[Federal Register Volume 65, Number 189 (Thursday, September 28, 2000)]
[Proposed Rules]
[Pages 58252-58255]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-24941]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 217-0261; FRL-6878-8]


Approving Implementation Plans; California State Implementation 
Plan Revision, San Joaquin Valley Unified Air Pollution Control 
District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing a limited approval and limited disapproval of 
two San Joaquin Valley Unified Air Pollution Control District 
(SJVUAPCD) permitting and New Source Review (NSR) rules for stationary 
sources. These rules were submitted as revisions to the California 
State Implementation Plan (SIP). EPA originally proposed full approval 
of these rules in the Federal Register (64 FR 51493) on September 23, 
1999. However, based on comments EPA received on the proposed approval 
and further review of the rules, EPA has determined that the rules as 
submitted are not fully approvable. Therefore, EPA is now proposing a 
limited approval and limited disapproval of the rules and requesting 
comment on this proposal.
    The intended effect of proposing limited approval and limited 
disapproval is to ensure that the District's permitting and NSR rules 
are consistent with the requirements of the Clean Air Act, as amended 
in 1990 (CAA or the Act). EPA is proposing a limited approval of the 
rules because the rules generally strengthen the SIP. EPA is 
concurrently proposing a limited disapproval of the rules because the 
rules contain deficiencies which do not fully meet the CAA requirements 
for non-attainment areas and must be corrected. If EPA finalizes this 
limited approval and limited disapproval, EPA's final action will 
incorporate the rules into the federally approved SIP. EPA evaluated 
these rules based on CAA guidelines for EPA action on SIP submittals 
and EPA's general rulemaking authority.

DATES: Comments must arrive by October 30, 2000.

ADDRESSES: Send comments to: Ed Pike, Permits Office [AIR-3], Air 
Division, U.S. Environmental Protection Agency, Region 9, 75 Hawthorne 
Street, San Francisco, CA 94105-3901.
    You can review and copy the submitted rules, the existing SIP 
rules, and EPA's Technical Support Document (TSD) at EPA's Region 9 
office from 8:30 a.m. to 5 p.m., Monday to Friday. A reasonable fee may 
be charged for copying.
    Copies of the submitted rules are also available for inspection at 
the following locations:

California Air Resources Board, 2020 L Street, Sacramento, CA 95814
San Joaquin Valley Unified Air Pollution Control District, 1990 East 
Gettysburg Avenue, Fresno, CA 93726

FOR FURTHER INFORMATION CONTACT: Please call Ed Pike at (415) 744-1211 
or send email to [email protected].

SUPPLEMENTARY INFORMATION:

[[Page 58253]]

Table of Contents

I. EPA is Proposing Limited Approval and Limited Disapproval of 
District Rule 2020, Permit Exemptions, and Rule 2201, New Source 
Review
II. How Did EPA Arrive at the Proposed Action?
    A. Previous Proposed Approval
    B. New Source Review Rule Offset Equivalency
    C. Lowest Achievable Emission Rate Applicability
    D. Agricultural Exemption
III. Overview of Limited Approval/Disapproval
IV. Administrative Requirements

I. EPA is Proposing Limited Approval and Limited Disapproval of 
District Rule 2020, Permit Exemptions, and Rule 2201, New Source 
Review

    EPA today proposes a limited approval and limited disapproval of 
revisions to the California SIP for District Rules 2020 and 2201. Upon 
final action, the rules will replace existing New Source Review and 
Permit Exemption Rules in the following SIPs: Fresno County, a portion 
of Kern County,\1\ Kings County, Madera County, Merced County, San 
Joaquin County, Stanislaus County, and Tulare County. Please see the 
Technical Support Document for a complete list of the Rules that will 
be replaced.
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    \1\ See the Technical Support Document for more information on 
the Districts' jurisdiction.
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    Rule 2020 was adopted by the San Joaquin Valley Unified Air 
Pollution Control District (for background information on the District, 
please see 64 FR 51493) 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 limited approval and 
limited disapproval does not include sections 5.9 and 6.0 of Rule 2201, 
which specify requirements for title V operating permits. The title V 
requirements in Rule 2201 (based on a prior version of Rule 2201) were 
given interim approval as part of the District's title V operating 
permits program in EPA's April 24, 1996 rulemaking on that program (see 
60 FR 55517 and 61 FR 18083). The District has not submitted any 
substantive changes to the title V sections of Rule 2201 since that 
approval.

II. How Did EPA Arrive at the Proposed Action?

A. Previous Proposed Approval

    On September 23, 1999 (64 FR 51493), EPA proposed to approve Rules 
2020 and 2201 into the California SIP and provided a 30-day public 
comment period. EPA had evaluated these rules for consistency with the 
requirements of the CAA and EPA regulations, as well as EPA's 
interpretation of these requirements in EPA policy guidance documents. 
(See the September 23, 1999 proposed rule and the TSD for this action 
for a detailed discussion of the rules and EPA's evaluation, as well as 
the updated information below). EPA received and reviewed public 
comment on its proposed approval and has also conducted further review 
of the rule. Based on the public comment and our further rule review, 
we have identified portions of the rules that do not meet EPA 
requirements: (1) The enforceability of the offset equivalency tracking 
system contained in the proposed rule; (2) the applicability of the 
Lowest Achievable Emissions Rate (LAER) to modified sources; and (3) an 
exemption for agricultural sources. As a whole, District Rules 2020 and 
2201 are an improvement to the permitting rules currently in the SIP 
(see page 3 of EPA's August 30, 1999 TSD) and strengthen the SIP. 
However, EPA has also determined that these rules do not fully meet the 
requirements of the Clean Air Act and EPA's regulations because they 
contain the three deficiencies listed above.

B. New Source Review Rule Offset Equivalency

    In September 1999, EPA proposed to approve the rules based on the 
District's commitment to demonstrate that the rules would require 
offsets that are, in the aggregate, equivalent to federal offset 
requirements (See our September 23, 1999 proposed rulemaking in the 
Federal Register for more information). The proposal identified 
situations where the District's offset rule might not collect as many 
federally recognized offsets as required by EPA regulations. For 
instance, the District does not adjust offsets at the time of use, 
which means that some emission reductions used to generate the offsets 
would not be surplus to all Clean Air Act requirements. The September 
1999 proposal also identified situations where the District's rule 
would require more offsets than federal requirements, such as the 
requirement for some non-major sources to obtain offsets. The District 
committed to demonstrate equivalency by calculating on an annual basis 
the quantity of offsets that would be required under federal non-
attainment NSR regulations (i.e. the quantity of offsets that meet all 
Clean Air Act requirements) and the quantity of offsets required under 
the District program. (See the September 23, 1999 proposal and the TSD 
for more information on the District's proposed equivalency 
demonstration.)
    EPA continues to believe that the District can adopt and EPA can 
approve into the SIP an offset system to show equivalency with federal 
offset requirements. However, a comment submitted by Adams, Broadwell 
and Cordoza on October 25, 1999 states that the District's commitment 
to EPA falls short of guaranteeing equivalent offsets.\2\ EPA agrees 
with this comment, but believes that this deficiency in the equivalency 
system can be corrected by a mandatory remedy that is automatically 
effective if the annual demonstration results in a shortfall of offsets 
meeting all federal requirements. Although the District's Deputy Air 
Pollution Control Officer had committed to initiate rule amendments if 
the annual demonstration results in a shortfall,\3\ Rule 2201 does not 
contain a specific requirement for the District to remedy any shortfall 
of offsets in the equivalency demonstration. Therefore, rather than 
finalize full approval of the rule, EPA is proposing this limited 
approval based on a finding that Rule 2201 is deficient because it does 
not include a specific and enforceable remedy for a shortfall in the 
annual equivalency demonstration. EPA believes that the rule must be 
revised to contain a mandatory and enforceable remedy to cure any 
annual shortfall and prevent future shortfalls.
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    \2\ Please note that other comments were contained in this 
letter and will be addressed in EPA's final rulemaking.
    \3\ Please see August 24, 1999 agreement signed by Mark Boese, 
of the District and David Howekamp, Air Division Director of US EPA 
Region IX, in the TSD.
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    The District has suggested adopting a rule amendment requiring that 
all new major sources, and certain modifications, use offsets that are 
surplus at the time of use, if the District does not demonstrate 
``equivalency''. EPA believes that amending the rule to include this 
enforceable remedy would correct this rule deficiency, because we 
expect that the District would make up any short-fall in the 
equivalency demonstration within twelve months.

C. Lowest Achievable Emission Rate Applicability

    After our September 1999 proposal, EPA discovered that the District 
rule does not under all circumstances require LAER for modifications to 
an emission unit(s). Specifically, the rule does not require LAER if 
the modification causes an increase in actual emissions but not an 
increase in

[[Page 58254]]

the emission unit's permitted emission rate. EPA's New Source Review 
regulations (40 CFR 51.165) require LAER for significant emission 
increases (for instance, 25 tons per year of volatile organic compounds 
or nitrogen oxides) and require that major sources calculate emissions 
changes based on the post-project allowable emissions minus the pre-
project actual emissions. The District rule, however, requires LAER 
(the District's rule uses the term ``Best Available Control 
Technology,'' which is defined to be at least as strict as EPA LAER) 
for all modified units with an increase in permitted emissions of 
greater than two pounds per day (section 4 of District Rule 2201). EPA 
believes that the District rule would require LAER for most sources 
that trigger federal LAER requirements. Nevertheless, EPA finds that 
there is a deficiency in the rule as currently written because it could 
exempt from LAER some sources that would have actual emissions 
increases greater than the federal significance level, even if the 
increase in permitted emission rates did not exceed two pounds per day.
    For example, EPA has reviewed emissions data for a glass furnace 
expansion that was a major modification based on a comparison of post-
project allowable emissions and pre-project actual emissions, but which 
the source believed was not subject to LAER under the current District 
rule. This is because the source compared their pre-project potential 
to emit (the source used potential to emit because the permit did not 
contain source-specific emission limitations) with the permit limit for 
the expanded furnace, rather than comparing their pre-project actual 
emissions to their new allowable emission rate. In this situation, the 
new allowable emission level was significantly higher than the prior 
actual emissions, but not higher than the source's estimate of their 
prior potential to emit. This could allow a source to make a major 
modification (based on increases in actual emissions at one or more 
units), but avoid LAER if it does not increase its potential to emit. 
In addition, determining the ``permitted'' emission rate is problematic 
when no source-specific emission limit exists. Therefore, EPA is 
proposing that the District must amend Rule 2201 to ensure that sources 
install LAER if they are allowed to make a significant increase in 
their actual emission rate.
    The District has suggested adopting an amendment to Rule 2201 that 
requires that certain modified sources apply LAER if they are included 
in the District's definition of a title I modification (Rule 2010). EPA 
believes that a rule amendment of this type would correct this rule 
deficiency.

D. Agricultural Exemption

    The District exemption rule (section 4.1 of Rule 2020) contains an 
exemption for agricultural operations. The exemption generally applies 
to ``any equipment used in agricultural operations in the growing of 
crops or the raising of fowl or animals.'' EPA did not originally 
identify this issue as a deficiency in our original Federal Register 
Notice. Upon further review, however, EPA recognized that this 
exemption could apply to major sources subject to the New Source Review 
requirements under the federal Clean Air Act. Therefore, EPA believes 
that the District must remove this exemption from the District program 
to receive full approval.

III. Overview of Limited Approval/Disapproval

    Because of the three deficiencies identified in this rulemaking, 
Rules 2020 and 2201 are not approvable pursuant to section 182(a)(2)(A) 
of the CAA, and EPA cannot grant full approval of the District's 
permitting and NSR program under section 110(k)(3) and part D. 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 
permitting and NSR rules (2020 and 2201) 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 the District's submitted Rules 2020 
and 2201 under sections 110(k)(3) and 301(a) of the CAA.
    At the same time, EPA is also proposing a limited disapproval of 
District Rules 2020 and 2201 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 non-attainment, 
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: withholding highway funding 
and increasing the offset requirements. 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 limited 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 already been adopted by the District. EPA's final limited 
disapproval action will not prevent the 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, environmental, and economic factors and in 
relation to relevant statutory and regulatory requirements.

IV. Administrative Requirements

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this 
proposed action is not a ``significant regulatory action'' and 
therefore is not subject to review by the Office of Management and 
Budget. This proposed action merely approves state law as meeting 
federal requirements and imposes no additional requirements beyond 
those imposed by state law. Accordingly, the Administrator certifies 
that this proposed rule will not have a significant economic impact on 
a substantial number of small entities under the Regulatory Flexibility 
Act (5 U.S.C. 601 et seq.). Because this rule proposes to approve pre-
existing requirements under state law and does not impose any 
additional enforceable duty beyond that required by state law, it does 
not contain any unfunded mandate or significantly or uniquely affect 
small governments, as described in the Unfunded Mandates Reform Act of 
1995 (Pub. L. 104-4). For the same reason, this proposed rule also does 
not significantly or uniquely affect the communities of tribal 
governments, as specified by Executive Order 13084 (63 FR 27655, May 
10, 1998). This proposed rule will not have substantial direct effects 
on the States, on the relationship between the national government and 
the States, or on the distribution of power and responsibilities among 
the various levels of government, as specified in Executive Order 13132 
(64 FR 43255, August 10, 1999), because it merely approves a state rule 
implementing a federal standard, and

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does not alter the relationship or the distribution of power and 
responsibilities established in the Clean Air Act. This proposed rule 
also is not subject to Executive Order 13045 (62 FR 19885, April 23, 
1997), because it is not economically significant.
    In reviewing SIP submissions, EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. In 
this context, in the absence of a prior existing requirement for the 
State to use voluntary consensus standards (VCS), EPA has no authority 
to disapprove a SIP submission for failure to use VCS. It would thus be 
inconsistent with applicable law for EPA, when it reviews a SIP 
submission, to use VCS in place of a SIP submission that otherwise 
satisfies the provisions of the Clean Air Act. Thus, the requirements 
of section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (15 U.S.C. 272 note) do not apply. As required by section 3 
of Executive Order 12988 (61 FR 4729, February 7, 1996), in issuing 
this proposed rule, EPA has taken the necessary steps to eliminate 
drafting errors and ambiguity, minimize potential litigation, and 
provide a clear legal standard for affected conduct. EPA has complied 
with Executive Order 12630 (53 FR 8859, March 15, 1988) by examining 
the takings implications of the rule in accordance with the ``Attorney 
General's Supplemental Guidelines for the Evaluation of Risk and 
Avoidance of Unanticipated Takings'' issued under the executive order. 
This proposed rule does not impose an information collection burden 
under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 
3501 et seq.).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, New Source Review, Nitrogen 
dioxide, Ozone, Particulate matter, Reporting and recordkeeping 
requirements, Volatile organic compounds.

    Dated: September 15, 2000.
Laura Yoshii,
Acting Regional Administrator, Region IX.
[FR Doc. 00-24941 Filed 9-27-00; 8:45 am]
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