[Federal Register Volume 76, Number 9 (Thursday, January 13, 2011)]
[Proposed Rules]
[Pages 2294-2297]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-647]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2010-1078; FRL-9252-7]


Revision to the South Coast Portion of the California State 
Implementation Plan, CPV Sentinel Energy Project AB 1318 Tracking 
System

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed Rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve a source-specific State Implementation Plan (SIP) revision for 
the South Coast Air Quality Management District (District) portion of 
the California SIP. This source-specific SIP revision is known as the 
CPV Sentinel Energy Project AB 1318 Tracking System. The submitted SIP 
revision, which consists of enabling language and the AB 1318 Tracking 
System, supplements the District's SIP approved New Source Review (NSR) 
program to allow the District to transfer offsetting emission 
reductions for particulate matter less than 10 microns in diameter 
(PM10) and one of its precursors, sulfur oxides 
(SOX), to the CPV Sentinel Energy Project. The District's 
SIP approved NSR program currently allows the District to provide 
offsetting emission reductions for certain exempt sources and sources 
that qualify as essential public services. The Sentinel Energy Project, 
which will be a natural gas fired power plant, does not qualify under 
either of these SIP approved exceptions. This proposed action 
supplements the District's SIP to allow the District to transfer 
offsetting emission reductions to the Sentinel Energy Project. In this 
action, EPA is proposing to incorporate the District's enabling 
language, which in turn incorporates the AB 1318 Tracking System by 
reference into the SIP. EPA's proposal to approve this source-specific 
SIP revision is based on finding that the offsetting emission 
reductions the District has transferred to the AB 1318 Tracking System 
meet the requirements of the Clean Air Act (CAA).

DATES: Comments on this Notice of Proposed Rulemaking (NPR) must be 
submitted no later than February 14, 2011.

ADDRESSES: Submit comments, identified by docket number EPA-R09-OAR-
2010-1078, by one of the following methods:
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the on-line instructions.
    2. E-mail: [email protected].
    3. Mail or deliver: Gerardo Rios (Air-3), U.S. Environmental 
Protection Agency Region IX, 75 Hawthorne Street, San Francisco, CA 
94105-3901.
    Instructions: All comments will be included in the public docket 
without change and may be made available online at www.regulations.gov, 
including any personal information provided, unless the comment 
includes Confidential Business Information (CBI) or other information 
whose disclosure is restricted by statute. Information that you 
consider CBI or otherwise protected should be clearly identified as 
such and should not be submitted through http://www.regulations.gov or 
e-mail. http://www.regulations.gov is an ``anonymous access'' system, 
and EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send e-mail directly to 
EPA, your e-mail address will be automatically captured and included as 
part of the public comment. If EPA cannot read your comment due to 
technical difficulties and cannot contact you for clarification, EPA 
may not be able to consider your comment.
    Docket: The index to the docket for this action is available 
electronically at http://www.regulations.gov and in hard copy at EPA 
Region IX, 75 Hawthorne Street, San Francisco, California. While all 
documents in the docket are listed in the index, some information may 
be publicly available only at the hard copy location (e.g., copyrighted 
material), and some may not be publicly available in either location 
(e.g., CBI). To inspect the hard copy materials, please schedule an 
appointment during normal business hours with the contact listed in the 
FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Laura Yannayon, EPA Region IX, (415) 
972-3524, [email protected].

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

Table of Contents

I. Background
    A. Facility Description and Background
    B. Emission Offsets
    C. Procedural History of Source Specific SIP Revision
II. Evaluation of Source Specific SIP Revision
    A. What is in the SIP revision?
    B. What are the Federal Clean Air Act requirements?
    C. SIP Relaxation
    D. Public Comment and Final Action
III. Administrative Requirements
    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. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Population

I. Background

A. Facility Description and Background

    The proposed Sentinel Energy Project is designed to be a nominally 
rated 850 megawatt electrical generating facility covering 
approximately 37 acres within Riverside County, adjacent to Palm 
Springs, California. The Sentinel Energy Project will emit air 
pollutants from eight General Electric LMS100 combustion turbine 
generators equipped with oxidation catalyst and selective catalytic 
reduction equipment, eight single cell mechanical draft cooling towers, 
and a 240 brake horsepower Tier III diesel emergency fire pump engine.
    The California Energy Commission (CEC) approved the application for 
certification for Sentinel on December 1, 2010. The District issued a 
Final Determination of Compliance (FDOC) and an Addendum to the FDOC, 
known as Appendix N, on March 2, 2010. Appendix N to the FDOC has 
evolved into the AB 1318 Tracking System submitted as part of this SIP 
revision. The CEC certification and the District's FDOC require the 
Sentinel Energy Project to install and operate stringent emissions 
controls to reduce emissions of NOX, VOC, CO and 
PM10 to the lowest achievable emissions rates.

B. Emission Offsets

    Pursuant to section 173 of the CAA, new major stationary sources 
are required to provide offsetting emission reductions for any non-
attainment pollutants that continue to be emitted after operation of 
the most stringent emissions controls, if those levels exceed certain 
thresholds. 42 U.S.C. 7503(a)(1)(A). The District implements these 
requirements through its NSR program in Regulation XIII, which EPA 
approved into the SIP in 1996 as

[[Page 2295]]

meeting the requirements for CAA Section 110, Part D. 61 FR 64291.
    The District estimated the amount of offsetting emission reductions 
that Sentinel must provide to comply with District Rule 1303 and CAA 
Sec.  173 for all non-attainment pollutants. For all pollutants other 
than PM10 and SOX, Sentinel has purchased 
Emission Reduction Credits (ERCs) on the open market. Those ERCs comply 
with Rule 1309.
    For PM10 and SOX emissions, the California 
Legislature enacted California Assembly Bill (AB) 1318, which went into 
effect on January 1, 2010. AB 1318 requires the District, upon making a 
specified finding, to transfer SOX and PM10 
emission offsets from its internal bank to eligible electric generating 
facilities. The District determined that the Sentinel Energy Project 
met all of the requirements of an eligible electric generating facility 
and made the required finding.
    AB 1318 also establishes requirements for the District's 
implementation of transferring the offsetting emission reductions from 
its internal bank to an eligible electric generating facility and for 
tracking the transfer of offsetting emissions reductions. The District 
completed those requirements as documented in Appendix N to the FDOC, 
which has evolved into the AB 1318 Tracking System for this SIP 
revision. The offsetting emission reductions transferred to the AB 1318 
Tracking System from the District's internal bank were created by 
permitted equipment that permanently ceased or reduced operations in 
District. The District examined each of these offsetting emission 
reductions and determined that they met the ``integrity criteria'' 
established in CAA Sec.  173(c). Specifically, the District determined 
that the offsetting emission reductions were real, permanent, 
quantifiable, enforceable and surplus. The District then transferred 
those specific PM10 and SOX offsetting emission 
reductions out of its internal bank and into the AB 1318 Tracking 
System. These offsetting emission reductions are no longer available 
for use in any other action.
    The amounts of offsetting emission reductions the District 
transferred from its internal bank to the AB 1318 Tracking System are 
based on estimated actual PM10 and SOX emissions 
reported to the District according to its Annual Emissions Reporting 
Program. For each source of offsetting emission reductions from a 
permanent shutdown of equipment, the District has inactivated that 
source's permit. For each offsetting emission reduction created by a 
source reducing emissions, the District has revised the source's 
federally enforceable permit to ensure the reduction is permanent. The 
complete list of PM10 and SOX offsetting emission 
reductions is provided in the AB 1318 Tracking System which is attached 
to EPA's Technical Support Document (TSD). Documentation for each of 
these offsetting emission reductions is included in the docket for this 
proposal.

C. Procedural History of Source Specific SIP Revision

    The District adopted the CPV Sentinel Energy Project AB 1318 
Tracking System on July 9, 2010. The California Air Resources Board 
(CARB) submitted the CPV Sentinel Energy Project AB 1318 Tracking 
System to EPA as a source specific SIP revision on September 10, 2010. 
EPA issued a completeness letter on October 27, 2010, finding that the 
submittal had met the completeness criteria in 40 CFR Part 51 Appendix 
V.

II. Evaluation of Source Specific SIP Revision

A. What is in the SIP revision?

    The package that the District, through CARB, submitted to EPA 
consists of text to be included as a revision to the District's portion 
of the California SIP, and the Sentinel Energy Project AB 1318 Tracking 
System created to implement this new SIP provision. The District's SIP 
text incorporates the Sentinel Energy Project AB 1318 Tracking System 
by reference. The AB 1318 Tracking System includes specific offsetting 
emission reductions that were identified from reductions of 
SOX and PM10 occurring between 1999 and 2008 from 
permitted equipment that has either permanently ceased operations in 
the District or became subject to federally enforceable conditions that 
reduced actual emissions. The District has not issued any Rule 1309 
ERCs for these specific emissions reductions and has inactivated the 
permits for the equipment that has been shut down. These SOX 
and PM10 offsetting emission reductions were transferred out 
of the District's internal bank and into the AB 1318 Tracking System. 
These reductions have not been used by any other source and cannot be 
used for any other source in the future if they are used to construct 
the CPV Sentinel Energy Project. A copy of the AB 1318 Tracking System 
for CPV Sentinel is included as an attachment to the TSD for this 
action.
    The text of the proposed source-specific SIP revision, in relevant 
part, is:

    The Executive Officer of the South Coast Air Quality Management 
District shall transfer sulfur oxides and particulate emission 
credits from the CPV Sentinel Energy Project AB 1318 Tracking 
System, attached hereto and incorporated by reference herein, to 
eligible electrical generating facilities pursuant to Health and 
Safety Code section 40440.14, as in effect January 1, 2010, (i.e. 
the CPV Sentinel Power Plant to be located in Desert Hot Springs, 
CA) in the full amounts needed to issue permits to construct and to 
meet requirements for sulfur oxides and particulate matter 
emissions. Notwithstanding District Rule 1303, this SIP revision 
provides a federally enforceable mechanism for transferring offsets 
from the AQMD's internal accounts to the CPV Sentinel Project.

    The SIP revision is intended to provide a federally approved and 
enforceable mechanism for the District to transfer PM10 and 
SOX offsetting emissions reductions from the District's 
internal bank to the Sentinel Energy Project and to track those 
emissions credits through the AB 1318 Tracking System.

B. What are the Federal Clean Air Act requirements?

    The South Coast Air Basin is an extreme non-attainment area for 
ozone and a serious non-attainment area for PM10. Sulfur 
oxide emissions are PM10 precursors and are therefore also 
treated as a PM10 non-attainment pollutant. As required by 
CAA Sec.  110(a)(2)(C), SIPs are required to include provisions to 
comply with CAA Part D for non-attainment pollutants. Among the Part D 
requirements, Sec.  173(a)(1)(A) requires offsetting emission 
reductions for new and modified major stationary sources. Section 
173(c) requires the offsetting emission reductions to be real, 
quantifiable, surplus, permanent, and enforceable.
    The District's NSR permitting program is contained in District 
Regulation XIII, which was approved into the South Coast portion of the 
California SIP on December 4, 1996, for purposes of complying with the 
CAA Part D. (61 FR 64291). District Rule 1303(b)(2) requires the 
District to deny a permit to construct a new source or modify an 
existing source unless it is exempt from offset requirements pursuant 
to Rule 1304, emissions increases are offset by ERCs approved pursuant 
to Rule 1309, or the source obtains allocations from the District's 
Priority Reserve accounts in accordance with the provisions of Rule 
1309.1. For PM10 and SOX emissions, Sentinel is 
not exempt pursuant to Rule 1304 and does not qualify for allocations 
from the Priority Reserve.\1\
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    \1\ When sources are exempt from offsets pursuant to Rule 1304 
or entitled to allocations pursuant to Rule 1309.1, the District 
deducts sufficient emission credits from its internal bank of 
credits to offset any emissions that would be subject to Federal 
offset requirements. The District prepares annual reports to show 
that it has adequate emissions credits in its internal bank.

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[[Page 2296]]

    However, the California legislature directed the District to 
provide offsetting emission reductions from the District's internal 
bank to the Sentinel Energy Project (providing it qualified) to offset 
its PM10 and SOX emissions. This source-specific 
SIP revision approves the Sentinel Energy Project AB 1318 Tracking 
System to provide the federally enforceable mechanism allowing the 
District to transfer PM10 and SOX offsetting 
emission reductions to meet the requirements of Rule 1303(b).
    EPA has reviewed the documents provided for each offsetting 
emission reduction the District has transferred to the AB 1318 Tracking 
System. We are proposing to find that the PM10 and 
SOX offsetting emission reductions transferred to the AB 
1318 Tracking System meet the CAA Section 173 requirements that 
emission reductions used as offsets be real, quantifiable, surplus, 
permanent, and enforceable prior to use. The TSD for this action 
provides more detail regarding how the offsetting emission reductions 
transferred to the AB 1318 Tracking System meet these requirements.

C. SIP Relaxation

    Under section 110(l) of the CAA, EPA may not approve any SIP 
revision that would interfere with attainment, reasonable further 
progress (RFP) or any other CAA requirement.
    We believe this revision will not interfere with attainment or RFP 
because the emission credits in the AB 1318 Tracking System are not 
relied on for attainment or RFP in the District's most recent 
attainment demonstrations. We are also not aware of this revision 
interfering with any other CAA requirement. For example, this source-
specific SIP revision provides a new but equivalent mechanism to 
provisions in Regulation XIII for satisfying the offset requirements of 
CAA Sec.  173 because the offsetting emission reductions the District 
is transferring from its internal bank to the AB 1318 Tracking System 
meet all Federal requirements. In addition, the District supplied a 
copy of its air quality analysis for the CPV Sentinel Energy Project 
which shows that operation of the facility will not interfere with the 
ability of the District to reach attainment.\2\
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    \2\ Air Quality Demonstration: SIP Revision for CPV Sentinel 
Energy Project
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D. Public Comment and Final Action

    Because EPA believes the submittal fulfills all relevant 
requirements, we are proposing to fully approve it 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 this submittal into the federally 
enforceable SIP.

III. Administrative Requirements

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 action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Burden is defined at 5 CFR 1320.3(b).

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.
    This 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).

D. Unfunded Mandates Reform Act

    Under sections 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 
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 the approval action proposed 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 Federal action proposes to 
approve 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.

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

[[Page 2297]]

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 
merely approves a State rule implementing a Federal standard, 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 proposed 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.

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

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) 
as applying only to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
rule is not subject to Executive Order 13045, because it approves a 
State rule implementing a Federal standard.

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. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Population

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA lacks the discretionary authority to address environmental 
justice in this rulemaking.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Intergovernmental 
relations, Particulate matter, Reporting and recordkeeping 
requirements.

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

    Dated: December 30, 2010.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2011-647 Filed 1-12-11; 8:45 am]
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