[Federal Register Volume 82, Number 114 (Thursday, June 15, 2017)]
[Proposed Rules]
[Pages 27451-27456]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2017-12469]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2016-0215; FRL-9963-78-Region 9]


Approval of California Air Plan Revisions, South Coast Air 
Quality Management District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve revisions to the South Coast Air Quality Management District 
(SCAQMD or District) portion of the California State Implementation 
Plan (SIP). These revisions concern the District's demonstration 
regarding Reasonably Available Control Technology (RACT) requirements 
for the 2008 8-hour ozone National Ambient Air Quality Standard (NAAQS) 
in the South Coast Air Basin and Coachella Valley ozone nonattainment 
areas. The EPA had previously proposed to partially approve and 
partially disapprove SCAQMD's RACT SIP demonstration. However, since 
publication of the proposed rule, SCAQMD has addressed the identified 
deficiency that was the basis for the proposed partial disapproval by 
completing additional analysis and by submitting the analysis to the 
EPA as a supplement to the RACT demonstration. Because the supplemental 
analysis adequately addresses the deficiency, the EPA is withdrawing 
the previous proposed action and is now proposing full approval of 
SCAQMD's RACT SIP demonstration for the 2008 ozone NAAQS, as recently 
supplemented. The action proposed herein is based on a public draft 
version of the SCAQMD RACT supplement, and the EPA will not take final 
action until submittal of the final version of the SCAQMD RACT 
supplement as a revision of the California SIP.

DATES:  Any comments must arrive by July 17, 2017.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R09-
OAR-2016-0215 at https://www.regulations.gov/, or via email to Andrew 
Steckel, Rulemaking Office Chief at [email protected]. For 
comments submitted at Regulations.gov, follow the online instructions 
for submitting comments. Once submitted, comments cannot be removed or 
edited from Regulations.gov. For either manner of submission, the EPA 
may publish any comment received to its public docket. Do not submit 
electronically any information you consider to be Confidential Business 
Information (CBI) or other information whose disclosure is restricted 
by statute. Multimedia submissions (audio, video, etc.) must be 
accompanied by a written comment. The written comment is considered the 
official comment and should include discussion of all points you wish 
to make. The EPA will generally not consider comments or comment 
contents located outside of the primary submission (i.e., on the Web, 
cloud, or other file sharing system). For additional submission 
methods, please contact the person identified in the FOR FURTHER 
INFORMATION CONTACT section. For the full EPA public comment policy, 
information about CBI or multimedia submissions, and general guidance 
on making effective comments, please visit https://www.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Stanley Tong, EPA Region IX, (415) 
947-4122, [email protected].

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

Table of Contents

I. The State's Submittal
    A. What documents did the State submit?
    B. Are there other versions of these documents?
    C. What is the purpose of the submitted documents?
II. The EPA's Evaluation and Proposed Action
    A. How is the EPA evaluating the submitted documents?
    B. Do the documents meet the evaluation criteria?
    C. Public Comment and Proposed Action
III. Incorporation by Reference
IV. Statutory and Executive Order Reviews

I. The State's Submittal

A. What documents did the State submit?

    On June 6, 2014, the SCAQMD adopted the ``2016 AQMP) Reasonably 
Available Control Technology (RACT) Demonstration'' (``2016 AQMP RACT 
SIP''), and on July 18, 2014, the California Air Resources Board (CARB) 
submitted it to the EPA for approval as a revision to the California 
SIP. On January 18, 2015, the submittal of the 2016 AQMP RACT SIP was 
deemed complete by operation of law.
    On May 22, 2017, CARB submitted the District's public draft version 
of the ``Supplemental RACM/RACT Analysis for the NOX RECLAIM 
Program'' (``2017 RACT Supplement'') along with a request for parallel 
processing.\1\ The District prepared the 2017 RACT Supplement to 
address a deficiency that the EPA had identified in the 2016 AQMP RACT 
SIP and that was the basis for the EPA's proposed partial disapproval 
of that submittal published on November 3, 2016 (81 FR 76547). The 2017 
RACT Supplement includes additional emissions analysis, two negative 
declarations, and certain conditions from permits for two specific 
stationary sources located in Coachella Valley. As noted in footnote 1 
of this document, under our parallel processing procedure, the EPA 
proposes action on a public draft version of a SIP revision but will 
take final action only after the final version is adopted and submitted 
to the EPA for approval. In this instance, we are proposing action 
based on the public draft version of the 2017 RACT Supplement submitted 
by CARB on May 22, 2017 and will not take final action until the final 
version of the 2017 RACT

[[Page 27452]]

Supplement is adopted and submitted to the EPA. CARB's May 22, 2017 
letter indicates that the District Board is scheduled to consider 
approval of the 2017 RACT Supplement and associated documents on July 
7, 2017, and if it is approved, CARB will submit the final package to 
the EPA.
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    \1\ Under the EPA's ``parallel processing'' procedure, the EPA 
proposes rulemaking action concurrently with the state's proposed 
rulemaking. If the state's proposed rule is changed, the EPA will 
evaluate that subsequent change and may publish another notice of 
proposed rulemaking. If no significant change is made, the EPA will 
publish a final rulemaking on the rule after responding to any 
submitted comments. Final rulemaking action by the EPA will occur 
only after the rule has been fully adopted by California and 
submitted formally to the EPA for incorporation into the SIP. See 40 
CFR part 51, appendix V.
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B. Are there other versions of these documents?

    There are no previous versions of the documents described above in 
the SCAQMD portion of the California SIP for the 2008 8-hour ozone 
NAAQS.

C. What is the purpose of the submitted documents?

    Volatile Organic Compounds (VOC) and nitrogen oxides 
(NOX) together produce ground-level ozone, smog and 
particulate matter (PM), which harm human health and the environment. 
Section 110(a) of the Clean Air Act (CAA or ``Act'') requires states to 
submit regulations that control VOC and NOX emissions. CAA 
sections 182(b)(2) and (f) require that SIPs for 1-hour ozone 
nonattainment areas classified as moderate or above implement RACT for 
any source covered by a Control Techniques Guidelines \2\ (CTG) 
document and for any major source of VOC or NOX. The EPA's 
implementing regulations for the 2008 ozone NAAQS extend the same RACT 
requirement to areas classified as moderate or above for the 2008 ozone 
NAAQS. See 40 CFR 51.1112.
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    \2\ CTGs are used to help define VOC RACT.
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    The SCAQMD is subject to the RACT requirement as it is authorized 
under state law to regulate stationary sources in the South Coast Air 
Basin (``South Coast''), which is classified as an extreme 
nonattainment area, and in the Coachella Valley portion of Riverside 
County (``Coachella Valley''), which is classified as a severe-15 
nonattainment area for the 2008 8-hour ozone NAAQS (40 CFR 81.305); 77 
FR 30088 at 30101 and 30103 (May 21, 2012). Therefore, the SCAQMD must, 
at a minimum, adopt RACT-level controls for all sources covered by a 
CTG document and for all major non-CTG sources of VOC or NOX 
within the two nonattainment areas. Any stationary source that emits or 
has the potential to emit at least 10 tons per year of VOC or 
NOX is a major stationary source in an extreme ozone 
nonattainment area (CAA section 182(e) and (f)), and any stationary 
source that emits or has the potential to emit at least 25 tons per 
year of VOC or NOX is a major stationary source in a severe 
ozone nonattainment area (CAA section 182(d) and (f)).
    Section III.D of the preamble to the EPA's final rule to implement 
the 2008 ozone NAAQS (80 FR 12264, March 6, 2015) discusses RACT 
requirements. It states, in part, that RACT SIPs must contain adopted 
RACT regulations, certifications where appropriate that existing 
provisions are RACT, and/or negative declarations that no sources in 
the nonattainment area are covered by a specific CTG source category, 
and that states must submit appropriate supporting information for 
their RACT submissions as described in the EPA's implementation rule 
for the 1997 ozone NAAQS. See id., at 12278; 70 FR 71612, at 71652 
(November 29, 2005).
    The submitted documents provide SCAQMD's analyses of its compliance 
with the CAA section 182 RACT requirements for the 2008 8-hour ozone 
NAAQS. CARB also intends the 2017 RACT Supplement to address the EPA's 
April 14, 2016 (81 FR 22025) disapproval of the reasonably available 
control measures/RACT (RACM/RACT) demonstration for the South Coast for 
the 2006 fine PM (PM2.5) NAAQS. Today's rulemaking addresses 
the RACT requirement for the 2008 ozone standard, not the RACM/RACT 
requirement for the PM2.5 NAAQS. The EPA will address the 
latter requirement in a separate rulemaking. The EPA's technical 
support documents (TSDs) evaluating the 2016 AQMP RACT SIP and the 2017 
RACT Supplement have more information about the District's submissions 
and the EPA's evaluation thereof.

II. The EPA's Evaluation and Proposed Action

A. How is the EPA evaluating submitted documents?

    SIP rules must be enforceable (see CAA section 110(a)(2)), must not 
interfere with applicable requirements concerning attainment and 
reasonable further progress or other CAA requirements (see CAA section 
110(l)), and must not modify certain SIP control requirements in 
nonattainment areas without ensuring equivalent or greater emissions 
reductions (see CAA section 193). Generally, SIP rules must require 
RACT for each category of sources covered by a CTG document as well as 
each major source of VOC or NOX in ozone nonattainment areas 
classified as moderate or above (see CAA section 182(b)(2) and (f), and 
40 CFR 51.1112). The SCAQMD regulates an extreme ozone nonattainment 
area (i.e., the South Coast Air Basin) and a severe ozone nonattainment 
area (i.e., Coachella Valley) (see 40 CFR 81.305), so the District's 
rules must implement RACT.
    Guidance and policy documents that we use to evaluate 
enforceability, revision/relaxation and rule stringency requirements 
for the applicable criteria pollutants include the following:

1. ``State Implementation Plans; General Preamble for the 
Implementation of Title I of the Clean Air Act Amendments of 1990,'' 
57 FR 13498 (April 16, 1992); 57 FR 18070 (April 28, 1992);
2. ``Issues Relating to VOC Regulation Cutpoints, Deficiencies, and 
Deviations,'' EPA, May 25, 1988 (the Bluebook, revised January 11, 
1990);
3. ``Guidance Document for Correcting Common VOC & Other Rule 
Deficiencies,'' EPA Region 9, August 21, 2001 (the Little Bluebook);
4. ``State Implementation Plans; Nitrogen Oxides Supplement to the 
General Preamble; Clean Air Act Amendments of 1990 Implementation of 
Title I; Proposed Rule,'' (the NOX Supplement), 57 FR 
55620, November 25, 1992;
5. Memorandum from William T. Harnett to Regional Air Division 
Directors, (May 18, 2006), ``RACT Qs & As--Reasonably Available 
Control Technology (RACT) Questions and Answers'';
6. ``Implementation of the 2008 National Ambient Air Quality 
Standards for Ozone: State Implementation Plan Requirements'' (80 FR 
12264; March 6, 2015); and
7. ``Final Rule to Implement the 8-hour Ozone National Ambient Air 
Quality Standard -Phase 2'' (70 FR 71612; November 29, 2005).

B. Do the documents meet the evaluation criteria?

    The 2016 AQMP RACT SIP and 2017 RACT Supplement build on the 
District's previous RACT SIP demonstrations: The 2006 RACT SIP (73 FR 
76947, December 18, 2008), the 2007 AQMP (77 FR 12674, March 1, 2012) 
and the 2012 AQMP (79 FR 52526, September 3, 2014). The 2016 AQMP RACT 
SIP concludes, after a review and evaluation of more than 30 rules 
recently developed by other ozone nonattainment air districts, that 
SCAQMD's current rules meet the EPA's criteria for RACT acceptability 
and inclusion in the SIP for the 2008 8-hour ozone NAAQS. The 2017 RACT 
Supplement adds to the 2016 AQMP RACT SIP by including two negative 
declarations, and by including certain permit conditions for two major 
NOX sources in Coachella Valley, and by providing a 
demonstration for how District rules meet the RACT requirement for 
major NOX sources in the South Coast.

[[Page 27453]]

1. CTG Source Categories--South Coast and Coachella Valley
    With regards to CTG source categories, based on its research of the 
District's permit databases and telephone directories for sources in 
the District for the 2007 AQMP, the 2012 AQMP, and the 2016 AQMP RACT 
SIP, the SCAQMD concluded that all identified sources subject to a CTG 
are subject to District rules that establish control requirements 
meeting or exceeding RACT. Because District rules apply in both the 
South Coast and Coachella Valley, the District's conclusion in this 
regard extends to both nonattainment areas.
    Where there are no existing sources covered by a particular CTG 
document, states may, in lieu of adopting RACT requirements for those 
sources, adopt negative declarations certifying that there are no such 
sources in the relevant nonattainment area. The SCAQMD did not include 
any negative declarations in the 2016 AQMP RACT SIP; however, 
subsequent to its 2016 AQMP RACT SIP submittal, the EPA had several 
discussions with the SCAQMD and concluded there may be two CTG 
categories where the District has no sources applicable to the CTGs: 
(1) Surface Coating Operations at Shipbuilding and Ship Repair 
Facilities CTG; and (2) the paper coating portion of the 2007 Paper, 
Film, and Foil Coatings CTG. Based on further investigation, the 
District has agreed that negative declarations for the two CTG 
categories are warranted and has included them in the 2017 RACT 
Supplement.\3\
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    \3\ SCAQMD, ``Negative Declaration for Control Techniques 
Guidelines of Surface Coating Operations at Shipbuilding and Ship 
Repair Facilities, and Paper, Film, and Foil Coatings,'' May 2017, 
included at the back of the 2017 RACT Supplement.
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    Based on our review and evaluation of the documentation provided by 
the SCAQMD in the 2016 AQMP RACT SIP (and earlier plans) and in the 
2017 RACT Supplement, we agree that existing District rules approved in 
the SIP meet or are more stringent than the corresponding CTG limits 
and applicability thresholds for each category of VOC sources covered 
by a CTG document, other than the two CTG documents discussed above. As 
discussed in our TSD, we conclude that existing District rules require 
the implementation of RACT for each category of VOC sources covered by 
a CTG document (other than the two discussed above) located in the 
South Coast and Coachella Valley. For the Surface Coating Operations at 
Shipbuilding and Ship Repair Facilities CTG and the paper coating 
portion of the 2007 Paper, Film, and Foil Coatings CTG, we have 
reviewed the District's evaluation of its sources as described in the 
2017 RACT Supplement and concur with the District's findings. As such, 
we propose approval of the District's two negative declarations 
included in the 2017 RACT Supplement.
2. Major Stationary Sources of VOC or NOX Emissions (Other 
than RECLAIM Facilities)--South Coast and Coachella Valley
    With respect to major stationary sources of VOC or NOX 
emissions, the District provided supplemental information identifying 
21 new major Title V sources since its 2006 RACT SIP certification and 
provided a list of equipment at these facilities that emit greater than 
5 tons per year. The District concluded that all the identified 
equipment were covered by command-and-control VOC or NOX 
rules that implement RACT. The District's efforts to identify all new 
major sources appears to be thorough, and we agree that the District's 
command-and-control VOC and NOX rules approved in the SIP 
require implementation of RACT for all major non-CTG VOC and 
NOX sources in the South Coast and Coachella Valley to which 
those rules apply. Generally, major NOX sources in the South 
Coast and two major NOX sources in Coachella Valley are not 
subject to the District's command-and-control rules, but are subject to 
a set of rules establishing a cap-and-trade program.\4\ Our evaluation 
of these sources for compliance with the RACT requirement is covered in 
the following sections of this document.
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    \4\ Certain sources such as fire-fighting facilities, police 
facilities, and public transit remain covered under SCAQMD's 
command-and-control rules and are exempted from the cap-and-trade 
program. See Rule 2001.
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3. RECLAIM Facilities in the South Coast
    Within the South Coast, major NOX sources are included 
in SCAQMD's Regulation XX (``Regional Clean Air Incentives Market 
(RECLAIM)'') program. The District adopted the RECLAIM program in 1993 
to reduce emissions from the largest stationary sources of 
NOX and sulfur oxides (SOX) emissions through a 
market-based trading program that establishes annual declining 
NOX and SOX allocations (also called ``facility 
caps'') and allows covered facilities to comply with their facility 
caps by installing pollution control equipment, changing operations, or 
purchasing RECLAIM trading credits (RTCs) from the RECLAIM market. 
Section 40440 of the California Health and Safety Code (CH&SC) requires 
the District to monitor advances in best available retrofit control 
technology (BARCT) and periodically to reassess the overall facility 
caps to ensure that the facility caps are equivalent, in the aggregate, 
to BARCT emission levels imposed on affected sources.\5\ Facilities 
subject to RECLAIM are exempted from a number of District command-and-
control (also referred to as ``prohibitory'') rules that otherwise 
apply to sources of NOX and SOX emissions in the 
South Coast.\6\ With certain exceptions, facilities located outside of 
the South Coast but within SCAQMD jurisdiction (e.g., facilities in 
Coachella Valley) are not included in the RECLAIM program. As of the 
2015 compliance year, the most recent compliance year fully audited, 
there are approximately 268 facilities in the RECLAIM NOX 
program.\7\
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    \5\ BARCT is defined as ``an emission limitation that is based 
on the maximum degree of reduction achievable taking into account 
environmental, energy, and economic impacts by each class or 
category of source.'' CH&SC section 40406. For the purposes of 
comparison, the EPA defines RACT as the lowest emission limitation 
that a particular source is capable of meeting by the application of 
control technology that is reasonably available considering 
technological and economic feasibility. 44 FR 53762 (September 17, 
1979). As such, we generally find that BARCT level of control meets 
or exceeds RACT level of control.
    \6\ See District Rule 2001 (``Applicability''), as amended May 
6, 2005. Exemptions from RECLAIM, such as the exemption for certain 
facilities located in Coachella Valley, are listed in Rule 2001(i).
    \7\ See page 4 of the 2017 RACT Supplement.
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    Under longstanding EPA interpretation of the CAA, a market-based 
cap and trade program may satisfy RACT requirements by ensuring that 
the level of emission reductions resulting from implementation of the 
program will be equal, in the aggregate, to those reductions expected 
from the direct application of RACT on all affected sources within the 
nonattainment area.\8\ The EPA approved the RECLAIM program into the 
California SIP in June 1998 based in part on a conclusion that the 
NOX emission caps in the program satisfied the RACT 
requirements of CAA section 182(b)(2) and (f) for covered 
NOX emission sources in the aggregate.\9\ In 2005 and 2010, 
the District adopted revisions to the RECLAIM program, which the EPA 
approved in 2006 and 2011, respectively, based in part on conclusions 
that the revisions continued

[[Page 27454]]

to satisfy RACT requirements.\10\ We refer to the current 
NOX RECLAIM program as approved into the SIP as the ``2010 
RECLAIM program.'' \11\
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    \8\ 59 FR 16690 (April 7, 1994) and the EPA, ``Improving Air 
Quality with Economic Incentive Programs,'' EPA-452/R-01-001 
(January 2001), at Section 16.7 and 80 FR 12264, 12279 (March 6, 
2015).
    \9\ 61 FR 57834 (November 8, 1996) and 63 FR 32621 (June 15, 
1998).
    \10\ 71 FR 51120 (August 29, 2006) and 76 FR 50128 (August 12, 
2011).
    \11\ The RECLAIM program is codified by the District in 
Regulation XX, which includes a number of individual rules, such as 
Rule 2001 (``Applicability'') and Rule 2002 (``Allocations for 
Oxides of Nitrogen (NOX) and Oxides of Sulfur 
(SOX)'' and many others. Herein, we refer to the ``2010 
RECLAIM program,'' because the most recent SIP-approved RECLAIM rule 
amendments were adopted by the District on November 5, 2010. The 
2010 amendments only affected certain sections of Rule 2002 
pertaining to SOX emissions, and thus, the ``2010 RECLAIM 
program'' reflects other amendments by the District that we approved 
prior to that time and that were unaffected by the 2010 amendments. 
For instance, with respect to NOX allocations, the most 
recent SIP-approved amendments that are part of the ``2010 RECLAIM 
program'' were adopted by the District on January 7, 2005.
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    The 2016 AQMP RACT SIP relies on the 2010 RECLAIM program to 
satisfy the RACT requirements for major NOX sources in the 
South Coast. With respect to such sources, we initially concluded, as 
described in our November 3, 2016 proposed rule, 81 FR 76547, at 76549, 
that the 2016 AQMP RACT SIP had failed to demonstrate that the 2010 
RECLAIM program had achieved NOX emissions reductions equal, 
in the aggregate, to those reductions expected from the direct 
application of RACT on all major NOX sources in the South 
Coast. We based our initial conclusion on information contained in 
SCAQMD's December 2015 Draft Final Staff Report (``2015 staff report'') 
revising Regulation XX that indicated that further reductions in the 
NOX RECLAIM emissions cap were needed to achieve BARCT.\12\ 
Given that BARCT level of control by definition meets or exceeds RACT 
level of control, we could have safely concluded that the 2010 RECLAIM 
program meets RACT level of control if it had been demonstrated to 
meet, in the aggregate, BARCT level of control. In light of the 
information in the 2015 staff report, however, there was evidence that 
the RECLAIM program had not achieved BARCT level of control, and thus 
we had inadequate basis to conclude that the 2010 RECLAIM program had 
achieved RACT level of control. The use of the BARCT level of control, 
rather than RACT, as the criterion for approval or disapproval was 
necessary for the purposes of the November 3, 2016 proposed rule 
because no specific demonstration of RECLAIM as meeting the RACT 
requirement had been submitted as part of the 2016 AQMP RACT SIP.
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    \12\ Draft Final Staff Report, Proposed Amendments to Regulation 
XX Regional Clean Air Initiatives Market (RECLAIM) NOX 
RECLAIM, December 4, 2015 http://www.aqmd.gov/docs/default-source/Agendas/Governing-Board/2015/2015-dec4-030.pdf?sfvrsn=9.
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    In response to our November 3, 2016 proposed partial disapproval of 
the South Coast RACT demonstration, and also to respond to the EPA's 
April 14, 2016 disapproval of the South Coast RACM/RACT demonstration 
for the 2006 PM2.5 NAAQS, both of which were premised on the 
same deficient showing with respect to major NOX sources in 
the South Coast that are subject to RECLAIM, the District has provided, 
in the 2017 RACT Supplement, a specific demonstration of how the 2010 
RECLAIM program has achieved, in the aggregate, RACT level of control 
for major NOX sources in the South Coast. In the 2017 RACT 
Supplement, the District has also evaluated the amendments in the 
RECLAIM program adopted by the District in 2015 and 2016 for compliance 
with the RACT requirement.\13\
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    \13\ On March 17, 2017, CARB submitted amended RECLAIM rules 
reflecting revisions adopted by the District on December 4, 2015 
(significant revisions reducing total NOX RTC holdings by 
12 tpd by 2022), February 5, 2016 (minor revisions to certain 
definitions), and October 7, 2016 (new provisions intended to 
prevent the majority of facility shutdown credits from entering the 
market) to the EPA as a revision to the California SIP. The EPA has 
recently proposed to approve the amended rules. See 82 FR 25996 
(June 6, 2017).
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    When the NOX RECLAIM program was first adopted, RECLAIM 
facilities were issued NOX annual allocations that declined 
annually from 1993 until 2003 and remained constant after 2003. The 
ending RTC allocation (for all program sources) in 2003 was set at 34.2 
tons per day (tpd). The annual allocations reflected the levels of 
BARCT to be in place at the RECLAIM facilities, and were the result of 
a BARCT analysis conducted in 1993.
    As noted above, state law also requires the District to monitor 
advances in BARCT and to periodically reassess the overall facility 
caps to ensure that RECLAIM facilities achieve the same or greater 
emission reductions that would have occurred under a command-and-
control approach. In 2005, the District examined the RECLAIM program 
and found that additional reduction opportunities existed due to the 
advancement of control technology.
    As part of the 2005 NOX BARCT reassessment, the District 
examined the most stringent emission limits in other air pollution 
control district rules and other requirements for equipment categories 
in the RECLAIM program in an effort to determine the appropriate mass 
emission reductions to reflect BARCT. District staff also examined 
types of retrofit technologies that had been achieved in practice 
regardless of whether these controls are required in SIP approved 
rules. As a result, the District identified new BARCT levels for six 
source categories in the NOX RECLAIM program and established 
a new ending RTC allocation of 26.5 tpd, which represented the 
allowable programmatic emissions after BARCT implementation. The 
methodology for determining the ending RTC allocation relied on using 
actual emissions that are adjusted for growth and BARCT. Under amended 
rules adopted by the District in 2005, the facility annual allocations 
(in the aggregate) were reduced in annual increments from 34.2 tpd to 
26.5 tpd between 2007 and 2011.
    To demonstrate that the 2010 RECLAIM program (reflecting 2005 
NOX RECLAIM rule amendments) implemented RACT, the District 
re-examined the BARCT reevaluation that it conducted in 2005 and 
determined that, for certain source categories, the BARCT allocation 
level was essentially equivalent to RACT, but that, for certain other 
source categories, the BARCT allocation level was beyond RACT because 
there were no other rules in the District itself or any other 
California air district for these specific categories that were more 
stringent than the limits established under the original RECLAIM 
program in 1993 (and fully implemented by 2003). The District re-
calculated a hypothetical ending annual RTC allocation (of 30.9 tpd) 
reflecting RACT implementation (rather than BARCT) and determined that, 
based on audited actual NOX emissions in 2012, the 2010 
RECLAIM program achieved a 16% reduction in actual NOX 
emissions from RECLAIM sources from 2006 to 2012 whereas only a 9.6% 
reduction (i.e., 34.2 tpd down to 30.9 tpd) was necessary to meet the 
RACT requirement. On that basis, the District concludes, in the 2017 
RACT Supplement, that the 2010 RECLAIM program met the RACT requirement 
for major NOX sources in the South Coast.
    We have reviewed the District's evaluation of the 2010 RECLAIM 
program for compliance with the RACT requirement and find that the 
District's approach, assumptions, and calculation methods are 
reasonable. Based on the District's analysis, we conclude that the 
NOX RECLAIM program, as amended in 2005, provided for 
NOX reductions equivalent, in the aggregate, to those 
reductions expected from the direct application of RACT on all major 
NOX sources in the South Coast.
    However, the emissions limits that form the basis for the 
District's re-examination of the RECLAIM program as described above are 
predicated on the

[[Page 27455]]

2005 BARCT reevaluation of the program. To comply with the RACT 
requirement for the 2008 ozone standard, for which designations were 
promulgated in 2012, the RECLAIM program had to be re-evaluated post-
2012 for potential improvements in control technology since 2005. In 
2015, the District conducted such a reevaluation and amended the 
RECLAIM rules to establish a new ending RTC allocation of 14.5 tpd 
(reflecting BARCT implementation) to be achieved incrementally from 
2017 through 2022.
    In the 2017 RACT Supplement, the District also provides a 
demonstration of how the RECLAIM program, as amended in 2015, meets the 
RACT requirement in the aggregate. To do so, the District performed a 
similar type of analysis as that described above for the 2005 RECLAIM 
amendments to determine a hypothetical ending RTC allocation reflecting 
RACT implementation (rather than BARCT) of 14.8 tpd. Because the ending 
RTC allocation (adopted by the District in 2015 and implementing BARCT) 
of 14.5 tpd is less than (i.e., more stringent than) the hypothetical 
RTC allocation (implementing RACT) of 14.8 tpd, the District concludes 
that the program as amended in 2015 meets the RACT requirement.
    We have reviewed the District's approach, assumptions, and methods 
to the updated RECLAIM program and agree that, as amended in 2015, the 
RECLAIM program provides for emissions reductions equivalent, in the 
aggregate, to those reductions expected from the direct application of 
RACT on all major NOX sources in the South Coast and thereby 
meets the RACT requirement for such sources for the purposes of the 
2008 ozone standard.\14\
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    \14\ While not required for our evaluation of the 2016 AQMP RACT 
SIP and 2017 RACT Supplement for compliance with the RACT 
requirement for the South Coast and Coachella Valley for the 2008 
ozone standard, we also take note of several recent developments 
that pertain to the RECLAIM program. On March 3, 2017, the District 
adopted the 2016 Air Quality Management Plan and in so doing 
directed staff to modify the 2016 AQMP NOX RECLAIM 
measure to achieve an additional 5 tpd NOX emission 
reduction as soon as feasible, and not later than 2025, to 
transition the RECLAIM program to a command-and-control regulatory 
structure requiring BARCT level controls as soon as practicable. See 
SCAQMD, Resolution No. 17-2 (``A Resolution of the South Coast Air 
Quality Management District (SCAQMD or District) Governing Board 
certifying the Final Program Environmental Impact Report (PEIR) for 
the 2016 Air Quality Management Plan (AQMP or Plan), and adopting 
the 2016 AQMP, which is to be submitted into the California State 
Implementation Plan (SIP)''), March 3, 2017, page 17.
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    We also agree with the District that RECLAIM rule amendments in 
October 2016 help to ensure the success of the program in achieving 
BARCT-equivalent (and RACT-equivalent) reductions by preventing the 
majority of facility shutdown RTCs from entering the market and 
delaying the installation of pollution controls at other NOX 
RECLAIM facilities.
4. RECLAIM Facilities in Coachella Valley
    As noted above, unlike major NOX sources in the South 
Coast, major NOX sources in Coachella Valley are generally 
not eligible to participate in the RECLAIM program but rather are 
subject to the District's prohibitory rules.\15\ The RECLAIM rules, 
however, establish an exception for electric generating facilities in 
Coachella Valley that submit complete permit applications on or after 
January 1, 2001. Such facilities may elect to enter the RECLAIM 
program, and to date, two facilities in Coachella Valley have elected 
to enter the program.
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    \15\ District Regulation XX (``Regional Clean Air Incentives 
Market (RECLAIM)'', Rule 2001 (``Applicability''), paragraph 
(i)(1)(I).
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    In our November 3, 2016 proposed rule, we did not extend the 
deficiency we identified in the RACT demonstration for the South Coast 
to Coachella Valley because we found that the two RECLAIM facilities 
that are located there were both equipped with control technology that 
meets or exceeds RACT level of control.\16\ The basic premise for our 
proposed conclusion in this regard was that the RACT requirement was 
met through permit conditions requiring RACT level of control because 
such permit conditions are enforceable because they were issued under 
SIP-approved New Source Review (NSR) rules. However, our rationale was 
mistaken. Generally, NSR permit conditions alone are not sufficient to 
meet the RACT requirement even where the conditions require control 
technology that represent RACT level of control because permit 
conditions are subject to revision outside of the SIP revision process 
and because permits can expire whereas SIP limits must be permanent 
until revised or rescinded through a SIP revision. On the other hand, 
permit conditions that require RACT level of control at a given 
facility may suffice to meet the RACT requirement if they are submitted 
as a SIP revision and approved into the SIP.
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    \16\ See footnote 8 of our November 3, 2016 proposed rule at 81 
FR 76547, at 76549.
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    In subsequent communications with the District, we noted our 
mistaken rationale with respect to RACT compliance and the two 
Coachella Valley facilities. In response, the District reviewed the 
permits for the facilities and included the relevant permit conditions 
for each as appendices A and B to the 2017 RACT Supplement. The permit 
conditions submitted by the District pertain to specified 
NOX emission limits ranging from 2.5 to 5 parts per million 
(ppm) for the gas turbines, control technology (selective catalytic 
reduction (SCR)), and monitoring, among other elements. The District's 
analysis indicates that SCR is generally identified as an emission 
control technology to achieve ``best available control technology'' 
emission limits in the range of 2 to 5 ppm for gas turbines, and thus 
the controls meet or exceed the requirements for RACT. We have reviewed 
the permit conditions (and SCAQMD's analysis) and find that they 
provide for RACT level of control (or better) at the two RECLAIM 
facilities in Coachella Valley. As such, we propose to approve the 
permit conditions as part of the SIP.

C. Public Comment and Proposed Action

    As authorized in section 110(k)(3) of the Act, and based on the 
rationale discussed above, the EPA proposes to approve the 2016 AQMP 
RACT SIP and 2017 RACT Supplement, including the RACT demonstrations 
provided in the two documents, negative declarations for two CTG source 
categories, and certain permit conditions for two power plants in 
Coachella Valley, because we believe they fulfill the RACT SIP 
requirements under CAA sections 182(b) and (f) and 40 CFR 51.1112 for 
the South Coast and Coachella Valley for the 2008 ozone NAAQS. As noted 
above, our proposed action relies upon our evaluation of the public 
draft version of the 2017 RACT Supplement and we will not take final 
action until it is adopted and submitted to us as a revision to the 
California SIP. If the 2017 RACT Supplement that we have evaluated were 
to be revised significantly prior to adoption and submittal, we will 
need to reconsider our proposed action accordingly. We are withdrawing 
our previous proposal (61 FR 76547, November 3, 2016) to partially 
approve and partially disapprove the 2016 AQMP RACT SIP and are now 
proposing full approval because we have concluded that the 2016 AQMP 
RACT SIP, as supplemented by the 2017 RACT Supplement, now meets the 
relevant CAA requirements.\17\ If you submitted

[[Page 27456]]

comments on our previous proposed action and believe that those 
comments remain relevant, you will need to resubmit your comments 
within the public comment period for today's proposed action.
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    \17\ Although we are withdrawing our November 3, 2016 proposed 
action, our TSD associated with that proposed action still contains 
pertinent information that summarizes our evaluation of SCAQMD's 
2016 AQMP RACT SIP.
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    We will accept comments from the public on this proposal until July 
17, 2017. If we take final action to approve the submitted documents, 
our final action will incorporate them into the federally-enforceable 
SIP.

III. Incorporation by Reference

    In this rule, the EPA is proposing to include in a final EPA rule 
regulatory text that includes incorporation by reference. In accordance 
with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by 
reference certain permit conditions for two stationary sources in 
Coachella Valley as described above in preamble. The EPA has made, and 
will continue to make, these materials available through 
www.regulations.gov and at the EPA Region IX Office (please contact the 
person identified in the FOR FURTHER INFORMATION CONTACT section of 
this preamble for more information).

IV. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the Act and 
applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). 
Thus, in reviewing SIP submissions, the EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. 
Accordingly, this proposed action merely proposes to approve SIP 
revisions as meeting federal requirements and does not impose 
additional requirements beyond those imposed by state law. For that 
reason, this proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Orders 
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 
2011);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     Does not provide the EPA with the discretionary authority 
to address disproportionate human health or environmental effects with 
practical, appropriate, and legally permissible methods under Executive 
Order 12898 (59 FR 7629, February 16, 1994).
    In addition, 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. In those areas of 
Indian country, the proposed rule does not have tribal implications and 
will not impose substantial direct costs on tribal governments or 
preempt tribal law as specified by Executive Order 13175 (65 FR 67249, 
November 9, 2000).

List of Subjects in 40 CFR Part 52

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

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

    Dated: June 7, 2017.
Alexis Strauss,
Acting Regional Administrator, Region IX.
[FR Doc. 2017-12469 Filed 6-14-17; 8:45 am]
BILLING CODE 6560-50-P