[Federal Register Volume 61, Number 218 (Friday, November 8, 1996)]
[Rules and Regulations]
[Pages 57775-57780]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-28594]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 078-2-0016; FRL-5642-8]


Approval and Promulgation of Implementation Plans; California 
State Implementation Plan Revision, South Coast Air Quality Management 
District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing a limited approval and a limited disapproval 
of revisions to the California State Implementation Plan (SIP) proposed 
in the Federal Register on February 28, 1995. The revisions concern 
rules from the South Coast Air Quality Management District (SCAQMD). 
This final action will incorporate these rules into the federally 
approved SIP. The intended effect of approving these rules is to 
regulate emissions of oxides of nitrogen (NOX) and oxides of 
sulfur (SOX) in accordance with the requirements of the Clean Air 
Act, as amended in 1990 (CAA or the Act). The rules concern the control 
of NOX emissions from facilities in the SCAQMD with four or more 
tons of NOX or SOX emissions per year from permitted 
equipment. The subject facilities, in order to meet annual emission 
reduction requirements, will participate in an economic incentive 
program (EIP) in order to reduce emissions at a significantly lower 
cost. This document also serves to respond to comments received from 
the public on the February 28, 1995 notice of proposed rulemaking 
(NPRM).

EFFECTIVE DATE: This action is effective on December 9, 1996.

ADDRESSES: Copies of the rule revisions and EPA's evaluation report for 
each rule are available for public inspection at EPA's Region 9 office 
during normal business hours. Copies of the submitted rule revisions 
are available for inspection at the following locations:


[[Page 57776]]


Rulemaking Section (A-5-3), Air and Toxics Division, U.S. Environmental 
Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 
94105.
Environmental Protection Agency, Air Docket (6102), 401 ``M'' Street, 
S.W., Washington, D.C. 20460.
California Air Resources Board, Stationary Source Division, Rule 
Evaluation Section, 2020 ``L'' Street, Sacramento, CA 92123-1095.
South Coast Air Quality Management District, 21865 E. Copley Drive, 
Diamond Bar, CA 91765-4182.

FOR FURTHER INFORMATION CONTACT: Kenneth Israels, Rulemaking Section, 
(A-5-3), Air and Toxics Division, U.S. Environmental Protection Agency, 
Region IX, 75 Hawthorne Street, San Francisco, CA 94105, Telephone: 
(415) 744-1194.

SUPPLEMENTARY INFORMATION:

Background

    On February 28, 1995 in 60 FR 10819, EPA proposed granting limited 
approval and limited disapproval of the following rules into the 
California SIP: South Coast Air Quality Management District, Regulation 
XX, NOX and SOX Regional Clean Air Incentives Market 
(RECLAIM). Regulation XX was adopted by SCAQMD on October 13, 1993. 
This rule was submitted by the California Air Resources Board to EPA on 
March 21, 1994. These rules were adopted as part of South Coast Air 
Quality Management District's efforts to achieve the National Ambient 
Air Quality Standards (NAAQS) for ozone and in response to section 
182(f) NOX reasonably available control technology (RACT) 
requirements of the Clean Air Act (CAA). A detailed discussion of the 
background for each of the above rules and nonattainment areas is 
provided in the NPRM cited above.
    In the NPRM, EPA proposed conditionally approving RECLAIM provided 
that the SCAQMD submitted an enforceable commitment within one year of 
publication of the NPRM to correct the deficiencies cited. EPA did not 
receive an enforceable commitment from SCAQMD within one year of the 
publication of the NPRM, therefore EPA is finalizing, as proposed in 
the alternative in the NPRM, a simultaneous limited approval and 
limited disapproval under CAA provisions regarding plan submissions and 
requirements for nonattainment areas. As a result of this limited 
disapproval EPA will be required to impose highway funding or emission 
offset sanctions under the CAA unless the State submits and EPA 
approves corrections to the identified deficiencies within 18 months of 
the effective date of this disapproval. Moreover, EPA will be required 
to promulgate a Federal implementation plan (FIP) unless the 
deficiencies are corrected within 24 months of the effective date of 
this disapproval.
    On August 28, 1996 the State of California submitted revisions to 
EPA which EPA believes address all of the deficiencies cited in the 
February 28, 1995 NPRM. Therefore, EPA is proposing elsewhere in the 
Federal Register today to approve into the SIP the August 28, 1996 
submittal which addresses the cited deficiencies. The final approval of 
the August 28, 1996 submittal will supersede the limited disapproval of 
the March 21, 1994 submittal and remove the possibility of sanctions 
associated with this limited approval/limited disapproval noted above.
    EPA has evaluated the above rule for consistency with the 
requirements of the CAA and EPA regulations and EPA's interpretation of 
these requirements as expressed in the various EPA policy guidance 
documents referenced in the NPRM. EPA is finalizing the limited 
approval of these rules in order to strengthen the SIP and finalizing 
the limited disapproval requiring the correction of the remaining 
deficiencies. The NOX and SOX RECLAIM program contains the 
following deficiencies:
     the program allows the use of variances to avoid 
compliance with program requirements; this results in the program 
failing to meet the requirements of section 110(i) of the Act,
     the program does not meet certain new source review (NSR) 
requirements of the Act and Part D,
     the program allows the use of Executive Officer discretion 
in the implementation of certain emissions monitoring provisions; this 
results in the program failing to meet the requirements of section 
110(i) of the Act,
     the program's references to other programs, notably those 
involving the use of mobile source emission reduction credits (MERCs) 
is inconsistent with section 110(i) of the Act, and
     the submittal does not provide all of the necessary 
demonstrations to ensure that the requirements of EPA's EIP rules are 
being met.
    A detailed discussion of the rule provisions and evaluations has 
been provided in the NPRM and in the technical support document (TSD) 
available at EPA's Region IX office (TSD dated February, 1995). On 
August 28, 1996 the State of California submitted revisions to EPA 
which EPA believes address all of the deficiencies cited in the 
February 28, 1995 NPRM. Therefore, EPA is proposing elsewhere in the 
Federal Register today to approve into the SIP the August 28, 1996 
submittal which addresses the cited deficiencies.

Response to Public Comments

    A 30-day public comment period was provided in 60 FR 10819. EPA 
received comments on a wide range of issues including the approval of 
the overall program. Four industry commentors supported full approval 
of the program, one environmental group opposed approval of the 
program, and one regulatory agency supported resolving program issues 
identified by EPA in the conditional approval and approving the 
program. EPA agrees with the commentors supporting approval of a 
federally enforceable RECLAIM program and is optimistic that such a 
program will lead to emission reductions necessary to achieve 
attainment of the ozone national ambient air quality standard (NAAQS) 
in the SCAQMD.
    EPA also received specific comments from the public on the 
following issues: (1) program definitions, (2) NSR, (3) the use of 
variances in the program, (4) the use of MERCs in the program, (5) EIP 
rule demonstrations, (6) monitoring requirements, (7) environmental 
justice, (8) planning requirements, (9) public participation, (10) the 
program's penalty structure, and (11) RACT. Following are EPA's 
responses to these more specific comments:

1. Program Definitions

    Comments: Two industry groups disagreed with EPA's request to 
modify or add definitions to RECLAIM to ensure that federal 
requirements relating primarily to NSR were being met.
    Response: EPA believes that the definitions cited are necessary to 
demonstrate that the fundamental requirements of NSR programs are being 
met. For example, the construction-related definitions cited as 
deficiencies in the NPRM are necessary to ensure that the statutory 
offset provisions found in Section 182 of the CAA are being met. 
Throughout the TSD, EPA cited the appropriate federal requirements to 
ensure that the rationale for requiring modification or addition of key 
definitions was clear.
    With respect to specific comments made regarding construction 
definitions, EPA believes that there is a fundamental need to address 
such definitions, via rule language or legal interpretation, in 
programs like RECLAIM which implement NSR requirements via trading 
mechanisms.

[[Page 57777]]

2. NSR Issues

    a. Offset Ratios and Tracking System:
    Comments: One environmental group commented that the NSR offset 
ratio for South Coast sources should be greater than 1:1. Two industry 
commentors commented that a tracking system is not necessary to ensure 
that the statutory offset ratio is being met by sources in South Coast 
in the aggregate.
    Response: EPA believes that the statutory offset ratios (1.5:1 or 
1.2:1 if all major sources apply best available control technology--
BACT) in an extreme ozone nonattainment area should be maintained. EPA 
believes that this requirement can be met on an aggregate basis. [See 
discussion in EIP preamble at 59 FR 16696, dated April 7, 1994] In 
order to meet this requirement, as EPA noted in its NPRM, a tracking 
system is necessary to demonstrate that the statutory offset ratios are 
met. The purpose of the tracking system would be to demonstrate that a 
balance of reductions between non-major and major sources both in 
RECLAIM and outside of RECLAIM achieved the statutory NSR offset ratio 
(considering factors such as the RECLAIM declining mass emissions cap).
    b. NSR Analysis on a Trade-by-trade Basis:
    Comment: One industry commentor stated that EPA's proposed approval 
would lead to a NSR analysis on a trade-by-trade basis in RECLAIM.
    Response: EPA's understanding of RECLAIM NSR is that NSR 
requirements do not, with respect to the need to purchase offsetting 
emissions, need to be examined on a trade-by-trade basis. The NSR 
offset requirements would only be triggered if a particular facility 
exceeded its initial RECLAIM allocation plus nontradeable emission 
allocation. However, the NSR lowest achievable emission rate (LAER) 
requirement is one which needs to be examined on a trade-by-trade basis 
when such trades increase emissions at an emissions unit. In these 
instances, while NSR offsets may not be necessary, LAER must still be 
applied to the emissions unit.
    c. Incorporation of the Requirements of 40 CFR 51.164 into RECLAIM:
    Comment: One industry commentor did not believe that the Stack 
height procedures found in 40 CFR 51.164 needed to be incorporated into 
the RECLAIM rules.
    Response: NSR regulations must state that sources may not affect 
their emissions by erecting a stack that does not meet the Stack height 
requirements found in Section 123 of the CAA and in 40 CFR 51.164. EPA 
disagrees with the commentor.

3. The Use of Variances in the RECLAIM Program

    Comment: Two industry commentors want the use of variances from 
program requirements in the program while one environmental group wants 
the use of variances out of the program.
    Response: Section 110(i) of the Clean Air Act prohibits the use of 
variances to change the federally-enforceable SIP. EPA agrees with the 
environmental group commentor in that the use of such mechanisms in a 
market system may be detrimental to the system's achievement of clean 
air goals.

4. The Use of Mobile Source Emission Reduction Credits (MERCs) in the 
Program

    Comment: One industry group does not believe MERC rules need to be 
SIP approved prior to being used in RECLAIM while one environmental 
group believes that MERCs can not be used in RECLAIM regardless of SIP 
approval.
    Response: EPA believes that MERCs can be used in the RECLAIM 
program as a means of compliance with the RECLAIM mass emissions cap. 
However, the use of MERCs generated using rules which have not been SIP 
approved raises an issue of whether such uses are consistent with the 
federally-enforceable SIP. EPA believes that if the underlying rules 
used to generate MERCs for RECLAIM compliance purposes have not been 
SIP-approved, the credits are not federally-enforceable. EPA believes 
that the District and EPA can work out a satisfactory solution on this 
issue which provides facilities using such unapproved MERCs notice that 
such credits are not federally enforceable (until the particular MERC-
generating rule(s) are approved into the SIP) and consequently users of 
such credits may be subject to federal enforcement action.

5. EIP Rule Demonstrations

    Comment: One industry group does not believe that the environmental 
benefit demonstration found at 40 CFR 51.493(e)(1)(ii) is needed as 
other program elements address this issue while one environmental group 
does not believe that the program as a whole meets the EIP 
requirements.
    Response: With respect to the environmental benefit demonstration, 
the package EPA proposed for action on February 28, 1995 did not 
address this issue and therefore did not meet the EIP requirements. 
However, EPA believes that, given the RECLAIM declining caps' rate of 
reduction goes beyond existing RACT requirements, the environmental 
benefit provision in the EIP can be met as a result of the program's 
design.
    With respect to the program as a whole meeting the EIP 
demonstration requirements, EPA agrees that some of the requirements 
were not met and therefore cited these demonstrations in the NPRM and 
February, 1995 TSD as deficiencies.

6. Monitoring Requirements

    Comment: One industry commentor did not support using the SIP-
approval mechanism to incorporate changes to RECLAIM monitoring 
requirements into the federally-approved SIP.
    Response: EPA intends to use the SIP-approval mechanism to 
incorporate changes to monitoring requirements in RECLAIM into the 
federally-enforceable SIP. In the future, if a generic set of criteria 
to determine the approvability of monitoring changes is developed, EPA 
may reconsider its position, provided such criteria are SIP-approved. 
Section 110(i) of the Clean Air Act does not allow such changes to 
become federally-enforceable without a SIP revision.

7. Environmental Justice

    Comment: One environmental group does not believe that EPA 
considered RECLAIM's environmental justice impacts in its proposed 
action.
    Response: RECLAIM is a program designed to reduce ozone precursor 
emissions from stationary sources. As such, it is designed to address 
the area-wide ozone issue in the Los Angeles area, not the localized 
toxics impacts issue. As the SCAQMD develops regulations which regulate 
toxic emissions, EPA will review those regulations under section 112 of 
the Clean Air Act. With respect to the concern that RECLAIM may 
incidentally increase toxic emissions as a result of trading, the 
RECLAIM program, as noted in the NPRM, meets the requirements of 
Section 182(e)(3) of the CAA which requires clean fuels or advanced 
controls for boilers which emit greater than 25 tons per year of 
NOX (see the February, 1995 TSD). The majority of emissions which 
can potentially be traded in RECLAIM are covered by this clean fuels/
advanced controls requirement (see RECLAIM supporting documentation). 
As a result, the bulk of RECLAIM emissions (including toxic emissions) 
will be controlled to a high degree through compliance with Section 
182(e)(3) of the CAA, which can not be met through trading. Further, 
SCAQMD examined the toxic impacts of RECLAIM (see pages EX-14 and 15 
and EX-29 and 5-31 of Volume 1 of the RECLAIM documentation); this 
analysis

[[Page 57778]]

shows that there will be no increase in toxic air pollutants as a 
result of the trading of NOX and SOX under the RECLAIM 
program. EPA has reviewed the SCAQMD analysis and agrees with its 
conclusions that there will be little, if any, impact on local 
communities as a result of trading in RECLAIM as most of the products 
of incomplete combustion (combustion is the primary source of NOX 
emissions in RECLAIM) are not classified as hazardous air pollutants 
(HAPs). For those incomplete combustion products which are classified 
as HAPs, their impact on local communities will be addressed in the 
SCAQMD's and EPA's toxic control strategies (see Section 112 of the 
CAA). EPA believes that, as a result of each of these factors (Section 
182(e)(3) of the CAA controls and State, local, and federal measures to 
control toxics) in the program design, EPA's approval of RECLAIM is 
consistent with the goals set out in Executive Order 12898, which 
provides the framework for federal agencies to address environmental 
justice issues.

8. Planning Requirements

    a. RECLAIM and the 1991 Air Quality Management Plan (AQMP) and 
reasonable further progress (RFP):
    Comment: One environmental group believes that the program is less 
effective than the 1991 AQMP and that it will not show RFP.
    Response: EPA's decision to approve NOX/SOX RECLAIM is 
based on the District's lack of federally approved rules regulating 
these source categories, not on the 1991 AQMP which had, at the time of 
submittal, not been approved. The RECLAIM program, from this 
perspective, strengthens the federally enforceable SIP and is more 
effective than measures in an unapproved attainment plan. Further, the 
test for the effectiveness of an attainment plan under Section 
182(c)(2) does not rely on a single measure to demonstrate attainment, 
but relies on all of the measures in the plan used to achieve 
attainment. As with the comment regarding RECLAIM and the 1991 AQMP, 
the RECLAIM program alone does not have to demonstrate compliance with 
the CAA's RFP requirements. In Section 182(c)(2)(B) of the CAA, RFP is 
defined over the period of 1990 to 1996 in terms of VOC emission 
reductions; after 1996, NOX emission reductions may be substituted 
for VOC emission reductions. EPA disagrees with the commentor that 
RECLAIM does not meet RFP requirements as individual measures do not 
shoulder the burden of meeting requirements taken on by an entire 
progress showing.
    b. Baselines:
    Comment: One environmental group believes that the baselines have 
been inflated causing the program to fail to meet planning 
requirements.
    Response: EPA recognizes the need for EIPs to address economic 
inequities in the design of such programs. In the case of RECLAIM, as 
the commentor has pointed out, baselines for some facilities may have 
been established in recognition of such inequities. Provided that 
increases in emissions resulting from the recognition of these 
inequities are addressed, then there should be no failure of the SCAQMD 
to meet the CAA planning requirements. As noted elsewhere in this 
notice, individual measures in an attainment plan need not meet 
specific CAA planning requirements as long as the plan as a whole 
demonstrates attainment.

9. Public Participation

    Comment: One environmental group believes that the program does not 
provide enough public participation.
    Response: EPA believes that RECLAIM afforded the public ample 
opportunity to comment during the design of the program and affords the 
public ample opportunity to participate during the implementation of 
the program via the permitting and auditing processes. The development 
of RECLAIM used a public process almost unprecedented in the history of 
air quality regulatory development. Over a three year period a steering 
committee, an advisory committee, and a myriad of workgroups dealing 
with such issues as socio-economic impacts, allocations (baselines), 
and energy impacts met on a regular basis. RECLAIM was adopted by the 
SCAQMD Governing Board after a two-session hearing, during which issues 
such as the baseline-setting procedures, environmental justice, NSR, 
public participation, and enforcement were discussed. In addition, the 
RECLAIM permitting process conforms to the CAA's NSR and Title V 
permitting requirements for public review.

10. Penalty Structure

    Comment: One environmental group believes that the penalty 
structure is too lenient.
    Response: In crafting the RECLAIM emission violation penalty 
structure, EPA, the SCAQMD, and members of the RECLAIM Steering 
Committee conducted a thorough analysis of what penalties for such 
violations are appropriate. In this analysis, the group sought to 
define appropriate penalties by examining the level of deterrence 
necessary to discourage noncompliance with applicable emission limits. 
EPA examined the history of enforcement of a variety of federal CAA 
programs to discover what level of deterrence has been historically 
effective. The group also linked the market mechanism to the amount of 
statutory maximum penalties in the RECLAIM program. EPA believes that a 
penalty structure which is based on the mass exceedance of the emission 
cap like the one in RECLAIM is suitable for this particular type of 
program. The results of this analysis led to the RECLAIM penalty 
scheme.

11. RACT

    a. RACT aggregation:
    Comment: One environmental group believes that RACT aggregation 
violates the Act.
    Response: EPA disagrees with the commentor. This issue was 
thoroughly explored in the final EIP rule. In the preamble to the final 
EIP rule EPA states:

    ``An EIP may allow sources subject to the RACT requirement to 
attain RACT-level emissions reductions in the aggregate, * * *'' 
[See 59 FR 16695, dated April 7, 1994]

    Further, the EIP preamble states:

    ``Under the EPA's interpretation, the application of the 
requirement to impose RACT upon ``existing sources'' meant that RACT 
applied in the aggregate, as opposed to source by source. This 
interpretation, which is reflected in the Emissions Trading Policy 
Statement [51 FR 43814 (December 4, 1986), the ``Bubble Policy''], 
was upheld in NRDC v. EPA, 33 ERC 1657 (4th Cir. 1991), an 
unpublished decision.'' [See 59 FR 16703, dated April 7, 1994]

    Finally, the final EIP rule preamble states:

    ``Under the 1990 Act, the EPA continues to take the position 
established under the 1977 Act that RACT applies in the aggregate 
because the RACT requirement of section 172(c)(1) of the Act is 
phrased identically to the RACT requirement of the 1977 Act (vis., 
``existing sources''). EPA does not read section 182(b)(2) to 
indicate to the contrary. Rather, the cross-reference to section 
172(c)(1) contained in section 182(b)(2) indicates that RACT is to 
be interpreted in the same manner under section 182(b)(2) as under 
section 172(c)(1).'' [See 59 FR 16703-16704, dated April 7, 1994]

    b. Long term averaging to meet RACT:
    Comment: One environmental group believes that long term averaging 
to meet RACT violates the Act.
    Response: EPA disagrees with the commentor. In the preamble to the 
final EIP rule EPA states:
    ``The final rules retain the proposed allowance for long-term 
emissions

[[Page 57779]]

averaging, as well as requirements that States make statistical 
showings that any such emissions averaging is consistent with 
applicable RACT, RFP, and short-term NAAQS. These statistical showings 
are necessary to show equivalency to, or noninterference with, each of 
these statutory requirements, although as a practical matter the same 
showing may suffice to assure consistency with more than one of the 
requirements. The statistical showings should take into account the 
extent to which emissions variations from an individual source or from 
all sources are random or systematic and, thus, the extent to which the 
variations can be considered to be independent. The showings must 
demonstrate that the pattern of emissions resulting from relaxed 
averaging periods would approximate the pattern of emissions that would 
occur without relaxed averaging periods to an extent sufficient to 
reasonably conclude that the relaxed averaging periods would not 
interfere with the statutory requirements.'' [See 59 FR 16706, dated 
April 7, 1994]

EPA Action

    EPA is finalizing a limited approval and a limited disapproval of 
the above-referenced rule. The limited approval of these rules is being 
finalized under section 110(k)(3) in light of EPA's authority pursuant 
to section 301(a) to adopt regulations necessary to further air quality 
by strengthening the SIP. The approval is limited in the sense that the 
rules strengthen the SIP. However, the rules do not meet the section 
182(a)(2)(A) CAA requirement because of the rule deficiencies which 
were discussed in the NPRM. Thus, in order to strengthen the SIP, EPA 
is granting limited approval of these rules under sections 110(k)(3) 
and 301(a) of the CAA. This action approves the rules into the SIP as 
federally enforceable rules.
    At the same time, EPA is finalizing the limited disapproval of 
these rules because they contain deficiencies that have not been 
corrected as required by section 182(a)(2)(A) of the CAA, and, as such, 
the rules do not fully meet the requirements of Part D of the Act. As 
stated in the NPR, upon the effective date of this NFR, the 18 month 
clock for sanctions and the 24 month FIP clock will begin. Sections 
179(a) and 110(c). If the State does not submit the required 
corrections and EPA does not approve the submittal within 18 months of 
the NFR, either the highway sanction or the offset sanction will be 
imposed at the 18 month mark. It should be noted that the rule covered 
by this NFRM has been adopted by the SCAQMD and is currently in effect 
in the SCAQMD. EPA's limited disapproval action will not prevent SCAQMD 
or EPA from enforcing this rule.
    On August 28, 1996 the State of California submitted revisions to 
EPA which EPA believes address all of the deficiencies cited in the 
February 28, 1995 NPRM. Therefore, EPA is proposing elsewhere in the 
Federal Register today to approve into the SIP the August 28, 1996 
submittal which addresses the cited deficiencies. The final approval of 
the August 28, 1996 submittal will supersede the limited disapproval of 
the March 21, 1994 submittal and remove the possibility of sanctions 
associated with this limited approval/limited disapproval noted above.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future request for 
revision to any state implementation plan. Each request for revision to 
the state implementation plan shall be considered separately in light 
of specific technical, economic, and environmental factors and in 
relation to relevant statutory and regulatory requirements.

Administrative Requirements

A. Executive Order 12866

    This action has been classified as a Table 3 action for signature 
by the Regional Administrator under the procedures published in the 
Federal Register on January 19, 1989 (54 FR 2214-2225), as revised by a 
July 10, 1995 memorandum from Mary Nichols, Assistant Administrator for 
Air and Radiation. The Office of Management and Budget (OMB) has 
exempted this regulatory action from E.O. 12866 review.

B. Regulatory Flexibility Act

    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 sections 110 and 301, and subchapter I, part D 
of the CAA 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 CAA, preparation of a flexibility analysis would constitute 
Federal inquiry into the economic reasonableness of state action. The 
Clean Air Act forbids EPA to base its actions concerning SIPs on such 
grounds. Union Electric Co. v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 
42 U.S.C. 7410(a)(2).

C. Unfunded Mandates

    Under Section 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 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 
private sector, of $100 million or more. Under Section 205, EPA must 
select the most cost-effective and least burdensome alternative that 
achieves the objectives of the rule and is consistent with statutory 
requirements. Section 203 requires EPA to establish a plan for 
informing and advising any small governments that may be significantly 
or uniquely impacted by the rule.
    EPA has determined that the approval action promulgated does not 
include a Federal mandate that may result in estimated costs of $100 
million or more to either State, local, or tribal governments in the 
aggregate, or to the private sector. This Federal action approves pre-
existing requirements under State or local law, and imposes no new 
Federal requirements. Accordingly, no additional costs to State, local, 
or tribal governments, or to the private sector, will result from this 
action.

D. Submission to Congress and the General Accounting Office

    Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business 
Regulatory Enforcement Fairness Act of 1996, EPA submitted a report 
containing this rule and other required information to the U.S. Senate, 
the U.S. House of Representatives and the Comptroller General of the 
General Accounting Office prior to publication of the rule in today's 
Federal Register. This rule is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

E. Petitions for Judicial Review

    Under section 307(b)(1) of the Act, petitions for judicial review 
of this action must be filed in the United States

[[Page 57780]]

Court of Appeals for the appropriate circuit by January 7, 1997. Filing 
a petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Hydrocarbons, 
Incorporation by reference, Intergovernmental relations, Nitrogen 
oxides, Ozone, Reporting and recordkeeping requirements, Volatile 
organic compound.

    Note: Incorporation by reference of the State Implementation 
Plan for the State of California was approved by the Director of the 
Federal Register on July 1, 1982.

    Dated: October 6, 1996.
Felicia Marcus,
Regional Administrator.
    Part 52, chapter I, title 40 of the Code of Federal Regulations is 
amended as follows:

PART 52--[AMENDED]

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

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

Subpart F--California

    2. Section 52.220 is amended by adding paragraph (c)(232) to read 
as follows:


Sec. 52.220  Identification of plan.

* * * * *
    (c) * * *
    (232) New regulations for the following APCD were submitted on 
March 21, 1994, by the Governor's designee:
    (i) Incorporation by reference.
    (A) South Coast Air Quality Management District.
    (1) Regulation XX, adopted October 15, 1993.
* * * * *
[FR Doc. 96-28594 Filed 11-7-96; 8:45 am]
BILLING CODE 6560-50-W