[Federal Register Volume 81, Number 147 (Monday, August 1, 2016)]
[Rules and Regulations]
[Pages 50339-50342]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-17904]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2015-0280; FRL-9947-70-Region 9]


Revisions to California State Implementation Plan; Bay Area Air 
Quality Management District; Stationary Source Permits

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is finalizing a 
limited approval and limited disapproval of revisions to Regulation 2, 
Rules 1 and 2 for the Bay Area Air Quality Management District (BAAQMD 
or District) portion of the California State Implementation Plan (SIP) 
submitted on April 22, 2013. These revisions consist of significant 
updates to rules governing the issuance of permits for stationary 
sources, including review and permitting of major sources and major 
modifications under parts C and D of title I of the Clean Air Act 
(CAA). Under the authority of the CAA, this action simultaneously 
approves a local rule that regulates permit requirements for stationary 
sources and directs the BAAQMD to correct rule deficiencies.

DATES: These rules will be effective on August 31, 2016.

ADDRESSES: The EPA has established docket number EPA-R09-OAR-2015-0280 
for this action. Generally, documents in the docket for this action are 
available electronically at http://www.regulations.gov or in hard copy 
at EPA Region IX, 75 Hawthorne Street, San Francisco, California 94105-
3901. While all documents in the docket are listed at http://www.regulations.gov, some information may be publicly available only at 
the hard copy location (e.g., copyrighted material, large maps, multi-
volume reports), and some may not be available in either location 
(e.g., confidential business information (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: Shaheerah Kelly, EPA Region 9, (415) 
947-4156, [email protected].

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

Table of Contents

I. Proposed Action
II. Summary of Public Comments and EPA Responses
III. EPA Action
IV. Incorporation by Reference
V. Statutory and Executive Order Review

Definitions

    For the purpose of this document, we are giving meaning to certain 
words or initials as follows:
    (i) The word or initials Act or CAA mean or refer to the Clean Air 
Act, unless the context indicates otherwise.
    (ii) The initials ATC mean or refer to the authority to construct 
permit.
    (iii) The word or initials BAAQMD or District mean or refer to the 
Bay Area Air Quality Management District.
    (iv) The initials CFR mean or refer to Code of Federal Regulations.
    (v) The initials or words EPA, we, us or our mean or refer to the 
United States Environmental Protection Agency.
    (vi) The initials ERCs mean or refer to Emission Reduction Credits.
    (vii) The initials FLM mean or refer to Federal Land Manager.
    (viii) The initials FR mean or refer to Federal Register.
    (ix) The initials NSR mean or refer to New Source Review.
    (x) The initials PM2.5 mean or refer to particulate matter with an 
aerodynamic diameter of less than or equal to 2.5 micrometers (fine 
particulate matter).
    (xi) The initials PSD mean or refer to Prevention of Significant 
Deterioration.
    (xii) The initials PTE mean or refer to potential to emit.
    (xiii) The initials SIP mean or refer to State Implementation Plan.
    (xiv) The initials SO2 mean or refer to sulfur dioxide.
    (xv) The initials TSD mean or refer to the technical support 
document for the proposed action.

I. Proposed Action

    On August 28, 2015, the EPA proposed a limited approval and limited 
disapproval of the rules listed in Table 1 that were submitted for 
incorporation into the California SIP. 80 FR 52236 (Aug. 28, 2015). Our 
detailed analysis of these rules is provided in the TSD and Federal 
Register notice for the proposed rulemaking for this SIP revision 
approval action.

                                          Table 1--Submitted NSR Rules
----------------------------------------------------------------------------------------------------------------
                                                                                     Adopted/
           Regulation & rule No.                          Rule title                  amended        Submitted
----------------------------------------------------------------------------------------------------------------
Regulation 2, Rule 1 (2-1).................  Permits, General Requirements......        12/19/12         4/22/13
Regulation 2, Rule 2 (2-2).................  Permits, New Source Review.........        12/19/12         4/22/13
----------------------------------------------------------------------------------------------------------------

    We proposed a limited approval because we determined that these 
rules strengthen the SIP and are largely consistent with the relevant 
CAA requirements. We simultaneously proposed a limited disapproval 
because some rule provisions conflict with CAA section 110, including 
Parts C and D, and the regulations implementing those laws. The 
disapproved provisions include the following:
    1. The definitions of ``agricultural source'' in Section 2-1-239 
and ``large confined animal facility'' used in Section 2-1-424 rely on 
other definitions and provisions in District rules that are not SIP 
approved. (See our evaluation of Sections 2-1-239 and 2-1-424 in 
section 6.1.2 of the TSD.)
    2. Section 2-1-234, subparagraph 2.2, is deficient because it does 
not satisfy the PSD provisions at 40 CFR 51.166(a)(7) and 51.166(r)(6) 
& (7), which require PSD programs to contain specific applicability 
procedures and recordkeeping provisions. (See our evaluation of Section 
2-1-234 in sections 6.1.2 and 7.2.2 of the TSD.)
    3. The same deficiency discussed above for the PSD provisions 
applies to the nonattainment NSR provisions. Section 2-1-234, 
subparagraph 2.1, does not satisfy the requirements of 51.165(a)(2) and 
51.165(a)(6) & (7), which require nonattainment NSR programs to contain 
specific applicability procedures and recordkeeping provisions. (See 
our evaluation of Section 2-1-234 in sections 6.1.2 and 7.3.12 of the 
TSD.)
    4. The definition of the term ``PSD pollutant'' as defined in 
Section 2-2-223, which is used in place of the federal definition for 
the term ``regulated NSR pollutant,'' is deficient

[[Page 50340]]

because it explicitly excludes nonattainment pollutants. (See our 
evaluation of Sections 2-2-223 and 2-2-224 in sections 6.2.2 and 7.2.3 
of the TSD.)
    5. Section 2-2-305 does not require written approval of the 
Administrator prior to using any modified or substituted air quality 
model as provided in subsection 3.2.2 of 40 CFR 51, appendix W. (See 
our evaluation of Section 2-2-305 in sections 6.2.3 and 7.2.15 of the 
TSD.)
    6. Section 2-2-611 does not include the requirement regarding ``any 
other stationary source category which as of August 7, 1980, is being 
regulated under section 111 or 112 of the Act'' in the list of source 
categories that must include fugitive emissions to determine whether a 
source is a major facility. (See our evaluation of Section 2-2-611 in 
sections 6.2.6 and 7.3.10 of the TSD.)
    7. Section 2-2-401.4 only requires a visibility analysis for 
sources that are located within 100 km of a Class I area, rather than 
for any source that ``may have an impact on visibility'' in any 
mandatory Class I Federal Area, as required by 40 CFR 51.307(b)(2). 
(See our evaluation of Section 2-2-401.4 in sections 6.2.4 and 7.3.9 of 
the TSD.)
    8. Section 2-2-411 pertaining to Offset Refunds does not contain 
any timeframe for obtaining an offset refund. (See our evaluation of 
Section 2-2-411 in section 6.2.4 of the TSD.)
    9. The Offset Program Equivalence demonstration required by Section 
2-2-412 does not provide a remedy if the District fails to make the 
required demonstration. (See our evaluation of Section 2-2-412 in 
section 6.2.4 of the TSD.)
    10. Subsection 2-2-605.2 allows existing ``fully-offset'' sources 
to generate ERCs based on the difference between the post-modification 
PTE and the pre-modification PTE. Emission reductions intended to be 
used as offsets for new major sources or major modifications are only 
creditable if they are reductions of actual emissions, not reductions 
in the PTE of a source. (See our evaluation of Section 2-2-605 in 
sections 6.2.6, 7.3.3, 7.3.13, and 7.3.22 of the TSD.)
    11. Subsection 2-2-606.2, as it applies to major modifications, 
does not require ``fully-offset'' sources to calculate the emission 
increases from a proposed major modification based on the difference 
between the post-modification PTE and the pre-modification actual 
emissions as required by 40 CFR 51.165(a)(3)(ii)(J). (See our 
evaluation of Section 2-2-606 in sections 6.2.6 and 7.3.22 of the TSD.)
    In addition, we had proposed a limited disapproval of Section 2-2-
308. (See our evaluation of Section 2-2-308 in sections 6.2.3 and 7.4.1 
of the TSD.) We also proposed to find the rules were deficient because 
they did not require a demonstration that a new source meet all 
applicable SIP requirements as required by 40 CFR 51.160(b)(1). (See 
section 7.4.1 in the TSD.) For the reasons discussed in sections 2.2 
and 2.3 of our Response to Comments document, we are not finalizing our 
proposed disapproval of Section 2-2-308 or the proposed deficiency 
based on the requirements of 40 CFR 51.160(b)(1).

II. Summary of Public Comments and EPA Responses

    Our August 28, 2015 proposed rulemaking provided a 30-day public 
comment period. The EPA granted a request from BAAQMD to extend the 
public comment period until November 12, 2015, which is the date the 
public comment period ended. We received comments from BAAQMD and the 
California Council for Environmental and Economic Balance (CCEEB).\1\ 
We also received a comment letter from the Sacramento Metropolitan Air 
Quality Management District (SMAQMD) after the public comment period 
ended. We received an anonymous, non-substantive comment letter and a 
comment letter submitted on behalf of the California Air Pollution 
Control Officers Association (CAPCOA) that was withdrawn during the 
comment period. Our Response to Comments document in the docket for 
this action contains a summary of the comments and the EPA's responses. 
The full text of the public comments, as well as all other documents 
relevant to this action, are available in the docket (visit http://www.regulations.gov and search for Docket ID: EPA-R09-OAR-2015-0280). 
Below, we briefly summarize the significant comments and our responses 
to the major issues raised by commenters.
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    \1\ Each of the comments contained in CCEEB's comment letter 
mirrored issues raised in the BAAQMD comment letter, therefore the 
comment summary provided in this notice does not attribute specific 
comments to CCEEB. Please see the Response to Comments documents for 
more information.
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    Comment 1: BAAQMD commented that the CAA is designed to achieve 
``cooperative federalism'', and that the EPA should defer to the 
District's policy choices on how to implement its NSR program.
    Response 1: The EPA understands its role under the cooperative 
federalism approach established under the CAA and we have applied the 
appropriate standard in reviewing the BAAQMD's NSR rules.
    Comment 2: BAAQMD disagrees with the EPA's limited disapproval of 
Section 2-2-308 as it relates to satisfying the requirements in 40 CFR 
51.160(b).
    Response 2: We are not finalizing our limited disapproval of 
Section 2-2-308 as it relates to 40 CFR 51.160(b)(2) for the reasons 
discussed in our Response to Comments document. Accordingly, the EPA is 
finalizing approval of Section 2-2-308.
    Comment 3: BAAQMD disagrees with the EPA's limited disapproval of 
the District NSR rules because it did not contain a prohibition on the 
issuance of an ATC if the project does not meet all applicable 
requirements of the control strategy as required in 40 CFR 
51.160(b)(1). BAAQMD commented that Sections 2-1-304 and 2-1-321 
satisfy this requirement.
    Response 3: The EPA is not finalizing our proposed limited 
disapproval of this issue because Section 2-1-304 satisfies the control 
strategy requirement in 40 CFR 51.160(b)(1). The EPA is finalizing 
approval of Section 2-1-304 as satisfying requirement in 40 CFR 
51.160(b)(1).
    Comment 4: BAAQMD disagrees with the EPA's proposed limited 
disapproval of Section 2-2-602.2 for determining the amount of offsets 
required for major modifications that will be constructed at major 
sources that have previously provided offsets equal to the source's PTE 
when the modification will not increase the PTE of the source.
    Response 4: The EPA is finalizing our limited disapproval regarding 
this issue. 40 CFR 51.165(a)(3)(ii)(J) directs SIPs to include rules to 
ensure that the total tonnage of increased emissions, in tons per year, 
resulting from a major modification that must be offset in accordance 
with section 173 of the Act shall be determined by summing the 
difference between the allowable emissions after the modification and 
the actual emissions before the modification. This provision requires 
providing offsets for each major modification at a major source in an 
amount equal to the difference between pre-modification actual 
emissions and post-modification PTE.
    Comment 5: BAAQMD disagrees with the EPA's proposed limited 
disapproval of the PTE-to-PTE calculation method for determining the 
amount of ERCs generated from sources that have provided offsets up to 
their full PTE and that are being shut down.
    Response 5: The EPA is finalizing its limited disapproval on this 
issue because offsets are required to be generated from reductions in 
actual

[[Page 50341]]

emissions consistent with CAA section 173(a) and (c) and 40 CFR 
51.165(a)(3).
    Comment 6: BAAQMD comments that the EPA cannot require 
nonattainment offsets for SO2 because the San Francisco Bay 
Area is not designated as nonattainment for SO2.
    Response 6: The EPA is finalizing its limited disapproval on this 
issue because 40 CFR 51.165(a)(1)(xxxvii) specifies that sulfur dioxide 
is a precursor in all PM2.5 nonattainment areas and the 
BAAQMD is designated nonattainment for the 2006 PM2.5 
National Ambient Air Quality Standards.
    Comment 7: BAAQMD comments that the EPA's visibility regulations at 
40 CFR 51.307(b) do not specify what projects ``may have an impact'' on 
visibility at Federal Class I areas, therefore it is acceptable to use 
a 100-km radius to meet the requirement.
    Response 7: The EPA is finalizing its limited disapproval on this 
issue because the EPA's visibility regulations require a new major 
source or major modification that ``may have an impact on visibility'' 
at a Federal mandatory Class I area to conduct a visibility analysis on 
a case-by-case basis in consultation with the applicable FLM.
    Comment 8: BAAQMD requests that the EPA confirm that the limited 
approval and limited disapproval action will make the BAAQMD's NSR 
rules as a whole part of the California SIP and federally enforceable 
under the CAA.
    Response 8: Regulation 2, Rules 1 and 2 will become the federally 
enforceable NSR program in the SIP for BAAQMD subject to an obligation 
to correct rule deficiencies listed in Section I of this Federal 
Register document.

III. EPA Action

    For the reasons provided in our proposed rule and above in response 
to comments, pursuant to section 110(k) of the CAA, the EPA is 
finalizing a limited approval and limited disapproval of the submitted 
BAAQMD rules, listed in Table 1 above, into the California SIP. 
Regulation 2, Rules 1 and 2 will become the federally enforceable NSR 
program in the SIP for BAAQMD subject to an obligation to correct the 
rule deficiencies listed in Section I of this Federal Register 
document. We are finalizing a limited approval because incorporating 
the BAAQMD permitting rules will strengthen and update the BAAQMD 
portion of the California SIP. We are finalizing our limited 
disapproval because some of the BAAQMD permitting rules do not comply 
with federal NSR requirements.
    We are finalizing our action as proposed, except for the limited 
disapprovals regarding Sections 2-2-308 and the requirements of 40 CFR 
51.160(a) and (b). Accordingly, the EPA will finalize approval of these 
provisions.
    Our limited disapproval action will trigger an obligation for the 
EPA to promulgate a Federal Implementation Plan under CAA section 
110(c) unless California corrects the deficiencies that are the bases 
for the limited disapproval, and the EPA approves the related rule 
revisions, within 24 months of the effective date of this final action. 
In addition, sanctions will be imposed unless the EPA approves 
subsequent SIP revisions that correct the rule deficiencies within 18 
months of the effective date of this action. These sanctions will be 
imposed under section 179 of the Act and 40 CFR 52.31.
    The District has been implementing the federal PSD permitting 
program based on a delegation agreement with the EPA pursuant to 40 CFR 
52.21(u).\2\ Despite limited deficiencies, this final action approving 
the District's PSD permitting program into the SIP means that the 
District will be the PSD permitting authority on the effective date of 
this final action. Concurrent with the EPA's approval of the District's 
rules, all PSD permits for sources located in the BAAQMD issued 
directly by the EPA or under the PSD delegation agreement are being 
transferred to the District. A list of these EPA-issued permits is 
included in the docket for this rulemaking action.
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    \2\ On June 21, 2004, the EPA issued a PSD delegation agreement, 
which was updated on January 20, 2006, February 4, 2008, and March 
9, 2011.
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IV. Incorporation by Reference

    The EPA is finalizing regulatory text that includes incorporation 
by reference. In accordance with requirements of 1 CFR 51.5, the EPA is 
finalizing the incorporation by reference of the BAAQMD rules described 
in the amendments to 40 CFR part 52 set forth below. The EPA has made, 
and will continue to make, these documents available electronically 
through http://www.regulations.gov and in hard copy at the appropriate 
EPA office (see the ADDRESSES section of this preamble for more 
information).

V. Statutory and Executive Order Review

    Additional information about these statutes and Executive Orders 
can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is not a significant regulatory action and was 
therefore not submitted to the Office of Management and Budget (OMB) 
for review.

B. Paperwork Reduction Act (PRA)

    This action does not impose an information collection burden under 
the PRA because this action does not impose additional requirements 
beyond those imposed by state law.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. This 
action will not impose any requirements on small entities beyond those 
imposed by state law.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect 
small governments. This action does not impose additional requirements 
beyond those imposed by state law. Accordingly, no additional costs to 
State, local, or tribal governments, or to the private sector, will 
result from this action.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It 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.

F. Executive Order 13175: Coordination With Indian Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175, because the SIP is not approved to apply on any 
Indian reservation land or in any other area where the EPA or an Indian 
tribe has demonstrated that a tribe has jurisdiction, and will not 
impose substantial direct costs on tribal governments or preempt tribal 
law. Thus, Executive Order 13175 does not apply to this action.

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

    The EPA interprets Executive Order 13045 as applying only to those

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regulatory actions that concern environmental health or safety risks 
that the EPA has reason to believe may disproportionately affect 
children, per the definition of ``covered regulatory action'' in 
section 2-202 of the Executive Order. This action is not subject to 
Executive Order 13045 because it does not impose additional 
requirements beyond those imposed by state law.

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

    This action is not subject to Executive Order 13211, because it is 
not a significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTAA)

    Section 12(d) of the NTTAA directs the EPA to use voluntary 
consensus standards in its regulatory activities unless to do so would 
be inconsistent with applicable law or otherwise impractical. The EPA 
believes that this action is not subject to the requirements of section 
12(d) of the NTTAA because application of those requirements would be 
inconsistent with the CAA.

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

    The EPA lacks the discretionary authority to address environmental 
justice in this rulemaking.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

L. 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 September 30, 2016. 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

    Air pollution control, Carbon monoxide, Environmental protection, 
Incorporation by reference, 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 3, 2016.
Alexis Strauss,
Acting Regional Administrator, Region IX.

    Part 52, chapter I, title 40 of the Code of Federal Regulations is 
amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart F--California

0
2. Section 52.220 is amended by adding paragraphs (c)(182)(i)(B)(7) and 
(c)(199)(i)(A)(9) and (c)(202)(i)(A)(2) and (c)(429)(i)(E)(1) and (2) 
to read as follows:


Sec.  52.220   Identification of plan.

* * * * *
    (c) * * *
    (182) * * *
    (i) * * *
    (B) * * *
    (7) Previously approved on January 26, 1999 in paragraph 
(c)(182)(i)(B)(6) of this section and now deleted with replacement in 
(c)(429)(i)(E)(1), Regulation 2, Rule 1 adopted on November 1, 1989.
* * * * *
    (199) * * *
    (i) * * *
    (A) * * *
    (9) Previously approved on January 26, 1999 in paragraph 
(c)(199)(i)(A)(8) of this section and now deleted with replacement in 
(c)(429)(i)(E)(2), Regulation 2, Rule 2 adopted on June 15, 1994.
* * * * *
    (202) * * *
    (i) * * *
    (A) * * *
    (2) Previously approved on April 3, 1995 in paragraph 
(c)(202)(i)(A)(1) of this section and now deleted with replacement in 
(c)(429)(i)(E)(1), Rule 2-1-249, adopted on June 15, 1994.
* * * * *
    (429) * * *
    (i) * * *
    (E) Bay Area Air Quality Management District.
    (1) Regulation 2, ``Permits,'' Rule 1, ``General Requirements,'' 
adopted on December 19, 2012.
    (2) Regulation 2, ``Permits,'' Rule 2, ``New Source Review,'' 
adopted on December 19, 2012.
* * * * *

0
3. Section 52.270 is amended by adding paragraph (b)(16) to read as 
follows:


Sec.  52.270  Significant deterioration of air quality.

* * * * *
    (b) * * *
    (16) The PSD program for the Bay Area Air Quality Management 
District (BAAQMD), as incorporated by reference in Sec.  
52.220(c)(429)(i)(E)(2), is approved under part C, subpart 1, of the 
Clean Air Act. For PSD permits previously issued by EPA pursuant to 
Sec.  52.21 to sources located in the BAAQMD, this approval includes 
the authority for the BAAQMD to conduct general administration of these 
existing permits, authority to process and issue any and all subsequent 
permit actions relating to such permits, and authority to enforce such 
permits.
* * * * *
[FR Doc. 2016-17904 Filed 7-29-16; 8:45 am]
 BILLING CODE 6560-50-P