[Federal Register Volume 67, Number 121 (Monday, June 24, 2002)]
[Proposed Rules]
[Pages 42516-42519]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-15723]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 266-0358b; FRL-7235-8]


Revisions to the California State Implementation Plan, Ventura 
County Air Pollution Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to approve revisions to the Ventura County 
Air Pollution Control District's (District) portion of the California 
State Implementation Plan (SIP). These revisions concern permitting and 
new source review (NSR) rules. We are taking comments on these proposed 
rules and plan to follow with a final action. Elsewhere in today's 
Federal Register, EPA has made an interim final determination that by 
submitting these revisions the District has corrected deficiencies 
noted in a December 7, 2000, limited approval and limited disapproval 
rulemaking (65 FR 76567), thereby deferring the imposition of 
sanctions.

DATES: Comments must be received by July 24, 2002.

ADDRESSES: Written comments must be submitted to Nahid Zoueshtiagh 
(Air-3), U.S. Environmental Protection Agency, Region IX, 75 Hawthorne 
Street, San Francisco, CA 94105-3901.
    You can inspect copies of the submitted SIP revisions and EPA's 
technical support document (TSD) at our Region IX office during normal 
business hours. You may also see copies of the submitted SIP revisions 
at the following locations:
    Ventura County Air Pollution Control District, 669 County Square 
Drive, Ventura, California 93003.
    California Air Resources Board, Stationary Source Division, Rule 
Evaluation Section, 1001 ``I'' Street, Sacramento, CA 95812.
    An electronic copy of the TSD is available from EPA Region IX upon 
request. The District rules are also available on the Internet at: 
http://arbis.arb.ca.gov/drdb/ven/cur.htm

FOR FURTHER INFORMATION CONTACT: Nahid Zoueshtiagh, U.S. Environmental 
Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 
94105-3901, telephone (415) 972-3978, email address: 
[email protected].

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and 
``our'' refer to EPA.

Table of Contents

I. Background
II. The State's Submittal
    A. What rules did the State submit?
    B. Are there other versions of these rules?
    C. What are the purposes of the submitted revisions and new 
rule?
III. EPA's Evaluation and Action
    A. How is EPA evaluating the rules?
    B. Do the rules meet the evaluation criteria?
    C. Public comment and final action.
IV. Administrative Requirements

I. Background

    On December 7, 2000, EPA finalized the limited approval and limited 
disapproval of revisions to the California State Implementation Plan 
(SIP) (65 FR 76567). This limited approval and limited disapproval 
incorporated Ventura Air Pollution Control District Rules 10 through 
15, 15.1, 16, 23, 24, 26, 26.1 through 26.10, 29 and 30 into the 
federally approved SIP. This action became effective on January 8, 
2001. Our final action was a limited approval and limited disapproval 
because the rules contained deficiencies and were not fully consistent 
with the Clean Air Act (CAA) requirements. In our limited disapproval, 
we required the District to correct specific rule deficiencies within 
18 months from the effective date of our action to avoid imposition of 
mandatory sanctions. In response, the District revised Rule 10 and Rule 
26 and developed a new rule, Rule 26.11.
    The District is designated a severe ozone nonattainment area, and 
an attainment area for all other criteria pollutants. 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. The revisions to Rules 10 and 26 and submission of Rule 
26.11 are the subject of today's proposal, and EPA has determined that 
the District's submittal satisfies the federal NSR implementing 
regulations.

II. The State's Submittal

A. What Rules Did the State Submit?

    Table 1 lists the rules discussed in this proposed rulemaking. The 
rules were adopted by the District on May 14, 2002, and submitted to us 
by the California Air Resources Board (CARB) on May 20, 2002.

                        Table 1.--Submitted Rules
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               Rule No.                            Rule title
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10...................................  Permits Required
26.1.................................  New Source Review--Definitions.
26.2.................................  New Source Review--Requirements.
26.3.................................  New Source Review--Exemptions.
26.4.................................  New Source Review--Emission
                                        Banking.
26.6.................................  New Source Review--Calculations.
26.11................................  New Source Review--ERC Evaluation
                                        At Time of Use.
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    On May 30, 2002, EPA determined that the rules met the completeness 
criteria in 40 CFR part 51, appendix V, which must be met before formal 
EPA review.

B. Are There Other Versions of These Rules?

    There are previous versions for all the above rules, except for 
Rule 26.11 because it is an entirely new rule. The TSD for this 
proposed rulemaking contains detailed information on the new rule and 
on the District's revisions to its previous rules.

C. What Are the Purposes of the Submitted Revisions and New Rule?

    The District has revised Rules 10 and 26 to correct the following 
deficiencies described in our December 7, 2000 final limited approval 
and limited disapproval.
    Issue number 1. Permitting--Rule 10: there was no requirement to 
obtain an authority to construct (ATC) permit for emission units 
located at major NSR sources when relocated within five miles in the 
District.
    Issue number 2. NSR--Rule 26: there was no requirement that 
emission reduction credits (ERCs) used as emission offsets for major 
NSR source

[[Page 42517]]

permitting actions be surplus at the time of use.
    Issue number 3. NSR--Rule 26: the rule did not provide for denial 
of a permit for sources that may violate Prevention of Significant 
Deterioration (PSD) increments.
    Issue number 4. NSR--Rule 26: for the alternatives analysis 
required by section 173(a)(5) of the CAA, the rule relied exclusively 
on the California Environmental Quality Act (CEQA) analysis.
    A brief description of each rule revision and the new rule follows.
     Rule 10--Rule 10 as originally drafted exempted sources of 
all size categories from the requirement to obtain an ATC permit for 
emission units relocating within five miles from the previous location 
in Ventura County, provided that there is no emissions increase. The 
District revised this rule to limit the size category of sources that 
can use the exemption to exclude any source considered major for NSR 
permitting purposes. This revision corrected our deficiency number 1.
     Rule 26.1--The District revised both the definition of 
``Major Modification'' and ``Surplus Emission Reduction'' to satisfy 
the NSR requirements.
    Part 16 of the rule (definition of ``Major Modification'') now 
states that emission reductions that are not surplus at the time of use 
shall not be included as a decrease in calculating federally 
significant contemporaneous net emissions increases. The revised 
definition also clarifies that a ``federally significant net emissions 
increase'' is a major modification for federal CAA NSR purposes. 
Finally, the definition now establishes that a ``contemporaneous net 
emissions increase'' is the sum, during the specified five-year 
evaluation period, of all emission increases and all emission 
reductions occurring at the modified major NSR source. In a severe 
nonattainment area such as Ventura County, a major NSR source is 
considered under both the District rules and the federal CAA as any 
source which emits or has the potential to emit 25 tons per year or 
more of nitrogen oxides (NOX) or reactive organic compounds 
(ROC).
    Part 28 of the rule (definition of ``Surplus Emission Reduction'') 
describes those surplus emission reductions that may qualify for use in 
the District as an offset. Part 28.a defines a surplus emission 
reduction for general District purposes (e.g., for banking and minor 
source permitting purposes) as those emission reductions not required 
by any federal, state, or District law, rule, order, permit or 
regulation, with a limited exception for sources utilizing Best 
Available Control Technology (BACT) when not required by federal major 
source NSR.\1\ For major NSR offset purposes, the revised rule has a 
different definition for ``surplus.'' Part 28.b defines creditable 
emission reductions for NSR offset purposes as the emission reduction 
that ``exceeds the emission reduction otherwise required by the federal 
Clean Air Act.'' This language is approvable since it is consistent 
with the language found in section 173(c)(2) of the CAA. EPA has 
previously determined that the emission reductions ``otherwise required 
by the federal CAA'' includes, at a minimum, each of the following:\2\
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    \1\ For example, if an existing minor source is required to 
install BACT, something not required by the federal CAA, any actual 
emission reductions resulting from application of the more stringent 
controls could be considered surplus.
    \2\ See In Re Operating Permit Formaldehyde Plant Borden 
Chemical, Inc., Petition No. 6-01-1, (December 22, 2000), at pages 
14-19 (Administrator's Title V Order finding Louisiana's regulation 
that generally defines surplus emission reductions as those not 
``required by any local, state or federal law, regulation, order, or 
requirement, and are in excess of reductions used to demonstrate 
attainment of federal and state ambient air quality standards' to be 
consistent with Section 173(c)(2) of the CAA); Proposed Rule, Clean 
Air Act Approval and Promulgation of California State Implementation 
Plan for the San Joaquin Valley Unified Air Pollution Control 
District, 64 FR 51493 (September 23, 1999), at page 51494 (Proposed 
limited approval and limited disapproval of SJVUAPCD's NSR rules 
where we state that surplus means those emission reductions that 
``are not required by the Clean Air Act or otherwise relied on, such 
as in an attainment plan'')
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    (1) Any emission reduction required by a stand-alone federal 
requirement or regulation, including, but not limited to, Acid Rain, 
New Source Performance Standards (NSPS), Reasonably Available Control 
Technology (RACT), and Maximum Achievable Control Technology (MACT), 
whether or not the requirements are part of the SIP or a local 
attainment plan.
    (2) Any emission reduction relied upon by a permitting authority 
for attainment purposes, such as through an approved attainment plan, 
including emission reductions relied upon for Reasonable Further 
Progress calculations. See e.g., 40 CFR 51.165(a)(3)(ii)(G). This also 
applies to reductions that have been identified as necessary for 
attainment with federal air quality standards, even though the plan may 
not yet have been approved.
    (3) Any emission reduction whose original emission is not included 
in the District's emission inventory. See 40 CFR 
51.165(a)(3)(ii)(C)(1).
    (4) Any emission reduction based on a source-specific or source 
category-specific SIP provision used to comply with CAA requirements.
    (5) Any emission reduction required by a condition of a permit 
issued to comply with NSR CAA requirements. See, e.g., 40 CFR 
51.165(a)(3)(ii)(G).
    (6) Any emission reduction based on a source-specific emission 
limitation resulting from EPA enforcement cases (e.g., consent 
decrees).
     Rule 26.2--The District added a new subpart d to part B.2 
to require that all ERCs provided by the applicant for an ATC permit 
for a new or modified major NSR source to be surplus at the time of 
use. These revisions correct deficiency number 2.
    To correct deficiency number 3, the District revised Rule 26.2.C to 
state that it will deny an applicant an ATC for any new, replacement, 
modified or relocated emissions unit which would cause the violation of 
any ambient air quality standard or the violation of any ambient air 
increment as defined in 40 CFR 51.166(c). Today's approval of this 
revision to Rule 26.2.C is for SIP strengthening purposes only. The 
District is neither approved for a Prevention of Significant 
Deterioration (PSD) program nor has been delegated the federal PSD 
program at 40 CFR 52.21 to implement, and the District has not 
submitted nor are we approving these rule revisions as they pertain to 
attainment pollutants for PSD purposes under CAA part C or 40 CFR 
51.166. Under the PSD program, any new major source or source with a 
major modification (as defined by 40 CFR 52.21(b)) within the 
District's jurisdiction must apply to EPA for a PSD permit as required 
by 40 CFR 52.21 and District Rule 26.10.
    The District corrected deficiency number 4 by revising the language 
in Rule 26.2.E. The revised language in Rule 26.2.E satisfies the 
requirement of section 173(a)(5) of the CAA. Rule 26.2.E, as revised, 
requires the permit applicant to submit an analysis of alternative 
sites, sizes, production processes, and environmental control 
techniques that, in the Air Pollution Control Officer's (APCO) 
independent judgment, demonstrates the benefits significantly outweigh 
the environmental costs. Therefore, the revised rule requires the APCO 
to deny a permit if, in the Control Officer's judgment, the analysis 
fails to demonstrate that the benefits of the proposed source 
significantly outweigh the environmental and social costs. In making 
this determination, the APCO may rely on information provided in 
documents prepared under the California Environmental Quality Act.
     Rule 26.3--To correct deficiency number 1, the District 
revised part A.3 of this rule to remove the previous

[[Page 42518]]

exemption which allowed for a major NSR source to relocate an emission 
unit within 5 miles without obtaining a new ATC, though smaller sources 
are still exempt. This revision is consistent with the revisions made 
to Rule 10.
     Rule 26.4--In conjunction with the expanded analysis of a 
``contemporaneous net emissions increase'' described in Rule 26.1.16, 
the District revised part F.3 of this rule to remove superfluous 
language excluding the temporary emission reduction credits from use in 
the contemporaneous net emissions increase analysis of a major source.
     Rule 26.6--The District revised part D.7.b to refer to the 
procedure under the new Rule 26.11 for calculating the total amount of 
all emission reduction credits that were determined to be surplus at 
the time of use. This revision corrects deficiency number 2.
     Rule 26.11--This is a new rule specifically developed to 
implement procedures to ensure that ERCs satisfy EPA's requirement to 
be surplus at the time of use. The District will implement this program 
to correct deficiency number 2 related to the requirements of section 
173(c)(2) of the CAA that emission reductions ``otherwise required by 
the CAA'' not be creditable emission reductions for NSR offsets 
purposes.
    The rule describes the mechanism to be used by the District when 
calculating the surplus portion of each ROC and NOX ERC at 
the time of that ERC's use as an offset. Generally, part B of the rule 
requires that each ERC provided by an applicant as an offset for its 
major source NSR ATC permit must be adjusted in conjunction with 
issuance of that ATC. The rule also creates an annual equivalency 
demonstration in the District. EPA has determined that the use of 
annual equivalency demonstrations is consistent with section 173 of the 
CAA, and has previously approved such a demonstration program for the 
San Joaquin Air Pollution Control District (Rule 2022, 66 FR 37587).
    An annual equivalency demonstration allows the District to show, 
via an annual equivalency analysis, that it is meeting the major source 
NSR offset requirements of section 173 of the CAA in the aggregate for 
the year in which the major permit is issued. The use of the annual 
equivalency demonstration will allow the District to demonstrate 
compliance with the section 173(c) offset requirements by relying on 
all sources of creditable emission reductions created within the 
District during the yearly accounting period, including all properly-
adjusted ERCs relied on for District permitting actions. All actual 
emission reductions used in the equivalency program must be found to be 
surplus under section 173(c)(2), and must otherwise meet federal 
creditability requirements by being real, federally enforceable, 
permanent, and quantifiable. Finally, part C.6 establishes that the 
District must immediately discontinue the use of the annual equivalency 
program and require sufficient adjusted ERCs at the time of major 
source NSR permit issuance if the annual demonstration fails to show 
yearly equivalence.

III. EPA's Evaluation and Action

A. How Is EPA Evaluating the Rules?

    The rules have been evaluated based on sections 173(c), 193, and 
110(l) of the CAA, regulations under 40 CFR subpart I (Review of New 
Sources and Modification), and guidelines for EPA action on SIP 
submittals.

B. Do the Rules Meet the Evaluation Criteria?

    We believe these rules are consistent with the relevant policy and 
guidance regarding Review of New Sources and Modifications, 
enforceability, RACT, and SIP relaxations. Relevant guidance documents 
are listed in the TSD. The District has made rule revisions to correct 
the deficiencies noted in our December 2000 action. The District has 
revised several parts of its rules and has developed a new rule to 
satisfy our requirements. The TSD contains more information on rule 
revisions and our evaluation.
    EPA has concluded that its approval of the District's rule 
revisions and development of a new rule meet the requirements of 
section 110(l) because the NSR permitting rule revisions strengthen 
Ventura County Air Pollution Control District's overall nonattainment 
area plans for all nonattainment pollutants by making the District's 
rules consistent with federal NSR requirements. Specifically, the SIP 
is strengthened because the rule revisions made by the District remove 
an existing exemption to obtaining an NSR permit, require an 
alternatives analysis in conjunction with appropriate permitting 
actions, provide the APCO the authority to deny a permit to a source 
who may violate the national air quality standard or available 
increment, and require that ERCs used as NSR offsets be surplus at the 
time of use. Moreover, because of these rule changes, the District's 
revised rules will insure equivalent or greater emission reductions for 
all nonattainment air pollutants, consistent with section 193 of the 
Act.

C. Public Comment and Final Action

    Because EPA believes the submitted rule revisions fulfill all 
relevant requirements, we are proposing to fully approve them as 
described in section 110(k)(3) of the Act. We will accept comments from 
the public on this proposal for the next 30 days. Unless we receive 
convincing new information during the comment period, we intend to 
publish a final approval action that will incorporate these rules into 
the federally enforceable SIP.

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. For this reason, this proposed action is also not subject to 
Executive Order 13211, ``Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use'' (66 FR 
28355, May 22, 2001). 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 (Public Law 104-4).
    This rule also does not have tribal implications because it will 
not have a substantial direct effect on one or more Indian tribes, on 
the relationship between the Federal Government and Indian tribes, or 
on the distribution of power and responsibilities between the Federal 
Government and Indian tribes, as specified by Executive Order 13175 (65 
FR 67249, November 9, 2000). This action also does not have Federalism 
implications because it does 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). This action merely proposes to approve a 
State rule

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implementing a Federal standard, and does not alter the relationship or 
the distribution of power and responsibilities established in the CAA. 
This proposed rule also is not subject to Executive Order 13045, 
``Protection of Children from Environmental Health Risks and Safety 
Risks'' (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 CAA. 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 CAA. 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. 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, Carbon monoxide, 
Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate 
matter, Reporting and recordkeeping requirements, Sulfur oxides, 
Volatile organic compounds.

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

    Dated: June 14, 2002.
Laura Yoshii,
Deputy Regional Administrator, Region IX.
[FR Doc. 02-15723 Filed 6-21-02; 8:45 am]
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