[Federal Register Volume 64, Number 192 (Tuesday, October 5, 1999)]
[Proposed Rules]
[Pages 53973-53976]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 99-25835]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA083-0182; FRL-6452-2]


Clean Air Act Approval and Promulgation of New Source Review 
Implementation Plan for El Dorado County Air Pollution Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA proposes three actions on rules submitted by El Dorado 
Air Pollution Control District (District or EDCAPCD) for the purpose of 
meeting requirements of the Clean Air Act, as amended in 1990 (CAA or 
Act), with regard to new source review (NSR) in areas that have not 
attained the national ambient air quality standards (NAAQS). First, EPA 
proposes to approve the following rules into State Implementation Plan 
(SIP): Rule 501, General Permit Requirements; Rule 520, Enhanced 
Monitoring and Compliance Certification; Rule 524, Emission Reduction 
Credits; and Rule 525, Priority Reserve. Second, EPA proposes a limited 
approval and limited disapproval of Rule 523, New Source Review. 
Finally, EPA proposes to rescind from the SIP 36 District rules that 
will be replaced by the rules mentioned above. All of these rules were 
submitted by the State of California on behalf of the District as a 
requested SIP revision to satisfy certain federal requirements for an 
approvable NSR SIP.

DATES: EPA is requesting comments on all aspects of the requested SIP 
revision and EPA's proposed rulemaking action. Comments on this 
proposed action must be received in writing by November 4, 1999.

ADDRESSES: To submit comments or receive further information, please 
contact Roger Kohn, Environmental Protection Specialist, Permits 
Office, Air Division (AIR-3), EPA Region 9, 75 Hawthorne Street, San 
Francisco, CA 94105. Copies of the State's submittal and other 
information are available for inspection during normal business hours 
at the following locations: (1) EPA Region 9, 75 Hawthorne Street, San 
Francisco, CA 94105; (2) California Air Resources Board, 2020 L Street, 
Sacramento, CA 95814; (3) El Dorado County Air Pollution Control 
District, 2850 Fairlane Ct., Bldg. C, Placerville, CA 95667-4100. A 
courtesy copy of these rules may be available via the Internet at 
http://arbis.arb.ca.gov/drdb/ed/cur.htm. These versions of the District 
rules, however, may be different from the versions submitted to EPA for 
approval. Readers are cautioned to verify that the adoption date of the 
rule listed is the same as the rule submitted to EPA for approval. The 
official submittals are available only at the three addresses listed 
above.

FOR FURTHER INFORMATION CONTACT: Roger Kohn, Permits Office, (AIR-3), 
Air Division, U.S. Environmental Protection Agency, Region IX, 75 
Hawthorne Street, San Francisco, CA 94105-3901, Telephone: (415) 744-
1238 E-mail: kohn.roger@epa.gov

SUPPLEMENTARY INFORMATION:

I. What Action is EPA Proposing?
    A. Today's Proposed Actions
    B. Limited Approval and Limited Disapproval of Rule 523
    C. Full Approval of Rules 501, 520, 524, and 525
    D. Recission of 36 Rules
    E. 1982 NSR SIP Conditional Approval
II. Rule 523 Deficiencies
    A. Offset Ratio for Severe Ozone Nonattainment Area
    B. Offsetting Total Emissions
    C. Incomplete BACT Definition
    D. Exemption for Regulatory Compliance
    E. Interpollutant Trading
III. How Did EPA Arrive at the Proposed Action?
IV. 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. Today's Proposed Actions

    EPA's proposed actions on NSR rules submitted by the District are 
summarized in Tables 1, 2, and 3 below.

                     Table 1.--EPA Proposes Approval
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             Rule No.                            Rule title
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501..............................  General Permit Requirements.
520..............................  Enhanced Monitoring and Compliance
                                    Certification.
524..............................  Emission Reduction Credits.
525..............................  Priority Reserve.
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     Table 2.--EPA Proposes Limited Approval and Limited Disapproval
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             Rule No.                            Rule title
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523..............................  New Source Review.
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               Table 3.--EPA Proposes Rescission From SIP
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             Rule No                             Rule title
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401 through 407..................  Various--refer to TSD.
410, 411
415, 416
418 through 425
501 through 508
510 through 513
515
517 through 519
521
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[[Page 53974]]

B. Limited Approval and Limited Disapproval of Rule 523

    EPA is proposing limited approval and limited disapproval of El 
Dorado County Air Pollution Control District (EDCAPCD) Rule 523, New 
Source Review into the California SIP. This rule consists of 
definitions and standards, including applicability, major source and 
major modification definitions, offsets, and Best Available Control 
Technology. EPA is proposing simultaneous limited approval and limited 
disapproval of this rule because, while it strengthens the SIP, it also 
does not fully meet the CAA provisions regarding plan submissions and 
requirements for nonattainment areas. The deficiencies that are the 
basis for our action are identified in section II below. A detailed 
discussion of the rule deficiencies is included in the Technical 
Support Document (TSD) for this rulemaking.
    If our final action remains a limited approval and limited 
disapproval, the action would constitute a disapproval under section 
179(a)(2) of the Act (see 57 FR 13566-13567). As provided under section 
179(a) of the Act, the District would have up to 18 months after a 
final SIP disapproval to correct the deficiencies that are the subject 
of the disapproval before EPA is required to impose sanctions. If the 
District does not correct its SIP deficiencies within 18 months, then 
section 179(a)(4) requires the immediate application of sanctions. 
According to section 179(b), sanctions can take the form of a loss of 
highway funds or a two to one emissions offset ratio. Once the 
Administrator applies one of the section 179(b) sanctions, the State 
will then have an additional six months to correct any deficiencies. 
Section 179(a)(4) requires that both highway and offsets sanctions must 
be applied if any deficiencies are still not corrected after the 
additional six month period.
    In addition, a final disapproval would trigger section 110(c) 
provisions for federal implementation plans. Section 110(c) requires 
EPA to promulgate a federal implementation plan within two years of 
disapproving a state implementation plan submittal in whole or in part.

C. Full Approval of Rules 501, 520, 524, and 525

    EPA is proposing to approve rules 501, 520, 524, and 525 into the 
California SIP. Rule 501, General Permit Requirements, contains 
procedures for the review of new stationary sources of air pollution 
and the modification and operation of existing sources through the 
issuance of permits. In addition to these substantive requirements, the 
rule also contains twelve definitions and twelve exemptions. EPA has 
reviewed the submitted rule for consistency with applicable 
requirements of the Act. The standards and definitions in the rule are 
consistent with the CAA and EPA regulations, and the rule does not 
exempt any stationary sources that are subject to federal review under 
the Act. Therefore, EPA proposes to approve Rule 501 into the SIP.
    Rule 501 contains a provision that states that an Authority to 
Construct (ATC) permit ``shall remain in effect until a permit to 
operate the equipment is granted or denied or the application is 
cancelled.'' The expiration of ATC permits upon issuance of permits to 
operate (PTO) appears to conflict with EPA policy, which requires that 
terms and conditions of ATCs remain in effect for the life of a 
facility. While the EDCAPCD provision is not the approach favored by 
EPA, we believe the District's rule is approvable because PTOs will 
contain the same permanent, enforceable conditions that were in the 
ATCs. EPA interprets the rule to mean that when a PTO is issued, all 
substantive terms and conditions of the ATC permit must be incorporated 
into the PTO. This includes, but is not limited to, emission limits, 
and all monitoring, record-keeping, and reporting necessary to verify 
compliance.
    Since EPA views ATC terms and conditions as federally enforceable 
(see section 113(b)(1) of the CAA and 40 CFR 52.23), these conditions 
remain federally enforceable when they are incorporated into the PTO.
    Rule 520, Enhanced Monitoring and Compliance Certification, 
provides standards by which compliance with CAA requirements can be 
determined. The rule allows the use of any credible evidence, including 
but not limited to EPA or EPA-approved reference test methods, 
compliance assurance monitoring pursuant to 40 CFR part 64, and 
periodic monitoring associated with part 70 federal operating permits, 
to be used to demonstrate compliance with federally enforceable permit 
conditions. This rule contains language recommended by EPA in a May 16, 
1994 SIP-call. Since the rule submittal was responsive to the SIP-call 
and satisfies the requirements of sections 110, 113, and 114 of the 
CAA, EPA proposes approval into the SIP.
    Rule 524, Emission Reduction Credits, allows the District to 
quantify, adjust, and certify surplus emission reductions for later use 
as offsets. This rule relates to new source review because these 
credits can be obtained by new sources and used as offsets. Rule 524 
satisfies EPA criteria that all emission reductions used as offsets be 
real, surplus, quantifiable, enforceable and permanent.
    Rule 525, Priority Reserve, is a mechanism to provide loans of 
emission reductions for essential public services (publicly owned and 
operated sources such as sewage treatment plants). The rule requires, 
pursuant to Rule 524 (Emission Reduction Credits), that all offsets in 
the Priority Reserve bank be real, enforceable, quantifiable, and 
permanent. Therefore Rule 525 is consistent with CAA requirements and 
EPA policy and EPA proposes approval into the SIP.

D. Recission of 36 Rules

    On April 26, 1994, EDCAPCD repealed 43 rules and adopted four new 
rules to replace them. Thirty-six of the repealed rules remained 
federally enforceable because they are still in the El Dorado County 
SIP. In its May 24, 1994 submittal to EPA, the California Air Resources 
Board (CARB) requested that EPA rescind the repealed rules from the 
SIP. The repealed rules, which are no longer enforced by the District, 
constituted EDCAPCD's stationary source permitting program at the time 
they were approved into the SIP in 1982 and 1983. After the 1990 CAA 
amendments, however, the District substantially revised its rules to 
include the substantive nonattainment new source review requirements 
mandated by the 1990 amendments. The rules that EPA is proposing to 
rescind from the SIP have been replaced by the more stringent rules 
proposed for approval and limited approval today. Thus, EPA has 
determined that the recission of the 36 repealed rules is approvable 
because they are being replaced in the SIP by more stringent rules that 
satisfy requirements mandated by the 1990 amendments. A summary 
document that shows how the repealed rules correspond to the more 
stringent rules that supercede them is included in the docket for this 
rulemaking.

E. 1982 NSR SIP Conditional Approval

    In a 1982 final rulemaking action (47 FR 29536, July 7, 1982), EPA 
conditionally approved the nonattainment area plan (NAP) for the 
Mountain Counties Air Basin, which includes El Dorado County. As a 
result of that action, 40 CFR 52.232 was amended to require El Dorado 
County to revise its NSR rules by October 30, 1985 in order to correct 
deficiencies identified at the time. Today, we propose to delete from 
40 CFR part 52

[[Page 53975]]

the requirement that the District correct NSR rule deficiencies 
identified when EPA finalized the District's NSR rules in 1982 for the 
following reasons:
     The current rules will, upon final approval, supercede the 
rules submitted in 1981.
     EPA has not taken action on any revisions to EDCAPCD NSR 
rules.
     EPA has not done a final rulemaking to correct the 
deficiencies of EDCAPCD NSR rules discussed in the July 7, 1982 final 
rulemaking.
     The District has revised and submitted new NSR rules to 
comply with the 1990 CAA amendments.

II. Rule 523 Deficiencies

A. Offset Ratio for Severe Ozone Nonattainment Area

    Section 523.3.C: This section allows an offset ratio of 1.2 to 1.0 
for nonattainment pollutants if the offset is located within a 15-mile 
radius and within the District. Most of El Dorado County was designated 
as severe nonattainment for ozone in 1995. Section 182(d)(2) of the CAA 
requires offset ratios of at least 1.3 to 1.0 for such areas, unless 
the SIP requires all existing major sources in the nonattainment area 
to apply Best Available Control Technology (BACT). Since the EDCAPCD 
SIP does not contain such a provision, the District must revise the 
ratio to comply with the CAA requirement.

B. Offsetting Total Emissions

    Section 523.3.B: This section contains offset thresholds, and 
requires new or modified sources to offset emissions that exceed these 
thresholds. Section 173(c)(1) of the CAA requires that the total 
tonnage of increased emissions be offset, not just the amount of 
emissions that exceed the threshold. Accordingly, the District must 
revise the rule to satisfy this federal requirement. The District could 
do this by either revising the rule to require that all new and 
modified sources that exceed federal offset thresholds offset down to 
zero, or by tracking offsets and demonstrating on an on-going basis 
that the implementation of Rule 523 creates a quantity of offsets that 
meets or exceeds CAA requirements.

C. Incomplete BACT Definition

    Section 523.2.G: The definition of BACT in this section does not 
include the most stringent emissions limitation ``which is contained in 
the implementation plan of any State for such class or category of 
stationary source, unless the owner or operator of the proposed 
stationary source demonstrates that such limitations are not 
achievable.'' (40 CFR 51.165(a)(xiii)) This provision must be added to 
the definition.

D. Exemption for Regulatory Compliance

    Section 523.1.G: This section allows an exemption from NSR for 
modifications that are necessary to comply with District prohibitory 
rules. This exemption for regulatory compliance, as written, is not 
allowed by the Clean Air Act. This provision must be either deleted or 
revised to be consistent with EPA policy that allows exemptions for 
pollution control projects if certain substantive and procedural 
criteria are satisfied. (The policy is described in a July 1, 1994 
memorandum entitled ``Pollution Control Projects and New Source Review 
(NSR) Applicability'', included in the docket for this rulemaking.) 
Under this policy, the District could exempt such projects, provided 
that they are environmentally beneficial and do not cause or contribute 
to a violation of a national ambient air quality standard, or PSD 
increment, or adversely affect an air quality related value in a Class 
1 area.

E. Interpollutant Trading

    Section 523.3.D: This section allows interpollutant offsets 
(trading among different precursors to the same secondary pollutant), 
and must either be removed or revised. There are no provisions 
addressing interpollutant trading in the CAA or EPA regulations. The 
CAA and EPA regulations provide only for trading (offsets) of the same 
pollutant. EPA has considered the approvability of interpollutant 
trading if certain criteria are met. If the District wishes to retain 
this provision, the District must revise the rule to require adequate 
modeling to determine the appropriate offset ratio, public 
notification, and EPA concurrence for all interpollutant trades.

III. How Did EPA Arrive at the Proposed Action?

    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.
    The Act requires States to observe 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 provide 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 provides that plan provisions for 
nonattainment areas shall meet the applicable provisions of Section 
110(a)(2).
    Rules 501, 523, 524, and 525 were adopted by the District Board of 
Directors on April 26, 1994. On that date, the District also repealed 
36 rules that are in the EDCAPCD SIP. The newly adopted rules, along 
with a request to rescind the repealed rules from the SIP, were 
subsequently submitted by CARB to EPA as proposed revisions to the 
California SIP on May 24, 1994. Rule 520 was adopted by the District on 
June 27, 1995, and submitted by CARB to EPA as a SIP revision on 
October 13, 1995. The submitted rules, which are new additions to the 
SIP, constitute the District's New Source Review permitting 
regulations.
    Most of El Dorado County, except for that portion within the Lake 
Tahoe basin, is included in the Sacramento Metro Area, which is 
currently designated as severe nonattainment for ozone. For all other 
pollutants, the County is designated as attainment or unclassifiable 
with respect to the NAAQS. District NSR rules therefore apply to all 
new or modified stationary sources proposing to emit VOC or NOx in the 
nonattainment area. The nonattainment provisions must also apply to any 
source which would contribute to a violation of the NAAQS. The Clean 
Air Act requirements are found at sections 172 and 173 for 
nonattainment NSR permitting. With certain exceptions, described in 
section II above, the District's submittal satisfies these 
requirements. For a detailed description of how the submitted rule 
meets the applicable requirements, please refer to EPA's technical 
support document (TSD).

IV. 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.

[[Page 53976]]

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 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, Intergovernmental 
relations, Nitrogen dioxide, Particulate matter, Carbon monoxide, 
Reporting and recordkeeping requirements, Sulfur dioxide, Volatile 
organic compounds.

    Dated: September 17, 1999.
Laura Yoshii,
Acting Regional Administrator, Region IX.
[FR Doc. 99-25835 Filed 10-4-99; 8:45 am]
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