[Federal Register Volume 68, Number 122 (Wednesday, June 25, 2003)]
[Rules and Regulations]
[Pages 37746-37749]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-16028]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 086-SIP; FRL-7518-4]


Finding of Substantial Inadequacy of Implementation Plan; Call 
for California State Implementation Plan Revision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing our February 13, 2003 proposed finding (68 
FR 7327) that the California State Implementation Plan (SIP) is 
substantially inadequate for all nonattainment air pollution control 
districts in the State and for all

[[Page 37747]]

attainment area districts that have an approved Prevention of 
Significant Deterioration (PSD) program. We did not receive any 
comments on our proposal. EPA is finalizing this finding, pursuant to 
our authority in section 110(k)(5) of the Clean Air Act (CAA or Act), 
because the State cannot provide ``necessary assurances'' that it or 
the districts have authority to carry out the applicable nonattainment 
New Source Review (NSR) or PSD portions of the SIP. This action 
requires California to amend its State law to eliminate the permitting 
exemption as it pertains to major agricultural sources of air pollution 
and submit the necessary assurances by November 23, 2003 to support an 
affirmative finding by EPA under section 110(a)(2)(E). If the State 
fails to submit the necessary assurances of authority or if EPA 
disapproves any such submittal in response to this final SIP call, the 
sanctions clock in section 179 of the Act will be triggered.

EFFECTIVE DATE: This rule is effective on July 25, 2003.

ADDRESSES: You can inspect copies of the administrative record for this 
action at EPA's Region IX office from 8:30 AM to 5 PM, Monday-Friday. 
Please call 24 hours in advance to accommodate building security 
procedures. A reasonable fee may be charged for copying.
    Copies of the SIPs for the State of California are also available 
for inspection at the following location: California Air Resources 
Board, Stationary Source Division, Rule Evaluation Section, 1001 ``I'' 
Street, Sacramento, CA 95814.

FOR FURTHER INFORMATION CONTACT: Please call Ed Pike, EPA Region IX, at 
(415) 972-3974 or send e-mail to [email protected].

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

Table of Contents

I. Background
    A. What action is EPA finalizing?
    B. How can California correct the SIP inadequacy?
    C. What are the consequences if California does not correct the 
SIP inadequacy ?
II. Statutory and Executive Order Reviews
    A. Executive Order 12866, Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132, Federalism
    F. Executive Order 13175, Coordination with Indian Tribal 
Governments
    G. Executive Order 13045, Protection of Children from 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211, Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Congressional Review Act
    K. Petitions for Judicial Review

I. Background

A. What Action Is EPA Finalizing?

    CAA section 110(k)(5) provides that whenever EPA finds the 
applicable implementation plan ``is substantially inadequate to attain 
or maintain the relevant national ambient air quality standard, * * * 
or to otherwise comply with any requirement of this Act, the 
Administrator shall require the State to revise the plan as necessary 
to correct such inadequacies.'' EPA did not receive any comments on our 
February 13, 2003 proposed finding of inadequacy. Today we are 
finalizing our finding that the approved California SIP is 
substantially inadequate. The SIP cannot provide ``necessary 
assurances'' that the State or districts have the authority to issue 
permits under their PSD and nonattainment NSR SIPs to all major sources 
because Health & Safety Code section 42310(e) exempts major 
agricultural stationary sources from these permitting requirements.
    Specifically, sections 110(a)(2)(C) and (I) and 172 of the Act 
require the applicable implementation plan to contain a program for 
issuing permits to major stationary sources of air pollution pursuant 
to parts C and D of title I of the Act. In addition, section 
110(a)(2)(E) requires that each SIP provide necessary assurances that 
the State or districts have adequate authority to carry out the SIP and 
that no State law prohibits the State or districts from carrying out 
any portion of the SIP. The California SIP does not meet these 
requirements because California Health & Safety Code section 42310(e) 
exempts ``equipment used in agricultural operations in the growing of 
crops or the raising of fowl or animals'' from all permitting, 
including PSD and NSR permitting otherwise required by parts C and D of 
title I of the Act. As a result, the State and districts cannot issue 
permits to these agricultural sources, even if they are major 
stationary sources under the Act. The CAA NSR and PSD permitting 
requirements do not provide for this exemption.

B. How Can California Correct the SIP Inadequacy?

    To correct the deficiency, EPA recommends that the State 
legislature amend Health & Safety Code section 42310(e) to remove the 
exemption as it applies to major agricultural sources. The State is 
already subject to a sanctions clock based on the Notice of Deficiency 
(NOD) that EPA issued on May 22, 2002, 67 FR 35990, with respect to the 
State's title V operating permits program. In that NOD, EPA explained 
that California Health & Safety Code section 42310(e) improperly 
exempted major agricultural sources from CAA title V permitting. The 
NOD stated: ``EPA has determined that significant action in this 
instance means the revision or removal of Health and Safety Code 
42310(e) so that local air pollution control districts have the 
required authority to issue title V permits to stationary agricultural 
sources that are major sources of air pollution.'' A similar correction 
with respect to NSR and PSD permitting is necessary by November 23, 
2003 to comply with this final action, i.e. remove the agricultural 
exemption for major sources. We are setting this deadline to be 
consistent with the deadline established in the May 22, 2002 NOD for 
making the revision for Title V purposes.
    Our proposal listed several districts that have New Source Review 
exemptions that may pose problems for permitting major agricultural 
stationary sources, but did not call for specific revisions at this 
time. We believe it is reasonable to wait for the State legislature to 
correct Health and Safety Code section 42310(e) before we determine 
whether any such exemptions at the district level represent authority 
problems under section 110(a)(2)(E).\1\ EPA, nonetheless, encourages 
districts to evaluate their SIP-approved rules to ensure that 
exemptions do not create potential authority problems. Once the State 
acts to address Health and Safety Code section 42310(e), EPA will work 
with the districts to determine if further rulemaking is necessary to 
address specific local deficiencies that remain after the State law 
change.
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    \1\ We note that certain local exemptions are tied to exemptions 
such as Health and Safety Code section 42310(e) provided under State 
law. Removal of the exemption at the State level could automatically 
resolve authority problems at the district level. In addition, if 
the State legislature were to not only revise the language of Health 
and Safety Code section 42310(e) but also to clarify that any such 
local exemptions were also void, no further action by the districts 
may be necessary. Depending on the action at the State level, EPA 
may be able to make the required finding under 110(a)(2)(E) that the 
authority to carry out the air permitting programs is not prohibited 
by any State or local law.
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C. What Are the Consequences if California Does Not Correct the SIP 
Inadequacy?

    As noted earlier, California must adopt and submit to EPA a 
revision to

[[Page 37748]]

State law that will provide the necessary assurances that it (or the 
districts) can fully implement the required NSR and PSD programs for 
all major sources, including agricultural sources, within the State. If 
EPA determines that the State has failed to amend State law by November 
23, 2003, or if EPA subsequently finds the correction does not 
adequately provide such assurances, EPA will make a finding under 
section 179 of the Act that will start a sanctions clock as specified 
under 40 CFR 52.31.\2\ There are two types of sanctions: highway 
funding sanctions (section 179(b)(1)) and offset sanctions (section 
179(b)(2)). Pursuant to our regulations at 40 CFR 52.31, offset 
sanctions will apply 18 months following a finding by EPA under section 
179(a); highway funding sanctions would apply six months later. 
However, we expect that the State will make the necessary corrections 
to avoid sanctions.
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    \2\ EPA is using its authority in section 110(k)(5) to set a 
deadline for a corrective submittal that is less than 18 months. We 
believe the November 23, 2003, deadline for beginning the 18 month 
sanctions clock is reasonable because action by this date is 
otherwise required to address the title V problems noted above.
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II. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

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

B. Paperwork Reduction Act

    This 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.)

C. 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.
    Today's SIP call does not establish requirements applicable to 
small entities. Instead, it requires the State of California to 
develop, adopt, and submit SIP revisions that would provide the 
necessary assurances that the applicable NSR and PSD programs do not 
exempt major agricultural sources.
    This rule will not have a significant impact on a substantial 
number of small entities because the rule does not establish 
requirements applicable to small entities. Therefore, the Administrator 
certifies that this action will not have a significant impact on a 
substantial number of small entities.

D. Unfunded Mandates Reform Act

    Under sections 202 of the Unfunded Mandates Reform Act of 1995 
(UMRA), 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 costs to State, local, 
or tribal governments in the aggregate, or to the 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 this final action does not include a 
Federal mandate that may result in estimated costs of $100 million or 
more to either State, local, or tribal governments in the aggregate, or 
to the private sector. This action will require the State of California 
to revise laws and regulations governing exemptions for agricultural 
sources. This requirement, even if considered a Federal mandate,\3\ 
would not result in aggregate costs over $100 million to either the 
state or local districts. In addition, this final action will not 
significantly or uniquely impact small governments.
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    \3\ It is unclear whether a requirement to submit a SIP revision 
would constitute a federal mandate. The obligation for a state to 
revise its SIP that arises out of sections 110(a) and 110(k)(5) of 
the CAA is not legally enforceable by a court of law, and at most is 
a condition for continued receipt of highway funds. Therefore, it is 
possible to view an action requiring such a submittal as not 
creating any enforceable duty within the meaning of section 
421(5)(9a)(I) of UMRA (2 U.S.C. 658 (a)(I)). Even if it did, the 
duty could be viewed as falling within the exception for a condition 
of Federal assistance under section 421(5)(a)(i)(I) of UMRA (2 
U.S.C. 658(5)(a)(i)(I)).
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E. Executive Order 13132, Federalism

    Federalism (64 FR 43255, August 10, 1999) revokes and replaces 
Executive Orders 12612 (Federalism) and 12875 (Enhancing the 
Intergovernmental Partnership). Executive Order 13132 requires EPA to 
develop an accountable process to ensure ``meaningful and timely input 
by State and local officials in the development of regulatory policies 
that have federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive Order to include regulations 
that 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.'' Under Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law unless the 
Agency consults with State and local officials early in the process of 
developing the proposed regulation.
    This 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, because it 
does not impose a new enforceable duty on the State, and does not alter 
the relationship or the distribution of power and responsibilities 
established in the Clean Air Act. Thus, the requirements of section 6 
of the Executive Order do not apply to this rule.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This final rule does not have 
tribal implications, as specified in Executive Order 13175. It will not 
have substantial direct effects on tribal governments, 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. Thus, Executive Order 13175 does not 
apply to this rule.

[[Page 37749]]

G. Executive Order 13045, Protection of Children From Environmental 
Health Risks and Safety Risks

    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 does 
not involve decisions intended to mitigate environmental health or 
safety risks.

H. Executive Order 13211, Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355, May 22, 2001) because it is not a 
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12 of the National Technology Transfer and Advancement Act 
(NTTAA) of 1995 requires Federal agencies to evaluate existing 
technical standards when developing a new regulation. To comply with 
NTTAA, EPA must consider and use ``voluntary consensus standards'' 
(VCS) if available and applicable when developing programs and policies 
unless doing so would be inconsistent with applicable law or otherwise 
impractical.
    The EPA believes that VCS are inapplicable to this action. Today's 
action does not require the public to perform activities conducive to 
the use of VCS.

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective July 25, 2003.

K. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by August 25, 2003. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, New source review, Nitrogen dioxide, Ozone, Particulate 
matter, Reporting and recordkeeping requirements, Volatile organic 
compounds.

    Dated: July 16, 2003.
Alexis Strauss,
Acting Regional Administrator, Region IX.
[FR Doc. 03-16028 Filed 6-24-03; 8:45 am]
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