[Federal Register Volume 64, Number 184 (Thursday, September 23, 1999)]
[Proposed Rules]
[Pages 51493-51496]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-24841]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 217-0180; FRL-6442-8]


Clean Air Act Approval and Promulgation of California State 
Implementation Plan for the San Joaquin Valley Unified Air Pollution 
Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to revise the California State Implementation 
Plan (SIP) by approving rules from the San Joaquin Valley Unified Air 
Pollution Control District (District). EPA is proposing to approve 
these rules to meet new source review (NSR) requirements of the Clean 
Air Act, as amended in 1990 (CAA or Act), for areas that have not 
attained the National Ambient Air Quality Standards (NAAQS). The State 
submitted Rules 2020 and 2201 to satisfy these Federal requirements for 
an approvable NSR SIP. EPA evaluated Rules 2020 and 2201 based on CAA 
guidelines for EPA action on SIP submittals and general rulemaking 
authority.

DATES: Comments on this proposed action must be received in writing by 
October 25, 1999.

ADDRESSES: Comments must be submitted in writing to Ed Pike at the 
Region IX mailing address listed below. Copies of the rules and EPA's 
evaluation report are available for public inspection at EPA's Region 
IX office during normal business hours. Copies of the submitted rules 
are available for inspection at the following locations:

Permits Office (AIR-3), Air Division, Environmental Protection Agency, 
Region IX, 75 Hawthorne Street, San Francisco, CA 94105
Environmental Protection Agency, Air Docket (6102), 401 ``M'' Street, 
S.W., Washington, D.C. 20460
California Air Resources Board, Stationary Source Division, Rule 
Evaluation Section, 2020 ``L'' Street, Sacramento, CA 95814
San Joaquin Valley Unified Air Pollution Control District, Central 
Region, 1990 E. Gettysburg Avenue, Fresno CA 93726

FOR FURTHER INFORMATION CONTACT: Ed Pike, (telephone 415/744-1211), Air 
Division (Air-3), U.S. Environmental Protection Agency, Region IX, 75 
Hawthorne Street, San Francisco, CA 94105-3901, or [email protected].

SUPPLEMENTARY INFORMATION:

I. EPA Is Proposing to Approve District Rules 2020 and 2201

    EPA is proposing to approve District Rules 2020 and 2201 into the 
California SIP. Rule 2020 was adopted by the District on September 17, 
1998, and submitted to EPA by the California Air Resources Board (CARB) 
on October 27, 1998. Rule 2201 was adopted by the District on August 
20, 1998 and submitted to EPA by CARB on September 29, 1998. This 
proposed approval does not include Secs. 5.9 and 6.0 of Rule 2201, 
which specify requirements for title V operating permits. The title V 
requirements in Rule 2201 were addressed in EPA's April 24, 1996 
rulemaking on the District's title V operating permits program (see 60 
FR 55517 and 61 FR 18083), and the District has not submitted 
substantive changes to these sections of Rule 2201 since that approval.
    The District is composed of Fresno County, a portion of Kern County 
1, Kings County, Madera County, Merced County, San Joaquin 
County, Stanislaus County, and Tulare County. The eight former County 
air pollution management agencies merged to form the unified Valley-
wide District in 1992. The District is designated as a serious 
nonattainment area for ozone and particulate matter less than ten 
microns in diameter (PM10). The District is designated 
attainment for the nitrogen dioxide (NO2), sulfur dioxide 
(SO2), and carbon monoxide (CO) NAAQS, although nitrogen 
oxides (NOx) and sulfur oxide (SOx) are regulated 
as precursors to other nonattainment pollutants. For the detailed area 
designations that apply to the District, please refer to 40 CFR 81.305. 
The CAA air quality planning requirements for nonattainment NSR are set 
out in part D of Title I of the Act, with implementing regulations at 
40 CFR 51.160 through 51.165.
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    \1\ This District includes the portion of Kern County described 
in District rule 1020 Sec. 3.44 (adopted November 13, 1996).
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    The District submitted Rule 2020, Permit Exemptions, and Rule 2201, 
New Source Review, to replace existing rules in the following SIPs: 
Fresno County, Kern County, Kings County, Madera County, Merced County, 
San Joaquin County, Stanislaus County, and Tulare County. As explained 
below, EPA has evaluated Rule 2020 and 2201 and has determined that 
they are consistent with the CAA, EPA regulations and EPA policy. 
Therefore, EPA is proposing to approve Rule 2020 and Rule 2201 under 
section 110(k)(3) of the CAA as meeting the requirements of section 
110(a), and part D of Title I of the Act. Please see the Technical 
Support Document for a complete list of the SIP NSR and Exemption rules 
that would be replaced.
    This proposed approval will also supercede an obsolete requirement 
(see 40 CFR 52.232(a)(5), (6), (10), and (11)) to submit regulations 
meeting the EPA NSR requirements that existed at the time that these 
sub-sections were established in the 1980s. EPA is proposing to delete 
these requirements.
    The air quality planning requirements for nonattainment NSR are set 
out in part D of title I of the Clean Air Act. 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. EPA has also proposed regulations to implement the 
changes under the 1990 Amendments in the NSR provisions in part D of 
Title I of the Act. (See 61 FR 38249 (July 23, 1996)). Upon final 
promulgation of those regulations, EPA will review those NSR SIP 
submittals on which it has already taken final action to determine 
whether additional SIP revisions are necessary.

II. Summary of New Source Review Issues

A. Lowest Achievable Emission Rate

    District rule 2201 (section 4) requires that sources meet the 
Lowest Achievable Emission Rate (LAER) as defined at 40 CFR 
51.165(a)(1)(xiii) for: (1) Any new emission unit with the potential to 
emit two pounds or more per day; and (2) any existing unit with an 
increase in permitted emissions of two pounds or more per day. EPA has 
determined that the two lb/day requirement for LAER is as stringent as 
the source-wide applicability triggers in title I part D of the CAA. 
The CAA triggers range from 15 to 70 tons per year for non-attainment 
pollutants depending on the pollutant and whether the increase occurs 
at an existing major source.

[[Page 51494]]

    District Rule 2201 uses the term ``Best Available Control 
Technology'' or ``BACT'' (rather than LAER) to define the emission 
limits required for new and modified emission units that exceed these 
District thresholds. Section 3.9 of District Rule 2201 defines BACT to 
require installation of all controls ``achieved in practice'' (section 
3.9.1) or contained in a SIP unless the SIP limits are technologically 
infeasible (section 3.9.2). Therefore, the District's ``BACT'' 
definition is as stringent as the federal LAER definition at 40 CFR 
51.165(a)(1)(xiii). The District confirmed, in a letter dated January 
21, 1999, that the District BACT definition requires emissions controls 
as stringent as EPA's LAER definition.

B. Offset Equivalency Tracking System

    The District has committed to demonstrate that its NSR rules will 
require offsets that are, in the aggregate, equivalent to federal non-
attainment NSR program requirements. The District Governing Board 
adopted a resolution on August 20, 1998 that requires the District to 
show program-wide equivalency with federal offset requirements. As part 
of this demonstration, the District must calculate the quantity of 
offsets that would be required under federal non-attainment NSR 
regulations. The District must also calculate the quantity of offsets 
that meet all Clean Air Act requirements and are required under the 
District program. The resolution requires that the Air Pollution 
Control Officer propose amendments to the District NSR rule to correct 
any shortfall if the total quantity (as an annual aggregate) of offsets 
that meet all federal requirements is less than the total quantity 
required by federal regulation. EPA is proposing to approve the offset 
provisions of the District's NSR regulations based on this commitment 
and the District's August 24, 1999 agreement on implementing this 
offset equivalency tracking system. Failure to achieve equivalent 
offset reductions, or failure to implement the tracking system, would 
constitute grounds for future EPA rulemaking to require corrective rule 
amendments.
    There are several differences between the District's program and 
federal offset requirements (offsets are generally referred to as 
``Emission Reduction Credits'' in the District rules). The District 
rules require offsets for some new sources that do not exceed the 
federal major source thresholds for offsets (section 4.5 of Rule 2201). 
Once the potential to emit a source exceeds the District offset 
applicability thresholds, the source must provide offsets for both non-
major and major emission increases. In addition, ten percent of each 
credit issued under Rule 2201 is deducted for air quality improvement.
    Rule 2201 also differs from federal requirements because it does 
not ensure that sources provide offsets that are surplus of all 
regulatory requirements at the time of use. The District rule only 
requires establishing that credits are surplus when they are generated. 
In addition, Rule 2201 allows some sources to determine offset 
applicability and quantities based on potential to emit. It also does 
not require that new major sources offset their full permitted 
emissions, as they are required to offset only the quantity of 
emissions that exceed the District offset trigger. Please see EPA's 
Technical Support Document (TSD) for additional information on the 
offset requirements of the District regulation.
    EPA has determined that Rule 2201 is equivalent to federal offset 
requirements because the District's program will, overall, require that 
sources provide as many offsets meeting federal requirements as are 
required under federal regulations. The federal requirements for a 
valid offset program include ensuring that the reductions used to 
generate the credit are surplus (i.e. are not required by the Clean Air 
Act or otherwise relied on, such as in an attainment plan); are based 
on real reductions of actual emissions; and are quantifiable and 
permanent. The District has guaranteed that the tracking system will 
demonstrate equivalency each year.
    EPA believes that it has discretion to approve this program based 
on the statutory language set forth in section 182(d)(2) of the Act, 42 
U.S.C. 7511a(d)(2). The Act provides for offset program approval upon 
showing that the ``the ratio of total emission reductions of VOCs to 
total increased emissions of such air pollutants shall be at least 1.3 
to 1 * * * .'' The Act, therefore, allows EPA to approve a SIP program 
that is based on demonstrating that the total annual aggregated 
emissions offsets are equivalent to the federal offset requirement.

C. Interpollutant Trading

    Rule 2201 allows for interpollutant trading to meet offset 
requirements (section 4.13.3). EPA expects that only trades between 
pollutants (including precursors) contributing to the same NAAQS will 
be allowed by the District. For instance, the rule states that 
interpollutant offsets between NOX and VOC may be allowed 
(section 4.13.3.4). The rule does not contain an interpollutant offset 
ratio, but states that the Air Pollution Control Officer shall impose 
appropriate ratios based on an air quality analysis. The District 
submitted a letter on January 21, 1999 that commits to following EPA 
guidelines for setting appropriate trading ratios. In addition, the 
rule requires that the applicant demonstrate that the new or modified 
source will not cause or contribute to a violation of an Ambient Air 
Quality Standard (which is defined to include all NAAQS; see sections 
3.6 and 4.13.3). Therefore, EPA is proposing to approve this provision 
of the District rule.

D. Pollution Control Project Exemption

    District Rule 2201 contains an exemption from BACT (i.e. EPA LAER) 
and offsets for ``an emission control technique performed solely for 
the purpose of compliance with the requirements of District, State or 
Federal air pollution control laws, regulations, or orders'' if certain 
additional qualifications listed in sections 4.2.3 and 4.6.8 are met. 
EPA's July 1, 1994 guidance entitled ``Pollution Control Projects and 
New Source Review (NSR) Applicability'' allows the District to exempt 
qualifying pollution control projects from certain NSR requirements, 
including BACT or LAER. The District rule states that the project 
cannot cause or contribute to a violation of a NAAQS, PSD increment, or 
an Air Quality Related Value, as required by EPA's policy. The District 
submitted a letter on January 21, 1999 confirming that the District 
Rule also excludes replacement or reconstruction of an emission unit as 
required by EPA's policy. In addition, the District's exemption 
excludes projects that would result in a significant emission increase 
of collateral pollutants to ensure that all significant emission 
increases are mitigated. Therefore, EPA has determined that District 
rule 2201 is consistent with the requirements of EPA's 1994 guidance 
and is proposing to approve this exemption. If the District implements 
Rule 2201 in a manner inconsistent with the 1994 guidance and January 
21 letter, EPA may require compliance with the NSR requirements of the 
SIP and conduct rulemaking to require corrective rule amendments.

E. Removing Conditions Established by Prior NSR SIP Approvals

    In addition to our proposed approval of District Rules 2020 and 
2201, we also propose to delete the special SIP obligations listed in 
the table below. These conditions required the prior County agencies to 
submit regulations consistent with the EPA regulations that

[[Page 51495]]

were current at the time these conditions were established in 1981, 
1982, and 1985. These conditions are moot today because the District 
has submitted revised NSR rules that comply with EPA's current 
regulations and the 1990 CAA amendments.

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               County                    Date of EPA action                    Regulatory citation
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Kern County........................  November 19, 1981.........  40 CFR 52.232(a)(5)(i)(A).
SJV Air Basin (all Counties).......  October 30, 1985..........  40 CFR 52.232(a)(6)(i)(A).
Kings, Madera, Merced, Stanislaus,   September 7, 1982.........  40 CFR 52.232(a)(10)(i)(A).
 and Tulare Counties.
Fresno County......................  November 1, 1982..........  40 CFR 52.232(a)(11)(i)(A).
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F. Additional Information

    For additional description of how District Rules 2020 and 2201 meet 
the Act's applicable requirements, please refer to EPA's Technical 
Support Document for this action.

III. Administrative Requirements

A. Executive Order 12866

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order 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 Executive 
Order 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 
Executive Order 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 
Executive Order 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 
Executive Order 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 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

[[Page 51496]]

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, New source 
review, Nitrogen dioxide, Ozone, Particulate matter, Reporting and 
recordkeeping requirements, Volatile organic compounds.

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

    Dated: September 15, 1999.
Keith Takata,
Acting Regional Administrator, Region 9.
[FR Doc. 99-24841 Filed 9-22-99; 8:45 am]
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