[Federal Register Volume 64, Number 151 (Friday, August 6, 1999)]
[Proposed Rules]
[Pages 42892-42899]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-20311]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 226-164; FRL-6415-4]


Approving Implementation Plans; California State Implementation 
Plan Revision, San Diego County Air Pollution Control Agency

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: EPA is proposing a limited approval and limited disapproval of 
revisions to the California State Implementation Plan (SIP) which 
concern New Source Review permitting requirements for stationary 
sources in San Diego County. EPA also proposes to eliminate approval 
conditions created in 1981 that are no longer relevant.
    The intended effect of proposing limited approval and limited 
disapproval is to ensure San Diego County's New Source Review rules are 
consistent with the requirements of the Clean Air Act, as amended in 
1990 (CAA or the Act). EPA's final action will incorporate these rules 
into the federally approved SIP. Although strengthening the SIP, these 
rules do not fully meet the CAA requirements for nonattainment areas. 
The rules have been evaluated based on CAA guidelines for EPA action on 
SIP submittals and general rulemaking authority.

DATES: Comments must be received on or before September 7, 1999.

ADDRESSES: Comments may be mailed to: David Wampler, Permits Office 
[AIR-3], Air Division, U.S. Environmental Protection Agency, Region IX, 
75 Hawthorne Street, San Francisco, CA 94105-3901.
    Copies of the rules and EPA's evaluation report of the rules are 
available for public inspection at EPA's Region 9 office during normal 
business hours. Copies of the submitted rules are also available for 
inspection at the following locations:

San Diego County Air Pollution Control District, 9150 Chesapeake Drive, 
San Diego, California 92123-1096
California Air Resources Board, 2020 ``L'' Street, Sacramento, 
California 95812

FOR FURTHER INFORMATION CONTACT: David Wampler, Permits Office, [AIR-
3], Air Division, U.S. Environmental Protection Agency, Region IX, 75 
Hawthorne Street, San Francisco, CA 94105-3901; Telephone: (415) 744-
1256; E-mail: [email protected].

SUPPLEMENTARY INFORMATION: Throughout this document wherever ``we,'' 
``us,'' or ``our'' are used we mean EPA.

I. What Action is EPA Proposing?
    A. New Source Review Rules
    B. Remove Conditions in 1981 NSR SIP Approval
II. How Did EPA Arrive at the Proposed Action?
    A. Overview
    1. New Source Review Rules
    2. How EPA Evaluates Past NSR Submittals
    3. Removing Conditions in 1981 NSR SIP Approval
    B. Rule Deficiencies
    1. Deficiencies with Rule 20.1
    2. Deficiency with Rules 20.3 and 20.4
    3. Deficiency with Rule 20.2
    4. Deficiency with Rules 20.1 through 20.4
III. EPA Solicits Comment on Two Special Issues:
    A. Provision 20.1(d)(1)(ii)(C)--Exclusion of emissions from 
portable equipment from a stationary source's potential to emit.
    1. Overview
    2. History of Portable Equipment Regulations in San Diego
    3. Summary of the District's Current NSR Requirements for 
Portable Emission Units in San Diego
    a. Portable Emission Unit is Defined in rule 20.1(c)(49)
    b. Offset Requirements for Type I and Type III units
    c. LAER Requirements for Type I and Type III units
    d. Air Quality Impact Analysis (AQIA) for Portable Equipment
    e. Public notification requirements for Portable Equipment
    4. Title V Consistency and Enforcement
    B. Minor New Source Review Requirements in San Diego--Rule 20.2
    1. Overview of Federal Minor NSR Requirements
    2. San Diego Minor NSR Program
    a. Minor source NSR public notification requirements
    b. Air quality impact analysis
    3. Federal Enforceability of Terms and Conditions of Minor NSR 
Permits
    4. Discussion on Minor NSR
IV. Overview of Limited Approval/Disapproval
V. Administrative Requirements
    A. Executive Order 12866
    B. Executive Order 12875
    C. Executive Order 13045
    D. Executive Order 13084
    E. Regulatory Flexibility Act
    F. Unfunded Mandates

I. What Action Is EPA Proposing?

A. New Source Review Rules

    EPA today proposes a limited approval and limited disapproval of 
revisions to the California State Implementation Plan (SIP) for San 
Diego Air Pollution Control District (District or SDCAPCD) rules 20.1, 
20.2, 20.3, and 20.4. Table 1 lists the number and title of the rules. 
The rules were submitted to EPA by the California Air Resources Board 
(CARB) on May 13, 1999 and found complete by EPA on June 10, 1999.

         Table 1.--Rules Included in Today's Proposed Rulemaking
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             Rule No.                  Rule Title--New Source Review
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20.1.............................  General Provisions.
20.2.............................  Non-Major Stationary Sources.
20.3.............................  Major Stationary Sources and PSD
                                    Stationary Sources.
20.4.............................  Portable Emission Units.
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    Upon final action, the rules will replace existing SIP rules of the 
same number approved by EPA into the SIP on April 14, 1981. See 46 FR 
21757 and 40 CFR 52.220(c)(64)(i)(A).1
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    \1\ In addition to the approval for rules 20.1 through 20.4, 
EPA's April 14, 1981 final rulemaking action also approved SDCAPCD 
rules 20.5, ``Power Plants;'' 20.6, ``Standards for Permit to 
Operate--Air Quality Analysis;'' and 20.7, ``Standards for Authority 
to Construct: Significant Deterioration.'' The 4/14/81 approval of 
Rule 20.7 was found to be incorrect and it was later rescinded from 
the SIP in a final rulemaking on June 4, 1982 (47 FR 24308). Rules 
20.5 and 20.6 remain fully approved into the SIP today and are 
unaffected by this rulemaking.
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    We evaluated the rules for consistency with the CAA, EPA 
regulations, and EPA policy. We've found that the revisions are overall 
more stringent than the rules of the same number that exist in the SIP.
    Even though San Diego County APCD rules 20.1, 20.2, 20.3 and 20.4 
will strengthen the SIP, these rules still contain deficiencies 
(discussed below)

[[Page 42893]]

and are not fully approvable under Part D of the CAA. Therefore, EPA 
today proposes a limited approval and limited disapproval of these four 
rules. If our final action remains a limited approval and limited 
disapproval, San Diego County APCD will have--from the date of the 
final action--18 months to correct any deficiencies to avoid federal 
sanctions. See CAA Sec. 179(b). Further the final disapproval triggers 
the Federal implementation plan requirements under 110(c). A detailed 
discussion of the rule deficiencies is included in the Technical 
Support Document (TSD) for this rulemaking. The TSD is available from 
the EPA Region IX office.

B. Remove Conditions in 1981 NSR SIP Approval

    In addition to our action on the NSR rules, we propose to delete 
the District NSR rule conditions identified when EPA finalized the NSR 
rules in 1981. See 46 FR 21757 and 40 CFR 52.232(a)(4).

II. How Did EPA Arrive at the Proposed Action?

A. Overview

1. New Source Review Rules
    EPA evaluated the rules for consistency with the requirements of 
the CAA and EPA regulations, as found in section 110 and part D of the 
CAA and 40 CFR part 51 (Requirements for Preparation, Adoption, and 
Submittal of Implementation Plans). Our interpretation of these 
requirements, which forms the basis for today's action, appears in the 
various EPA policy guidance documents.
    EPA has issued a ``General Preamble'' describing EPA's preliminary 
views on how EPA intends to review SIPs and SIP revisions submitted 
under part D, including those State submittals containing nonattainment 
NSR SIP requirements (See 57 FR 13498 (April 16, 1992) and 57 FR 18070 
(April 28, 1992)). Because EPA is describing its interpretations here 
only in broad terms, the reader should refer to the General Preamble 
for a more detailed discussion.
    The Act requires States to comply with certain procedural 
requirements in developing implementation plans and plan revisions for 
submission to EPA. Section 110(a)(2) and section 110(l) of the Act 
require that each implementation plan or revision to an implementation 
plan submitted by a State must be adopted after reasonable notice and 
public hearing. Section 172(c)(7) of the Act requires that plan 
provisions for nonattainment areas shall meet the applicable provisions 
of section 110(a)(2).
2. How EPA Evaluates Past NSR Submittals
    Since 1981, numerous revisions to rules 20.1 through 20.4 have been 
adopted by SDCAPCD and submitted by CARB to EPA for SIP approval. See 
the TSD for a list of all previous NSR rule submittals for San Diego 
County. Although EPA is acting only on the most recently submitted 
version of May 13, 1999, EPA has reviewed materials associated with the 
two most recent NSR SIP submittals dated July 13, 1994 and July 22, 
1998.
    Once approved as new rules into the California SIP for San Diego 
County, the May 13, 1999, submitted SDCAPCD rules 20.1, 20.2, 20.3 and 
20.4 will strengthen the existing SIP by:
     Including major source and major modification thresholds 
that are consistent with the 1990 Clean Air Act Amendments for major 
stationary sources and major modifications locating in serious ozone 
non-attainment areas;
     Establishing the appropriate emissions offset ratio for 
major stationary sources and major modifications locating in serious 
ozone non-attainment areas.
3. Removing Conditions in 1981 NSR SIP Approval
    In addition to our proposed limited action to approve SDCAPCD rules 
20.1 through 20.4, we also propose to delete the District NSR rule 
conditions identified when EPA finalized the NSR rules in 1981. See 46 
FR 21757 and 40 CFR 52.232(a)(4). These conditions are moot today for 
the following reasons:
     The current rules will, upon final approval, supercede the 
1980 rules.
     EPA has not taken action on any revisions to SDCAPCD NSR 
rules 20.1 through 20.6.
     We have not issued final rulemaking to correct the 
deficiencies of SDCAPCD NSR rules discussed in the April 14, 1981 final 
rulemaking.
     The District has revised and submitted new NSR rules to 
comply with the 1990 CAA amendments.

B. Rule Deficiencies

    The following rule deficiencies prevent EPA from being able to 
fully approve SDCAPCD rules 20.1, 20.2, 20.3 and 20.4 contained in 
today's action. In addition to identifying the deficiencies, we have 
provided information on how to correct some of the deficiencies.
1. Deficiencies With Rule 20.1
     20.1(b)(4) provides for an exemption from the offset 
requirements of rule 20.2(d)(5) 2 or of rules 20.3(d)(5) and 
(d)(8) for NOX emission increases from new, modified or 
replacement emission units subject to the requirements of rule 
69(d)(6). Rule 69, ``Electrical Generating Steam Boilers, Replacement 
Units and New Units,'' is not SIP approved and CARB, on behalf of 
SDCAPCD, does not intend to submit it to EPA for SIP approval. This 
exemption from the offset requirements is a deficiency because CAA 
section 173(c) requires offsets for all new major stationary sources or 
major modifications as defined in CAA 182(c) for serious ozone non-
attainment areas. Rule 69 does not provide a recognized alternative to 
the offset requirement because it is not a SIP-approved rule.
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    \2\ Subsection (d)(5) of rule 20.2 was adopted locally by 
SDCAPCD on 11/4/98 but not included in the May 13, 1999 CARB SIP-
submittal.
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     Rule 20.1(c)(26) definition of ``Federally Enforceable.'' 
There are two reasons why this definition is a rule deficiency. First, 
the definition allows Authority to Construct (ATC) terms and conditions 
imposed pursuant to the SDCAPCD rules and regulations or state law to 
be deemed ``non-federally enforceable'' unless otherwise requested by 
the owner. SDCAPCD has not defined which ``rules and regulations'' 
could create permit terms and conditions that are not federally 
enforceable. It is our position that SIP-approved rule 10 
3--``Permits Required,'' and rule 21--``Permit Conditions'' 
create a SIP-approved permitting program for subject sources in San 
Diego County. Additional SIP NSR rules for major and minor sources 
add--or will add, upon SIP approval--more specific pre-construction 
permitting requirements. Given the broad authority of SIP rules 10 and 
21, it is our position that all permit terms and conditions in SIP-
approved permits are federally enforceable.4 The Air 
Pollution Control Officer (APCO) cannot unilaterally deem a such a 
permit condition ``non-federally-enforceable.''
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    \3\ Rule 10 ``Permits Required'' is a broad rule that states in 
subsection (a) ``Authority to Construct': ``Any person building, 
erecting, altering or replacing any article, machine, equipment or 
other contrivance * * * shall first obtain written authorization for 
such construction from the Air Pollution Control Officer.''
    \4\ See 40 CFR 52.23 and letter dated March 31, 1999 from John 
Sietz to Mr. Doug Allard, President of CAPCOA.
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    Second, the definition incorrectly states, ``* * * which term or 
condition is imposed pursuant to * * * 40 CFR part 51, subpart I.'' 
Part 51, subpart I is not a permitting program that, on its own, 
provides a state authority to impose permit terms and conditions. 
Rather, part 51, subpart I contains

[[Page 42894]]

federal minor NSR (sections 51.160 through 51.166) and major non-
attainment NSR (sections 51.160 through 51.165) requirements that state 
programs (i.e., rules) must contain before they can be SIP-approved. 
Once SIP-approved pursuant to part 51, subpart I, the NSR rules, and 
all terms and conditions of ATC permits issued pursuant to those rules, 
become federally enforceable.
    To correct the deficiencies, the District must do either of the 
following:
    1. The District could require all terms and conditions to be 
federally enforceable. To create this, the District must eliminate the 
entire paragraph that allows non-federally enforceable conditions to be 
created and revise the statement in rule 20.1(c)(26)(ii) to state, ``* 
* * which term or condition is imposed pursuant to * * * District rule 
10, 21, 20.1 through 20.4 * * *'' EPA believes this option is the best 
way to correct the deficiencies and would eliminate any ambiguity 
surrounding the enforceability of the terms and conditions NSR permits.
    2. Alternatively, if SDCAPCD would like the ability to separate NSR 
permit terms into federally enforceable and non-federally enforceable 
terms, SDCAPCD must revise and submit for SIP approval rules 10 and 21 
and revise the statement in rule 20.1(c)(26)(ii) to state, ``* * * 
which term or condition is imposed pursuant to * * * District rule 10, 
21, 20.1 through 20.4 * * *''
     20.1(d)(5) requires that offsets be ``actual emission 
reductions'' but does not require offsets to be surplus at the time of 
use. Further, rule 20.1(d)(4)(ii) and (iii) prescribe how actual 
emission reductions are calculated (including any necessary 
adjustments), at the time of generation, not at the time of use. EPA 
requires that the emissions reductions used to offset any new or 
modified major stationary source be surplus at the time of 
use.5
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    \5\ CAA section 173(c)(2) prohibits the use of emission 
reductions that are ``otherwise required by this chapter.''
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    To correct the deficiency the District must require offsets to be 
surplus at the time of use.
     20.1(d)(5) is deficient because the subsection contains a 
reference to rule 27. Rule 27 has been submitted but contains a 
deficiency at 27(c)(1)(vi)--``Other Emission Reduction Strategies.'' 
Rule 27(c)(1)(vi) would allow emissions reduction credits (ERCs) to be 
created upon approval of the APCO and concurrence from ARB. EPA cannot 
approve into the SIP a reference to a rule that allows such broad APCO 
discretion as to how ERCs are created. Because the emission reductions 
are used to offset emission increases from new or modified major 
stationary sources, the district rules must be amended to assure that 
emission increases from new and modified stationary sources are offset 
by real reductions in actual emissions as required by Clean Air Act 
section 173(c)(1).
    The following are two possible options to correct the deficiency:
    (1) Remove the reference to rule 27 in the subsections of 
20.1(d)(5).
    (2) Revise and submit to EPA for SIP approval a new version of rule 
27 that is approvable. Such approval must occur within 18 months from 
final approval of today's action.
2. Deficiency with Rules 20.3 and 20.4
     Rules 20.3(d)(5)(vi) and 20.4(d)(5)(vi) allow the APCO to 
authorize interpollutant 6 trading to satisfy the federal 
offset requirements. Specific ratios are provided in the rule. For 
example, a source may acquire, for every ton of NOX 
increase, 2.0 tons of VOC emission reduction. Conversely, a one ton VOC 
increase may be offset with one ton of NOX decrease. SDCAPCD 
has not provided a justification as to how the interpollutant offset 
ratios were obtained. Furthermore, to date, EPA has not developed a 
policy that describes how a state could establish appropriate basin-
wide interpollutant offset ratios.
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    \6\ Although the term ``interpollutant'' is used, the District 
rules only allow for trades between the ozone precursors 
NOX and VOC.
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    To correct the deficiency in Rules 20.3 and 20.4 the District must 
either delete the interpollutant ratios and add the requirement that 
interpollutant ratios will be evaluated on a case-by-case basis with 
public notice and EPA concurrence or provide modeling studies to 
adequately support the ratio in the rule.
3. Deficiency with Rule 20.2
     20.2(d)(2) establishes the air quality impact analysis 
requirements for non-major (minor) sources in San Diego County. This 
section does not require an analysis of the available increment as 
required in 51.166(a)(1).
    To correct the deficiency the District must revise the rule to add 
the requirement that minor sources subject to the AQIA requirements 
must evaluate their impact on the increment.
4. Deficiency with Rules 20.1 through 20.4
     Rules 20.1 through 20.4 do not provide that the degree of 
emission limitation required of any source for control of any air 
pollutant must not be affected by so much of any source's stack height 
that exceeds good engineering practice. Although subsection of 
20.3(d)(3)--Prevention of Significant Deterioration--of the locally 
adopted rule contains this requirement, rule 20.3(d)(3) has not been 
submitted to EPA to be included in the SIP.
    To correct this deficiency the District must revise the rules to 
require that the degree of emission limitation required of any source 
for control of any air pollutant must not be affected by so much of any 
source's stack height that exceeds good engineering practice.

III. EPA Solicits Comment on Two Special Issues

    In addition to the above deficiencies, there are two provisions in 
the submitted rules for which EPA solicits comment:
    (1) The provision in 20.1(d)(1)(ii)(C) that allows a stationary 
source to exclude emissions from portable equipment from its aggregate 
potential to emit; and
    (2) The overall adequacy of the SDCAPCD minor source NSR program 
requirements contained in submitted rule 20.2.
    EPA is not proposing its limited approval, limited disapproval on 
the basis of these two deficiencies.7 We are soliciting 
comment on the provisions and will, after evaluating the comments, 
either approve the above listed provisions, or cite the provisions as a 
deficiency and as a further basis for limited disapproval in the final 
rulemaking. The Agency's evaluation of the two provision are provided 
below.
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    \7\ Except that San Diego's minor NSR rule contains one 
deficiency in that rule 20.2 does not require minor sources to 
analyze the impact on the available increment.
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A. Provision 20.1(d)(1)(ii)(C)--Exclusion of emissions from portable 
equipment from a stationary source's potential to emit (PTE)

1. Overview
    By excluding the emissions from portable equipment from a 
stationary source's aggregate PTE, major stationary sources could be 
improperly classified as minor sources and avoid applicable 
requirements.8 On the surface, it appears that 
20.1(d)(1)(ii)(C) is not consistent with federal law. However, CARB has 
submitted to EPA for SIP approval SDCAPCD rule 20.4 which is

[[Page 42895]]

dedicated entirely to the NSR regulation of portable equipment.
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    \8\ SDCAPCD provided EPA an internal memo dated May 17, 1999 
that explained how the District regulations would prevent a 
stationary source from abusing portable equipment to avoid major NSR 
requirements.
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    EPA solicits comment on whether it is appropriate to exclude 
emissions from portable equipment from a stationary source's PTE. In 
general, EPA believes it could be appropriate if the portable equipment 
is subject to NSR regulations separate from, and equivalent to, 
stationary source NSR regulations. Without separate regulations, 
however, EPA believes emissions from portable equipment should not be 
excluded from the stationary source's PTE.
    On a side note, Rule 20.1 (d)(1)(ii)(D) allows emissions from 
military tactical support equipment, including gas turbines, to be 
exempt from a stationary source's aggregate potential to emit. Based on 
conversations with District staff and data provided by representatives 
of the Department of Defense, EPA believes this is allowable in San 
Diego County because: (1) Most of the emissions from military tactical 
support equipment are from piston engines that are non-road engines and 
are therefore not required to be considered part of a stationary 
source; and (2) emissions from gas turbines (emission units that are 
not covered under non-road engine regulations) are de minimus. If the 
emissions from gas turbines exceed de minimus levels after approval of 
this rule, the District must submit a revision deleting this exemption 
or EPA will use its authority under section 110(k)(5) of the Act to 
require the District to submit a SIP revision.
2. History of Portable Equipment Regulations in San Diego
    Rule 20.1(d)(1)(ii)(C) allows emissions from all portable emission 
units to be excluded from a stationary source's PTE. The exemption does 
not distinguish between portable units that were previously permitted 
(before regulations for portable units were adopted by SDCAPCD on May 
17, 1994) 9 and those permitted after 1994. EPA solicits 
comment on whether such a distinction is necessary for the exclusion to 
be allowed. EPA believes that only portable equipment permitted after 
May 17, 1994 should be eligible for the exclusion because portable 
units permitted prior to that date were regulated as part of a 
stationary source and may not have met appropriate federal NSR 
requirements at that time.
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    \9\ For example, many pre-1994 permits limited the portable unit 
and the stationary source to less than 100 #/day NOX to 
avoid BACT requirements.
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    In addition, EPA solicits comment on specific portable equipment 
NSR requirements contained in rule 20.4 as identified below.
3. Summary of the District's Current NSR Requirements for Portable 
Emission Units in San Diego
    a. Portable emission unit is defined in rule 20.1(c)(49). The 
District's definition generally limits the amount of time a portable 
unit could operate at one location (stationary source) to no more than 
12 consecutive months. If the portable unit exceeds this time limit or 
is otherwise operated in a manner to circumvent NSR, the portable unit 
is considered ``relocated'' and subject to the requirements for 
relocated units under 20.1, 20.2 and 20.3.
    District rule 20.4 further defines two types of portable emissions 
units: Type I and Type III. Type I portable units can locate at 
stationary sources with an aggregate PTE less than 50 tpy and Type III 
portable units can locate at any stationary source regardless of the 
stationary source's aggregate PTE.
    b. Offset Requirements for Type I and Type III units: According to 
rule 20.4(d)(5), Type III units are required to obtain offsets at a 
1.2:1 ratio for any emission increase prior to operation at a major 
stationary source. Type I emission units are generally limited to 
operation at non-major stationary sources only. However, they are 
allowed, according to the District's definition of Type I, to operate 
at a major stationary source if they provide emission offsets prior to 
operation. Sources of emissions offsets may include same-pollutant or 
interpollutant reductions,10 or emission reductions obtained 
from the ``emission offset pool'' as allowed in 20.4(d)(5)(v).
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    \10\ Interpollutant ratios established in the rule for Type III 
(or Type I) portable units has been identified as a rule deficiency.
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    We solicit comment on the definition of Type I Portable Emission 
Unit (rule 20.4(c)(3)) that would allow Type I units to only obtain 
offsets (at the levels required for Type III portable units) before it 
locates at a major stationary source. This definition creates an 
apparent loophole by allowing Type I portable equipment to locate at a 
major stationary source without meeting the same LAER requirement as 
Type III portable equipment.
    Finally, we solicit comment on rule 20.4(d)(5)(v) that would allow 
offsets from portable equipment to come from an ``emission offset 
pool.'' According to the rule, the offset pool consists of emission 
offsets which are designated for use by any number of portable emission 
units. EPA believes this alternative mechanism is workable as outlined 
in the rule provided the offsets are surplus emission reductions at the 
time of use,11 enforceable, quantifiable, and permanent.
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    \11\ The District rules do not require that NSR offsets are 
surplus at the time of use. See rule Deficiency section and the TSD 
for more information.
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    c. LAER Requirements for Type I and Type III units: Only Type III 
emission units are required to comply with LAER. See 20.4(d)(1)(ii). In 
lieu of complying with LAER, this subsection allows Type III portable 
units to obtain offsets at a 1.3:1 ratio from the stationary source at 
which the portable unit will locate. 12 13
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    \12\ Type I portable units are not required to comply with LAER 
even if they plan to locate at a major stationary source (as allowed 
in the definition of Type I).
    \13\ The provision to allow ``internal'' offsets at a 1.3:1 
ratio to be used in lieu of LAER is allowed under CAA section 
182(c)(7) and (8) for major stationary source modifications in 
serious ozone non-attainment areas. See SDCAPCD rule 20.3(d)(7) for 
stationary source LAER requirements.
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    We solicit comment on rule 20.4(d)(1)(ii) that allows Type III 
portable units to obtain additional offsets from a stationary source in 
lieu of LAER. While the CAA allows internal offsets to be used in lieu 
of LAER for stationary sources, SDCAPCD's portable equipment rule--in 
EPA's view--has decoupled portable equipment from the stationary 
source, and therefore, stationary source reductions cannot be extended 
to independent portable equipment.
    d. Air Quality Impact Analysis (AQIA) for Portable Equipment: Type 
III and Type I emission units are required to perform an AQIA if a 
portable emission unit's proposed emissions are above the AQIA 
thresholds specified in table 20.4-1 (reproduced below in Table 2). See 
rule 20.4(d)(2). The AQIA requires that the portable unit perform such 
analyses based on the location at which the unit will locate. 
Furthermore, the APCO may require an AQIA even if the thresholds are 
not exceeded. Finally, rule 20.4(d)(2)(ii) does not require an AQIA for 
NOX and VOC impacts on ozone.
    In general, an example of how the AQIA analysis will be performed 
for portable equipment is discussed by the District in response to 
written comment #96 in the District's 1992 NSR rule Workshop Report:

    An applicant for a portable emission unit can perform a ``worst-
case'' AQIA, where the impact of an emission unit's maximum 
emissions is analyzed and added to the maximum background 
concentration in the County. If the applicant can demonstrate that 
the proposed emissions do not cause or contribute to a violation of 
any Ambient Air Quality Standard (AAQS), then further analysis would 
not be required for that unit

[[Page 42896]]

when it is moved from one site to another. If a worst case analysis 
cannot be made * * * then an AQIA would be required each time the 
equipment moves from one site to another.

    As with the other provisions in the portable equipment rule, EPA 
solicits comment on the provisions for AQIA in 20.4(d)(2). In 
particular, because 20.4(d)(2) does not require any analysis for 
impacts related to a portable unit's potential VOC emissions, we 
solicit comments on how to evaluate ambient air quality impacts from a 
high VOC emitting portable source that moves from one location to 
another within San Diego the County. Furthermore, EPA is soliciting 
comment on whether or not there is any potential for this rule's 
implementation to cause or contribute to any disparate impact in local 
communities. We are not suggesting that this rule does have such an 
impact, but we are aware of community concerns surrounding these issues 
in San Diego and want to ensure that such concerns are not associated 
with this rule.
    Also, although 20.4(d)(2)(iv) gives the APCO the authority to 
require an AQIA at any time--regardless of the portable unit's emission 
rates--the District, through CARB, has not submitted any analyses to 
justify the AQIA trigger levels in Table 20.4-1 (reproduced below in 
Table 2). EPA is concerned that the trigger levels in Table 20.4-1 do 
not account for multiple emission units that may independently locate 
at a single stationary source. EPA, therefore, solicits comment on 
whether the trigger levels in Table 20.4-1 are appropriate considering 
that multiple emission units may independently locate at a single 
stationary source.
    e. Public Notification Requirements for Portable Equipment: If the 
owner or operator of a portable unit, with proposed emission increases 
above the thresholds in table 20.4-1, requests a permit, the APCO is 
required to provide at least a 40 day public comment period. Within 
that period, the APCO shall provide at least 30 days during which 
comment on the proposed project may be received. All comments will be 
considered prior to the APCO taking final action.
    Federal regulations require at 40 CFR 51.161 public notification 
requirements for minor and major stationary sources. While section 
51.161 does not establish a deminimus threshold below which no public 
notification is needed, 40 CFR 51.160(e) requires states to ``identify 
types and sizes of facilities that will be subject to review * * *'' 
and ``discuss the basis for determining which facilities will be 
subject to review.'' SDCAPCD, through CARB has not provided an analysis 
that the sizes and types of emissions units regulated--and for which 
public notice will be provided--will ensure the federal requirements of 
section 51.160 are met.
    EPA solicits comment on whether the trigger levels are 
appropriately established in Table 20.4-1 to ensure the public has the 
opportunity to review the proposed portable equipment permits.
4. Title V Consistency and Enforcement
    The title V program in San Diego County does not allow a stationary 
source to exclude emissions from portable equipment. See definition of 
stationary source at SDCAPCD Regulation XIV, rule 1401(c)(45). Further, 
the District requires emissions from insignificant emission units to be 
included in the title V applicability determination of a stationary 
source.
    If the emissions from portable equipment are not required for NSR 
applicability determinations, EPA is concerned that the separate 
applicability determination requirements could create a source that is 
non-major under NSR and major under title V. While EPA generally 
promotes consistency across programs, an alternative may be acceptable 
if there is a rational basis for treatment under one program compared 
to the other. The EPA solicits comment on whether a separate permitting 
requirement for portable units will lead to confusion for sources, 
contractors operating portable units at those sources, the public and 
the District.
    Furthermore, EPA solicits comment on whether possible confusion 
would lead to ill-informed, and incorrect compliance certifications 
under title V because a stationary source operator may not examine the 
Title V compliance requirements for certain portable equipment if the 
equipment has been excluded under NSR.

B. Minor New Source Review Requirements in San Diego--Rule 20.2

    EPA also requests comment on whether the minor source NSR 
regulations contained in SDCAPCD rule 20.2--combined with the 
requirements in existing SIP rules 10 and 21--are sufficient to assure 
that the national air quality standards are achieved as required in CAA 
section 110(a)(2)(C).
1. Overview of Federal Minor NSR Requirements
    In addition to the regulation of major stationary sources as 
required in part C (attainment areas) and part D (non-attainment areas) 
of the Clean Air Act, states are also required to include in the SIP a 
program to provide for the ``regulation of the modification and 
construction of any stationary source * * * as necessary to assure that 
national ambient air quality standards are achieved * * *'' [emphasis 
added]. See CAA section 110(a)(2)(C).
    The implementing regulations require states to develop ``legally 
enforceable procedures'' to enable the state ``to determine whether the 
construction or modification of a facility, building, structure or 
installation, or combination of these will result in--(1) a violation 
of applicable portions of the control strategy; or (2) interference 
with attainment or maintenance of a national standard * * *'' See 40 
CFR 51.160(a). However, instead of establishing sizes and types of 
stationary sources that will be subject to minor new source review, EPA 
allows states some discretion. This discretion is not unbounded, 
however, and states are required to, ``discuss the basis for 
determining which facilities will be subject to review.''
2. San Diego's Minor NSR Program
    Rule 20.2, ``New Source Review--Non-Major Stationary Sources,'' is 
part of the District's minor NSR rule. This rule supplements existing 
SIP 14 rule 10, ``Permits Required,'' and rule 21, ``Permit 
Conditions.'' Rule 20.2 applies to sources that are, after completion 
of a project, not a major source. See rule 20.2(a). Rule 20.2 contains 
two basic requirements: (1) an air quality impact analysis at 
subsection (d)(2); and (2) the public notification requirements at 
subsection (d)(4). The following is a discussion of the two substantive 
requirements both of which are triggered if the emissions increase from 
a project is greater than the levels indicated in the Table 2 below.
---------------------------------------------------------------------------

    \14\ See 60 FR 62756 for discussion on minor NSR as it applies 
to Title V permitting. In the discussion of the District's 
definition of ``Federally Mandated New Source Review'' in Regulation 
XIV, EPA identified--and SDCAPCD concurred--that SIP-approved rules 
10 and 21 constitute the District minor NSR program, at that time. 
On a side note, today's proposed rulemaking does not alter the 
status of EPA's Title V interim approval in San Diego as it relates 
to minor NSR.

[[Page 42897]]



  Table 2.--San Diego's AQIA and Public Notification Trigger Levels for
                Minor Sources and Portable Emission Units
------------------------------------------------------------------------
        Air contaminant             Lb/hr        Lb/day        Tons/yr
------------------------------------------------------------------------
Particulate matter(PM-10)......  ...........         100            15
NOX............................           25         250            40
SOX............................           25         250            40
CO.............................          100         550           100
Lead and Lead compounds........  ...........           3.2           0.6
------------------------------------------------------------------------

    a. Minor source NSR public notification requirements: Rule 
20.2(d)(4) requires that the APCO shall not issue an ATC or modified 
PTO for any project subject to the AQIA requirements unless the APCO 
provides the public with at least 40 days notice of the proposed 
action. Within that time period, the APCO shall make available all 
information relevant to the proposed action and provide at least 30-
days during which comments may be submitted.
    b. Air quality impact analysis: An air quality impact analysis is 
required for any project (including relocated and replacement emission 
units) that has an emissions increase greater than or equal to the 
applicable thresholds in table 20.2-1. See 20.2(d)(2). If an AQIA is 
required, the applicant of a new, modified, replacement, or relocated 
emission unit shall demonstrate to the satisfaction of the APCO that 
the project will not:
    ``(A) cause a violation of a state or national ambient air standard 
anywhere that does not already exceed such standard; nor 15
---------------------------------------------------------------------------

    \15\ The District rule requires that the applicant analyze the 
project's impact on state air quality standards. CARB has requested 
that this subsection ``be submitted for inclusion in the SIP only 
with respect to the NAAQS.'' EPA interprets this to mean that 
sources are not required to assure compliance with the state air 
quality standards for purposes of fulfilling the federal permitting 
standards contained in the SIP.
---------------------------------------------------------------------------

    (B) cause additional violations of a national ambient air quality 
standard anywhere the standard is already being exceeded, nor
    (C) cause additional violations of a state ambient air quality 
standard anywhere the standard is already being exceeded, except as 
provided for in Subsection (d)(2)(v), nor
    (D) prevent or interfere with the attainment or maintenance of any 
state or national ambient air quality standard.''
    As discussed in the Rule Deficiencies Section of this proposed 
rulemaking, San Diego's NSR rule for minor and major sources must 
require an analysis of the source's impact on the air quality 
increment.
3. Federal Enforceability of Terms and Conditions of Minor NSR Permits
    As discussed in the Rule Deficiencies section above, EPA has 
identified the District's definition of ``federally enforceable'' as a 
rule deficiency. It is important to discuss how EPA interprets the 
District's definition of ``federally enforceable'' as it applies to 
terms and conditions of minor NSR permits.
    For minor NSR, EPA interprets, and the District 
concurs,16 that SIP-approved rules 10 and 21, combined with 
new rule 20.2 (upon SIP-approval) constitute the District's minor NSR 
rule. EPA recognizes that the District would like the ability to 
separate minor and major NSR terms and conditions into federally 
enforceable and non-federally enforceable terms and 
conditions.17 EPA is concerned about the practical 
implementation of a program that allows for separation of permit terms 
and conditions because sources, the public, and regulators may 
experience confusion if competing compliance obligations reside within 
the same permit. Please see the Rule Deficiencies section for options 
on how the District could change the definition of ``federally 
enforceable.''
---------------------------------------------------------------------------

    \16\ See Footnote 14.
    \17\ See second to last paragraph of the district's definition 
of federally enforceable that would allow for such separation 
provided the term or condition is not created to fulfill a federal 
requirement.
---------------------------------------------------------------------------

4. Discussion on Minor NSR
    EPA solicits comment today on whether the thresholds for AQIA and 
public notice contained in 20.2 are sufficient and/or whether 
additional requirements are necessary in addition to the AQIA and 
public notice requirements.
    SDCAPCD, through CARB has not provided an analysis, as required in 
section 51.160(e) that discusses the basis for determining which 
(minor) facilities will be subject to review. This analysis is 
important because it supports the ``legally enforceable procedures'' 
established in rule 20.2 (e.g., AQIA analysis). These ``procedures,'' 
in turn, must enable the District to determine whether the construction 
or modification of a facility, building, structure, or installation, or 
combination of these, will result in a violation of the applicable 
control strategy or interfere with attainment of the NAAQS. See section 
51.160(a).
    While the District AQIA analysis requires an individual source with 
expected emissions above the AQIA thresholds to analyze its air quality 
impact, EPA is concerned that the District has not accounted for the 
combined impact from multiple sources with emissions below the AQIA 
thresholds.
    Furthermore, in the past, EPA has accepted control requirements for 
minor sources (e.g. minor source BACT) to support a state's 
demonstration that minor source construction will not interfere with 
attainment or violate an applicable portion of the control strategy. 
Many air pollution control districts within the state of California 
require air pollution controls on non-major (minor) sources. CARB, 
however, has elected to not submit for SIP approval the state BACT 
requirements at SDCAPCD rule 20.2(d)(1). San Diego explicitly requested 
CARB to exclude the state BACT requirement (and other state 
requirements) from the submittal. For a complete list of the sections 
and subsections of this rule that are not included, please refer to the 
TSD.
    To conclude, EPA solicits comment on whether the requirements for 
minor sources are adequate to assure that national ambient air quality 
standards are achieved. EPA has not received a demonstration from San 
Diego that shows the air quality impacts from individual or combined 
minor sources will not interfere with attainment of the NAAQS or result 
in a violation of the control strategy. We believe such a demonstration 
is necessary and we solicit comments on what should be required (e.g., 
minor source BACT). Furthermore. EPA solicits comment on the practical 
implementation of a minor source permitting program that allows for 
separation of permit terms and conditions into federally enforceable 
and non-federally enforceable. EPA believes such a permit program could 
be

[[Page 42898]]

confusing to sources, regulators and the public.

IV. Overview of Limited Approval/Disapproval

    A detailed discussion of rule 20.1 through 20.4 deficiencies, a 
discussion of SDCAPCD's minor NSR program and portable emission unit 
NSR rule, as well as other rule clarifications and EPA interpretations, 
can be found in the Technical Support Document for Rules 20.1, 20.2, 
20.3 and 20.4 which is available from the U.S. EPA, Region 9 office.
    Because of the deficiencies identified in this rulemaking, rules 
20.1, 20.2, 20.3 and 20.4 are not approvable pursuant to the section 
182(a)(2)(A) of the CAA because they are not consistent with the 
interpretation of sections 110(a)(2)(C) and 173 of the CAA, and may 
lead to rule enforceability problems.
    Because of the above deficiencies, EPA cannot grant full approval 
of these rule(s) under section 110(k)(3) and part D. Also, because the 
submitted rules are not composed of separable parts which meet all the 
applicable requirements of the CAA, EPA cannot grant partial approval 
of the rules under section 110(k)(3). However, EPA may grant a limited 
approval of the submitted rules 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 because EPA's action also contains a simultaneous limited 
disapproval. In order to strengthen the SIP, EPA is proposing a limited 
approval of San Diego County Air Pollution Control District's submitted 
rule 20.1, 20.2, 20.3 and 20.4 under sections 110(k)(3) and 301(a) of 
the CAA.
    At the same time, EPA is also proposing a limited disapproval of 
San Diego County Air Pollution Control District's rules 20.1, 20.2, 
20.3 and 20.4 because they contain deficiencies and, as such, the rules 
do not fully meet the requirements of part D of the Act. Under section 
179(a)(2), if the Administrator disapproves a submission under section 
110(k) for an area designated nonattainment, based on the submission's 
failure to meet one or more of the elements required by the Act, the 
Administrator must apply one of the sanctions set forth in section 
179(b) unless the deficiency has been corrected within 18 months of 
such disapproval. Section 179(b) provides two sanctions available to 
the Administrator: highway funding and offsets. The 18 month period 
referred to in section 179(a) will begin on the effective date of EPA's 
final limited disapproval. Moreover, the final disapproval triggers the 
Federal implementation plan (FIP) requirement under section 110(c). It 
should be noted that the rules covered by this proposed rulemaking have 
been adopted by the SDCAPCD and are currently in effect in the SDCAPCD. 
EPA's final limited disapproval action will not prevent San Diego 
County Air Pollution Control District or EPA from enforcing these 
rules.
    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.

V. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order (E.O.) 12866, Regulatory 
Planning and Review.

B. Executive Order 12875

    Under Executive Order 12875, Enhancing the Intergovernmental 
Partnership, EPA may not issue a regulation that is not required by 
statute and that creates a mandate upon a State, local or tribal 
government, unless the Federal government provides the funds necessary 
to pay the direct compliance costs incurred by those governments, or 
EPA consults with those governments. If EPA complies by consulting, 
Executive Order 12875 requires EPA to provide to the Office of 
Management and Budget a description of the extent of EPA's prior 
consultation with representatives of affected State, local and tribal 
governments, the nature of their concerns, copies of any written 
communications from the governments, and a statement supporting the 
need to issue the regulation. In addition, Executive Order 12875 
requires EPA to develop an effective process permitting elected 
officials and other representatives of State, local and tribal 
governments ``to provide meaningful and timely input in the development 
of regulatory proposals containing significant unfunded mandates.'' 
Today's rule does not create a mandate on State, local or tribal 
governments. The rule does not impose any enforceable duties on these 
entities. Accordingly, the requirements of section 1(a) of E.O. 12875 
do not apply to this rule.

C. Executive Order 13045

    Protection of Children from Environmental Health Risks and Safety 
Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) is 
determined to be ``economically significant'' as defined under E.O. 
12866, and (2) concerns an environmental health or safety risk that EPA 
has reason to believe may have a disproportionate effect on children. 
If the regulatory action meets both criteria, the Agency must evaluate 
the environmental health or safety effects of the planned rule on 
children, and explain why the planned regulation is preferable to other 
potentially effective and reasonably feasible alternatives considered 
by the Agency. This rule is not subject to E.O. 13045 because it is 
does not involve decisions intended to mitigate environmental health or 
safety risks.

D. Executive Order 13084

    Under Executive Order 13084, Consultation and Coordination with 
Indian Tribal Governments, EPA may not issue a regulation that is not 
required by statute, that significantly or uniquely affects the 
communities of Indian tribal governments, and that imposes substantial 
direct compliance costs on those communities, unless the Federal 
government provides the funds necessary to pay the direct compliance 
costs incurred by the tribal governments, or EPA consults with those 
governments. If EPA complies by consulting, Executive Order 13084 
requires EPA to provide to the Office of Management and Budget, in a 
separately identified section of the preamble to the rule, a 
description of the extent of EPA's prior consultation with 
representatives of affected tribal governments, a summary of the nature 
of their concerns, and a statement supporting the need to issue the 
regulation. In addition, Executive Order 13084 requires EPA to develop 
an effective process permitting elected officials and other 
representatives of Indian tribal governments ``to provide meaningful 
and timely input in the development of regulatory policies on matters 
that significantly or uniquely affect their communities.'' Today's rule 
does not significantly or uniquely affect the communities of Indian 
tribal governments. Accordingly, the requirements of section 3(b) of 
E.O. 13084 do not apply to this rule.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to conduct a regulatory flexibility analysis of any

[[Page 42899]]

rule subject to notice and comment rulemaking requirements unless the 
agency certifies 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 small 
governmental jurisdictions. This final rule will not have a significant 
impact on a substantial number of small entities because SIP approvals 
under section 110 and subchapter I, part D of the Clean Air 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 create any new requirements, I certify that this action will 
not have a significant economic impact on a substantial number of small 
entities. Moreover, due to the nature of the Federal-State relationship 
under the Clean Air Act, preparation of 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).

F. 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 
annual 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 annual 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 
requirements. Accordingly, no additional costs to State, local, or 
tribal governments, or to the private sector, result from this action.

List of Subjects in 40 CFR Part 52

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

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

    Dated: July 29, 1999.
Nara L. McGee,
Acting Regional Administrator, Region 9.
[FR Doc. 99-20311 Filed 8-5-99; 8:45 am]
BILLING CODE 6560-50-P