[Federal Register Volume 62, Number 133 (Friday, July 11, 1997)]
[Rules and Regulations]
[Pages 37138-37144]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-18245]


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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[TX-55-1-7335; FRL-5856-3]


Approval and Promulgation of Air Quality Implementation Plans; 
Texas; Motor Vehicle Inspection and Maintenance Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Interim final rule.

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

SUMMARY: The EPA is granting conditional interim approval of a State 
Implementation Plan (SIP) revision submitted by Texas. This revision 
establishes and requires the implementation of an enhanced inspection 
and maintenance (I/M) program in the Houston/Galveston and El Paso 
areas and a basic I/M program in the Dallas/Fort Worth area. The effect 
of this action is to conditionally approve Texas's I/M program for an 
interim period to last 18 months, based upon the good faith estimate of 
the program's performance. This action is being taken under section 110 
of the Clean Air Act (Act) and section 348 of the National Highway 
Systems Designation Act (NHSDA).

DATES: This interim final rule is effective on August 11, 1997.

ADDRESSES: Copies of the documents relevant to this action are 
available for public inspection during normal business hours at the 
following locations. Persons interested in examining these documents 
should make an appointment with the appropriate office at least 24 
hours before the visiting day.

Environmental Protection Agency, Region 6, Air Planning Section (6PD-
L), 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733.
Texas Natural Resource Conservation Commission, 12100 Park 35 Circle, 
Austin, Texas 78711-3087.

FOR FURTHER INFORMATION CONTACT: Mr. James F. Davis, Air Planning 
Section (6PD-L), EPA Region 6, 1445 Ross Avenue, Dallas, Texas 75202-
2733, telephone (214) 665-7584.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background
II. Public Comments/Response to Comments
III. Interim Final Rulemaking Action
IV. Conditional Interim Approval
V. Further Requirements for Permanent I/M SIP Approval
VI. Administrative Requirements
    A. Executive Order 12866
    B. Regulatory Flexibility Analysis
    C. Unfunded Mandates Act
    D. Submission to Congress & the General Accounting Office
    E. Petitions for Judicial Review

I. Background

    On October 3, 1996 (61 FR 51651), EPA published a Notice of 
Proposed Rulemaking (NPR) for the State of Texas. The NPR proposed 
conditional interim approval of Texas' I/M program, submitted to 
satisfy the applicable requirements of both the Act and the NHDSA. The 
formal SIP revision was submitted by Texas on March 14, 1996.
    As described in that notice, the NHSDA directs EPA to grant interim 
approval for a period of 18 months to approvable I/M submittals. The 
NHSDA also directs EPA and the states to review the interim program 
results at the end of that 18-month period, and to make a determination 
as to the effectiveness of the interim program. Following this 
demonstration, EPA will adjust any credit claims made by the state in 
its good faith effort, to reflect the emissions reductions actually 
measured by the state during the program evaluation period. The NHSDA 
is clear that the interim approval shall last for only 18 months, and 
that the program evaluation is due to EPA at the end of that period. 
Therefore, EPA believes Congress intended for these programs to start 
up as soon as possible, which EPA believes should be on or before 
November 15, 1997, so that at least six months of operational program 
data can be collected to evaluate the interim programs. The EPA 
believes that in setting such a strict timetable for program 
evaluations under the NHSDA, Congress recognized and attempted to 
mitigate any further delay with the start-up of this program. If Texas 
fails to fully start its program according to this schedule, this 
conditional interim approval granted under the provisions of the NHSDA 
will convert to a disapproval after a finding letter is sent to the 
state. Unlike the other specified conditions of this rulemaking, which 
are explicit conditions under section 110(k)(4) of the Act and which 
will trigger an automatic disapproval should Texas fail to meet its 
commitments, the startdate provision will only trigger a disapproval 
upon EPA's notification to the State by letter that the startdate has 
been missed. This letter will not only notify Texas that this 
rulemaking action has been converted to a disapproval, but also that 
the sanctions clock associated with this disapproval has been triggered 
as a result of this failure. Because the startdate condition is not 
imposed pursuant to a commitment to correct a deficient SIP under 
section 110(k)(4), EPA does not believe it is necessary to have the SIP 
approval convert to a disapproval automatically if the startdate is 
missed. The EPA is imposing the startdate condition under its general 
SIP approval authority of section 110(k)(3), which does not require 
automatic conversion. It should be noted that the State of Texas has 
already started major elements of its program in all three program 
areas.
    The program evaluation to be used by the state during the 18-month 
interim period must be acceptable to EPA. The Environmental Council of 
States (ECOS) group has developed such a program evaluation process 
which includes both short term qualitative and long term quantitative 
measures, and this process has been deemed acceptable to EPA. The core 
requirement for the long term quantitative measure is that a Mass 
Emission Transient Test be performed on 0.1 percent of the subject 
fleet, as required by the I/M Rule at 40 CFR 51.353 and 366.
    Per the NHSDA requirements, this conditional interim rulemaking 
will expire on February 11, 1999. A full approval of Texas final I/M 
SIP revision (which will include Texas' 18-month program evaluation) is 
still necessary under section 110 and under sections 182, 184 or 187 of 
the Act. After EPA reviews Texas' submitted program evaluation and 
other required elements for final approval, final rulemaking on the 
Texas' I/M SIP revision will occur.

[[Page 37139]]

    Specific requirements of the Texas I/M SIP and the rationale for 
EPA's proposed action are explained in the NPR and will not be restated 
here.

II. Public Comments/Response to Comments

    This section discusses the content of the comments submitted to the 
docket during the Federal comment period for the notice of proposed 
rulemaking, published in the October 3, 1996 Federal Register, and 
provides EPA's responses to those comments. On November 18, 1996, EPA 
granted a 60-day extension of the comment period which was requested by 
four parties. The extended comment period closed on January 3, 1997. 
Four sets of comments were received by the Region. The comments were 
from the Texas Natural Resource Conservation Commission (TNRCC), the 
Environmental Defense Fund (EDF), the Sierra Club (SC) and by the law 
firm Bickerstaff, Heath, Smiley, Pollan, Kever, & McDaniel, L.L.P 
(BHS). Copies of the original comment letters are available at EPA's 
Region 6 office at the address listed in the ADDRESSES section of this 
notice. The EPA has first grouped similar comments and summarized them, 
followed by EPA's response to specific comments. For clarity, in some 
cases EPA has provided background information within a comment on its 
requirements or its proposed action relevant to Texas' SIP, prior to 
summarizing the comment itself.

Comment--Legal Authority of Texas I/M Plan

    The SC and BHS commented that the State program does not have 
adequate authority to implement the program. The law firm BHS commented 
that the State law (Senate Bill 178) the State is using to implement 
the program is unconstitutional. The law firm BHS commented that a 
written decision in favor of Texas is forthcoming and will be forwarded 
to EPA when issued, thus EPA should not be considering approving the 
State's program. The law firm BHS commented that even if Senate Bill 
178 were constitutional it does not give the State authority to 
implement major portions of its program including, reregistration 
denial, enforcement of remote sensing, and test on resale provisions of 
the program. Thus, EPA cannot approve the program based on the NHSDA 
which requires that ``all'' authority be present for EPA to approve the 
program. It is argued that EPA's proposal does not address whether the 
State's submission meets the requirements of the NHSDA while other EPA 
actions on NHSDA submittals do. The law firm BHS contends the NHSDA 
only allows a brief window of 120 days for a submittal which is 
required to include all authority. Since this window has already 
passed, EPA cannot extend the deadline. The SC similarly noted that EPA 
cannot postpone the deadline by using a conditional approval following 
the Natural Resource Defense Council case of 1994.

Response to Comment

    The EPA's proposal explicitly identified the lack of authority as a 
deficiency which required correction by the imposition of major 
conditions which if not fulfilled would convert the action to a 
disapproval. Thus, EPA agrees that the State submittal does not meet 
all of the requirements of the NHSDA and is deficient in this regard. 
We also stated that the SIP contained enabling legislation that would 
allow the State to implement ``most'' of its program and that the State 
could get the legislative authority in the next legislative session. To 
support the State's commitment on obtaining the additional required 
authority the SIP included a Governor's Executive Order stating the 
intention of the Governor to support the needed legislation in the 1997 
legislative session. The Texas legislature meets only once every two 
years and therefore obtaining the additional legislation four months 
after passage of the NHSDA was impractical. Also, it is EPA's 
understanding that the Texas legislature has recently passed 
legislation during the 1997 session addressing legislative deficiencies 
in the SIP. The EPA will be evaluating the legislation over the next 
several months. The EPA is authorized to promulgate conditional 
approvals under the Clean Air Act and does not believe the action 
postpones the deadlines contained in the NHSDA. The NRDC case involved 
postponing of a deadline by the use of a ``committal SIP'' which did 
not include a substantive submittal of legislation, regulations, SIP 
narrative, etc. Due to the substantive nature of the Texas submittal 
EPA does not believe the submittal constitutes merely a ``committal 
SIP.''
    Texas has submitted a substantive I/M SIP, and has adequate legal 
authority to adopt and implement that SIP. The SIP has several 
deficiencies, which Texas has committed to remedy. It will require the 
adoption of additional legislative authority to remedy the 
deficiencies. The EPA believes it is authorized to conditionally 
approve a substantive SIP submittal under the Act section 110(k)(4) in 
these circumstances, and that such approval is consistent with the 
holding of the court interpreting the Act section 110(k)(4), NRDC v. 
EPA, 22 F.3d 1125, 1134 (D.C. Cir. 1994). The EPA further believes that 
this action is consistent with the requirements of the NHSDA. The EPA 
believes that so long as a state submits a substantative I/M SIP with 
underlying statutory authority during the 120-day period specified in 
the NHSDA, EPA can conditionally approve that SIP even if it contains 
some deficiencies that require additional legislative authority to 
remedy. Such authority must be obtained before EPA can give full final 
approval to the I/M SIP.
    Regarding the constitutionality of the State's authority, a Texas 
Court ruled that the two laws creating the Texas Motorists' Choice 
program, Texas Senate Bills 19 and 178, were in violation of both the 
Texas and Federal Constitution. The Court ruled that those laws were an 
unconstitutional ``taking'' and an unconstitutional interference with 
contract, Tejas Testing Technologies I, et al, v. The State of Texas, 
No. 95-1462 (126th Dist. Court, Travis County, Texas) (April 21, 1997).
    The State has filed a Notice of Intent to Appeal the ruling. Texas 
Rules of Appellate Procedure, Rule 47 and associated case law seem to 
indicate that such a filing supersedes the finding of the lower court 
pending determination by the Court of Appeals. See, Ammex Warehouse Co. 
v. Archer, 381 S.W. 2d 478, 481 (Tex. 1964), Porth v. Currie, 613 S.W. 
2d 534 (Tex. Civ. App., Austin 1981), and Texas Workers' Compensation 
Commission v. Garcia, 893 S.W. 2d 504, 517 (Texas 1995). However, EPA 
is not basing today's action on Senate Bill 19 and 178 because of the 
uncertainty regarding the constitutionality of those laws after the 
Court's ruling. In order to determine whether the program is supported 
by adequate legislative authority, EPA reviewed the statute submitted 
by Texas excluding the language added by Senate Bills 19 and 178. Based 
on that review, EPA has determined that Texas has sufficient authority 
to implement the program with the exception of remote sensing and 
registration denial (as discussed in the conditions for final interim 
approval).
    Title 5 of the Texas Health and Safety Code, Section 382.037(a) 
(Vernon's 1995) authorizes the promulgation of rules to ``establish, 
implement and administer a program requiring emissions-related 
inspections of motor vehicles to be performed at inspection facilities 
consistent with the requirements of the Federal Clean Air Act.'' This 
gives very broad authority to establish any type of vehicle inspection

[[Page 37140]]

program so long as that program is consistent with the Federal 
requirements.
    Enforcement of the program is authorized by Title 5 of the Texas 
Health and Safety Code, Section 382.037(d), by a ``sticker-based'' 
program. As discussed elsewhere, a sticker-based program is not 
acceptable without an adequate demonstration that the State's pre-1990 
Act mechanism was more effective than its registration denial system. 
Texas has not made such a demonstration, and either an adequate 
demonstration must be submitted or authority for registration denial 
must be submitted within one year to fulfill one of the conditions of 
this approval. It is EPA's understanding that the Texas Legislature has 
recently passed a law allowing for a registration denial program upon 
EPA's finding that the State has not made a adequate demonstration that 
sticker enforcement is more effective than registration denial. Section 
382.037(n) authorizes audits to determine compliance, but was added by 
the laws determined unconstitutional and, therefore, was not considered 
by EPA. However, Sections 382.038(a) and 382.038(d) authorize the State 
to pass appropriate regulations to conduct compliance audits.

Comment--Low Enhanced Performance Standard Issues

    The TNRCC commented that although the Dallas/Fort Worth area is 
only required to implement a basic I/M program the State submitted 
modeling showing that the program also meets the low enhanced 
performance standard. The SC and BHS commented that EPA cannot allow 
the use of a ``low enhanced'' I/M program for areas such as Houston/
Galveston that need more effective I/M programs to meet air quality 
goals. The law firm BHS cites EPA's proposed disapproval of the State's 
original 15% Plan. They also note that EPA cannot approve the revised 
15% Plan since it does not achieve the required reductions by 1996, and 
that EPA cannot extend the deadline of the original November 15, 1993, 
submittal date for a revision to the 15% Plan. The law firm BHS 
commented that the revised program does not even start up prior to the 
end of 1996, and notes the rising contribution of mobile sources to the 
air quality problem in the area.

Response to Comment

    The EPA agrees with the TNRCC's comment that the State's modeling 
shows that the low enhanced performance standard is met in the Dallas/
Fort Worth area. However, the Dallas/Fort Worth area is only required 
to implement a basic I/M program and all the elements of an enhanced I/
M program are not being implemented in the Dallas/Fort Worth program. 
Therefore, EPA is approving the Dallas/Fort Worth program only as a 
basic I/M program.
    The EPA disagrees with the comment that the State is not eligible 
for the low enhanced performance standard. While EPA proposed 
disapproval of the State's original 15% Plan, the EPA has already 
proposed an approval action on the State's revised 15% Plan. The Texas 
I/M NPR stated that EPA would not finalize an interim action on the I/M 
SIP unless an approval action was proposed on the 15% Plan which has 
now been done. The I/M flexibility rules define eligibility and only 
require that the State have an approved 15% Plan and not received 
disapprovals on the other Rate of Further Progress or attainment plans. 
Issues regarding the approval of the 15% Plan including late start up 
dates for I/M programs are addressed in the proposed approval of the 
State's revised 15% Plan. Those are issues relevant to approval of the 
15% Plan and will not be further addressed in this notice on the I/M 
plan. In the case of Texas, the State has already started most of the 
major elements of its I/M Plan and no further reductions are possible 
by the end of 1996 since this date already is historical. Also, States 
may, and often do, make revisions to previously submitted SIPs as part 
of the SIP process. Section 110 of the Act allows for and contemplates 
revisions to SIPs.
    The EPA agrees that mobile source pollution is a continuing and 
significant source of pollution in the I/M nonattainment areas. The EPA 
also believes that it may be necessary to expand the geographic 
coverage or to improve effectiveness of the State's I/M Program in the 
future. Additional emission reductions may be required in the Texas 
nonattainment areas due to a continuing nonattainment status, or that 
the reductions claimed as a ``good faith estimate'' are not achieved in 
practice.

Comment--Geographic Coverage Requirements

    The SC and BHS commented that the Beaumont/Port Arthur area should 
be in the I/M program. The SC commented that the redesignation was not 
completed and the area is an influence on the air quality of the 
Houston/Galveston area. The law firm BHS commented that the 1990 
urbanized area population for Beaumont/Port Arthur is 232,434 and 
exceeds EPA's cutoff of 200,000.
    The SC, BHS, and EDF commented that the Texas I/M program does not 
adequately cover the entire urbanized area for Dallas/Fort Worth and 
Houston/Galveston. The SC commented that remote sensing is not complete 
coverage and incompletely evaluated for effectiveness. The law firm BHS 
commented that exclusion of some of the urban population is allowed if 
an equal number of residents is included and the State used vehicles 
not residents in their analysis. The law firm BHS noted the uncertain 
feasibility and effectiveness of remote sensing and the delay in the 
State's data collecting phase of its remote sensing plan. The law firm 
BHS also commented on the lack of enforcement authority for remote 
sensing in the State's plan. The EDF commented that the exclusion of 
the rapidly growing counties of Collin and Denton County will result in 
dirtier air for the Region. The EDF commented that this exclusion will 
result in the failure to inspect 147,000 commuting vehicles and an 
additional 304,000 noncommuting vehicles.

Response to Comment

    The Beaumont/Port Arthur area was reclassified from a serious to 
moderate ozone nonattainment area on April 2, 1996 (61 FR 14496). While 
the Beaumont/Port Arthur area is one moderate ozone nonattainment area 
it is composed of at least two separate urbanized areas each with a 
1990 urbanized area population of under 200,000. According to the 
report entitled ``1990 Census of Population and Housing: Population and 
Housing Unit Counts: Texas'' issued in March 1993 by the U.S. Bureau of 
the Census, the 1990 population of the Beaumont urbanized area is 
122,841. The 1990 population of the urbanized area population for Port 
Arthur is 109,560. The I/M flexibility rule only requires that for 
moderate ozone nonattainment areas outside the ozone transport region, 
basic I/M programs be implemented in any 1990 Census-defined urbanized 
area of 200,000 or more (40 CFR 51.350(a)(4)). Since the Beaumont/Port 
Arthur area is a moderate area and contains no 1990 urbanized areas of 
over 200,000, EPA does not require that I/M be implemented in the 
Beaumont/Port Arthur nonattainment area.
    The EPA agrees that the State's exclusion of counties in both the 
Houston/Galveston area and the Dallas/Fort Worth area results in a less 
effective I/M program which hinders each of the areas reaching 
attainment of the National Ambient Area Quality Standard for ozone. 
Specifically, the exclusion of heavily populated portions

[[Page 37141]]

of the nonattainment areas, such as portions of Collin and Denton 
Counties, from the regular testing I/M program in the Dallas/Fort Worth 
area in our view is hindering the State from reaching attainment of air 
quality standards. However, in the proposed Federal Register notice 
(FRN), EPA made allowance for the State's use of remote sensing to make 
up deficiencies in the State's area of coverage plans. Nevertheless, 
recognizing the uncertainty of the remote sensing program, EPA included 
a provision in the proposed FRN that for permanent I/M SIP approval, 
the remote sensing program must be demonstrated to be effective in 
identifying and obtaining repairs on vehicles with high levels of 
emissions, or the Texas I/M core program must be expanded to include 
the entire urbanized area for both Dallas/Fort Worth and Houston. Also, 
since I/M programs are designed to reduce emissions from vehicles, and 
populations or persons do not directly equate to vehicle population, 
EPA also allowed for an interpretation of its I/M rule which would 
apply a ratio to the population shortfall to determine the minimum 
number of vehicles required to be tested by the State from commuting 
vehicles outside the I/M core program areas.
    The EPA's proposal also identified the lack of authority for 
enforcement of remote sensing as a deficiency which required correction 
by the imposition of major conditions which if not fulfilled would 
convert the action to a disapproval. We also stated that the State 
could get the legislative authority in the next legislative session. To 
support the State's commitment the SIP included a Governor's Executive 
Order stating the intention of the Governor to support the needed 
legislation in the 1997 legislative session. It is EPA's understanding 
that the Texas legislature recently passed legislation for enforcement 
of a remote sensing program.

Comment--Enforcement of Texas I/M Program

    The TNRCC commented that the Texas Motorist Choice inspection 
program is a sticker-based enforcement program with computer matching 
enhancements. The State commented that it believes that it has 
demonstrated that sticker-based enforcement is more effective than 
registration denial. The State included a sticker survey from the I/M 
areas which indicated that most vehicles (95 percent) had stickers 
showing appropriate dates of compliance. The SIP also states that 
unregistered vehicles range from 2 to 15 percent. The SC commented that 
the lack of registration denial is a major inadequacy. The SC also 
commented that the State's program to deter fraud and assure accuracy 
is not adequate. The law firm BHS also commented that the State does 
not have an effective enforcement system and does not have authority 
for registration denial and had questions about exactly how the State's 
plan would work. The law firm BHS argued that a sticker based program 
without a demonstration of greater effectiveness with a vague undefined 
threat of reregistration denial does not meet the requirements of the 
Act. Also, BHS cited the EPA proposed disapproval for the District of 
Columbia for its lack of similar but more comprehensive deficiencies in 
its enforcement program. The District of Columbia program also did not 
have authority for registration denial, and no penalty schedule 
accompanying the SIP.

Response to Comment

    The EPA's proposed approval was based upon the State commitment in 
the SIP and specifically the commitment in the Governor's Executive 
Order which specified the State's intention to support legislation for 
the authority to enforce the program with reregistration denial. The 
Clean Air Act and Federal I/M regulations specify that registration 
denial must be the enforcement mechanism for a state unless an 
alternative enforcement mechanism of a pre-1990 Act program is 
demonstrated to be more effective. The demonstration is further 
specified in the Federal I/M rule (40 CFR 51.361(b)). The State's 
demonstration fails in relation to these requirements in two general 
areas, the failure to tie stickers issued to tests given and more 
accurate and substantiated data on the number of vehicles in compliance 
with the registration requirements. The demonstration was also 
deficient since it is required to be comprehensive, which the State's 
current demonstration was not.
    The EPA agrees that the lack of authority for enforcement through 
registration denial is a major deficiency in the plan. The EPA's 
proposal also identified the lack of authority for registration denial 
as a deficiency which required correction by the imposition of a major 
condition which if not fulfilled would convert the action to a 
disapproval. We also stated that the State could get the legislative 
authority in the 1997 legislative session. To support the State's 
commitment the SIP included a Governor's Executive Order stating the 
intention of the Governor to support the needed legislation in the 1997 
legislative session. It is EPA's understanding that the Texas 
Legislature has recently passed a law allowing for a registration 
denial program upon EPA's finding that the State has not made a 
adequate demonstration that sticker enforcement is more effective than 
registration denial. The State's quality control and consumer 
protection portions of the I/M plan were consistent with the I/M rule 
(Secs. 51.360 and 51.368(b)). Regarding the District of Columbia's 
proposed disapproval notice for enforcement deficiencies similar to the 
Texas program, EPA was required to propose disapproval on this issue 
because it did not have a commitment from the State to correct the 
deficiencies in the District's plan. In the case of Texas, EPA had the 
commitment in the Governor's Executive Order and the SIP narrative to 
correct the major deficiencies and thus was able to propose conditional 
interim approval of the plan.

Comment--Waivers in the Texas I/M Modeling

    The TNRCC commented that, since the low income time extension is 
not a waiver, it should not be required to be included in the projected 
waiver rate.

Response to Comment

    The EPA concurs with the State comment that the low income time 
extension is not legally a waiver. However, the numbers of time 
extensions granted by the State may impact the air quality benefits of 
the program and should therefore be accounted for in the State's 
modeling estimates if significant. If low income time extensions are 
granted after a vehicle fails the emissions test, the emissions 
characteristics of the vehicle for the purposes of emissions modeling 
are identical to a vehicle that has received a waiver. If such time 
extensions were granted prior to an initial test they should be 
accounted for in the compliance rate estimates if significant.

Comment--Texas Good Faith Credit Estimates

    The EDF commented that while the NHSDA removes EPA's 50 percent 
credit discount for test-and-repair programs, it does not grant 
presumptive equivalency between test-and-repair and test-only programs. 
The SC also commented that the decentralized program fails to 
demonstrate equivalency with the centralized program. The EDF commented 
that TNRCC's claim of 100 percent effectiveness is not consistent with 
other states implementing decentralized

[[Page 37142]]

programs and are not based on ``good faith estimates'' with a basis in 
fact, but rather unsubstantiated assumptions. Additional features to 
the program such as the electronically connected testing system may 
increase effectiveness but do not substantiate the State's claim. The 
law firm BHS similarly also commented that the State's credit estimates 
are not made in good faith. The law firm BHS commented that the 
estimates must have a ``basis in fact'' and cites EPA's position 
contained in the I/M flexibility amendments that all the data gathered 
from previously running I/M programs justify EPA's previously imposed 
50 percent credit discount for test-and-repair programs. The law firm 
BHS also notes EPA's December 12, 1995, guidance on the NHSDA, which 
suggested that good faith estimates could be based upon innovative 
program designs where no data, per se, exists but where the State can 
make a reasonable argument that the level of enforcement and oversight, 
and the innovative features included in the program to prevent or 
eliminate improper testing will together achieve the claimed 
reductions. In its guidance, EPA stated examples of such innovative 
designs and BHS commented that the State's program did not include any 
of these examples.

Response to Comment

    The EPA agrees that the NHSDA does not grant presumptive 
equivalency between test-only and test-and-repair programs, but rather 
it calls upon the State to make a ``good faith estimate'' which has a 
basis in fact of its program's effectiveness. The EPA is required by 
the NHSDA to allow for such an estimate on an interim basis. The NHSDA 
further specifies that EPA shall grant final approval to a program if 
data collected from the operation of the program demonstrates the 
credits are appropriate and the revision is otherwise in compliance 
with the Act. The EPA agrees that a claim of 100 percent credit for the 
test-and-repair network may be difficult to justify in the State's 
program demonstration for final full approval. However, EPA believes it 
is appropriate under the NHSDA to grant interim approval to the credit 
based on the State's good faith estimate until the data collected from 
the program is analyzed by the State and EPA.
    In the State's response to comment from its public comment period 
on this issue, the State cited the electronic data link, the use of 
remote sensing technology, the test-on-resale component of the program, 
recognized repair technicians, and the testing of heavy duty vehicles 
as measures to be implemented which would help to improve the 
effectiveness of the program. The EPA believes that of these items the 
electronic data link, use of remote sensing technology, and the 
recognized repair technician program offer the greatest potential of 
substantially improving the program's effectiveness with regard to 
network design. The EPA believes that credit obtained from these 
enhanced features provides a basis in fact for the interim credit 
claimed under the NHSDA. Thus, EPA will allow for the State's estimates 
to be used on an interim basis. Permanent SIP approval of the credit 
claim however, will be subject to the data collected during the program 
demonstration.

Comment--Contingency Measures

    The EDF commented that contingency measures should be identified 
and immediately implemented in the likely event that the TNRCC will not 
achieve the emission reductions claimed.

Response to Comment

    The 15% Plan contains contingency measures equal to at least 3 
percent reductions for each area required to submit a 15% SIP. If the 
State's reduction estimates are not achievable by Texas, the State 
would have to implement contingency measures in the event that a 
shortfall exists in the State's 15% Plan. In addition, if the State's 
I/M plan achieves less than the reductions required to meet the 
appropriate I/M performance standards corrections to the State's I/M 
plan would be required by EPA. Neither the Act nor the NHSDA require 
contingency measures to support interim approval of an I/M program. If 
credit is not demonstrated through the program evaluation, additional 
control strategies or I/M program enhancements have to be adopted to 
support final full approval.

Comment--Compliance Rate of Texas I/M Program

    The EDF commented that a 96 percent compliance rate will be 
difficult to achieve. The EDF cites an estimate by Texas Department of 
Transportation that as many as 15 percent of the vehicles may fail to 
meet registration requirements and thus effectiveness of the Texas 
program is overstated.

Response to Comment

    The EPA agrees that a 96 percent compliance rate may overstate the 
State's actual I/M effectiveness. However, the State's estimates on 
vehicles not meeting registration requirements is given in the SIP as 
between 2 and 15 percent. Also, the State's SIP includes provisions to 
help improve the current compliance rate such as the real time data 
link of all test stations, remote sensing to catch vehicles with high 
emissions, and computer matching of testing and registration data bases 
to supplement an improved sticker enforcement program. These 
enhancements hold the potential to make the State's enforcement 
mechanism comparable to traditional registration denial. The EPA 
assumes that a well-run registration denial based program will achieve 
a compliance rate of 96 percent based upon prior experience with such 
programs. For SIP purposes, states are required to commit to a 
compliance rate which will be used in their modeling. States must also 
commit to corrective actions should the actual compliance rate fall 
below the modeled level.

Comment--Adequate Oversight of Texas I/M Program

    The law firm BHS commented that the State's SIP does not provide 
adequate oversight to protect against improper testing which is cited 
as inherent in decentralized I/M programs. The law firm BHS also argues 
that Texas's plan relies on an unproven data link and an inadequate 
number of auditing staff. The law firm BHS also notes that the State 
oversight test fee is only $1.75 per inspection, while in California 
$7.00 is needed per inspection. Thus, a logical conclusion is that 
Texas is underfunding its program.

Response to Comment

    The EPA rules do not specify the exact oversight test fee or number 
of employees each State is required to use in support of its I/M 
program. Rather each State is required to assess and use sufficient 
resources needed to support the program consistent with the SIP, and 
identify the dedicated resources for I/M program implementation. The 
EPA believes the State is in a better position to assess its specific 
resource needs and fulfill EPA's general resource requirements. The EPA 
believes that the oversight resources cited in the Texas SIP are 
sufficient for the purposes of interim approval. As the Texas program 
operates and undergoes evaluation, EPA will be better able to assess 
the adequacy of the State resources. For example, the State commits in 
the SIP to meet the numbers of EPA required covert and overt audits and 
reporting requirements. If the State is unable to meet the EPA 
requirements contained in the SIP, EPA could require the State to 
correct the deficiency.

[[Page 37143]]

III. Interim Final Rulemaking Action

    The EPA is conditionally approving the Texas I/M program as a 
revision to the Texas SIP, based upon certain conditions. This 
conditional approval satisfies the requirements of section 182 and the 
NHSDA for low enhanced and basic I/M programs. For the purposes of 
strengthening the SIP, EPA is also giving a limited approval under 
section 110 if the State fulfills all of its commitments within 12 
months of this final rulemaking. This limited approval under section 
110 will not expire at the end of the 18 month interim period. Thus, 
although an approved I/M SIP satisfying the requirements of section 182 
may no longer be in place after the termination of the interim SIP 
approval period provided by the NHSDA, this program will remain a part 
of the Federally enforceable SIP. Should the State fail to fulfill the 
conditions by the deadlines contained in each condition, the latest of 
which is no more than one year after the date of EPA's final interim 
approval action, this conditional interim approval will convert to a 
disapproval pursuant to the Act section 110(k)(4). In that event, EPA 
would issue a letter to notify the State of Texas that the conditions 
had not been met and that the approval had converted to a disapproval.

IV. Conditional Interim Approval

    Under the terms of EPA's October 3, 1996, proposed interim 
conditional approval rulemaking, the State of Texas was required to 
remedy three major deficiencies with the I/M program SIP (as specified 
in the NPR), within twelve months of final interim approval. The 
State's commitment to support the additional needed legislation was to 
be carried out in Texas's 75th Legislative Session. The EPA will be 
evaluating the I/M legislation that was passed during this session. As 
discussed in detail later in this notice, this approval is being 
granted on an interim basis, for an 18-month period under authority of 
the NHDSA.
    The major conditions for approvability of the SIP are as follows:
    Texas must obtain all of the legal authority needed to implement 
its program. The specific authority needed was outlined in EPA's 
proposed approval action (61 FR 51651) and was identified in a February 
27, 1996, Governor's Executive Order that was submitted as part of the 
Texas I/M SIP. The legal authority identified in the Executive Order 
includes: (1) The denial of reregistration of vehicles that have not 
complied with I/M program requirements, (2) the establishment of a 
class C misdemeanor penalty for operating a grossly polluting vehicle 
in a nonattainment area (i.e., enforcement of remote sensing), and (3) 
the requirement for an inspection within 60 days of resale and prior to 
transfer of title to nonfamily member consumers in Dallas, Tarrant, or 
Harris counties.
    The EPA is aware that the State of Texas has expressed plans to 
remove the ``test-on-resale'' provisions from their I/M plan. In 
addition, EPA has recently received a SIP submission to remove the 
``test-on-resale'' provision from the SIP. The EPA will be evaluating 
the submission for completeness and approvability. Regarding the 
``test-on-resale'' provisions of the State plan, EPA included a 
condition for obtaining legal authority to implement this provision 
based on the requirement in the NHSDA's that states have all of the 
statutory authority needed for program implementation. While the 
``test-on-resale'' provision was not required by the Act or the Federal 
I/M rule, the provision was intended to improve program effectiveness 
and consumer protection. Texas has stated that certain program changes 
have made the program unnecessary and that the State is therefore 
taking no credit for this particular element. The EPA agrees with the 
State's assessment of the creditable impact of such a component. While 
the EPA still believes that the ``test-on-resale'' authority may prove 
to be beneficial for consumer protection and program effectiveness 
should loaded mode testing develop as the program proceeds, EPA will 
not require the State to obtain authority for and implement the ``test-
on-resale'' provisions of the current State plan if the State submits a 
SIP revision.

V. Further Requirements for Permanent I/M SIP Approval

    This approval is being granted on an interim basis for a period of 
18 months, under the authority of section 348 of the National Highway 
Systems Designation Act of 1995. At the end of this period, the 
approval will lapse. At that time, EPA must take final rulemaking 
action upon Texas' SIP, under the authority of section 110 of the Act. 
Final approval of Texas' plan will be granted based upon the following 
criteria:
    (1) Texas has complied with all the major conditions of its 
commitment to EPA,
    (2) The EPA's review of Texas' program evaluation confirms that the 
appropriate amount of program credit was claimed by the State of Texas 
and achieved with the interim program,
    (3) Final Texas Department of Public Safety program regulations are 
submitted to EPA, and
    (4) The Texas I/M program meets all of the requirements of EPA's I/
M rule, including those de minimus deficiencies identified in the 
October 3, 1996, proposal (61 FR 51651) as minor for purposes of 
interim approval.
    (5) The remote sensing program proves to be effective in 
identifying and obtaining repairs on vehicles with high levels of 
emissions, or the Texas I/M core program area is expanded to include 
the entire urbanized area for both Dallas/Fort Worth and Houston.

VI. Administrative Requirements

    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.

A. Executive Order 12866

    The Office of Management and Budget has exempted this regulatory 
action from Executive Order 12866 review.

B. Regulatory Flexibility Analysis

    Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA 
prepares a regulatory flexibility analysis assessing the impact of any 
proposed or final rule on small entities. See 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.
    Conditional approvals of SIP submittals under section 110 and 
subchapter I, part D of the Act do not create any new requirements but 
simply approve requirements that the State is already imposing. 
Therefore, because the Federal SIP approval does not impose any new 
requirements, I certify that it does not have a significant impact on 
any small entities affected. Moreover, due to the nature of the 
Federal-State relationship under the Act, preparation of a flexibility 
analysis would constitute Federal inquiry into the economic 
reasonableness of state action. The Act forbids EPA to base its actions 
concerning SIPs on such grounds. Union Electric Co. v. U.S. EPA, 427 
U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

[[Page 37144]]

    If the conditional approval is converted to a disapproval under 
section 110(k), based on the State's failure to meet the commitment, it 
will not affect any existing state requirements applicable to small 
entities. Federal disapproval of the state submittal does not affect 
its state-enforceability. Moreover, EPA's disapproval of the submittal 
does not impose a new Federal requirement. Therefore, EPA certifies 
that this disapproval action does not have a significant impact on a 
substantial number of small entities because it does not remove 
existing requirements nor does it substitute a new Federal requirement.

C. Unfunded Mandates

    Under Section 202 of the Unfunded Mandates Reform Act of 1995, 
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.
    The 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 
preexisting requirements under State or local law, and imposes no new 
requirements. Accordingly, no additional costs to State, local, or 
tribal governments, or to the private sector, 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 Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by September 9, 1997.
    Filing a petition for reconsideration by the Administrator of this 
interim final rule to conditionally approve the Texas I/M SIP, on an 
interim basis, 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) of the Administrative Procedures Act).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, 
Hydrocarbons, Intergovernmental relations, Nitrogen dioxide, Ozone, 
Reporting and recordkeeping requirements.

    Dated: July 1, 1997.
Jerry Clifford,
Acting Regional Administrator.

    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 SS--Texas

    2. Section 52.2310 is added to read as follows:


Sec. 52.2310  Conditional approval.

    The State of Texas' March 14, 1996, submittal for an motor vehicle 
inspection and maintenance (I/M) program, is conditionally approved 
based on certain contingencies, for an interim period to last eighteen 
months. If the State of Texas fails to fully start its program by 
November 15, 1997, at the latest, this conditional approval will 
convert to a disapproval after EPA sends a letter to the State. If the 
State of Texas fails to satisfy the following conditions within 12 
months of August 11, 1997, this conditional approval will automatically 
convert to a disapproval as explained under section 110(k) of the Clean 
Air Act. The conditions for approvability are as follows:
    Texas must obtain all of the legal authority needed to implement 
its program. The specific authority needed was outlined in EPA's 
proposed approval action and was identified in a February 27, 1996, 
Governor's Executive Order that was submitted as part of the Texas I/M 
SIP. The legal authority identified in the Executive Order includes: 
The denial of reregistration of vehicles that have not complied with I/
M program requirements; the establishment of a class C misdemeanor 
penalty for operating a gross polluting vehicle in a nonattainment 
area; and the requirement for an inspection within 60 days of resale 
and prior to transfer of title to nonfamily member consumers in Dallas, 
Tarrant, or Harris counties (or regarding the third major condition, 
the removal of the test-on-resale program element from the SIP). Texas 
has committed to support additional needed legislation in Texas's 75th 
Legislative Session. Should Texas fail to fulfill these conditions by 
the end of the 75th Legislative Session, this approval will convert to 
a disapproval. Texas must also fully start its I/M program by November 
15, 1997, or this action will covert to a disapproval.

[FR Doc. 97-18245 Filed 7-10-97; 8:45 am]
BILLING CODE 6560-50-P