[Federal Register Volume 62, Number 244 (Friday, December 19, 1997)]
[Proposed Rules]
[Pages 66578-66583]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 97-33225]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 81

[CA-004-BU; FRL-5937-5]


Designation of Areas for Air Quality Planning Purposes; State of 
California; Redesignation of the San Francisco Bay Area to 
Nonattainment for Ozone

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: On May 22, 1995, EPA redesignated the San Francisco Bay Area 
(Bay Area) from moderate nonattainment for the federal 1-hour ozone 
standard to attainment (60 FR 27028). The redesignation became 
effective on June 21, 1995. Two days later, the Bay Area experienced 
its first violation of the federal 1-hour ozone standard as an 
attainment area. There have been a total of 43 exceedances and 17 
violations of the standard since redesignation. The Clean Air Act (CAA 
or Act) provides that EPA may at any time notify the Governor that 
available air quality information indicates that the designation of an 
area within the State should be revised. EPA must consider the response 
from the Governor as well as public comment on the proposed 
redesignation before finalizing its action.
    On August 21, 1997, EPA sent a letter to the Governor of California 
notifying him of the Agency's intent to redesignate the Bay Area from 
attainment to nonattainment of the federal 1-hour ozone standard. In 
today's action, EPA is proposing to redesignate the Bay Area as a 
nonattainment area for ozone.

DATES: Comments on this proposed action must be received in writing by 
February 17, 1998. Comments should be addressed to the contact listed 
below.

ADDRESSES: EPA's technical support document and other supporting 
documentation for the proposal are contained in the docket for this 
rulemaking. A copy of this document and the technical support document 
are also available in the air programs section of EPA Region IX's 
website, http://www.epa.gov/region09. The docket is available for 
inspection during normal business hours at EPA Region IX, Planning 
Office, Air Division, 17th Floor, 75 Hawthorne Street, San Francisco, 
California 94105. (415) 744-1288.

FOR FURTHER INFORMATION CONTACT: Dave Jesson, Planning Office (AIR-2), 
Air Division, EPA Region IX, 75 Hawthorne Street, San Francisco, CA 
94105, (415) 744-1288.

SUPPLEMENTARY INFORMATION:

I. Background

A. Original Designation

    The Bay Area was originally designated under section 107 of the 
1977 CAA as nonattainment for ozone on March 3, 1978 (40 CFR 81.305). 
The Bay Area consists of the following counties: Alameda, Contra Costa, 
Marin, Napa, San Francisco, San Mateo, Santa Clara, Solano (part), and 
Sonoma (part). Following the 1990 amendments to the Act, the area was 
classified by operation

[[Page 66579]]

of law, under section 181(a), as a ``moderate'' nonattainment area. (56 
FR 56694, November 6, 1991).

B. Redesignation to Attainment

    On November 12, 1993, after three years without any violations of 
the federal ozone standard according to quality assured ambient air 
quality data from the official monitoring network 1 of the 
Bay Area Air Quality Management District (Bay Area, District, or 
BAAQMD), the California Air Resources Board (CARB) submitted to EPA for 
approval a maintenance plan and a request to redesignate the Bay Area 
ozone nonattainment area to attainment. On September 28, 1994, EPA 
proposed to approve the State of California's submittal (59 FR 49361). 
On May 22, 1995, EPA published the final rule redesignating the Bay 
Area to attainment for ozone (60 FR 27028). The redesignation to 
attainment became effective on June 21, 1995.
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    \1\ There were no monitored violations of the federal ozone 
standard at the District's official State and Local Air Monitoring 
Station (SLAMS) network monitors. There were, however, two 
violations at special purpose monitors (SPMs) that were established 
for research purposes. EPA was aware of these violations at the time 
it redesignated the area to attainment. However, EPA excluded these 
data because the monitors were not part of the official monitoring 
network and were not intended to monitor ambient air quality for 
federal compliance purposes. For policy reasons, EPA did not want to 
discourage the Bay Area, or other areas, from establishing monitors 
for research purposes. EPA has since determined that all quality 
assured data that meet the requirements of 40 CFR 58.14, with the 
exception of fine particulate matter data (PM-2.5), must be 
considered for any regulatory purpose, including an ozone 
redesignation action. (August 22, 1997 memorandum entitled, ``Agency 
Policy on the Use of Special Purpose Monitoring Data,'' from John 
Seitz, Director of the Office of Air Quality Planning and Standards, 
to Air Division Directors, EPA Regions I-X) While EPA has determined 
that the SPMs data should have been considered in the 1995 
redesignation action, the Agency is not basing today's proposed 
action on these data. Today's action is based on the 17 violations 
recorded during 1995 and 1996.
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C. Violations of the Ozone Standard After Redesignation

    Despite implementation of most of the measures in the Bay Area's 
maintenance plan, the Bay Area's monitoring network 2 has 
recorded 46 exceedances (43 since the redesignation to attainment in 
June 1995) and 17 violations of the federal 1-hour ozone standard over 
the 3-year period 1994-1996.3
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    \2\ Air quality in the Bay Area is monitored by the District's 
State and Local Air Monitoring Station (SLAMS) network, which 
comprises 24 monitoring stations. All data must be quality assured.
    \3\ As required by section 175A of the Act, the Bay Area 
maintenance plan contains contingency measures that should be 
designed to correct any violation of the standard occurring after 
redesignation to attainment. The Bay Area maintenance plan contains 
six equipment-specific NOx controls and several improvements to the 
federally mandated Basic Inspection and Maintenance Program (I/M). 
While the District is continuing to implement the contingency 
measures in its maintenance plan, the remaining emission reductions 
to be gained from these measures total 1.2 tons per day in NOx 
reductions and almost no reductions of Volatile Organic Compounds 
(VOCs).
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    An exceedance of the 1-hour ozone standard occurs when the hourly 
average ozone concentration at a given monitoring site is greater than 
or equal to .125 ppm. A violation of the standard occurs when the 
expected number of days per calendar year with maximum hourly average 
ozone concentrations above 0.12 ppm is greater than one. 40 CFR part 
50.9. The average number of days is calculated for a 3-year period. 40 
CFR part 50, appendix H. This 3-year period was established to reduce 
the impact of yearly fluctuations in ozone levels. Table 1 lists both 
the exceedances and the 3-year average number of days over the 1-hour 
ozone standard for each SLAMS monitoring site in the Bay Area for the 
period 1994-1996.

Table 1.--Average Number of Exceedances for the Ozone Slams Network 1994-
                                  1996                                  
------------------------------------------------------------------------
                                                  Observed              
                                                   values      Average  
                Monitoring site                    greater    number of 
                                                    than     exceedances
                                                  standard     per year 
------------------------------------------------------------------------
Livermore......................................          17          5.7
Oakland........................................           0          0.0
San Leandro....................................           3          1.0
Fremont........................................           2          0.7
Hayward........................................           2          0.7
Concord........................................           4          1.3
Richmond.......................................           0          0.0
Bethel Island..................................           2          0.7
Pittsburg......................................           0          0.0
San Rafael.....................................           0          0.0
Napa...........................................           1          0.3
San Francisco..................................           0          0.0
Redwood City...................................           1          0.3
Gilroy.........................................           1          0.3
San Jose (4th Street)..........................           1          0.3
Los Gatos......................................           5          1.7
Mountain View..................................           0          0.0
San Jose (W. San Carlos).......................           0          0.0
San Jose (Piedmont)............................           3          1.0
San Martin.....................................           2          0.7
Fairfield......................................           1          0.3
Vallejo........................................           1          0.3
Santa Rosa.....................................           0          0.0
Sonoma.........................................           0          0.0
------------------------------------------------------------------------
Source: AIRS/AQS.                                                       

D. Petitions to the Administrator

    EPA has received two petitions requesting that the Administrator 
redesignate the Bay Area to nonattainment with the federal 1-hour ozone 
standard. On March 31, 1997, the Sierra Club and Communities for a 
Better Environment requested that EPA withdraw the 1995 redesignation 
action, or alternatively redesignate the area to nonattainment. The 
Sierra Club also requested that EPA issue a section 110(k)(5) SIP call 
based on the inadequacy of the current SIP.4 On July 14, 
1997, U.S. Congressman Gary Condit and a coalition of federal, state 
and local elected officials and public interest and industry groups 
from downwind areas (primarily the San Joaquin Valley) also requested 
that EPA withdraw the 1995 redesignation to attainment, or 
alternatively redesignate the area to nonattainment and issue a SIP 
call.
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    \4\ A SIP call is a determination under section 110(k)(5) of the 
Clean Air Act that the SIP is inadequate and must be revised.
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E. Applicable Statutory Provisions

    Section 107(d)(3) of the Act gives the Administrator the authority 
to redesignate areas. Under this provision, the Administrator may 
``(O)n the basis of air quality data, planning and control 
considerations, or any other air quality-related considerations the 
Administrator deems appropriate, * * * at any time notify the Governor 
of any State that available information indicates that the designation 
of any area * * * should be revised.'' Section 107(d)(3)(A). The 
Governor then has 120 days to submit the redesignation, as the Governor 
considers appropriate. Section 107(d)(3)(B). The Administrator must 
promulgate the redesignation within 120 days of the Governor's 
response. The Administrator may make any modifications to the 
Governor's redesignation which she deems necessary, but must notify the 
Governor of such changes 60 days before promulgating a final 
redesignation. If the Governor does not submit the redesignation, the 
Administrator shall promulgate the redesignation which she deems 
appropriate. Section 107(d)(3)(C). EPA notified the Governor of 
California by letter dated August 21, 1997, that EPA believes that, 
based on air quality data, the Bay Area should be redesignated to 
nonattainment.5 The

[[Page 66580]]

Governor must respond to this letter by December 19, 1997.
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    \5\ This letter is available to the public as part of the docket 
for this rulemaking action. While EPA indicated in this letter that 
the Bay Area would be classified as ``moderate,'' the Agency has 
determined that a moderate classification is not necessary under 
subpart 1 of the Act. (See discussion at II.A.) Furthermore, the 
planning requirement to prepare a modeling plan for the 8-hour ozone 
standard will no longer be required as the District is already 
engaged in such an exercise with the California Air Resources Board 
and downwind air districts.
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F. Proposed Action

    In today's document, EPA proposes to redesignate the San Francisco 
Bay Area to nonattainment for the 1-hour ozone NAAQS because ozone 
levels have violated the federal standard 17 times over the three year 
period 1994-1996. Today's action further proposes to require the Bay 
Area to develop and submit a SIP revision designed to demonstrate 
attainment of the 1-hour ozone NAAQS by November 15, 1999. Finally, 
today's action proposes an amendment to 40 CFR parts 52 and 81 to 
reflect the change in designation. These actions are proposed in 
accordance with sections 107(d), 110, and 172 of the CAA.

II. Applicable Plan Requirements

A. Clean Air Act Provisions

    The classifications and attainment dates for areas classified 
nonattainment under the 1990 amendments to the Act are contained in 
section 181(a). The provisions for new designations to nonattainment 
are found in subsection (b)(1). This subsection provides that areas 
that were attainment or unclassifiable at the time of the 1990 
amendments and are subsequently redesignated to nonattainment are to be 
classified according to the table in section 181(a)(1). This language 
contains no reference to areas that were designated nonattainment as a 
result of the 1990 amendments.
    For areas that were designated attainment or unclassifiable 
following the 1990 amendments, this section further provides that such 
areas are subject to the same requirements of section 110 and subparts 
1 and 2 of the Act as areas designated nonattainment pursuant to the 
1990 amendments. In addition, these areas are given an extension of all 
fixed date deadlines equal to the length of time between November 15, 
1990, and the date the area is redesignated.
    Although section 181(b)(1) deals with designations to nonattainment 
occurring after the initial round of classifications under the 1990 
amendments, it does not address areas, such as the Bay Area, that were 
designated nonattainment under the amendments, redesignated to 
attainment, and that subsequently fall out of attainment and are 
redesignated back to nonattainment. Because this provision does not, on 
its face, apply to areas like the Bay Area, EPA believes that it has 
discretion to determine whether such areas should fall under subpart 2 
of the Act when they are redesignated to nonattainment, or should only 
be subject to the more general provisions of subpart 1.
    EPA believes the latter is the appropriate result for a number of 
reasons. First, the plain language of section 181(b)(1) of the statute 
applies only to areas designated attainment under section 107(d)(4) and 
excludes areas like the Bay Area. Second, it is logical to grant the 
generous extension of deadlines to areas that have never been 
nonattainment and must devise their first nonattainment area SIPs. 
Conversely, an area that was previously designated as nonattainment has 
already done much of this work and should not need this lengthy time 
period to complete its planning process. Moreover, areas such as the 
Bay Area generally will have already implemented the section 181 
requirements applicable to their previous classification (moderate, 
serious, severe or extreme). Assuming that these requirements continue 
to be implemented, placing the area back into the section 181 scheme 
would do little to bring the area back into attainment. On the other 
hand, placing the area under section 172 provides the flexibility for 
the area to identify a new mix of measures that, when combined with 
those already implemented under section 181, will bring the area back 
into attainment. Finally, sections 172(a)(1) and (2) contain express 
statements that they do not apply to nonattainment areas that are 
specifically covered by other provisions of part D of the Act, thereby 
demonstrating that the Act contemplates that some areas will fall under 
subpart 1, rather than subpart 2. See sections 172(a)(1)(C) and 
(a)(2)(D). For these reasons, EPA believes the best interpretation of 
the Act is that it intentionally excludes areas like the Bay Area from 
section 181 and places them under section 172.

B. Section 172 Requirements

    General nonattainment plan requirements are contained in section 
172(c). Section 172(b) requires the Bay Area plan to meet the 
``applicable'' requirements of section 172(c). For reasons set forth 
below, we believe that some of the section 172(c) requirements have 
already been satisfied and therefore need not be part of the plan 
revisions the Bay Area would be required to submit under this proposed 
action. A table containing the proposed submittals and submittal dates 
is located at the end of section II.D. below.
    Section 172(c)(1) requires that the plan provide for implementation 
of all reasonably available control measures (RACM) as expeditiously as 
practicable, including emission reductions from existing sources 
through adoption of reasonably available control technology (RACT). 
This provision is applicable to the Bay Area only to the extent that it 
has not already been complied with. EPA believes that the Bay Area 
implemented all VOC RACT and most, if not all, oxides of nitrogen 
(NOX) RACT measures prior to being redesignated to 
attainment in 1995.6 60 FR 27028.
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    \6\ The Bay Area requested and received a NOx waiver 
pursuant to section 182(f) of the Act. 60 FR 27028, May 22, 1995. 
The waiver was based on 3 years of clean ambient air quality data 
showing that ozone attainment was achieved without application of 
the section 182(f) NOx control requirements. Since the 
waivers only apply to nonattainment areas, they remain in effect 
only during the period before redesignation of the area to 
attainment under section 107(d)(3). Thus, when the Bay Area's 
redesignation to attainment became effective on June 21, 1995, 
precursor emissions, like NOx, were addressed, as 
appropriate, under terms of the Bay Area maintenance plan. It is 
clear, upon final redesignation of the Bay Area to nonattainment 
based on subsequent violations of the ozone NAAQS, that the basis 
for granting the original NOx waiver no longer exists.
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    As required by section 172(c)(1), the plan must provide for 
attainment. Generally, new modeling is required in order to demonstrate 
that a plan will indeed provide for attainment. During the stakeholder 
process that preceded the Agency's decision to propose redesignation 
EPA heard two points made fairly consistently by all those involved. 
First, all parties agreed on the importance of a new field study and 
modeling effort in order to better understand the ozone problem in the 
Bay Area, as well as its effects on downwind areas. Second, the parties 
agreed that it would be impossible to conduct a new field study and 
modeling effort for a short term plan, particularly in light of the 
fact that the Bay Area will be required to undertake such an effort for 
the new 8-hour standard if designated nonattainment for the 8-hour 
standard.
    In response to public input, EPA is proposing to require an 
assessment, employing available modeling information, of the level of 
emission reductions needed to attain the 1-hour ozone NAAQS. The 
assessment should take into account the meteorological conditions and 
ambient concentrations associated with the ozone violations in 1995 and 
1996, and should be based on likely control measures for reducing VOC 
and NOx emissions. This work may include previous 
photochemical modeling that was based on Bay Area's 1989 field study, 
the 1990 modeling analysis done for the San Joaquin Valley, modeling 
conducted for Bay Area's SIP attainment demonstration

[[Page 66581]]

that was based on the Empirical Kinetic Modeling Approach [EKMA], and 
any other work that will lend insight into the nature of the ozone 
problem in the Bay Area. It may be appropriate to form a committee made 
up of representatives with technical modeling expertise from the 
BAAQMD, CARB, and EPA to review the analysis. EPA recommends that the 
committee also include technical staff from downwind districts. EPA is 
proposing that this assessment be submitted on May 1, 1998.
    Section 172(c)(2) contains the requirement for reasonable further 
progress (RFP). RFP is defined as ``such annual incremental reductions 
in emissions * * * as are required by this part or may reasonably be 
required by the Administrator for the purpose of ensuring attainment * 
* * by the applicable date.'' Section 171(1). Because EPA is not 
proposing to require submission of adopted measures until September 
1998, the Agency believes that the RFP requirement would be satisfied 
if all required emission reductions occur by 1999, the proposed 
attainment year.
    Under section 172(c)(3) the Bay Area must submit a comprehensive, 
accurate, and current inventory of actual emissions from all sources. 
To address this requirement, EPA proposes that the Bay Area must submit 
a current and complete baseline annual average and summer weekday and 
weekend day 7 emissions inventory for VOC, NOx, 
and carbon monoxide (CO). This submittal would be due on May 1, 1998.
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    \7\ EPA Guidance Document #EPA-450-4-91-014, entitled 
``Preparation of Emissions for CO and Ozone Precursors for Air 
Quality Modeling,'' Volume II, May 1991.
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    Section 172(c)(4) requires the area to identify and quantify 
emissions that will be allowed from new major sources or major 
modifications in urban enterprise zones identified by the Administrator 
in consultation with the Secretary of Housing and Urban Development 
under section 173(a)(1)(B) of the Act. No such zones have been 
identified in the Bay Area nonattainment area. Thus, no submission is 
required for this plan. Were such zones to be identified, a growth 
allowance would have to be included in the SIP to ensure that emission 
increases from new sources in the urban enterprize zones would not 
interfere with attainment.
    Section 172(c)(5) requires submittal of a new source review (NSR) 
program consistent with section 173 of the Act. While the Bay Area does 
have a SIP-approved NSR program, it is out of date and does not meet 
current statutory requirements.\8\ The Bay Area has submitted a revised 
new source review rule designed to meet the requirements of the 1990 
amendments to the Act. EPA will act on this rule and the NSR 
requirement in separate rulemaking. Based on the Bay Area's design 
value of .138 ppm, EPA believes that the NSR program should, by 
analogy, meet the requirements applicable to a moderate area. Thus, we 
are proposing that the NSR permitting requirements, applicability 
thresholds, and offset ratios be set at the same levels that apply to 
moderate ozone nonattainment areas under sections 182(a)(2)(C) and 
182(b)(5).
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    \8\ See 54 FR 11866 (March 19, 1982).
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    Section 172(c)(6) requires enforceable emission limitations and 
other control measures, means or techniques, necessary to provide for 
attainment by the applicable date. We are proposing that the Bay Area 
submit by September 1, 1998, adopted regulations (and/or enforceable 
commitments to adopt and implement control measures in regulatory form 
by specified dates) sufficient to attain the 1-hour ozone NAAQS by 
November 15, 1999. Section 172(c)(6) allows the Bay Area to identify 
and adopt a mix of measures that best meets the needs of the area.
    Section 172(c)(7) requires that nonattainment plans meet the 
general SIP requirements of section 110(a)(2).
    Section 172(c)(8) allows the District to apply to the Administrator 
to use equivalent modeling, emission inventory, and planning 
procedures.
    Under section 172(c)(9), a plan must contain contingency measures 
that go into effect if the area fails to make RFP or fails to attain 
the standard. The Bay Area plan will need to contain contingency 
measures that go into effect if the area is unable to attain the 1-hour 
ozone NAAQS by the attainment date. As discussed above, the short 
attainment period for the Bay Area means that failure to make RFP and 
failure to attain are equivalent.

C. Applicable Attainment Date

    Section 172(a)(2) governs attainment dates for nonattainment areas 
that fall under section 172. This section provides that the attainment 
date for an area designated nonattainment shall be as expeditiously as 
practicable, but no later than 5 years from the date the area is 
designated nonattainment. Thus, the Administrator may set the 
attainment date at any point up to 5 years based on an assessment of 
what is ``as expeditiously as practicable.''
    Because the Bay Area's emissions appear to be on a downward trend 
based on currently available information,9 and because the 
area was attaining the standard as recently as 1994, EPA believes that 
the Bay Area should be able to identify and implement measures that 
will bring it back into attainment fairly quickly. Thus, EPA is 
proposing to set the Bay Area's attainment deadline as November 15, 
1999. This is the date by which the area would have had to attain if it 
had been bumped up to a ``serious'' classification rather than being 
redesignated to attainment. As discussed above, the Bay Area recorded 
43 exceedances and 17 violations of the standard from June 21, 1995 
(the date on which the area was redesignated to attainment) and 
November 15, 1996, the attainment deadline for moderate ozone 
nonattainment areas. These violations far exceed those recorded during 
the same time frame by other moderate ozone nonattainment areas which 
EPA is proposing to bump up to serious for failure to attain by 
November 15, 1996.
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    \9\ ``Bay Area Emission Inventory Projections: 1980-2002,'' 
provided by the Bay Area to EPA May 1997.
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    EPA proposes to make the determination as to whether the area has 
attained based on monitoring data from the years 1997, 1998 and 1999. 
During this time frame, EPA will be reviewing 1997-1999 monitoring data 
for the entire country to determine whether areas are violating the new 
NAAQS. Areas that violate the 8-hour standard but attain the 1-hour 
standard prior to designation under the new standard will be eligible 
for classification as a ``transitional'' area when designated 
nonattainment for the new 8-hour NAAQS.10 If the Bay Area 
attains the 1-hour standard by 1999 and meets the requirements for 
transitional areas, it may take advantage of this status and avoid 
certain enumerated requirements under the new NAAQS.
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    \10\ 62 FR 38426, July 18, 1997.
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    In the event that the Bay Area does not meet the 1999 attainment 
date, it may, in the future, be eligible for up to two 1-year 
extensions of this date if it were to meet the requirements of section 
172(a)(2)(C).
    EPA is particularly interested in receiving public comment on the 
proposed November 15, 1999 attainment deadline. The Agency has received 
preliminary input from the District indicating that it believes a later 
date should be chosen. EPA solicits comment from all interested parties 
on this issue.

D. Schedule for Plan Submissions

    The schedule for plan submissions is governed by section 172(b). 
This section

[[Page 66582]]

provides that the Administrator must establish a schedule for each area 
to submit a plan or plan revision that meets the applicable 
requirements of sections 172(c) and 110(a)(2). The schedule must, at a 
minimum, require submission of the attainment plan no later than three 
years after designation to nonattainment. EPA is proposing two separate 
submittal dates for elements of the Bay Area plan that are designed to 
achieve the November 15, 1999 attainment date. These submittals will be 
due on May 1, 1998 and September 1, 1998. The contents of these 
submittals are discussed in section II.B. above.

 Schedule of Submittal of Revisions to the State Implementation Plan for
                  Ozone for the San Francisco Bay Area                  
------------------------------------------------------------------------
                    Action/SIP submittal                         Date   
------------------------------------------------------------------------
Current and complete baseline annual average and summer                 
 weekday and weekend day emissions inventory for volatile               
 organic compounds (VOC), nitrogen oxides (NOX), and carbon             
 monoxide...................................................      5-1-98
Assessment, employing available modeling information, of the            
 level of emission reductions needed to attain the current 1-           
 hour ozone National Ambient Air Quality Standard (NAAQS).              
 This assessment should take into account the meteorological            
 conditions and ambient concentrations associated with the              
 violations of the ozone NAAQS in the period 1995-6, and                
 should be based on likely control measures for reducing VOC            
 and NOX emissions..........................................      5-1-98
Adopted regulations and/or control measures, with                       
 enforceable commitments to adopt and implement the control             
 measures in regulatory form by specified dates, sufficient             
 to meet reasonable further progress and attain the 1-hour              
 NAAQS expeditiously........................................      9-1-98
------------------------------------------------------------------------

III. Administrative Requirements

A. Executive Order (E.O.) 12866

    Under E.O. 12866, (58 FR 51735, October 4, 1993), EPA is required 
to determine whether today's proposal is a ``significant regulatory 
action'' within the meaning of the E.O., and therefore should be 
subject to OMB review, economic analysis, and the requirements of the 
E.O. See E.O. 12866, Sec. 6(a)(3). The E.O. defines, in Sec. 3(f), a 
``significant regulatory action'' as a regulatory action that is likely 
to result in a rule that may meet at least one of four criteria 
identified in section 3(f), including,
    (1) Have an annual effect on the economy of $100 million or more or 
adversely affect in a material way the economy, a sector of the 
economy, productivity, competition, jobs, the environment, public 
health or safety, or State, local, or tribal governments or 
communities;
    (2) Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    (4) Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    EPA has determined that the redesignation to nonattainment proposed 
today, as well as the establishment of SIP submittal schedules, would 
result in none of the effects identified in E.O. 12866 Sec. 3(f). Under 
section 107(d)(3) of the Act, redesignations to nonattainment are based 
upon air quality considerations. The finding, based on air quality 
data, that the Bay Area is not attaining the ozone NAAQS and should be 
redesignated to nonattainment does not, in and of itself, impose any 
new requirements on any sectors of the economy. Similarly, the 
establishment of new SIP submittal schedules merely establishes the 
dates by which SIPs must be submitted, and does not adversely affect 
entities.

B. Regulatory Flexibility

    Under the Regulatory Flexibility Act, 5 U.S.C. 601 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 economic 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.
    A redesignation to nonattainment under section 107(d)(3), and the 
establishment of a SIP submittal schedule for a reclassified area, do 
not, in and of themselves, directly impose any new requirements on 
small entities. See Mid-Tex Electric Cooperative, Inc. v. FERC, 773 
F.2d 327 (D.C. Cir. 1985) (agency's certification need only consider 
the rule's impact on entities subject to the requirements of the rule). 
Instead, this rulemaking simply proposes to make a factual 
determination and to establish a schedule to require the State to 
submit SIP revisions, and does not propose to directly regulate any 
entities. Because EPA is proposing to apply the same permitting 
applicability thresholds and offset ratios applicable to moderate 
areas, no additional sources will be subject to these requirements as a 
result of EPA's action. Therefore, pursuant to 5 U.S.C. 605(b), EPA 
certifies that today's proposed action does not have a significant 
impact on a substantial number of small entities within the meaning of 
those terms for RFA purposes.

C. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 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, when EPA promulgates ``any general notice of proposed 
rulemaking that is likely to result in promulgation of any rule that 
includes any Federal mandate that may result in the expenditures by 
State, local, and tribal governments, in the aggregate, or by the 
private sector, of $100 million or more'' in any one year. A ``Federal 
mandate'' is defined, under section 101 of UMRA, as a provision that 
``would impose an enforceable duty'' upon the private sector or State, 
local, or tribal governments,'' with certain exceptions not here 
relevant. Under section 203 of UMRA, EPA must develop a small 
government agency plan before EPA ``establish[es] any regulatory 
requirements that might significantly or uniquely affect small 
governments.'' Under section 204 of UMRA, EPA is required to develop a 
process to facilitate input by elected officers of State, local, and 
tribal governments for EPA's ``regulatory proposals'' that contain 
significant Federal intergovernmental mandates. Under section 205 of 
UMRA, before EPA promulgates ``any rule for which a written statement 
is required under [UMRA sec.] 202'', EPA must identify and consider a 
reasonable number of regulatory alternatives and either adopt the least 
costly, most cost-effective or least burdensome alternative that 
achieves the objectives of the rule, or explain why a different 
alternative was selected.
    EPA has concluded that this proposed rule is not likely to result 
in the promulgation of any Federal mandate

[[Page 66583]]

that may result in expenditures of $100 million or more for State, 
local or tribal governments in the aggregate, or for the private 
sector, in any one year. It is questionable whether a redesignation 
would constitute a federal mandate in any case. The obligation for the 
state to revise its State Implementation Plan that arises out of a 
redesignation is not legally enforceable and at most is a condition for 
continued receipt of federal highway funds. Therefore, it does not 
appear that such an action creates any enforceable duty within the 
meaning of section 421(5)(a)(i) of UMRA (2 U.S.C. 658(5)(a)(i)), and if 
it does the duty would appear to fall within the exception for a 
condition of Federal assistance under section 421(5)(a)(i)(I) of UMRA 
(2 U.S.C. 658(5)(a)(i)(I)).
    Even if a redesignation were considered a Federal mandate, the 
anticipated costs resulting from the mandate would not exceed $100 
million to either the private sector or state, local and tribal 
governments. Redesignation of an area to nonattainment does not, in 
itself, impose any mandates or costs on the private sector, and thus, 
there is no private sector mandate within the meaning of section 421(7) 
of UMRA (2 U.S.C. 658(7)). The only cost resulting from the 
redesignation itself is the cost to the State of California of 
developing, adopting and submitting any necessary SIP revision. Because 
that cost will not exceed $100 million, this proposal (if it is a 
federal mandate at all) is not subject to the requirements of sections 
202 and 205 of UMRA (2 U.S.C. 1532 and 1535). EPA has also determined 
that this proposal would not result in regulatory requirements that 
might significantly or uniquely affect small governments because only 
the State would take any action as result of today's rule, and thus the 
requirements of section 203 (2 U.S.C. 1533) do not apply.

List of Subjects in 40 CFR Part 81

    Environmental protection, Air pollution control, Hydrocarbons, 
Intergovernmental relations, Nitrogen oxides, Ozone, Volatile organic 
compounds.

    Authority: 42 U.S.C. 7401 et seq.

    Dated: December 11, 1997.
Felicia Marcus,
Regional Administrator, Region IX.
[FR Doc. 97-33225 Filed 12-18-97; 8:45 am]
BILLING CODE 6560-50-P