policy Statement issued by President 
Reagan stressed two related themes: (1) that the Federal government 
will pursue the principle of Indian ``self-government'' and (2) that it 
will work directly with Tribal governments on a ``government-to-
government'' basis. An April 29, 1994 Presidential Memorandum issued by 
President Clinton reiterated that the rights of sovereign Tribal 
governments must be fully respected. See 59 FR 22951 (May 4, 1994). 
EPA's Tribal policies implement these principles, including recognizing 
Tribal Governments as sovereign entities with primary authority and 
responsibility for the reservation populace. See November 8, 1984 ``EPA 
Policy for the Administration of Environmental Programs on Indian 
Reservations''; Policy Reaffirmed by Administrator Carol M. Browner in 
a Memorandum issued on March 14, 1994. See also Washington Department 
of Ecology, 752 F.2d 1465, 1471-72 and n.5 (9th Cir. 1985). The United 
States also has a unique fiduciary relationship with Tribes. See, e.g., 
Nance v. EPA, 645 F.2d 701, 710-11 (9th Cir.), cert. denied, Crow Tribe 
of Indians v. EPA, 454 U.S. 1081 (1981).
    Finally, a central purpose of the CAA is ``to protect and enhance 
the quality'' of air resources ``to promote the public health and 
welfare.'' See section 101(b)(1) of the CAA; see also Sierra Club v. 
Ruckleshaus, 344 F. Supp 253 (D.D.C. 1972), aff'd per curiam, 4 Env't 
Rep. Cases 1815 (D.C. Cir. 1972), aff'd by an equally divided court, 
sub nom. Fri v. Sierra Club, 412 U.S. 541 (1973). The specific purposes 
of the PSD program include: (1) protecting the public health and 
welfare from any actual or potential adverse effect from air pollution, 
notwithstanding attainment and maintenance of the NAAQS; (2) insuring 
that economic growth will occur in a manner consistent with the 
preservation of existing clean air resources; and (3) assuring that 
emissions from any source in one jurisdiction will not interfere with 
the prevention of significant deterioration in any other jurisdiction. 
See section 160(1), (3), and (4) of the CAA.
2. Overview of Dispute Resolution
    To disapprove the Tribe's Class I redesignation would wholly and 
summarily deprive the Tribe of any air quality protection on its 
Reservation that may be afforded by a more stringent classification. 
The intergovernmental dispute resolution provisions of section 164(e) 
provide a more narrowly tailored mechanism for addressing any disputes 
that actually result from the Class I redesignation in the context of a 
specific permit proceeding.
    EPA would be the permitting authority for any proposed source 
locating within the boundaries of the Indian Reservation and EPA, in 
consultation with the Tribe, would implement the new Class I increment 
within the Reservation. However, the State is the permitting authority 
for PSD sources proposing to locate in the Verde Valley outside the 
Reservation boundaries. If, in the context where the State is the 
permitting authority, the governing body of the Tribe determines that a 
proposed source locating outside the Reservation would cause or 
contribute to an excess change in air quality within the Reservation, 
section 164(e) provides that the Tribe may request that EPA enter into 
negotiations with the State and Tribe to resolve the dispute. If the 
parties do not reach agreement, EPA would be required to resolve the 
dispute.
    Thus, the Tribe may pursue specific concerns about a proposed 
source's impact on possible violations of air quality standards within 
the redesignated Class I area through EPA and the section 164(e) 
dispute resolution process. Section 164(e) similarly authorizes an 
affected State to invoke the dispute resolution process because of the 
impacts of a proposed PSD source on the State's air quality.
    The Tribe's authority to protect the non-Federal Class I area 
within its jurisdiction is notably different from the authority of 
Federal Land Managers under section 165(d) of the CAA to protect 
Federal Class I areas. Federal Land Managers must directly certify that 
a proposed source causing or contributing to a violation of the Class I 
increment in a Federal Class I area will not adversely impact the area, 
before permitting may proceed. See, e.g., section 165(d)(2)(C)(iii) of 
the CAA.
    In the specific circumstances at issue, EPA believes that fully 
examining any State or Tribal concerns raised in the context of a 
particular permit proceeding where the Tribe has actually determined 
that a proposed source will cause or contribute to a violation of the 
allowable increment within the Reservation pursuant to section 164(e) 
is a more measured alternative to summarily disapproving the Tribe's 
request for several reasons. First, a central concern raised by the 
State (as well as public commenters) is the potential off-Reservation 
impacts of the redesignation. As explained below and in the Federal 
Register notice approving the redesignation request, EPA does not 
expect that the Class I redesignation will have major off-Reservation 
impacts. Further, if there are any actual permit controversies that 
result from the Class I redesignation, at that juncture there will be 
concrete facts and particularized, focused issues that are better fit 
for resolution than more general allegations and objections. EPA is 
committed to working with the State and Tribe to resolve any 
intergovernmental permit disputes that actually arise as a result of 
the Class I redesignation.
    In addition, as explained further below, EPA will continue to 
provide public education about the potential impacts of the Class I 
redesignation. Further, EPA's technical staff do not expect that the 
additional Class I area, comprised of five separate parcels, will 
present substantial air quality management obstacles. EPA will work 
with the State to overcome any particular air quality management 
difficulties it encounters as a result of the Class I redesignation.
    In the discussion below, EPA addresses the issues and concerns 
raised by the State, including the specific factors EPA is directed to 
consider pursuant to section 164(e) of the CAA. Ultimately, EPA 
declines in these specific circumstances to disapprove the Tribe's 
decision to limit the amount of air quality deterioration within its 
Reservation. Thus, the Class I redesignation for the Reservation will 
become part of the applicable implementation plan for the Yavapai-
Apache Tribe, as provided in the final rulemaking notice published 
elsewhere in today's Federal Register.

B. Public Understanding of Redesignation Implications and Off-
Reservation Impacts

    The August 22, 1994 letter from the Governor of Arizona stated that 
the Governor was requesting EPA to initiate the dispute resolution 
process so that the effects of EPA's proposal to approve the 
redesignation can be better understood and outstanding concerns 
addressed for the benefit of all

[[Page 56456]]

stakeholders. See Letter from Fife Symington, Governor of Arizona, to 
Carol M. Browner, EPA Administrator.
    At the January 12, 1995 meeting with EPA and Tribal 
representatives, a State representative expressed concern that the 
redesignation would have impacts outside of the Reservation that were 
unanticipated by the non-Indian residents of the Verde Valley, 
including significant impacts on future growth and growth trends, 
business trends, and job opportunities in the Verde Valley. The State 
representative objected to the redesignation because of this 
``extraterritorial effect.'' See Trans. at p. 7.
    The Tribe's redesignation request has been subject to a fairly 
extensive public review process to provide an opportunity for public 
input and to facilitate public understanding. The Tribe held a public 
hearing during its development of the redesignation request. A number 
of local citizens who are not Tribal members attended the Tribe's 
public hearing and expressed support for the Class I redesignation.
    To enhance public understanding, EPA's Federal Register notice 
proposing to approve the redesignation request described the PSD 
program and the implications of a Class I redesignation. See 59 FR 
18346 (April 18, 1994). EPA held a public hearing on its proposed 
approval of the redesignation request, to be responsive to a request 
from the Town of Clarkdale, a town located near one of the Reservation 
parcels. As indicated in the public notice announcing the public 
hearing, EPA began the public hearing ``with an informational 
discussion of the Class I redesignation process and an overview of the 
air quality permitting program that is related to the Class I 
redesignation'' to help the public understand the potential 
implications of the proposed redesignation. See Red Rock News and Verde 
Independent, both May 20, 1994. EPA also extended the public comment 
period on its proposal to August 22, 1994, in response to a request 
from the Town of Clarkdale. See 59 FR 37018 (July 20, 1994).
    After receiving the Governor's August 22, 1994 letter expressing 
concerns about the stakeholder's understanding, EPA wrote to the 
Governor indicating that EPA ``would be pleased to meet with you to 
discuss options for additional outreach and dissemination of 
information.'' See Letter from John C. Wise, EPA Deputy Regional 
Administrator, to Fife Symington, Governor of Arizona (October 6, 
1994). The State's reply did not further pursue this issue. See Letter 
from Fife Symington, Governor of Arizona, to Felicia Marcus, EPA 
Regional Administrator (December 5, 1994).
    In this notice and the final rulemaking notice approving the 
Tribe's redesignation published elsewhere in today's Federal Register, 
EPA has endeavored to explain the PSD program and the potential effects 
of the Class I redesignation on areas outside the Reservation. The 
final rulemaking notice contains a detailed discussion that addresses 
concerns and misimpressions about potential economic and regulatory 
impacts, in response to questions and comments raised by the Towns of 
Camp Verde and Clarkdale and a mining company. This discussion was 
included in the final rulemaking notice to promote public 
understanding.
    In the final rulemaking notice, EPA addressed, among other 
concerns, misconceptions about the CAA requirements associated with a 
PSD Class I redesignation. As explained, a PSD Class I redesignation 
does not impose vehicle inspection and maintenance (i.e., motor vehicle 
``smog check'') in the surrounding area or establish requirements for 
controls on residential woodstoves in the surrounding area. EPA also 
indicated that it does not expect the redesignation of the non-Federal 
Class I area to adversely impact economic growth in the Verde Valley. 
For example, Tucson, which is located in southern Arizona, is bordered 
on its east and west by two separate parcels of a Federal Class I area, 
the Saguaro National Monument, Tucson has a population size and 
economic activity level that far exceeds that presently found in the 
Verde Valley. The reader is referred to that notice for further 
discussion of these issues.
    Also, as explained in part II.A, the PSD preconstruction review 
permit requirements only apply to major stationary sources in a PSD 
area. The permit requirements apply to major stationary sources 
proposing to locate in a PSD area or to major modifications at existing 
major stationary sources. Major stationary sources are large sources 
that have the potential to emit 250 tons per year of regulated air 
pollutant or, for certain listed source categories, 100 tons per year 
of regulated air pollutant. See 40 CFR 51.166(b)(1) and 52.21(b)(1). In 
general terms, a major modification is a physical or operational change 
at a major stationary source that would result in a significant net 
emissions increase of a regulated air pollutant. See 40 CFR 
51.166(b)(2) and 52.21(b)(2).
    The area in the Verde Valley outside the Reservation boundaries is 
designated a Class II area under the PSD provisions. The owner/operator 
of a proposed major stationary source or proposed major modification to 
an existing major stationary source in this area would have to 
implement ``best available control technology'' irrespective of the PSD 
classification of the Reservation. See 40 CFR 51.166(b)(12) & 
51.166(j). In addition, the owner or operator would have to demonstrate 
that emissions increases from the proposed source would not cause or 
contribute to a violation of a NAAQS or increment. See 40 CFR 
51.166(k). The Class I designation may influence this analysis because 
in addition to assessing its air quality impact relative to the Class 
II increment in effect where the source is located, the source may have 
to assess its impact relative to the Class I increment applicable on 
the Reservation. The Class I designation may also trigger PSD review 
(including best available control technology and air quality analyses) 
for a new major stationary source or major modification which would 
construct within 10 kilometers of the Class I boundary and whose 
emissions rate or net emissions increase would have an impact of 1 
microgram per cubic meter (24-hour average) on the Class I area.
    As noted, the intergovernmental dispute resolution provisions of 
section 164(e) apply to permit disputes. If the Tribal governing body 
determines that a proposed source locating outside the Reservation 
would cause or contribute to an excess change in air quality within the 
Reservation, the Tribe may request that EPA enter into negotiations 
with the State to resolve the dispute. If the parties do not reach 
agreement, EPA would be required to resolve the dispute:

    In the event a dispute occurs over any development or activity 
in an adjacent State, the Governor of the affected State [or the 
Indian governing body of an affected Tribe] may request the 
Administrator to enter into negotiations. If this is not successful, 
the Administrator shall then resolve the dispute.

See 1977 CAAA Legislative History, vol. 3 at 530.
    Thus, a Tribe or State with a non-Federal Class I area may pursue 
their concerns about a proposed source's impact on excess air quality 
deterioration within the area through the section 164(e) dispute 
resolution process. This is in contrast with the broad authority 
conferred on Federal Land Managers to protect Federal Class I areas. 
For example, Federal Land Managers must directly certify that a 
proposed source causing or contributing to a violation of a Class I 
increment in a Federal Class I area nevertheless will

[[Page 56457]]

not adversely impact the area, before a permit may be issued. See, 
e.g., section 165(d)(2)(C)(iii) of the CAA.
    There is a dilemma that is created by virtue of the 
interjurisdictional issues presented. The State has objected to the 
Tribe's redesignation because of potential off-Reservation impacts on 
economic development. However, to disapprove the Tribe's redesignation 
because it may have impacts on activity outside the Reservation would 
wholly deprive the Tribe of its decision to provide additional air 
quality protection within the Reservation and allow the State to 
effectively dictate the air quality increment appropriate for the 
Reservation and its populace.
    Congress, by the adoption of the permit dispute provisions of 
section 164(e), has established a useful and reasonable mechanism to 
address this dilemma--providing for consideration and resolution of the 
reciprocal interjurisdictional concerns in particular permit 
proceedings. In these circumstances, EPA elects to rely on this 
statutory mechanism instead of disapproving the redesignation. For the 
reasons outlined above and in the final notice approving the 
redesignation, EPA does not expect the redesignation to have major off-
Reservation impacts. Further, resolving conflicts in any permit 
controversy that actually does arise as a result of the Class I 
redesignation is more narrowly tailored than the sweeping decision of 
wholly disapproving the Tribe's request. At the same time, any 
unresolvable State and Tribal concerns actually raised as a result of 
the Class I redesignation may be considered in addressing the permit 
dispute. In any actual permit controversy the parties would also be 
resolving a dispute where the facts and issues are more concrete and 
therefore more fit for resolution than disputes involving general 
concerns and allegations. EPA is committed to working with the State 
and Tribe to resolve any intergovernmental permit disputes that 
actually arise as a result of the Class I redesignation.
    Finally, by no means does EPA view the need to advance the public's 
understanding of the Tribal Class I redesignation as ending with EPA's 
approval of the Tribe's Class I redesignation request. EPA will 
continue to help clarify any confusion or misunderstanding. Among other 
efforts, EPA will continue to make staff available to answer any public 
inquiries about the Class I designation and its potential effects. 
Public inquiries should be directed to the EPA contact identified at 
the beginning of this notice. Further, in conjunction with today's 
decision, EPA is communicating with the Governor's office to reiterate 
EPA's willingness to meet with State officials to plan and conduct 
additional public outreach efforts.

C. Sufficient Size to Allow Effective Air Quality Management.

    The State expressed concern that the redesignation of the 
Reservation would not necessarily result in effective air quality 
management. The State is concerned that the approximately 635 acre 
Reservation is comprised of five land parcels ranging in size from 
almost four to 458 acres, separated by different land uses and located 
over a large area. The State is therefore concerned that ``it would be 
neither realistic nor practicable'' to distinguish the Class I and II 
areas in applying the PSD permitting requirements. See Letter from 
Edward Z. Fox, Director of the Arizona Department of Environmental 
Quality, to Theodore Smith, Sr., Chairman of the Yavapai-Apache Tribe 
(Oct. 20, 1993). During the January 12, 1995 meeting with EPA and the 
Tribe, the State representative reiterated that he objected to ``a very 
untenable and unworkable arrangement with regard to trying to manage 
air quality off of these dispersed pieces of Indian land.'' See Trans. 
at p. 9.
    As noted, in disputes resolving area redesignations, section 164(e) 
calls for EPA to consider ``the extent to which the lands involved are 
of sufficient size to allow effective air quality management.'' See 
also 40 CFR 52.21(t). Neither the statute nor EPA's implementing 
regulations elaborate on EPA's consideration of this factor.
    The legislative history suggests that Congress intended to give 
States and Tribes broad discretion regarding the size and boundaries of 
areas redesignated. The report of the House Committee on Interstate and 
Foreign Commerce provides that if a State or Tribe ``wished to 
designate some parts class I and retain some class II areas, it may 
draw classification boundaries in any way it chooses--by entire air 
quality control regions, along county lines, or even along smaller 
subcounty lines.'' See H.R. Rep. No. 294 at 147 (1977) reprinted in 
1977 CAAA Legislative History, vol. 4 at 2614. Further, a colloquy 
between Senators Garn and Muskie during the Senate's consideration of 
the Conference report indicates that it would be permissible to 
redesignate a single mine. See 1977 CAAA Legislative History, vol. 3 at 
371.
    The State did not specify why the Class I designation for the 
Reservation parcels would create difficulty in distinguishing between 
the Class I and II areas in implementing PSD permitting requirements, 
rendering implementation of the PSD program ``untenable and 
unworkable.'' EPA is uncertain what particular underlying concerns or 
obstacles informed the State's objection.
    Over the years, air quality management tools, techniques and 
policies have become increasingly sophisticated and refined. Currently, 
air quality planning and management strategies apply to a variety of 
area sizes and configurations. For example, EPA, in coordination with 
States, has established nonattainment areas in States for the purpose 
of implementing nonattainment planning requirements for the lead NAAQS 
that encompass areas of only a few square kilometers. See, e.g., 40 CFR 
81.310 (lead nonattainment area in Florida that consists of ``[t]he 
area encompassed within a radius of (5) kilometers centered at UTM 
coordinates: 364.0 East, 3093.5 North, zone 17 (in city of Tampa)'') 
and 40 CFR 81.311 (lead nonattainment area in Georgia that consists of 
``[t]hat portion of [Muscogee] county which includes a circle with a 
radius of 2.3 kilometers with the GNB, Inc., lead smelting and battery 
production facility in the center''). Conversely, there is an ozone 
transport region under the CAA for the purpose of ozone nonattainment 
planning that spans from Maine to northern Virginia. See section 184(a) 
of the CAA.
    As noted in parts II.A and IV.B, a PSD permit applicant for a 
source proposing to locate outside the Reservation may have to 
demonstrate that the proposed source does not cause or contribute to a 
violation of the applicable increment in either the Class II area in 
which it is proposing to locate or within the Tribe's Class I area. 
Thus, applicants may need to include additional receptor points in 
their Class II area air quality modeling analyses to assess the effect 
of potential emissions on the Class I area parcels. As the permitting 
authority, the State would review the analyses to determine whether in 
the State's informed judgment the demonstration is sound.
    EPA's technical staff examined whether it would be difficult to 
perform a PSD air quality modeling analysis that assessed the impacts 
of a proposed source on the Class II area in which it was located as 
well as the five separate, disperse Class I parcels. EPA staff 
concluded that based on existing modeling tools it would be relatively 
simple and practicable for a proposed source to project its impact on 
the Class I area parcels and relatively straight-forward for the 
reviewing permitting authority to evaluate the analyses. Further, such 
Class I area analyses may

[[Page 56458]]

already be required for a source locating in the area based on the 
source's proximity to the Sycamore Canyon Wilderness Area, a Federal 
Class I area. This analysis is included in the EPA's Technical Support 
Document, which is available for public review in the docket identified 
at the beginning of this notice.
    EPA is the permitting authority for new major stationary sources 
that propose to locate within the boundaries of the Yavapai-Apache 
Reservation. EPA does not believe that its ability or the State's 
ability to effectively administer the PSD program within or outside the 
Yavapai-Apache Reservation will be significantly affected by the 
designation of the five separate parcels as Class I areas.
    EPA, States and local governments routinely manage air quality 
management situations that are of greater complexity than the 
consideration of additional Class I areas within an area that is 
exclusively subject to PSD, containing no overlapping nonattainment 
areas and associated nonattainment planning requirements.
    The State of Arizona contains a number of areas with complex air 
quality situations. Phoenix, for example, has one set of boundaries for 
ozone and carbon monoxide nonattainment planning purposes, another set 
of boundaries for particulate matter nonattainment planning purposes 
and overlapping portions of the City that are subject to PSD for other 
pollutants that are attainment or unclassifiable with respect to the 
NAAQS. See 40 CFR 81.303.
    Arizona also has a number of Federal Class I areas. See 40 CFR 
81.403. The City of Tucson contains a carbon monoxide nonattainment 
area with a specific set of boundaries. The metropolitan area is 
subject to PSD for other pollutants and is generally a Class II area. 
In addition, the City is bordered on its eastern and western boundaries 
by two separate parcels of the Saguaro National Monument, a Federal 
Class I area. Thus, in the Tucson area, it may be necessary to manage 
source impacts on the carbon monoxide nonattainment area, Class II 
increments and the two separate Class I area parcels.
    In the Verde Valley, the State manages a PSD program that 
encompasses the Sycamore Canyon Wilderness Area, which is a mandatory 
Federal Class I area. Therefore, under current circumstances, the State 
may have to ensure that a major stationary source or major modification 
proposing to locate in the area demonstrate whether emissions would 
cause or contribute to violations of the Class I and II increments.
    Thus, while the redesignation of the Yavapai-Apache Reservation as 
a non-Federal Class I area may increase the number of Class I increment 
analyses that the State would need to review, consideration of the 
consumption of Class I increment in addition to the consumption of 
Class II increment would not preclude the State from effectively 
implementing the PSD program. The PSD program frequently applies in 
areas that are comprised of disparate classifications and land uses. In 
addition, EPA will make technical staff and resources available to the 
State in the event the State encounters obstacles to effective air 
quality management as a result of the Class I redesignation.
    In the circumstances at issue, the Tribe has requested that its 
entire Reservation be redesignated as a Class I area. EPA is reluctant 
to establish rigid requirements regarding the geographic size, 
geographic orientation, or population size of a Reservation, that would 
disqualify certain Tribes as a threshold matter from exercising the 
authority conferred under section 164(c) to redesignate lands within 
Reservation boundaries.
    EPA would be inclined to a different outcome regarding the 
consideration of air quality management issues if EPA was faced with a 
specious redesignation request. For example, EPA would be disinclined 
to resolve an intergovernmental dispute by approving a Class I 
redesignation for a very small portion of a State or Reservation where 
the purpose of the request is not to provide air quality benefit for 
the requesting jurisdiction but to interpose effects and accompanying 
air quality management burdens outside of the jurisdiction.
    Here, however, the Tribe's redesignation request indicates that 
protecting the health and welfare of the Reservation population is a 
primary concern. See Yavapai-Apache Tribe Air Quality Redesignation 
Plan, Sept. 1993. Moreover, the Tribe has requested that its entire 
Reservation be redesignated as a Class I area. That historical events 
have diminished the size of the Tribe's Reservation should not 
disqualify the Tribe from obtaining additional health and welfare 
protection for its Reservation populace.

D. Air Quality Related Values

    The State also questioned whether the Reservation ``is of 
sufficient size to * * * have air quality-related values.'' See Letter 
from Fife Symington, Governor of Arizona, to Felicia Marcus, EPA 
Regional Administrator (Dec. 5, 1994). The State averred that in 
addressing a redesignation dispute under section 164(e) EPA is required 
to consider ``whether the area can be effectively managed for air 
quality values, meaning the redesignated area, which is the Tribal 
lands, or whether there are air quality related values on the 
Reservation that need to be protected.'' See Trans. at ps. 7-8. The 
State further contended that the redesignation is inappropriate because 
the answer to both questions is no. See Trans. at p. 8.
    The State's concern that the Reservation is of insufficient size to 
have air quality related values was not clearly explained. The State's 
December 5, 1994 letter raising this concern referred to a previous 
October 20, 1993 correspondence between the State and the Tribe as 
having specifically raised this issue. However, the October 20, 1993 
correspondence does not mention air quality related values. See Letter 
from Edward Z. Fox, Director Arizona Department of Environmental 
Quality, to Theodore Smith, Sr., Yavapai-Apache Tribal Chairman.
    Section 164(e) provides that in resolving disputes about area 
redesignations EPA shall consider ``the extent to which the lands 
involved are of sufficient size to allow effective air quality 
management or have air quality related values of such an area.'' The 
State appears to have combined the two criteria into one, objecting 
that the redesignation should be denied because ``air quality values'' 
cannot be effectively managed on a Reservation of this size. In part 
IV.C, EPA addressed the State's concerns about whether the Reservation 
lands are of sufficient size to allow for effective air quality 
management. In this discussion, EPA addresses the separate 
consideration of ``air quality related values'' (AQRVs), including the 
State's assertion that the Tribe's redesignation is not warranted 
because there are no AQRVs on the Reservation that need to be 
protected.
    Section 164(e) does not make identification of AQRVs that need to 
be protected a necessary condition of a redesignation. The final 
sentence of section 164(e) provides that in resolving redesignation 
disputes EPA must consider the extent to which the lands involved have 
AQRVs. A preceding sentence in section 164(e) explicates the meaning of 
this passage by calling for EPA to ``protect the air quality related 
values of the lands involved'' in resolving intergovernmental disputes 
over proposed PSD permits and redesignations. Thus, under section 
164(e) EPA is to consider the AQRVs of

[[Page 56459]]

the lands involved in a redesignation, ensuring that any AQRVs are 
adequately protected in resolving intergovernmental disputes.
    The provisions of section 164(e) do not, by contrast, require EPA 
to disapprove a decision by a State or Tribe to redesignate lands 
because a disagreeing State or Tribe believes the area does not have 
attributes that need to be protected. In addition to disputes over 
Class I redesignations, the terms of section 164(e) apply to 
intergovernmental disputes over a decision by a State or Tribe to give 
their Class II lands less air quality protection by redesignating them 
as Class III. The State's interpretation of section 164(e) that a 
redesignation is inappropriate if the area does not have AQRVs that 
need to be protected would not make sense in the context of a dispute 
over a Class III redesignation. It would be illogical for EPA to 
disapprove a redesignation to allow less air quality protection in an 
area because the requesting State or Tribe has failed to demonstrate 
that the lands involved have AQRVs that need to be protected.
    Further, section 164(b) of the CAA and EPA's implementing 
regulations governing redesignation requirements do not require that a 
Tribe or State requesting a redesignation demonstrate or establish that 
the affected lands have AQRVs. See 40 CFR 52.21(g)(4). In addition, the 
legislative history accompanying the adoption of the PSD provisions, 
discussed in part IV.A, indicates that Congress intended to give States 
and Tribes broad discretion in redesignating areas and to restrict 
EPA's authority to override or disapprove their judgment.
    AQRVs are given special protection under section 164(e) at least in 
significant part because of this local decisionmaking discretion. The 
PSD program adopted by Congress in 1977 modified EPA's pre-1977 
administrative program to provide greater local discretion in 
redesignation decisions by ``removing the Federal land manager's 
authority to control classification of Federal lands.'' See H.R. Rep. 
No. 294 at 7-8 reprinted in 1977 CAAA Legislative History, vol. 4 at 
2474-75.
    Congress specified certain mandatory Federal Class I areas that may 
not be redesignated. See section 162(a) of the CAA. Congress also 
called for the Federal Land Managers to review certain Federal Class II 
areas--national monuments, primitive areas, and national preserves--and 
recommend to the affected States any appropriate areas for 
redesignation as Class I ``where air quality related values are 
important attributes of the area.'' See section 164(d) of the CAA. 
However, as indicated, Congress ultimately left it to the judgment of 
States, not the Federal Land Managers, to decide whether to redesignate 
these Class II Federal lands as Class I areas. Thus, by calling for EPA 
to protect any identified AQRVs in resolving intergovernmental 
disputes, section 164(e) ensures AQRV protection when a State has 
accepted the Federal Land Manager's recommendation under section 164(d) 
to request a Class I redesignation for Class II Federal lands where 
AQRVs are important attributes. See generally H.R. Rep. No. 294 at 148-
49 reprinted in 1977 CAAA Legislative History, vol. 4 at 2615-16; see 
also section 160(2) of the CAA.
    The term ``air quality related values'' is not defined in the CAA. 
The term ``air quality related values (including visibility)'' is used 
in conjunction with Federal Class I areas. See generally section 165(d) 
of the CAA. For Federal lands, the legislative history indicates that 
the term AQRVs includes: ``the fundamental purposes for which such 
lands have been established and preserved by Congress and the 
responsible Federal agency. * * * [U]nder the 1916 Organic Act to 
establish the National Park Service * * * the purpose of such national 
park lands `is to conserve the scenery and the natural and historic 
objects and the wildlife therein and to provide for the enjoyment of 
the same in such manner and by such means as will leave them unimpaired 
for the enjoyment of future generations.''' See S. Rep. No. 197, 95th 
Cong., 1st Sess. at 36 reprinted in 1977 CAAA Legislative History, vol. 
3 at 1410. Federal Land Managers have identified, for example, values 
such as visibility, sensitive streams and watershed, and park 
vegetation as AQRVs for particular resources and impaired visibility, 
stream acidification and foliar injury as potential adverse impacts. 
See, e.g., 55 FR 38403 (Sept. 18, 1990).
    The Tribe's redesignation request addresses the Tribe's desire to 
ensure a clean and safe environment by maintaining high air quality 
standards for its citizens including, in particular, the elderly and 
young, to ensure that air quality within the Reservation is not 
adversely impacted by harmful industrial development, and to ensure 
that its resources are protected for future generations. The Tribe's 
request recounts the history of the Reservation and the special 
religious and cultural value it holds for Tribal members. The submittal 
describes the importance of the Class I redesignation in protecting 
vegetation, wildlife and water resources, and visual air quality, and 
expresses the Tribe's concern about adverse impacts on these resources. 
The Tribe's submittal describes the unique natural resources in the 
area where the Reservation is located, including: the Montezuma Castle, 
Montezuma Well and Tuzigoot National Monuments; the Prescott, Coconino 
and Kaibab National Forests; the Sycamore Canyon Wilderness Area, which 
is a Federal Class I area; and the ``red rock'' country near Sedona. 
See Yavapai-Apache Tribe Air Quality Redesignation Plan, Sept. 1993.
    There may be a number of reasons for a State or Tribe to propose 
redesignation of its lands as Class I, including its judgment that 
decreasing the amount of allowable air quality deterioration is in the 
interests of the health and welfare of its community, independent of 
AQRVs. The purposes of the PSD program are broad and include: 
protection of health and welfare from actual or potential adverse 
effects, notwithstanding attainment of the national ambient air quality 
standards; and assuring that economic growth will occur in a manner 
consistent with the preservation of existing clean air resources. See 
section 160 (1) and (3) of the CAA.
    The Yavapai-Apache Tribe has offered many reasons why it is 
requesting a Class I redesignation. The Clean Air Act generally calls 
for EPA to defer to such judgments. EPA declines to disapprove the 
Tribe's redesignation request because of the State's concern that the 
Tribe has not identified AQRVs that need to be protected.

E. Redesignation Does Not Resolve Current Air Quality Problems

    The State's objection to the proposed redesignation because it does 
not address the Tribe's concern about ``current problems with the 
health and welfare of Tribal members'' and because such concerns ``will 
have to be resolved otherwise in some other form'' is problematic. See 
Trans. at p. 8.
    If no steps were taken to protect current air quality until all 
pre-existing air quality problems were addressed, new air quality 
problems would be created in the interim that in turn require remedial 
action. This would be at odds with the purpose of the CAA to ``protect 
and enhance'' the quality of air resources. See section 101(b)(1). 
Further, the PSD program is fundamentally premised upon the efficacy 
of, at least, preventing existing air quality from significantly 
deteriorating.
    Moreover, as noted, Federal law and policy provide that the Tribe 
as a sovereign government may decide whether requesting a Class I

[[Page 56460]]

redesignation for its Reservation is in the interests of Tribal health 
and welfare. The Tribe summarized its decision to request a Class I 
designation as follows:

    All people need a clean environment. The Yavapai-Apache Tribe 
desires to maintain high quality air standards for its citizens by 
redesignating Reservation lands as a Class I Clean Air area.
    * * * The Clean Air Act specifically provides a mechanism for 
any Indian tribe to promote and maintain clean air by redesignating 
reservation lands as Class I areas. Considering the uncertainty of 
``safe levels'' of air pollution, the Yavapai-Apache Tribe seeks 
additional protection by redesignating its lands to Class I air 
quality under the Clean Air Act.
    Presently, Reservation lands are designated Class II allowing 
for increases in industrial pollution. A redesignation to Class I 
would reduce the permissible levels of pollution to ensure a clean 
and safe environment.

See Yavapai-Apache Tribe Air Quality Redesignation Plan, September 1993 
at p. 1. EPA declines to disapprove the Tribe's decision to provide 
prospective air quality protection because of the State's concern that 
the redesignation will not remedy extant air quality problems.

F. Additional Concern Regarding Potential Future Redesignations

    Governor Symington expressed the following additional concern in a 
letter to U.S. EPA Administrator Browner dated October 3, 1995:

    * * *  approval of this redesignation may have effects far 
beyond the Verde Valley area. Twenty-one reservations are located, 
in whole or in part, in Arizona. A proliferation of redesignation 
requests and approvals for other reservations could have far-
reaching consequences for the future of the State and its economic 
well-being.

See Letter from Governor Fife Symington to Administrator Carol Browner. 
In separate communication, Governor Symington posed whether Tribes 
whose reservations were located in proximity to large urban areas may 
redesignate to Class I. As discussed at length in both this notice and 
the accompanying notice granting the Yavapai-Apache Tribe's request, 
the Clean Air Act provides that federally recognized tribes may 
redesignate their reservation lands as they deem appropriate. Each such 
request must be individually evaluated as set forth in Section 164 of 
the Act and the implementing regulations at 40 CFR 52.21(g). EPA's 
action today redesignating the Yavapai-Apache Reservation is based on 
consideration of the specific factors relevant to this redesignation 
request. EPA does not believe that speculation concerning potential 
future requests for redesignation by other tribes is an appropriate 
consideration in granting or denying the request at hand.
    Similarly, it would be difficult to speculate at this time about 
the general impact, economic or otherwise, if such a request for 
redesignation in proximity to an urban area were approved. We have 
explained in the Federal Register notice for the Yavapai-Apache 
Redesignation that a Class I designation creates requirements only for 
the construction or modification of major sources of air pollution. 
Smaller sources of air pollution would not be affected by a Class I 
designation, and permit applications for ``major sources'' are 
generally infrequent. On the other hand, the Class I area would be 
afforded greater air quality protections if one or more major sources 
were proposed for construction. Specifically, the Class I designation 
establishes a more stringent air quality standard that allows less 
emissions growth than in surrounding Class II areas over a certain 
baseline. A Class I designation would generally only affect those 
sources emitting pollutants for which an urban metropolitan area is 
designated attainment. In contrast, emissions of those pollutants for 
which the urban area is designated nonattainment would be mitigated by 
emissions offsets and more stringent control technology requirements. 
In addition, Tribes whose requests for redesignation have been approved 
would be able to invoke the dispute resolution provisions in section 
164(e) to contest the permitting of any major source emitting criteria 
pollutants-- whether under PSD or nonattainment new source review--with 
visibility impairment or other air quality related values serving as a 
basis for the dispute.
    With respect to the review of PSD permit applications for major 
sources proposing to locate near tribal class I areas, EPA will publish 
shortly an advance notice of proposed rulemaking (ANPR) that will 
address issues related to non-federal class I areas. The decision to 
develop an ANPR follows a June 4, 1996, meeting among Mary Nichols, 
EPA's Assistant Administrator for Air and Radiation and representatives 
for the state environmental agencies of Michigan and Wisconsin. The 
state representatives expressed concern about the lack of specific 
procedures governing the review of PSD permit applications for major 
sources locating on state lands near tribal class I areas. In that 
meeting, Assistant Administrator Nichols agreed that rules specifically 
addressing the PSD permit review process for sources potentially 
affecting non-federal class I areas might be useful in clarifying the 
roles and responsibilities of the affected parties. The ANPR is 
intended to raise specific issues and solicit input from all interested 
parties. See Letters from Carol M. Browner, EPA Administrator, to 
Michigan Governor John Engler and Wisconsin Governor Tommy G. Thompson, 
both July 16, 1996.
    While it is likely that issues and disputes will arise from time to 
time regarding impacts on reservations which have been redesignated to 
Class I, we do not expect such disputes to be frequent or 
insurmountable. As we have noted, there are many Class I areas located 
adjacent to communities that are Class II areas. We have mentioned 
Tucson's proximity to the Saguaro National Monument, a Federal Class I 
area. Economic growth is not inconsistent with the management of the 
more stringent air quality standard of the Class I area, as economic 
development in Tucson has not been hindered by its close proximity to 
the Saguaro National Monument Class I area. In addition, there are 
seven Class I areas either within or adjacent to the Los Angeles 
metropolitan area.

V. Administrative Review

A. Executive Order 12866

    The Office of Management and Budget has exempted this action from 
centralized regulatory review pursuant to section 6 of Executive Order 
12866.

B. Regulatory Flexibility Act

    Under the Regulatory Flexibility Act, 5 U.S.C. Section 600 et seq., 
EPA must prepare a regulatory flexibility analysis assessing the impact 
of any proposed or final rule on small entities. See 5 U.S.C. sections 
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. The decision announced in this notice is not a rule within the 
meaning of the Regulatory Flexibility Act. In any event, EPA's 
resolution of the intergovernmental dispute and the final rulemaking 
action to approve the Tribe's PSD redesignation request, published 
elsewhere in today's Federal Register, do not impose new requirements 
on small entities, may only potentially have an impact on major 
stationary sources, as defined by 40 CFR 52.21, and therefore will not 
have a significant economic impact on a substantial number of small 
entities.

[[Page 56461]]

C. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L. 
104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local, and tribal governments, in 
the aggregate, or to the private sector, of $100 million or more in any 
one year. Before promulgating an EPA rule for which a written statement 
is needed, section 205 of the UMRA generally requires EPA to identify 
and consider a reasonable number of regulatory alternatives and adopt 
the least costly, most cost-effective or least burdensome alternative 
that achieves the objectives of the rule and is consistent with 
statutory requirements. Section 205 allows EPA to adopt an alternative 
other than the least costly, most cost-effective or least burdensome 
alternative if EPA publishes with the final rule an explanation why 
that alternative was not adopted.
    The decision announced in this notice is not a regulation or rule 
within the meaning of the UMRA. In any event, EPA's resolution of the 
intergovernmental dispute announced in this notice and the final 
rulemaking action to approve the Tribe's PSD redesignation request, 
published elsewhere in today's Federal Register, are not subject to the 
requirements of sections 202 and 205 of the UMRA because they do not 
contain Federal mandates that may result in expenditures of $100 
million or more for State, local, and Tribal governments, in the 
aggregate, or the private sector in any one year.

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

List of Subjects in 40 CFR Part 52

    Air pollution control, Carbon monoxide, Hydrocarbons, 
Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate 
matter, Reporting and recordkeeping requirements, Sulfur oxides.

    Dated: October 2, 1996.
Felicia Marcus,
Regional Administrator.
[FR Doc. 96-27848 Filed 10-31-96; 8:45 am]
BILLING CODE 6560-50-P