31200 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Rules and Regulations 

CONTIGUOUS UNITED STATES

Mail class 

Destination entry (at appropriate facility) 

DDU 

(days) 

SCF 

(days) 

ADC 

(days) 

NDC/ASF 

(days) 

Periodicals ....................................................................................................................... 1 1 1–2 2–3 

Standard Mail ................................................................................................................... 2 3 .................... 5 

Package Services ............................................................................................................ 1 2 .................... 3 

Table 6. Destination entry service standard 

day ranges for mail to non-contiguous states 

and territories. 

NON-CONTIGUOUS STATES AND TERRITORIES

Mail class 

Destination Entry (at appropriate facility) 

DDU 

(Days) 

SCF (Days) ADC (Days) NDC (Days) 

Alaska 

Hawaii, 

Guam, & 

American 

Samoa 

Puerto 

Rico & 

USVI 

Alaska 

Hawaii, 

Guam, & 

American 

Samoa 

Puerto 

Rico & 

USVI 

Alaska 

Hawaii, 

Guam, & 

American 

Samoa 

Puerto 

Rico & 

USVI 

Periodicals ........................................ 1 1–3 1 1–3 1–4 (AK) 

11 (JNU) 

11 (KTN) 

1 (HI) 2 

(GU) 

1–4 10–11 10 8–10 

Standard Mail ................................... 2 3 3–4 3–4 ................ ................ ............ 14 13 12 

Package Services ............................ 1 2 2–3 2–3 ................ ................ ............ 12 11 11 

AK = Alaska 3-digit ZIP Codes 995–997; JNU = Juneau AK 3-digit ZIP Code 998; KTN = Ketchikan AK 3-digit ZIP Code 999; HI = Hawaii 3- 

digit ZIP Codes 967 and 968; GU = Guam 3-digit ZIP Code 969. 

Stanley F. Mires, 

Attorney, Legal Policy & Legislative Advice. 

[FR Doc. 2012–12564 Filed 5–24–12; 8:45 am] 

BILLING CODE 7710–12–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R09–OAR–2012–0140; FRL–9669–8] 

Revision to the South Coast Air Quality 

Management District Portion of the 

California State Implementation Plan, 

South Coast Rule 1315 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) is taking final action to 

approve a State Implementation Plan 

(SIP) revision for the South Coast Air 

Quality Management District (District) 

portion of the California SIP. This SIP 

revision incorporates Rule 1315— 

Federal New Source Review Tracking 

System—into the District’s SIP 

approved New Source Review (NSR) 

program to establish the procedures for 

demonstrating equivalency with federal 

offset requirements by specifying how 

the District will track debits and credits 

in its Offset Accounts for Federal NSR 

Equivalency for specific federal 

nonattainment pollutants and their 

precursors. EPA is approving this SIP 

revision because Rule 1315 provides an 

adequate system to demonstrate on an 

on-going basis that the rule requires 

offsets in amounts equivalent to those 

otherwise required by the Clean Air Act 

(CAA) and that the emission reductions 

the District is crediting and debiting in 

its Offset Accounts meet the CAA’s NSR 

offset requirements for federal major 

sources and modifications. 

DATES: Effective Date: This rule is 

effective on June 25, 2012. 

ADDRESSES: EPA has established docket 

number EPA–R09–OAR–2012–0140 for 

this action. Generally, documents in the 

docket for this action are available 

electronically at www.regulations.gov 

and in hard copy at EPA Region IX, 75 

Hawthorne Street, San Francisco, 

California. Some docket materials, 

however, may be publicly available only 

at the hard copy location (e.g., 

voluminous records, maps, 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) 

972–3534, yannayon.laura@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document, ‘‘we’’, ‘‘us’’, 

and ‘‘our’’ refer to EPA. 

Table of Contents 

I. Background 

II. EPA’s Evaluation of the SIP Revision 

A. What action is EPA finalizing? 

B. Public Comments and EPA Responses 

III. EPA’s Final Action 

IV. Statutory and Executive Order Reviews 

I. Background 

EPA allows and encourages local 

authorities to tailor SIP programs, 

including new source review permitting 

programs, to account for that 

community’s particular needs provided 

that the SIP is not less stringent than the 

Act’s requirements. See generally CAA 

Section 116, 42 U.S.C. 7416; Train v. 

Natural Res. Defense Council, 421 U.S. 

60, 79 (1975); Union Electric Co. v. EPA, 

427 U.S. 246, 250 (1976). The District’s 

SIP-approved nonattainment permitting 

rules are contained in District 

Regulation XIII. See 61 FR 64291 

(December 4, 1996) (final rule approving 

SCAQMD’s NSR program) and 40 CFR 

52.220(c)(240)(i)(1). 

When EPA approved Regulation XIII 

in 1996, we noted that Rule 1304 

exempted certain major sources from 


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1Environmental Protection Agency, Region IX Air 

& Toxics Division Technical Support Document for 

EPA’s Notice of Final Rulemaking for the California 

State Implementation Plan South Coast Air Quality 

Management District New Source Review by 

Gerardo C. Rios, October 24, 1996 (TSD). 

the requirement to obtain offsets and 

Rule 1309.1 allowed the District to 

provide offsets for specific ‘‘priority’’ 

projects. We approved these rules 

because the District committed to 

demonstrating on an annual basis that it 

was providing an amount of offsets that 

was equivalent to the amount required 

to offset federal new and modified major 

sources subject to Rules 1304 and 

1309.1.1 The District adopted Rule 

1315’s regulatory language codifying 

how it will account for, or ‘‘track’’, the 

emission reductions that it adds into its 

Offset Accounts as credits and those 

which it subtracts as debits to provide 

offsets for the construction of certain 

federal major sources or modifications 

exempted from offset requirements 

pursuant to Rule 1304 or for which the 

District provided offsets pursuant to 

Rule 1309.1. SCAQMD Governing Board 

Resolution for the Re-adoption of Rule 

1315—Federal New Source Review 

Tracking System, dated Feb. 4, 2011. 

EPA is now finalizing approval of Rule 

1315 as a SIP revision. For a more 

detailed discussion of the District’s NSR 

program and Rule 1315, please refer to 

our proposed approval. 77 FR 10430, 

10430–31 (Feb. 22, 2012). 

II. Evaluation of SIP Revision 

A. What action is EPA finalizing? 

EPA is finalizing a SIP revision for the 

South Coast portion of the California 

SIP. The SIP revision will be codified in 

40 CFR 52.220 by incorporating by 

reference South Coast Rule 1315, as 

adopted February 4, 2011 and submitted 

on March 2, 2011. 

The SIP revision provides a federally 

approved and enforceable mechanism 

for the District to transfer offsetting 

emissions reductions from the District’s 

Offset Accounts to projects that qualify 

under District Rules 1304 and 1309.1. 

B. Public Comments and EPA Responses 

In response to our February 22, 2012 

proposed rule, we received six 

comments, one from the South Coast Air 

Quality Management District (District), 

one from a consortium of environmental 

groups (Coalition for a Safe 

Environment, Communities for a Better 

Environment, Desert Citizens Against 

Pollution and the Natural Resources 

Defense Council (collectively referred to 

herein as ‘‘CSE’’)), and one each from 

the County Sanitation Districts of Los 

Angeles County, California Small 

Business Alliance, California Council 

for Environmental and Economic 

Balance, and the Southern California 

Gas Company. Copies of each comment 

letter have been added to the docket and 

are accessible at www.regulations.gov. 

The comment from the District 

supported EPA’s analysis and proposal 

to approve Rule 1315 into the SIP. With 

the exception of CSE, all of the 

commenters generally supported EPA’s 

analysis and proposed approval. The 

comment from CSE opposed the SIP 

revision and raised several specific 

objections. We have summarized the 

comments and provided a response to 

each comment below. 

Comment 1: CSE’s first comment 

provides an overview of the reasonable 

further progress (RFP) and base year 

requirements of the Clean Air Act 

(CAA). CSE asserts that the South Coast 

is prohibited from including pre-base 

year (i.e. pre-1997) emissions credits for 

particulate matter of 10 microns or less 

(PM10) and sulfur oxides (SOX) in its 

NSR Account under 40 CFR 

51.165(a)(3)(ii)(C)(1) because the 2003 

Air Quality Management Plan (2003 

AQMP) is not ‘‘valid.’’ Comment Letter 

at 3 (stating: ‘‘In the absence of a valid 

attainment demonstration, the 

shutdown-unit requirement under 40 

CFR 51.165(a)(3)(ii)(C)(2) applies, not 

the base-year requirement.’’) [Footnote 

omitted] CSE’s basis for concluding the 

2003 AQMP is not ‘‘valid’’ is that EPA 

has not re-designated the area to 

attainment for PM10. Comment Letter at 

3, n. 8 (‘‘Whether [the ‘fully approved 

SIP language’] is currently in 40 [CFR] 

51.165(a)(3)(ii)(C)(1) or not is not 

relevant where, as here, [sic] attainment 

demonstration offered for compliance 

with this provision did not achievement 

[sic] attainment.’’ [Citation omitted]). 

CSE also includes a discussion of the 

shutdown credit requirement in 40 CFR 

51.165(a)(3)(ii)(C)(2). 

Response 1: We disagree with these 

assertions. Although the text of EPA’s 

current regulation in 40 CFR 

51.165(a)(3)(ii)(C)(1) does not require a 

fully approved attainment 

demonstration in order to allow for the 

use of pre-base year shutdown credits as 

NSR offsets, in light of recent caselaw 

we have evaluated Rule 1315 for 

consistency with EPA’s pre-2005 

requirement for an approved attainment 

demonstration for these purposes. See 

NRDC v. EPA, 571 F.3d 1245, 1265 (D.C. 

Cir. 2009) (remanding, inter alia, those 

portions of EPA’s 2005 ozone 

implementation rule that eliminated the 

approved attainment demonstration 

requirement in 40 CFR 

51.165(a)(3)(ii)(C)). As the NRDC court 

explains, until EPA amended its 

regulations in 1989, emissions 

reductions from shutting down a source 

could only be used to offset a 

replacement for that source’s production 

capacity. Id. at 1264 (citing 54 FR 

27286, 27290 (June 28, 1989)). EPA 

proposed to change this limitation in 

1989 in response to concerns expressed 

by local air pollution authorities that the 

restriction would infringe on their 

authority to make growth management 

decisions and industry commenters who 

argued that the policy encouraged 

sources to continue operating to prevent 

forfeiting emissions credits. 54 FR 

27286 (June 28, 1989). EPA also 

received negative comments from a 

consortium of environmental groups 

opposing the proposed change because 

they were concerned that sources with 

a limited lifetime could get large 

‘‘paper’’ credits that would result in 

worsening air quality. 54 FR at 27291– 

92. 

EPA responded to these comments by 

revising the restriction on using 

emissions credits from shutdown 

sources, stating: ‘‘The essence of the 

Act’s offset provision is that a new 

source may be allowed in a 

nonattainment area only where its 

presence would be consistent with RFP 

toward attainment of the NAAQS.’’ Id. 

at 27292. EPA explained in the 

preamble to the 1989 final rule: ‘‘Thus, 

where a fully approved SIP 

demonstrates RFP and attainment, it is 

appropriate to grant that State maximum 

flexibility in its nonattainment plan, 

under section 173, within the constraint 

that the demonstration not be 

invalidated. By definition, any fully 

approved SIP has independently 

assured RFP and attainment.’’ 54 FR at 

27292 (emphasis added). 

EPA cited several planning scenarios 

‘‘in which EPA considers the SIP to be 

inadequate and will continue to restrict 

offset credits for prior shutdowns.’’ Id. 

at 27294. These scenarios included (1) 

‘‘nonattainment areas that have received 

a final notice of disapproval of their 

current SIP,’’ (2) ‘‘nonattainment areas 

that have received either a section 

110(a)(2)(H) notice of deficiency based 

on failure to attain or maintain the 

primary NAAQS, or a notice of failure 

to implement an approved SIP,’’ and (3) 

‘‘nonattainment areas that received 

notice from EPA that they have failed to 

meet conditions in their EPA-approved 

SIPs, including commitments to adopt 

particular regulations by a certain date.’’ 

Id. at 27294–95. These are the relevant 

limited situations in which a fully 

approved SIP may be inadequate or 

inappropriate for allowing pre-base year 

shutdown credits to be added. In 

summary, EPA’s pre-2005 regulations 


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2We note that our TSD referred to ‘‘projected 

planning inventories’’ rather than investments. 

required an area to have a fully 

approved SIP, which has not been 

followed by a notice of deficiency, a 

notice of failure to implement the SIP or 

a notice that the area failed to meet 

conditions in the SIP. Id. at 27294–95. 

CSE provides no support for its 

conclusory position that an approved 

attainment plan is only ‘‘valid’’ if EPA 

has redesignated the area to attainment 

for the pollutant at issue prior to or 

upon the attainment date. EPA fully 

approved the plan submitted by 

California to provide for attainment of 

the particulate matter (PM10) NAAQS in 

the Los Angeles-South Coast Air Basin 

(2003 AQMP) in 2005. 70 FR 69081 

(November 14, 2005). EPA has not 

notified the South Coast of any 

deficiency, failure to implement or 

unsatisfied condition in the 2003 

AQMP. Moreover, although EPA has not 

yet re-designated the South Coast to 

attainment for PM10 (for which SOX is 

a precursor), the District has submitted 

a re-designation request to EPA along 

with data showing it has not had a 

violation of the PM10 NAAQS since 

2008. See Final PM–10 Redesignation 

Request and Maintenance Plan for the 

South Coast Air Basin, December 2009. 

Because EPA has fully approved the 

2003 AQMP (which contains control 

strategies for both PM10 and SOX

emissions in the South Coast area), the 

District may use pre-base year PM10 and 

SOX shutdown emission credits 

pursuant to 40 CFR 

51.165(a)(3)(ii)(C)(1). 

Accordingly, the requirements in 40 

CFR 51.165(a)(3)(ii)(C)(2) related to 

emission reductions that do not meet 

the requirements in section 

51.165(a)(3)(ii)(C)(1) do not apply to our 

action. 

Comment 2: CSE states ‘‘In its 

Proposed Rule and associated TSD, EPA 

applies the base-year requirement to all 

pollutants deposited in SCAQMD’s 

Community Bank. For PM10 and its 

precursor SOX, EPA looks to the 2003 

AQMP with a 1997 base year. For ozone 

precursors VOC and NOX, EPA looks to 

the 2007 AQMP with a 2003 base year. 

In both instances, EPA concludes that 

‘even if the District Offset Accounts rely 

on pre-base year emission reductions as 

offsets, the District’s Plans have 

adequately added pre-base year 

emissions explicitly into the appropriate 

projected planning investments [sic].’ ’’ 

Comment Letter at 4, quoting EPA’s TSD 

at 13.2 CSE’s comment continues, 

stating: ‘‘As shown below, this 

conclusion violates 40 CFR 

52.165(a)(3)(i)(C) in two ways. First, for 

the PM10 and SOX credits, EPA should 

have applied the shutdown-credit 

requirement, not the base-year 

requirement, because no attainment 

demonstration is in place for PM10. Even 

if it could apply the 2003 AQMP, it 

commits additional errors. Second, for 

VOC an [sic] NOX, EPA erroneously 

concludes that the 2007 AQMP 

explicitly includes pre-base year credits 

that it explicitly excluded.’’ Comment 

Letter at 4. 

Response 2: This comment appears to 

repeat arguments CSE made above in 

Comment 1 regarding whether the 

District can rely on the 2003 AQMP and 

below in Comment 8 regarding whether 

the District added pre-base year credits 

in its plan to provide for attainment of 

the 1997 8-hour ozone NAAQS (2007 

AQMP). EPA’s responses to this 

comment are above in response to 

Comment 1 and below in response to 

Comment 8. 

Comment 3: CSE asserts that the 2003 

AQMP is not a valid attainment 

demonstration because it did not 

demonstrate attainment with the federal 

PM10 NAAQS by 2006. Based on this, 

the South Coast may only allow 

emissions credits from shutdown 

sources pursuant to 40 CFR 

51.165(a)(3)(ii)(C)(2). Comment Letter at 

4–5. 

Response 3: As discussed above, the 

CAA and 40 CFR 51.165(a)(3)(ii)(C)(1) 

require the South Coast to have a fully 

approved attainment demonstration for 

PM10 (and SOX as a precursor) in order 

to allow the use of pre-baseline 

shutdown emission reduction credits for 

PM10 and its precursors. The 2003 

AQMP was fully approved in 2005. 70 

FR 69081 (November 14, 2005). EPA has 

not issued a notice of deficiency, notice 

of failure to implement or notice that 

the District is not meeting conditions in 

the 2003 AQMP. See 54 FR at 27294– 

95. The District has requested redesignation and submitted 3 years of 

data showing there has not been a 

violation of the federal PM10 NAAQS. 

EPA therefore disagrees with CSE’s 

assertion that the District is limited to 

allowing emissions reductions for 

shutdown sources pursuant to 40 CFR 

51.165(a)(3)(ii)(C)(2) (i.e. shutdowns 

occurring after the 1997 AQMP base 

year). 

Comment 4: The next several pages of 

the CSE’s comment letter assert that the 

South Coast did not ‘‘explicitly 

include[] adequate pre-base-year PM10

and SOX credits in its [2003 AQMP] 

emissions inventories.’’ It discusses 

‘‘expected growth from the NSR 

program and the need for pre-base year 

credits.’’ Comment Letter at 5. In 

reviewing Table 2–14 in the 2003 

AQMP, CSE states: ‘‘Where no pre-baseyear credits are needed, the emissions 

inventories exclude them.’’ Id. 

Response 4: Although CSE’s 

references are to the 2007 AQMP, it 

appears from the body of the discussion 

that CSE intended to refer to the 2003 

AQMP and Appendix III of the 2003 

AQMP. Comment Letter at 5, n. 14 & 15. 

Given the context of these comments, 

we assume that the references to the 

2007 AQMP are an inadvertent 

typographical error and that CSE meant 

to refer to similar tables in the 2003 

AQMP and Appendix III of this plan. 

CSE’s comment uses the phrase 

‘‘expected growth,’’ which is not a term 

used in the 2003 AQMP, and then refers 

only to portions of the AQMP pertaining 

to expected demand. The District 

handles growth and demand separately 

and they are distinct in the 2003 AQMP. 

The District includes pre-base year 

emissions in the growth portion of its 

2003 AQMP. See 2003 AQMP Figure 3– 

6 and Appendix III Table 2–8 (Growth 

Impact to 2010 Annual Average 

Emissions in Tons Per Day). Appendix 

III, Table 2–8 shows a sum of the 

inventory for all emissions sources for 

each criteria pollutant with and without 

growth. The 2003 AQMP forecasts the 

2010 (i.e. future year) emissions 

inventories ‘‘with growth’’ through a 

detailed consultation process with the 

Southern California Association of 

Governments (SCAG). SCAG provides 

extensive data on demographics and all 

emissions sources in the South Coast. It 

performs an exhaustive analysis of the 

growth in the inventory of sources that 

is likely to occur through the planning 

periods of 2010. The District’s AQMP 

summarizes this data in the 2003 AQMP 

Figure 3–6 and provides additional 

details in Appendix III Table 2–8 and 

Attachments A–C. 

The District’s growth projections 

include the pre-base year emissions, 

consistent with the requirements of 40 

CFR 51.165(a)(3)(i)(C)(1). For PM10, the 

District added PM10 emissions into its 

future year 2010 inventory for growth of 

both point and area sources. For point 

sources of PM10, the District added 3 tpd 

(from 11 tpd to 14 tpd); for area sources 

23 tpd were added (from 77 tpd to 100 

tpd) in its future year 2010 inventory. 

Appendix III, Table 2–8. This means 

that the District added a total of 26 tpd 

of PM10 emissions to its future year 2010 

inventory for all point and area sources. 

The detailed inventories in the 

Attachments to Appendix III (2003 

AQMP) separate the point and area 

sources into specific source categories 

(e.g. refineries, spray booths, 

charbroilers) so that the emissions with 

and without growth for each category is 


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3The District submitted several spreadsheets 

containing emissions data related to its base year 

and future year emission inventories, which we 

identify herein as lettered ‘‘Docket Items,’’ all of 

which are available in the docket for today’s final 

rule. 

4This table was inadvertently left out of the 

docket, and has now been added as Docket Item III– 

BB. 

included in the base year and future 

year inventories for 2010 and 2020. 

Appendix III, Attachments A–C. 

However, not all point and area 

sources are subject to NSR permit 

requirements. Therefore, the District 

provided data 3 to EPA indicating what 

portion of the baseline and growth 

projections are attributed to the point 

and area sources subject to NSR offset 

requirements. Docket Item III–Z and III– 

AA. This data shows that the District 

explicitly included 5.9 tpd of PM10 in its 

future year 2020 inventory for point and 

area sources subject to the District’s 

NSR program. (Docket Item III–AA 

showing Total Emissions of 14.5 tpd for 

1997 and Docket Item III–Z showing 

Total Emissions of 20.4 tpd for 2020). 

The District also provided data showing 

that it included 3.1 tpd of PM10 (the 

difference between 14.5 tpd for 1997 

and 17.6 tpd for 2010) to the future year 

2010 growth projection.4

In our proposed rule, after describing 

the 2007 AQMP’s treatment of VOC and 

NOX for ensuring a sufficient amount of 

pre-base year credits had been added as 

growth, we stated that ‘‘[t]he District 

used a similar approach for the 2003 

Plan as it pertains to PM10 and SOX.’’ 77 

FR at 10433. EPA’s proposal explains 

that the District added a certain amount 

of emissions as growth for various 

source categories in Table 2–8 of 

Appendix III. EPA further explained 

that ‘‘[f]or Table 2.8, the District 

provided EPA with the point and area 

source data used to generate the 

summary data. EPA used this data to 

determine the amount of emissions due 

to growth at facilities subject to NSR 

offset requirements.’’ 77 FR 10433, n.3. 

Our TSD provides a detailed 

discussion of these data as it relates to 

the 2003 AQMP. We state: ‘‘For PM10, 

the District added 3.1 tpd as growth. 

[footnote omitted].’’ TSD at 12. EPA is 

clarifying in this final approval that the 

TSD should have said the District added 

5.9 tpd as growth because Docket Item 

III–Z is the District’s future year 2020 

inventory for NSR sources. To clarify, 

for those point and area sources subject 

to NSR, the 1997 ‘‘no growth’’ inventory 

was 14.5 tpd. Docket Item III–AA. The 

District then included ‘‘growth’’ of 5.9 

tpd for the 2020 inventory in Docket 

Item III–Z and ‘‘growth’’ of 3.1 tpd to 

the 2010 inventory in Docket Item III– 

BB, for NSR sources. EPA inadvertently 

did not post the information for the 

2010 inventory with our proposal and is 

adding it to the Docket as Docket Item 

III–BB. EPA’s TSD inadvertently recited 

the sum from the 2010 inventory (3.1 

tpd growth) rather than 5.9 tpd from the 

2020 inventory. This mistake arising 

from referring to the wrong future year 

inventory total does not have any 

substantive consequence because the 

District’s inclusion of either tonnage 

(3.1 tpd or 5.9 tpd) of pre-base year 

growth to the future year inventories far 

exceeds the amount that the District 

expects will be used. 

In summary, CSE confuses growth (3.1 

tpd for future year 2010 NSR sources or 

5.9 tpd for future year 2020 NSR 

sources), which is where the District 

adds expected emission increases due to 

growth into the inventories—with 

demand for credits. CSE looks only at 

demand (0.23 tpd) for pre-base year 

offsets, which the District provides as a 

check to ensure its growth estimate is 

sufficient to account for this demand. 

This confusion leads CSE to contend 

that ‘‘[t]he 2003 AQMP includes no prebase year PM10 credits and 0.7 pre-base 

year SOx credits.’’ Comment Letter at 5– 

6, referring to Table 2–14 in 2003 

Appendix III. 

CSE is incorrect. This portion of the 

2003 AQMP is evaluating historic PM10

demand and in addition, is limited to 

the historic demand from the District 

NSR Accounts. See Appendix III Table 

2–14 ‘‘2010 Net Demand for ERCs in the 

AQMD’s NSR Accounts’’. EPA’s TSD 

more accurately refers to Table 2–15 

that includes the District’s estimated net 

demand from the NSR Accounts and the 

open market transactions, which is 0.23 

tpd. 

EPA’s proposal and TSD stated: ‘‘For 

PM10, the District added 3.1 tpd as 

growth.’’ TSD at 12. The footnote to this 

statement provided ‘‘See 2003 Plan 

Appendix III, pgs. 25–35. For Table 2.8, 

the District provided EPA with the point 

and area source data used to generate 

the summary data. EPA used this data 

to determine the amount of emission 

due to growth at facilities subject to 

NSR offset requirements.’’ TSD at 12, 

n.7. As explained above, EPA’s TSD 

should have stated that the District 

added 5.9 tpd as growth for 2020 

(Docket Item III–Z) and 3.1 tpd as 

growth for 2010 (Docket Item III–BB). 

CSE does not acknowledge that the 2003 

AQMP added PM10 emissions growth in 

the future year 2010 and 2020 

inventories. In fact, the District added 

emissions for growth in the 2010 (3.1 

tpd) and 2020 (5.9 tpd) inventories far 

in excess of the expected need for 

offsets on the open market and by the 

NSR Account combined. Further, CSE’s 

comment that if the District did not 

estimate that it would need credits from 

historic supply and demand that the 

District has ‘‘excluded’’ emissions from 

its inventories is not supported by any 

facts. The 2003 AQMP includes pre-base 

year credits in its growth added to its 

future year inventories. 

Comment 5: Beginning on page 7 of 

its Comment Letter, CSE lists three 

comments. The first comment actually 

repeats several paragraphs of CSE’s 

previous comments (e.g. that the only 

pre-base year emissions added in the 

2003 AQMP are from Table 2–14 in 

Appendix III.) To the extent that CSE is 

repeating comments, EPA’s responses 

above (and the statements in EPA’s 

TSD) that the District added PM10

emissions as growth for point and 

stationary sources subject to NSR, 

address these comments. CSE’s 

comment then addresses Table 2–8. 

Comment Letter at 8. EPA considers this 

comment to contain three separate 

points. First, CSE states that Table 2–8 

includes growth from all point sources 

without distinguishing between prebase year and post-base year credits. 

Second, CSE states that the growth from 

point sources in Table 2–8 does not 

distinguish between open market 

emissions transactions and the District’s 

NSR Account transactions. Third, with 

respect to the data provided to EPA by 

the District (Docket Items III–Z and III– 

AA) CSE says: ‘‘A review of those 

documents reveals that it is nothing 

more than identical information already 

attached to Appendix III of the 2003 

AQMP—but simply repackaged into a 

single table.’’ Comment Letter at 8. 

Response 5: CSE’s comment in this 

section confuses the District’s and EPA’s 

treatment of the Table 2–8 point and 

area sources subject to NSR. CSE says 

that it reviewed the documents prepared 

by the District and appended to EPA’s 

TSD and found it was repackaging 

identical information regarding the 

future year inventories in Appendix III 

of the 2003 AQMP. CSE’s review of the 

information is inaccurate. The 

spreadsheets contained in Docket Items 

III–Z and III–AA extract from the 

AQMP’s base year and future year 

inventories (2020) those point and area 

sources subject to NSR. The point and 

area sources listed in Docket Items III– 

Z and III–AA are far fewer, particularly 

for the area sources, than those included 

in Appendix III, Attachments A–C. 

Therefore it is incorrect to say that the 

documents provide identical but 

repackaged information as that which is 

included in the 2003 AQMP. 

EPA requested the District to extract 

those point and area sources subject to 


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NSR because those are the only sources 

in Appendix III, Attachments A–C, for 

which EPA’s regulations require 

sufficient emissions to be added back to 

the future year inventory to account for 

the use of pre-base year emissions 

reductions from shutdowns. EPA 

calculated that the District had added 

3.1 tpd for the subset of point and area 

sources subject to NSR for the future 

year 2010 inventory by comparing the 

sum in Docket Item III–AA to the sum 

in Docket Item III–BB and 5.9 tpd when 

compared to the future year 2020 

inventory (Docket Item III–Z). In the 

docket for our proposed rule, we 

included the spreadsheet for future year 

inventory for 2020 (Docket Item III–AA), 

and in response to comments we are 

adding Docket Item III–BB for the future 

year 2010 inventory to the docket for 

this final rule. 

CSE’s same comment contends that 

the District’s Table 2–8 does not 

separate emissions into pre- and postbase year emissions. The spreadsheets 

the District provided and EPA attached 

to its TSD show the actual 1997 

emission inventory for point and area 

sources subject to NSR—assuming no 

growth (Docket Item III–AA), the 2010 

projected emission inventory (added to 

the docket as Docket Item III–BB), and 

the 2020 projected inventory that was 

attached to the TSD (Docket Item III–Z). 

Each of the future year NSR inventories 

(2010 and 2020) are based on emissions 

growth expected from the 1997 baseline. 

This means that the inventory for ‘‘no 

growth’’ is the inventory NSR subject 

point and area sources of 1997 

emissions. Docket Item III–AA. The 

inventory ‘‘with growth’’ is the amount 

of emissions added into the 1997 

inventory for purposes of showing 

attainment in 2010 and projecting out to 

2020. Docket Items III–Z and III–AA. 

The distinctions between the 

inventories for the base year and after 

the base year, therefore, are inherent in 

the data itself and are summarized for 

NSR sources in the Docket Items III–Z, 

III–AA and III–BB. Based on the 

District’s projected demand, 3.1 tpd of 

PM10 emissions added to the future year 

2010 inventory and 5.9 tpd added to the 

future year 2020 inventory, far exceed 

the amount of pre-base year PM10 offsets 

that the District expected would ever be 

used. The District projected that it 

would not need to use any pre-base year 

PM10 emissions and 0.7 tpd of SOx

emissions from its NSR Accounts, and 

that the entire projected demand 

including the open market demand 

would not exceed 0.23 tpd for PM10. We 

have concluded that the District has 

satisfied the requirements of 

51.165(a)(3)(C)(ii)(1) by adding PM10

emissions to the 1997 base year 

emissions inventory and projecting 

these emissions as ‘‘growth’’ for the 

2010 and 2020 future year inventories 

for point and area sources subject to 

NSR. 77 FR 10433 n.3. 

CSE is correct that the 2003 AQMP 

inventories with no growth and with 

growth do not distinguish between the 

open market and the NSR Account 

transactions. Comment Letter at 7. 

However, there is no need for such a 

distinction and CSE has not provided 

any reason that such a distinction is 

needed. The only issue is whether the 

District has added sufficient pre-base 

year emissions from shutdown sources 

to allow for expected use of those 

emissions after the base year. As 

discussed above, the District has 

adequately accounted for these pre-base 

year PM10 emission reduction credits in 

the 2003 AQMP’s future year (2010 and 

2020) inventories. 

CSE’s comment concludes: ‘‘This 

leads EPA to conclude that the District 

added 3.1 tpd of PM10 credits as growth 

while admitting that that figure includes 

only 0.23 tpd of pre-base year PM10

credits for open-market transactions.’’ 

As noted above, CSE has 

mischaracterized the District’s 2003 

AQMP and EPA’s position. The 2003 

AQMP provides its analysis of ‘‘the 

potential 2010 emissions from new and 

modified sources.’’ 2003 AQMP at III–2– 

29. The District further clarifies: ‘‘The 

net demand simply represents the 

emission increases in the future years to 

be offset by reductions previously 

banked (i.e. prior to the AQMP base 

year).’’ Id. The estimated 2010 demand, 

however, does not equal the amount of 

pre-base year emission reductions that 

the District added back into the 

inventory. The pre-base year PM10

emissions are included in the growth 

inventory. The District’s evaluation of 

demand is a check to ensure that 

adequate emissions (3.1 tpd and 5.9 tpd 

calculated from the NSR subject point 

and area source growth in 2010 and 

2020) are included. EPA’s proposed rule 

and TSD specifically state: ‘‘For PM10,

the District added 3.1 tpd as growth.’’ 

[footnote omitted]. TSD at 12. 

Comment 6: The section of the 

Comment Letter that CSE identifies as 

its second separate comment says that it 

was improper for EPA to allow the 

District’s NSR Account to carry a larger 

balance (3.94 tpd) of PM10 credits than 

the total amount of emissions that were 

added as growth (3.1 tpd). Comment 

Letter at 8. 

Response 6: EPA’s proposal and TSD 

acknowledged that the amount of PM10

emissions that the District added to its 

inventories (3.1 tpd) falls somewhat 

short of the starting balance in its NSR 

Account (3.94 tpd) for PM10. TSD at 12– 

13 (stating: ‘‘While this [3.1 tpd] is not 

the total amount of the pre-1997 base 

year emissions reductions available as 

debits pursuant to Rule 1315 (3.94 tpd) 

the District has demonstrated that this 

amount represents the highest amount 

of pre-1997 credits that are expected to 

be used as offsets prior to attainment of 

the ozone [sic] standard.’’ We note that 

the reference to the ozone standard here 

was a typographical error and that we 

intended to refer to Appendix III of the 

2003 AQMP for PM10. TSD at 13. 

As we explained in the TSD, the 

District’s adjustment to the future year 

PM10 inventory in the 2003 AQMP is 

adequate, even though the total tonnage 

is somewhat lower than its NSR 

Account balance, because the District’s 

analysis showed that it anticipated 

using significantly less than the pre-base 

year credits being added as growth. 

EPA’s TSD stated: ‘‘This approach is 

consistent with EPA guidance that 

States must include pre-base year 

credits to the ‘extent that the State 

expects that such credits will be used as 

offsets * * *.’’ TSD at 13 quoting 57 FR 

13498. We conclude that the District’s 

addition of 3.1 pre-base year PM10

credits to cover an expected use of 

emissions offsets (0.23 from both the 

NSR Accounts and the open market) in 

the 2010 emissions inventory and 5.9 

tpd for 2020, is acceptable. 

CSE’s argument on this point appears 

to be that EPA’s regulations require the 

District to include in its future year 

inventories all of the emissions offsets 

that could ever be available for use in 

the Air Basin (i.e. 3.94 tpd of PM10 from 

the NSR Account). But EPA’s NSR 

regulations, as interpreted in the 

General Preamble, do not require this. 

See 57 FR 13498 at 13509 (stating that 

‘‘[a]ll pre-enactment banked credits 

must be included in the nonattainment 

areas attainment demonstration for 

ozone to the extent that the State 

expects that such credits will be used for 

offsets or netting prior to attainment of 

the ambient standards’’) (emphasis 

added). As CSE’s summary sentence 

itself says: ‘‘the guidance was intended 

to direct the District to include all prebase year credits it expected to use in 

the emissions inventories because 

otherwise the CAA would not allow 

their usage.’’ Comment Letter at 9. 

EPA proposed to approve Rule 1315 

upon finding that the District included 

in its 2003 AQMP 3.1 tpd of PM10

emissions for 2010 and 5.9 tpd for 2020, 

an amount that would amply cover the 

District’s projected historic supply and 

demand of 0.23 tpd. CSE has failed to 


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5EPA notes that for purposes of the California 

Environmental Quality Act (CEQA), the District 

capped its account balances. See Chapter 4.1— 

Environmental Impacts And Mitigation Measures— 

Air Quality. CSE submitted this Chapter with its 

Comment Letter but does not provide any 

comments that address it. Although the CEQA caps 

are not part of Rule 1315 that will be included in 

the SIP, the District’s commitment to limit usage of 

the Offset Accounts below these levels unless it 

performs additional CEQA analysis is significant. 

6As a result, although the text of current 40 CFR 

51.165(a)(3)(ii)(C)(1) does not require a fully 

approved attainment demonstration in order to 

allow offset credit for prior shutdowns or 

curtailments, in light of the NRDC decision we have 

evaluated Rule 1315 for consistency with EPA’s 

pre-2005 requirement for an approved attainment 

demonstration for these purposes. The NRDC 

decision did not affect section 51.165(a)(3)(ii)(C)(1) 

in any other respect. 

demonstrate that the District has 

projected any circumstance in which it 

would use 3.94 tpd of pre-base year 

PM10 emissions by 2010. CSE’s 

Comment Letter fails to provide any 

reasoning, much less regulatory citation, 

showing why the District’s AQMD 

should be required to add 3.94 tpd of 

pre-base year PM10 credits when the 

projected demand is only 0.23 tpd (and 

that demand is expected to occur on the 

open market rather than in the District’s 

NSR Accounts.) 

Comment 7: The following comment 

appears to be ancillary to CSE’s prior 

comment. In the portion of its comment 

letter that purports to discuss CSE’s 

‘‘third’’ comment, CSE contends that 

Section 173 and 40 CFR 

51.165(a)(3)(ii)(C)(1)(ii) requires the 

District to place a ‘‘cap’’ on the amount 

of pre-base year emissions offsets it may 

use in applying Rule 1315. CSE states: 

‘‘In other words approving pre-base year 

PM10 and SOX credits for withdrawal 

that were not included in the emission 

inventories with no limitations on their 

use based on an ‘expectation’ they will 

not be used is not in accordance with 

the law.’’ [footnote omitted] Comment 

Letter at 9. 

Response 7: This comment seems to 

repeat the same issue as CSE’s Comment 

6. The problem is that CSE has 

misconstrued EPA’s regulation at 40 

CFR 51.165(a)(3)(ii)(C)(1). 

As EPA noted in Response 1 above, in 

1989, EPA significantly revised its 

previous restrictions on use of offset 

credit for source shutdowns and 

curtailments (formerly 40 CFR 51.18(j)) 

to allow the planning agency to have 

more control over emissions growth in 

the area and to allow sources to 

shutdown without forfeiting emissions 

credit if it could not be used 

immediately to replace productive 

capacity. See 54 FR at 27295–95. 

Congress substantially amended the 

Clean Air Act in 1990, including the 

attainment planning process in Part D of 

Title I of the Act. In 1992, EPA issued 

guidance entitled ‘‘State 

Implementation Plans: The General 

Preamble for the Implementation of 

Title I of the Clean Air Act Amendments 

of 1990.’’ 57 FR 13498 (April 16, 1992). 

In that document, EPA stated: ‘‘For 

purposes of equity, EPA encourages 

States to allow sources to use preenactment banked emissions reductions 

credits for offsetting purposes. States 

may do so as long as the restored credits 

meet all other offset creditability criteria 

and such credits are considered by 

States as part of the attainment 

emissions inventory when developing 

their post-enactment attainment 

demonstration * * *. Existing EPA 

regulations [40 CFR 

51.165(a)(3)(ii)(C)(1)] prohibits certain 

pre-enactment banked emissions 

reduction credits, i.e., reductions 

achieved by shutting down existing 

sources or curtailing production or 

operating hours, from being used in the 

absence of an EPA-approved attainment 

plan.’’ 57 FR 13498 at 13508. Nothing in 

these discussions suggests that the 

entire amount, or balance, of pre-base 

year banked credits must be included in 

the future year inventory of the 

approved attainment demonstration. 

In 1996, EPA further considered this 

issue as part of our proposed rule to 

revise the Prevention of Significant 

Deterioration (PSD) and NSR regulations 

in 40 CFR part 51, subpart I (61 FR 

38250, July 23, 1996). In that proposed 

rule, EPA stated: ‘‘Passage of the 1990 

Amendments has significantly altered 

the landscape that confronted EPA at 

the time of the 1989 rulemaking. 

Congress significantly reworked the 

attainment planning requirements of 

part D of title I of the Act such that EPA 

now believes it is appropriate to delete 

the restrictions on crediting of 

emissions reductions from source 

shutdowns and curtailments that 

occurred after 1990. In particular, 

Congress enhanced the importance of 

the requirement in section 172(c)(3) that 

States prepare a ‘comprehensive, 

accurate, current inventory of actual 

emissions from all sources’ in a 

nonattainment area as the fundamental 

tool for air quality planning.’’ 61 FR 

38250, 38311. 

The proposed rule in 1996 notes that 

the 1990 Amendments added specific 

milestones towards achieving 

attainment and also mandated sanctions 

that would apply to States that fail to 

submit an attainment demonstration. 61 

FR at 38311–12. EPA proposed two 

alternatives to allow increased use of 

shutdown credits. Id. In 2005, EPA’s 

Phase 2 8-hour ozone implementation 

rule finalized the 1996 proposed 

alternative that did not require a State 

to have an approved attainment plan to 

use prior shutdown credits. 70 FR 

71612, 71676 (November 29, 2005). On 

reconsideration of this rule in 2007, 

EPA disagreed with a comment that 

suggested retiring a certain quantity of 

pre-base year emissions each year, 

stating: ‘‘The requirements of the NSR 

program provide growth management 

tools and are an integral part of the 

overall air quality attainment 

program.’’ 5 72 FR 31727, 31741 (June 8, 

2007). 

NRDC challenged this portion (among 

others) of EPA’s 2005 final rulemaking, 

arguing in part that EPA’s allowance of 

pre-base year shutdown credits and 

elimination of the requirement for an 

approved attainment demonstration 

were arbitrary and capricious. In 2009, 

the Court of Appeals for the D.C. Circuit 

rejected NRDC’s challenge to EPA’s 

longstanding policy allowing ‘‘preapplication reductions’’ as NSR offsets, 

as codified in 40 CFR 

51.165(a)(3)(ii)(C)(1)(ii). NRDC, 571 F.3d 

1245 (DC Cir. 2009). The court held that 

NRDC’s challenge to this longstanding 

policy was time-barred because EPA’s 

2005 ozone implementation rule did not 

reopen the general issue of allowing preapplication offsets addressed in the 

1989 rulemaking. However, the D.C. 

Circuit agreed with NRDC on the narrow 

issue that EPA’s elimination of the 

requirement to have an approved 

attainment demonstration was not 

adequately justified. The court 

remanded this portion of EPA’s 2005 

rule to the Agency but did not vacate it.6

Id. 

Thus, we agree with CSE’s general 

point that approval of an attainment 

demonstration for the relevant NAAQS 

is a prerequisite to the use of prior 

shutdown credits in accordance with 40 

CFR 51.165(a)(3)(ii)(C)(1). We disagree, 

however, with CSE’s assertion that the 

District is required to either add the 

entire pre-base year balance of credits to 

the approved future year attainment 

inventory or somehow cap the Rule 

1315 NSR Account balance at the 

amount of projected demand, as this 

assertion is not supported by the text of 

40 CFR 51.165(a)(3)(ii)(C) or the NRDC 

decision. 

Comment 8: CSE titled this section of 

their comments ‘‘The 2007 AQMP 

Explicitly Excludes VOC and NOX

Credits From Projected Emissions 

Inventories.’’ CSE does not contest the 

‘‘validity’’ of the 2007 AQMP. CSE’s 

comments about the 2007 AQMP’s 

treatment of pre-base year credits largely 

mirrors the comments about the 2003 


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AQMP. The Comment Letter begins by 

characterizing Tables 2–10 and 2–11 in 

Appendix III of the 2007 AQMP, and 

then states: ‘‘This is where growth for 

the Community Bank portion of the NSR 

program is accounted for, and this is 

where the pre-base-year credits would 

need to be included for ozone 

precursors. The 2007 AQMP includes 

no pre-base-year credits for VOC and 

NOX.’’ [Citation omitted] Comment 

Letter at 11. CSE’s comment on the 2007 

AQMP also recites three specific 

objections: (1) That EPA ‘‘conflates total 

growth from all point sources in Table 

2–8—where no distinctions are made 

between pre-base-year credits and postbase-year credits nor open-market 

transactions and NSR-Account 

transactions—for growth based on prebase year credits from the NSR 

Account’’; (2) EPA approves starting 

balances in the NSR Account that are 

larger than the growth; and (3) EPA’s 

approval does not require a cap on the 

bank that is the same as the amount of 

growth that is added. Comment Letter at 

12–14. Last, CSE states that EPA was 

required to analyze whether the 1-hour 

ozone attainment plan included 

adequate pre-base year credits. EPA 

responds to this comment at Response 

27 below. 

CSE is continuing to confuse growth 

and demand. Tables 2–10 and 2–11 in 

Appendix 3 are evaluating historic 

demand for VOC and NOX credits. The 

District adds the pre-base year credits to 

its 2007 future year inventories in the 

growth portion of the 2007 AQMP 

which is graphically shown in Table 2– 

8 of the AQMP. Then, the District 

evaluates historic supply and demand 

as a check to ensure that adequate 

growth is added back into the future 

year inventories. 

Table 2–8 in the 2007 AQMP 

Appendix III shows the VOC and NOX

emissions from area and point sources 

as ‘‘no growth’’ and ‘‘with growth’’. The 

growth that is added for the point and 

area sources in the ‘‘with growth’’ 

portion of Table 2–8 includes the prebase year credits the District is adding 

to its future year inventories. For total 

point sources of VOC, Table 2–8 shows 

that the District added 12 tpd as growth 

(35 tpd to 47 tpd) and for area sources 

of VOC, the District added 36 tpd (195 

tpd to 231 tpd). For NOX, the District 

added 1 tpd for point sources (36 tpd to 

37 tpd) and 2 tpd for area sources (29 

tpd to 31 tpd). 

EPA requested the District to provide 

data on the amount of growth that was 

included for point and area sources 

subject to NSR. EPA provided that 

information in Docket Items III–P 

(showing point and area NSR subject 

sources with growth) and III–Q 

(showing point and area NSR subject 

sources for no growth). These tables 

show that for NSR subject sources the 

District added 12 tpd for VOC (35 tpd 

to 47 tpd) and 2 tpd for NOX (36 tpd to 

38 tpd). EPA’s TSD says that the District 

added 27 tpd for VOC and 2 tpd for 

NOX. The TSD notes that the amount of 

pre-base year credits included in the 

growth far exceeded the District’s 

projection of possible demand (3.1 tpd 

for VOC from the NSR Account and the 

open market) and 0 for NOX. EPA 

determined that the credits the District 

was including in its growth for its future 

year inventories was ‘‘conservative and 

an appropriate way to meet the 

requirements of 40 CFR 51.165.’’ TSD at 

12. 

CSE’s comment that EPA ‘‘conflates 

total growth from all point sources in 

Table 2–8 * * * for growth based on 

pre-base-year credits from the NSR 

Account’’ is not clear. CSE appears to 

consider only point sources as being 

subject to NSR. However, the District 

includes both point and area sources in 

its NSR program. Therefore, the District 

put together data on the point and area 

sources that are subject to NSR and 

prepared the tables in Docket Item III– 

P and III–Q. CSE apparently did not 

understand this information because it 

says that ‘‘it is identical information 

already attached to Appendix III of the 

2007 AQMP—simply repackaged into a 

single table.’’ Comment Letter at 13. 

This is incorrect. EPA stated in its TSD: 

‘‘For Table 2.8 [sic], the District 

provided EPA with point and area 

source data used to generate the 

summary data. EPA used this data to 

determine the amount of emission due 

to growth at facilities subject to NSR 

requirements.’’ TSD at 12, n 6. 

Therefore, EPA correctly determined 

that the District added sufficient prebase year credits for point and area 

sources subject to NSR. The amount 

added as growth far exceeded the 

historic demand that the District used as 

a check. 

For the two next points in CSE’s 

comment on the 2007 AQMP, EPA 

incorporates its response from 

Responses 6 and 7, as applicable to the 

2007 AQMP for VOC and NOX

emissions. 

Comment 9: CSE comments that EPA 

lacks evidence to support the 

conclusions in the proposed rule 

concerning retroactive rule operation: 

‘‘Internal bank balances lack 

documentation.’’ As an introduction to 

this section, CSE makes the following 

statement: ‘‘Approving Rule 1315 would 

incorporate in federal law two changes 

to the District’s internal banking system: 

‘‘One retroactive, in an effort to expunge 

from the District’s legers [sic] the fact 

that it permitted more emission 

increases than the CAA’s offsetting 

requirements allow; and one 

prospective, so that going forward the 

District would operate a new banking or 

‘‘tracking’’ scheme. The rule’s attempt to 

change history is rife with flaws, 

including a pervasive lack of 

documentation.’’ 

Response 9: These statements are 

unsupported and lack sufficient 

specificity for EPA to respond. We 

assume the lettered subsections that 

follow this introduction contain specific 

comments which provide the factual 

support for these conclusions. Our 

response to the additional comments 

found in this subsection are provided 

below in response to each section 

(group of comments) provided by CSE. 

Comment 10: CSE titled this section 

of their comments ‘‘Pre-1990 Credits 

Lack Documentation.’’ In this comment, 

CSE makes several assertions about the 

emission reductions that occurred prior 

to 1990 and how they are tracked in 

Rule 1315. The first is that ‘‘the 1990 

‘starting balance’ established in the Rule 

includes offsets for which the District 

claims to have ‘some or all’ 

documentation. (Emphasis added by 

commenter.) (See Response 10A) 

‘‘Second, the EPAs approval of the 

decision to retire the pre-1990 offsets 

that remained in the Internal Bank in 

2005 does not remove all invalid offsets 

from the system, since the Rule 

proposes to allow the facilities 

permitted prior to 2005 in reliance upon 

those pre-1990 offsets to ‘‘return’’ those 

offsets as ‘‘payback of offset debt’’ under 

Rule 1315(c)(3)(A)(v).’’ (See Response 

10B) Third, CSE states ‘‘it is unclear 

why the EPA did[] not include the 

documentation that establishes the 

validity of the offsets in the ‘‘Initial 

District Offset Account Balances’’ set 

out at Table A in the Proposed Rule in 

the record for this rulemaking’’ and that 

‘‘* * * EPA’s failure to do so not only 

deprives the public the opportunity to 

review and comment upon that 

documentation, the failure is also a 

violation of the Administrative 

Procedures Act.’’ (See Response 10C) 

And fourth that ‘‘Proposed Rule 1315 

has no mechanism to track how the pre1990 credits are returned to the bank, 

either as payback of offset debt or 

through orphan shutdowns * * *’’. 

(Citations omitted) (See Response 10D). 

Response 10: EPA disagrees with each 

of these assertions for the reasons 

provided below. 

Response 10A: First, CSE states that 

‘‘the 1990 ‘starting balance’ established 

in the Rule includes offsets for which 


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7The District imposes this more stringent current 

day BACT adjustment at the time of credit creation 

Continued 

the District claims to have ‘some or all’ 

documentation,’’ (emphasis added by 

commenter) and continue by stating that 

‘‘having ‘some’ documentation to 

support the claim that an offset is valid 

is not sufficient.’’ The District provided 

a full discussion of their evaluation of 

pre-1990 credits on page 12 of their Staff 

Report (as well as the prior 2005 and 

2006 evaluations), all of which are 

included in the Docket. The District 

explains that where ‘‘all’’ 

documentation was not available (e.g., 

the original permit file that generated 

the emission reductions) there was still 

sufficient historical records to verify the 

specific information listed in the 1994 

Seitz memo and determine that the 

emission reductions meet the federal 

integrity criteria for offsets. The Staff 

Report also explains that all pre-1990 

credits were evaluated when they were 

originally transferred into the District’s 

initial Internal Bank. As discussed 

below, the District’s 2003–2005 reevaluation of all of its banked pre-1990 

emissions reductions eliminated (with a 

starting date of 1990) all credits for 

which the District no longer possessed 

sufficient documentation to determine 

the emission reductions meet the federal 

integrity criteria for offsets. Therefore, 

we disagree with CSE and CSE has not 

pointed to any specific information 

showing that the District retained a pre1990 credit without adequate 

documentation. 

As discussed both in the District’s 

Staff Report and EPA’s TSD, EPA raised 

the issue of availability of sufficient 

records for the pre-1990 credits in the 

District’s Offset Accounts in 2002, in 

light of the District’s adoption of Rule 

1309.2—Offset Budget, which would 

allow more sources access to the Offset 

Accounts. TSD at 4. EPA pointed to a 

1994 EPA memo regarding the use of 

pre-1990 offsets as guidance. See 

Memorandum dated August 26, 1994 

from John S. Seitz, Director, EPA Office 

of Air Quality Planning and Standards, 

to David Howekamp, Director, EPA 

Region IX Air and Toxics Division, 

‘‘Response to Request for Guidance on 

Use of Pre-1990 ERC’s and Adjusting for 

RACT at Time of Use’’ (1994 Seitz 

Memo). The 1994 Seitz Memo states that 

pre-1990 credits may be utilized, 

provided the State ‘‘collect[s] and 

maintain[s] information on these ERC’s, 

including, at a minimum, the name of 

the source that generated the ERC’s, the 

source category that applies to this 

source, the quantity of ERC’s generated 

by this source, the specific action that 

created the ERC’s (e.g., a shutdown of a 

unit, process change, add-on control), 

the date that the ERC’s were generated 

and enough other information to 

determine the creditability of all ERC’s.’’ 

1994 Seitz Memo at 2. At EPA’s request, 

the District reviewed all available 

records and determined that sufficient 

records were no longer available for 

some of pre-1990 credits, or that the 

effort to provide those records was too 

burdensome. See Proposed SCAQMD 

NSR Offset Tracking System, 

Background, February 23, 2006. 

Nevertheless, the District undertook a 

complete and thorough review of its 

offset records. Id. at 2. The result was 

the District’s elimination of pre-1990 

credits for which it did not have 

adequate documentation. Id. (stating: 

‘‘In order to resolve EPA’s comments, 

SCAQMD staff is proposing several 

modifications to the procedures used in 

the tracking system. In the revised 

procedures SCAQMD has proposed 

elimination of all credits for which 

SCAQMD no longer retains 

documentation.’’) 

From this review, the District 

calculated new beginning balances for 

each of the pollutants. The District 

removed pre-1990 credits with 

inadequate records from the 1990 

starting balance, leading to much lower 

balances for all pollutants except NOX. 

Id. (stating: ‘‘Several elements of the 

proposed revisions to the SCAQMD’s 

tracking system contribute to these 

reductions, as discussed below, but the 

single element of the proposal with the 

greatest contribution is the reevaluation 

of pre-1990 credits and proposed 

elimination of all credits for which 

SCAQMD no longer retains 

documentation.’’) Accordingly, the 

District removed this quantity of credits 

from the 1990 starting balances for the 

Internal Bank, as shown on page I–1 of 

Appendix I of the District’s staff report. 

Thus the District’s 1990 starting 

balances only contain credits for which 

the District possessed sufficient 

documentation, consistent with the 

1994 Seitz Memo. Therefore, we 

disagree with CSE that there are pre1990 credits in the District’s bank that 

lack documentation. In approving the 

District’s newly calculated starting 

balances (i.e those from which pre-1990 

credits without documentation were 

eliminated), EPA is not required to 

independently review all 

documentation. As noted in our TSD, 

EPA is approving a system for tracking 

credits. EPA acknowledges the system 

depends on the starting balances. EPA 

determined that the District’s Staff 

Report and the preceding documents 

setting forth the District’s procedures 

ensured accurate and conservative 

starting balances for each pollutant. CSE 

has not identified any information to 

show otherwise. 

Response 10B: Regarding CSE’s 

second assertion that while Rule 1315 

requires ‘‘removal of some of those 

offsets, [the Rule] does not actually 

require removal of all invalid offsets’’; 

EPA disagrees. As stated on page 14 of 

the District’s Staff Report, all pre-1990 

credits for CO and PM10 were used by 

1997, and the remaining balance of 

VOC, NOX and SOX credits were retired 

at the end of 2005. CSE claims that this 

retirement ‘‘does not remove all invalid 

offsets from the system, since the Rule 

proposes to allow the facilities 

permitted prior to 2005 in reliance upon 

those pre-1990 offsets to ‘return’ those 

offsets as ‘payback of offset debt’ under 

Rule 1315(c)(3)(A)(v).’’ [Footnote 

omitted] Comment Letter at 16. 

According to CSE, as the pre-1990 

internal bank offsets are returned to the 

internal bank, they are laundered, or 

‘tracked’ as if they were never touched 

by the improper crediting of those 

offsets in the first place.’’ Comment 

Letter at 16. These statements are 

incorrect and appear to be based on a 

misunderstanding of the fact that once 

a credit is used to offset new emission 

increases, the ‘‘credit’’ is gone. When 

credits are debited from the bank to 

allow the construction and increased 

emissions from a new or modified 

source, these new emissions are no 

longer ‘‘pre-1990’’ emissions, as they are 

being emitted in the present timeframe. 

When such a source shuts down or has 

controls applied to reduce emissions, 

the reductions reduce the current 

emission inventory. In other words, 

pollution that is being emitted into the 

air stops being emitted into the air. 

These current day emission reductions 

no longer have any relationship to any 

pre-1990 credits. For example, assume a 

new piece of equipment was permitted 

in 2000 entirely with the use of pre1990 credits and operated until the 

entire facility shutdown in 2011. If the 

facility submits an application to claim 

the emission reductions from the entire 

facility (where some pieces of 

equipment obtained credits from the 

District Offset Account and some did 

not), the District would evaluate the 

application under the provisions of Rule 

1309—Emission Reduction Credits and 

Short Term Credits, which is SIP 

approved. Rule 1309 requires the 

quantity of emission reductions verified 

as meeting the federal integrity criteria 

to undergo an additional adjustment to 

reflect current day BACT levels,7 and 


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in lieu of current and future surplus adjustments to 

the quantity of emission reductions. See 61 FR 

64292, Dec. 4, 1996 and Environmental Protection 

Agency, Region IX Air & Toxics Division Technical 

Support Document for EPA’s Notice of Final 

Rulemaking for the California State Implementation 

Plan South Coast Air Quality Management District 

New Source Review by Gerardo C. Rios, October 24, 

1996 (TSD). 

only then is the quantity of any 

‘‘payback of offset debt’’ credited to the 

District Offset Accounts. The remaining 

balance of emission reductions is issued 

to the source as an ERC certificate. If the 

source did not claim any emission 

reductions from the shutdown of their 

facility, the District would then evaluate 

the emission reductions pursuant to 

Rule 1315, which imposes different 

requirements than Rule 1309, but also 

ensures that all credits meet the federal 

integrity criteria. It is important to note 

that all crediting of emission reductions 

in either example are based on real 

reductions of emissions that were 

recently emitted into the air but are no 

longer being emitted. The association 

with the pre-1990 credits no longer 

exists. Thus CSE is incorrect to claim 

that the pre-1990 credits are 

‘‘laundered’’ in the tracking system, 

since the tracking system only collects 

as credits the quantity of actual 

emission reductions calculated pursuant 

to Rule 1309 that were originally lent to 

the source from the District’s Offset 

Accounts. In addition, orphan 

shutdown credits are collected in 

accordance with Rule 1315, which 

requires that permitted emission limits 

be adjusted by an 80% factor to estimate 

actual emissions. See Rule 

1315(c)(3)(B)(i). 

Response 10C: CSE’s third comment 

claims that EPA must review 

documentation for each of the 

thousands of individual transactions 

that contributed to the 1990 starting 

balance, otherwise our approval of Rule 

1315, including our determination that 

the 1990 starting balance meets the 

federal integrity criteria for offsets is 

improper. EPA does not believe it was 

Congress’s intent that we review each 

individual action carried out by a local 

air District to ensure compliance with 

the CAA. As the Court’s have 

recognized, the Clean Air Act 

establishes a system of cooperative 

federalism. The federal EPA establishes 

the National Ambient Air Quality 

Standards, but the States have primary 

authority for ensuring that their air 

quality meets the NAAQS. 42 U.S.C. 

7407(a), 7401(a)(3). The CAA requires 

States to develop SIPs to implement, 

maintain and enforce the NAAQS and to 

submit these SIPs to EPA, and EPA must 

approve a submitted SIP that meets the 

CAA’s requirements. 42 U.S.C. 7410, 

7410(k)(3). In this case, the District 

adopted and submitted a rule that 

provides detailed methodologies for 

reviewing and quantifying specific types 

of emission reductions prior to crediting 

such reductions to their Offset 

Accounts. It is the overall program that 

EPA must review to ensure it contains 

the necessary provisions to ensure (1) 

that the District is providing an 

adequate quantity of emission 

reductions to make up for all required 

federal emission reductions not required 

by the District’s NSR program (CAA 

Section 173), and (2) to ensure the 

federal offset criteria for offsets debited 

to be permanent, surplus, quantifiable, 

and enforceable are met (40 CFR 

51.165((a)(3)(ii)(C)(1)(i)). For the reasons 

explained in EPA’s proposed rule and 

TSD, we have determined that Rule 

1315 satisfies these statutory and 

regulatory criteria for approval. CSE’s 

broad assertion that EPA should have 

reviewed the extensive documentation 

for each pound of emissions credits in 

the District’s Offset Accounts is without 

merit. 

CSE claims that since ‘‘EPA failed to 

review the documentation that the 

SCAQMD relied upon to establish its 

Offset Account balance, then EPA[ ] is in 

no position to find * * *’’ that the 

credits in the Offset Accounts meet the 

requirements of the CAA. As discussed 

on page 10 of the TSD, EPA made a 

determination as to the whether the 

credits contained in the District’s Offset 

Accounts meet the federal integrity 

criteria of being permanent, surplus, 

quantifiable, and enforceable and 

therefore meet the requirements of the 

CAA. It is not necessary for EPA to 

review documentation for every single 

credit and debit in the District’s Offset 

Account to make this determination. 

Instead EPA has reviewed and evaluated 

the mechanisms contained within Rule 

1315 to ensure that at the time of use, 

all credits used to offset new emission 

increases meet the federal integrity 

criteria. Further discussion of how EPA 

evaluated the rule is provided below in 

response to specific comments made by 

CSE. 

Response 10D: CSE’s fourth assertion 

is based on the misconception that pre1990 credits remain classified as pre1990 credits even after they have been 

used to construct a new project. As 

discussed above in EPA’s response to 

CSE’s second assertion, this is incorrect. 

(See Response 10B) Once a credit is 

used by a source, the credit is retired. 

Any credits generated later from 

emissions reductions at that source are 

new credits from actual reductions that 

meet the federal criteria. See EPA’s 

response to CSE’s second assertion 

under this comment for a more detailed 

discussion. 

Comment 11: CSE titled this section 

of their comments ‘‘Annual Balances 

Lack Documentation’’. In this comment, 

CSE correctly points out that Rule 1315 

relies on permitted emission limits, 

discounted by 20% to account for actual 

emissions from a shutdown source, 

rather than relying on actual emissions 

information for major or minor source 

orphan shutdowns. They claim that 

‘‘This presents three problems inherent 

to this rulemaking.’’ 

The first problem identified by CSE is 

that ‘‘the CAA’s plain language requires 

‘actual’ emissions be used to meet its 

offsetting requirement * * *’’ They 

then cite 40 CFR 51.165(a)(1) which 

reads ‘‘All such plans shall use the 

specific definitions. Deviations from the 

following wording will be approved 

only if the State specifically 

demonstrates that the submitted 

definition is more stringent, or at least 

as stringent, in all respects as the 

corresponding definition below.’’ While 

not stated explicitly, it appears that 

CSE’s intended comment is that the rule 

must use the term and meaning of 

‘‘actual’’ as defined in 51.165 and not an 

alternative determination of ‘‘actual’’ 

emissions. 

Response 11: As CSE points out in 

their comment, the CAA does allow 

deviations from defined terms if the 

definition is ‘‘at least as stringent, in all 

respects as the corresponding definition 

* * *’’ Except for orphan shutdowns, 

all credits are first evaluated pursuant to 

the requirements of Rule 1309, which in 

turns specifies that the Rule 1306 

emission calculation methods be used to 

calculate emission reductions. Rule 

1306(c)(1) states that emission decreases 

are ‘‘The sum of actual emissions, * * * 

which have occurred each year during 

the two-year period immediately 

preceding the date of permit 

application, or other appropriate period, 

determined by the Executive Officer or 

designee to be representative of the 

source’s cyclical operation, and 

consistent with federal requirements; 

* * *’’ In turn, Rule 1302 defines 

Actual emissions as ‘‘the emissions of a 

pollutant from an affected source 

determined by taking into account 

actual emission rates and actual or 

representative production rates (i.e., 

capacity utilization and hours of 

operation).’’ Thus, except for reductions 

from Orphan Shutdowns, the quantity 

of emission reductions credited to the 

District Offset Accounts is based on the 

same definition of ‘‘Actual Emissions’’ 

as in 40 CFR 51.165. 


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The only remaining question is 

whether the District’s use of 80% of 

permitted emission limits for orphan 

shutdowns provides a result that is ‘‘at 

least as stringent as’’ the result of using 

the 40 CFR 51.165 definition of the term 

Actual Emissions when quantifying the 

amount of emission reductions to be 

credited to the District Offset Accounts. 

The TSD and proposal for the proposed 

approval of Rule 1315 both provide a 

discussion on this topic and explain 

why the provisions of Rule 1315 

provide an acceptable method (i.e. at 

least as stringent as the federal 

requirement) to calculate actual 

emissions from orphan shutdowns as 

required by Rule 1315. (See TSD pgs 9– 

10) CSE’s comments do not question the 

reasoning behind EPA’s determination, 

but simply state in their next comment 

that actual emission data is available, 

therefore it should be used. EPA’s 

responds to this assertion in our 

response to Comment 13, that also 

makes this point. 

Comment 12: CSE also states in this 

comment that Rule 1315 contains a 

definition for ‘‘Net Emission Increase’’ 

that differs from the language in the 

regulation. 

Response 12: This definition is not 

included in the version of Rule 1315 

that we are approving, as the District 

has specifically excluded this definition 

from the SIP submittal. See Rule 

1315(h). Therefore, we do not need to 

evaluate this definition as part of our 

action on Rule 1315. 

Comment 13: CSE states that ‘‘While 

some very small sources do not report 

emissions, major sources and sources 

that emit over 4 tons per year of certain 

pollutants all report annually. Yet under 

Rule 1315(c)(3)(B), all orphan 

shutdowns and reductions are treated as 

if they were very small sources, with no 

emissions information. Actual 

emissions information cannot be 

ignored in favor of assuming 80% of 

permitted emissions.’’ 

Response 13: While District Rule 

301—Permitting and Associated Fees, 

requires all sources with a potential to 

emit greater than 4 tpy to submit an 

annual emission report, these reports do 

not always include emission data for 

individual pieces of equipment. Instead, 

since the annual report covers the entire 

facility, many sources, such as 

combustion sources and coating 

operations are often grouped together 

for the report. Annual emissions from 

these units are based on the equipment 

group’s total material usage multiplied 

by an appropriate default emission 

factor. The default emission factors are 

designed to be conservative and may not 

be as accurate as the emission factors 

used for permitting of equipment or the 

calculation of ERCs. For these reasons, 

EPA disagrees with CSE that the use of 

annual emission reports would provide 

a better (more accurate?) way to 

calculate actual emission reductions 

from orphan shutdowns. As stated in 

the TSD and proposal, we have 

determined that the method provided in 

Rule 1315 is at least as stringent as 

using actual emissions records for 

determining the actual emission 

reductions from orphan shutdowns. See 

TSD at 9, 10. 

Comment 14: CSE states that there is 

no evidence that any of the Orphan 

Reduction/Orphan Shutdown credits 

meet the definitions for these terms 

because the District does not evaluate 

whether these reductions are ‘‘not 

otherwise required by rule, regulation, 

law, approved Air Quality Management 

Plan Control Measure, or the State 

Implementation Plan.’’ 

Response 14: This statement is 

incorrect. As part of the process for 

collecting orphan shutdowns the 

District reviews existing rules and laws 

to ensure the reduction or shutdown (or 

equivalent such as electrification) is not 

required as of the date of the reduction. 

The requirement to perform this check 

and make any necessary adjustments is 

inherent in the definition of orphan 

shutdown, which is defined as follows: 

‘‘Any reduction in actual emissions 

from a permitted source within the 

District resulting from removal of the 

source from service and inactivation of 

the permit without subsequent 

reinstatement of such permit provided 

such reduction is not otherwise required 

by rule, regulation, law, approved Air 

Quality Management Plan Control 

Measure, or the State Implementation 

Plan and does not result in issuance of 

an ERC.’’ Rule 1315(b)(5). To the extent 

CSE intended to comment on the 

District’s implementation of the rule, 

such comments are outside of the scope 

of our action on this rule under CAA 

110(k). 

Comment 15: This comment states 

that ‘‘[CSE] knows[ ] that the SCAQMD 

has made mistakes in determining what 

can lawfully be credited to its Internal 

Bank,’’ and offers two examples. First 

they cite the District’s action of 

removing pre-1990 credit balances for 

which sufficient records were no longer 

available. Second they claim that the 

documentation the District provided for 

the CPV Sentinel Energy Project sourcespecific SIP revision proves that the 

District has claimed some offsets for 

their Internal Bank that were not valid. 

Last, CSE claims that the rulemaking 

lacks the record required for EPA to 

make a finding ‘‘* * * that the emission 

reductions the District is crediting and 

debiting in its Offset Accounts meet the 

requirements of the CAA and can be 

used to provide the offsets otherwise 

required for Federal major sources and 

modification.’’ CSE bases this claim 

primarily on that fact that the same type 

of documentation provided for the CPV 

Sentinel Energy Project source-specific 

SIP revision was not made available for 

Rule 1315. 

Response 15: As EPA stated earlier in 

Response 10C, there is no requirement 

for EPA to review and approve every 

transaction that was or will be 

undertaken pursuant to Rule 1315. 

Instead EPA has carefully reviewed each 

of the provisions of Rule 1315 and 

determined that it provides an adequate 

method for tracking and quantifying 

emission reductions which meet all of 

the federal integrity criteria for offsets. 

The TSD provided a full discussion on 

each aspect of these criteria. (See TSD 

pgs 7–10) 

As stated in the District’s Staff Report, 

the District has implemented an NSR 

tracking system to demonstrate 

programmatic equivalence between its 

NSR program and the offset 

requirements of the Federal program 

since EPA’s 1996 approval of the 

Districts NSR program. District staff 

have prepared and presented to the 

AQMD Governing Board at public 

meetings a series of reports that track 

credits and debits from August 1990 

through July 2002. While the 

rulemaking process for Rule 1315 was in 

flux (adopted, challenged in court, 

repealed, re-adopted * * *) the District 

submitted additional reports in 2007 

that also tracked the credits and debits 

from the District’s Offset Accounts. Each 

of these reports demonstrated that in the 

aggregate, the District provided an 

equivalent number of offsets as would 

have otherwise been required by the 

federal CAA. Each of these reports is 

included in the docket for this 

rulemaking. 

Comment 16: CSE titled this section 

of their comments ‘‘The Rule 1315 

Approach to Surplus Adjustment Does 

Not Capture Reductions as Required by 

Federal Law’’ CSE claims that ‘‘the 

provisions of Proposed[ ] Rule 1315(c)(4) 

are inadequate to capture all the 

reductions needed to ensure banked 

reductions remain surplus at time of 

use’’ because when offsets are deposited 

from any source listed in 1315(c)(3)(A) 

there is no provision that requires those 

emission reductions to be surplus 

adjusted prior to deposit; and ‘‘once the 

emissions reductions are deposited, 

there is no mechanism for ensuring that 

the proper annual reduction is 


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calculated and applied.’’ Comment 

Letter at 19. 

Response 16: EPA disagrees. Rule 

1306 requires all actual emission 

reductions to be BACT adjusted at the 

time of creation. South Coast Rule 

1306(c). This means that only 

reductions that exceed the level of 

control required by BACT are allowed to 

be credited under the Districts NSR 

program. As EPA discussed in our 1996 

approval of the District’s NSR program 

(61 FR 64292), we approved this 

requirement in lieu of the requirement 

to surplus adjust credits at the time of 

use based on our conclusion that the 

District’s BACT adjustment at time of 

creation was at least as stringent as a 

requirement to adjust at the time of use. 

For the same reasons, we believe that all 

credits deposited under paragraph 

(c)(3)(A), except clauses (c)(3)(A)(i), 

(c)(3)(A)(ii), and (c)(3)(A)(vi) are 

adequately surplus adjusted both at the 

time of creation and use. Paragraph 

(c)(4) entitled ‘‘Surplus at the Time of 

Use’’ only applies to these three clauses 

because they are the only ones not 

automatically adjusted to account for a 

surplus adjustment at the time of use. 

Instead, paragraph (c)(4) requires credits 

deposited into the District Offset 

Accounts, pursuant to clauses 

(c)(3)(A)(i), (c)(3)(A)(ii), and 

(c)(3)(A)(vi), to be annually discounted 

in the aggregate to ensure they remain 

surplus at the time of use. 

Typically credits are adjusted at the 

time of use by reviewing the source 

category and type of reduction that 

created the emission reduction and 

determining if any new requirements 

requiring additional reductions have 

become applicable. This method would 

be extremely difficult and 

administratively burdensome if applied 

to the District’s tracking system. 

Therefore the District proposed an 

alternative which we believe is 

equivalent to the case by case 

application of surplus adjustment at the 

time of use. Rule 1315 paragraph (c)(4) 

requires the District to determine the 

quantity of emission reductions 

expected from the adoption of new 

regulations for each non-attainment 

pollutant. The District then determines 

what percentage of permitted emissions 

these reductions represent. The same 

percentage of emission reductions is 

then applied to the Offset Account 

balance for that pollutant. For example, 

if the District adopts two rules that will 

achieve 200 tpy of PM10 emission 

reductions, these 200 tpy represents a 

specific percentage of the total PM10

stationary source inventory. This 

percentage is applied to (multiplied by) 

the Offset Account balance and the 

resulting figure is subtracted from the 

Offset Account Balance, which in effect 

reduces the total Offset Account balance 

by a percentage equal to the total 

amount of emission reductions achieved 

by new or revised control measures, as 

a percentage of the total PM10 stationary 

source inventory. This means that the 

degree of emission reduction achieved 

by any rules implemented in a year are 

applied to the entire Offset Account 

balance, not just to sources that would 

otherwise be subject to the new rules, 

which will result in a greater downward 

adjustment in the total Offset Account 

balance compared to source categoryspecific adjustments. We conclude that 

this surplus adjustment requirement in 

Rule 1315 is at least as stringent as 

other, more traditional methods for 

surplus adjustments at time of use. 

Comment 17: CSE’s comment states 

that while Rule 403, a fugitive dust rule, 

was adopted to control PM10 emissions, 

no surplus reductions appear in the 

District Offset Account balance sheet for 

that year. Comment Letter at 19. 

Response 17: CSE is correct that no 

surplus reductions were made for Rule 

403. This rule regulates fugitive dust 

from any active operation—such as 

earth-moving activities, construction/ 

demolition activities, disturbed surface 

areas, or heavy- and light-duty vehicular 

movement and open storage piles. It 

does not apply to permitted emission 

units. If a source subject to this rule was 

to shut down, no emission reductions 

would be collected for the reduced 

fugitive emissions subject to Rule 403. 

Since there are no emission reductions 

in the District’s Offset Accounts that are 

subject to Rule 403, the Offset Account 

balance does not need to be surplus 

adjusted for Rule 403. 

Comment 18: CSE’s comment 

continues by stating that this system is 

not equivalent because the credits in the 

District’s internal bank do not reflect the 

District’s rules as a whole and offers as 

an example that spray coating 

operations are more likely to occur at 

minor, rather than federal major 

facilities. And finally that ‘‘Spray 

coating operations became subject to a 

new PM regulation in 2002, when the 

District adopted Rule 481. The District 

made no discount to the internal bank 

PM10 account in 2002–2003.’’ Comment 

Letter at 19. 

Response 18: This statement is not 

correct. Since the balance of both minor 

and major orphan shutdowns undergo 

annual surplus adjustments, it does not 

matter at which type of facility the 

emission reductions occur. In addition, 

since Rule 1315 requires the amount of 

emission reductions achieved from the 

entire permitted stationary source 

inventory to be applied to the total 

Offset Account balances, it does not 

matter at which source categories the 

emission reductions from new rules 

occur, nor does it matter what source 

categories generated the credits in the 

District’s Offset Accounts. The Offset 

Account balances are surplus adjusted 

annually, in the aggregate, so that all 

credits meet the surplus at time of use 

requirement prior to being debited from 

these accounts. The revisions to Rule 

481, which were adopted in 2002, were 

all administrative in nature and did not 

achieve any PM10 emission reductions, 

therefore no surplus adjustment was 

made to the District’s Offset Accounts 

for PM10 in 2002–03. 

Comment 19: Finally CSE offers an 

example of an instance where the 

District failed to surplus adjust at time 

of use some of the emission reductions 

listed in the AB 1318 Tracking System. 

Comment Letter at 19. EPA notes that 

credits transferred from the Rule 1315 

Offset Accounts into the AB 1318 

Tracking System had already been 

surplus adjusted to account for the 

emission reductions of Rule 1157—in 

the aggregate, as represented by the 0.31 

tpd surplus adjustment the District 

made to their PM10 Offset Account 

balance at the end of 2006. While CSE 

is correct that Rule 1157 reduced 

emissions from the 389 affected 

facilities by 60%, the effect on the entire 

permitted stationary source emission 

inventory was only 2.8%. 

Response 19: It appears, based on 

CSEs comments, that CSE did not fully 

understand the requirements of Rule 

1315 (c)(4). Section (c)(4) of the rule 

requires an ‘‘in the aggregate’’ 

adjustment of the Offset Account 

balances, which reduces emissions by 

the same overall percentage achieved by 

any new rules, whether or not credits in 

the District’s accounts came from source 

categories affected by the new rules. For 

the reasons provided in our TSD in 

Section IV.A.2. and in Response 16 

above, we conclude that Rule 1315 

contains adequate provisions to ensure 

all Offset Account balances are surplus 

adjusted annually to satisfy the surplus 

adjustment at the time of use 

requirement. 

Comment 20: CSE asserts that 

‘‘Proposed Rule 1315 Does not 

Incorporate the Federal Validity 

Requirements.’’ Specifically, CSE states 

that ‘‘To meet the requirements of 

federal law, the Proposed Rule must 

incorporate the definitions for validity 

found in federal law * * *’’ and that 

‘‘While Proposed Rule 1315 (6) is titled 

‘‘Federal Offset Criteria,’’ it does 

nothing more than reference other parts 

of the Proposed Rule and those parts 


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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Rules and Regulations 31211 

8See Appendix A of Rule 1315 Staff Report, entry 

entitled ‘‘1990–97 BACT Discount ERCs 

[(c)(3)(A)(vi)]’’. 

neither contain nor reference the 

requirements of federal law. Proposed 

Rule 1315(6) instead is circular and selfreferential.’’ Comment Letter at 20. 

Response 20: CSE does not provide 

any citations to support this alleged 

requirement. While EPA agrees that all 

emission reductions used to offset the 

emissions from new and modified 

sources must meet the federal integrity 

criteria of being permanent, surplus, 

quantifiable, and enforceable, it is not 

necessary for the rule to specifically 

define these terms. See 40 CFR 

51.165(a)(3)(ii)(C)(1)(i). Instead the rule 

must include provisions that ensure that 

the credits being used as offsets meet 

these criteria. Paragraph (c)(6) of Rule 

1315 is not intended to be a requirement 

that the criteria be met, but instead 

points to the rule section(s) that ensure 

each of these criteria are met. Section 

IV.A. of our TSD discusses EPA’s 

evaluation of how the rule ensures each 

of these criteria are being met, 

consistent with the requirements of 40 

CFR 51.165(a)(3)(ii)(C)(1)(i). CSE’s 

comment is conclusory and 

unsupported. 

Comment 21: CSE’s comments that 

the SCAQMD’s existing SIP approved 

NSR program establishes certain 

requirements on emissions that this 

Rule attempts to set aside. CSE cites 

sections of Rule 1315 which allow some 

of the offsets provided from the open 

market, pursuant to the requirements of 

Rule 1303, to be collected as credits for 

the District’s Offset Accounts. They 

claim that since Rule 1303 requires 

these offsets to be provided to obtain a 

permit, they are not surplus to the 

requirements of the SIP, and may not be 

credited into the District’s Offset 

Accounts. Comment Letter at 21. 

Response 21: The purpose of Rule 

1315 is to provide a tracking system to 

demonstrate that in the aggregate, the 

District is providing at least as many 

offsets under their approved NSR 

program as would otherwise be required 

by a program that contained no 

exemptions from federal offset 

requirements. The requirement in Rule 

1303 for minor sources (>4 tpy but less 

than major source emission thresholds) 

to provide offsets for emission increases 

is more stringent than federal 

requirements which only apply to major 

sources. South Coast Rule 1303(b)(2). 

Likewise, the general requirement to 

provide offsets at a ratio of 1.2:1 is more 

stringent than the CAA’s general 

requirement in subpart 1 of part D, title 

I to provide offsets at a ratio of 1:1 for 

all non-attainment pollutants except 

ozone precursors (VOC and NOX), 

which are subject to more stringent 

offset ratios under subpart 2 of part D. 

When the District collects offsets (or 

portions thereof) that were already 

determined to be surplus, they are 

collecting a greater quantity of offsets 

than required by the federal NSR 

program. Rule 1315 collects some of the 

offsets surrendered to the District that 

are in excess of federal requirements to 

balance against the offsets not collected 

by the District, which would have been 

required under federal requirements. 

Before any emission reductions can be 

credited to the District’s Offset 

Accounts, the emission reductions must 

first meet the federal integrity criteria, 

which these credits—offsets collected 

for minor sources and the additional 0.2 

offset ratio, have already met. They are 

‘‘credits’’ i.e., pluses to the tracking 

system because they are in excess of 

federal offset requirements. 

Comment 22: CSE states that the 

provisions of Section (c)(3)(A)(v) are 

problematic for two reasons: (1) ‘‘Once 

a facility uses an ERC (or ERC 

equivalent) to meet its NSR offsetting 

requirement, that ERC no longer 

exists.’’; (2) ‘‘* * * there is no provision 

in Proposed Rule 1315 that requires a 

surplus adjustment for those emissions 

* * *’’. Comment Letter at 21. CSE then 

provides the following example of how 

they believe this process would work: 

As the Rule is currently proposed, a 

manufacturing facility operating now could 

have received a Community Bank or Priority 

Reserve allocation for emissions in 1994 

[check], based upon the shutdown of a boiler 

that operated between 1987 and 1993. Then, 

the manufacturing facility shuts down in 

2010 and submits a 1306 banking 

application. This proposed rule would allow 

the SCAQMD to bank the entire Community 

Bank or Priority Reserve allocation even 

though the intervening facility has already 

used that allocation to meet its 1303 

obligation and there have been rules adopted 

between 1987 and 2010 that would have 

required emission reductions for boilers. 

Response 22: There are several errors 

in this example. If an existing facility 

shutdown in 2010 and submits a 

banking application pursuant to Rule 

1306, then the District will first 

determine how much of the emission 

reduction meets the federal offset 

integrity criteria, including the required 

BACT surplus adjustment. After this 

determination has been made, the 

District will then review its records to 

determine if the source ever obtained 

any offsets from the District (e.g., 

Priority Reserve, Community Bank, NSR 

Balance). If so, then the District will 

subtract this amount from the total 

creditable amount of emission 

reductions calculated pursuant to Rule 

1306, and credit only the amount 

originating from the District accounts 

back to the Rule 1315 tracking system. 

To the extent the District provided these 

credits to the source in the first place, 

the District is simply returning the same 

amount of credits to the District NSR 

Account. These credits are still surplus 

adjusted. 

Comment 23: Based on the example 

provided in the earlier comment, CSE 

also claims these emission reductions 

are not surplus when they are credited 

back to the District offset accounts 

because they were already relied upon 

by the shutdown source. Comment 

Letter at 22. 

Response 23: EPA agrees that such a 

facility would have relied on these 

credits at the time their permit was 

issued, but since that time, the facility 

has been emitting its own emissions 

into the air. When the facility shuts 

down, it is creating new emission 

reductions when compared to the 

baseline inventory. These new emission 

reductions are evaluated pursuant to 

Rule 1306 to verify that they meet all of 

the federal integrity criteria, including 

the requirement that the reduction be 

surplus. 

Comment 24: CSE claims that 

‘‘Similarly, for Proposed Rule 

1315(3)(A)(vi)[ ] Rule 1306 does not 

allow ERCs to be generated for the 

activities described therein.’’ 

Response 24: CSE’s comment does not 

provide an explanation or basis for this 

claim. The provision contained in 

section (c)(3)(A)(vi) of Rule 1315 allows, 

upon EPA concurrence, the amount of 

the BACT adjustment required by Rule 

1306(c) to be credited to the District’s 

Offset Accounts if this amount ‘‘is not 

otherwise required by rule, regulation, 

law, approved Air Quality Management 

Plan Control Measure, or the State 

Implementation Plan.’’ This provision 

has only been used once since the 

District created its Internal Bank in 

1990.8 EPA intends to approve such use 

only in cases where the credits are to be 

used immediately for a specifically 

identified project (and therefore the 

credits would not be subject to an 

additional at time of use surplus 

adjustment) and where EPA determines 

that the construction of the identified 

project would not interfere with any 

applicable requirement concerning 

attainment and RFP or any other 

applicable requirement of the Act. 

Comment 25: CSE states in this 

comment ‘‘As a broader, more universal 

matter the SCAB and the Coachella 

Valley’s failure to attain the PM10

NAAQS and the 1 hour ozone NAAQS 


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31212 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Rules and Regulations 

9Health & Safety Code § 40440(a)(1). 

coupled with the massive black box in 

the 8 hour ozone plan show that no 

emission reductions that have occurred 

or will occur as part of the NSR program 

are actually surplus. In fact, the Air 

Basins need all the reductions of the 

NSR program and more for attainment. 

The currently approved SIP Rules set 

out a rigorous process for banking 

emission reductions that was developed 

at the direction of the Clean Air Act 

because the Air Basins are 

nonattainment areas. The EPA cannot 

now approve a Rule that, in effect, sets 

aside parts the SIP approved NSR 

program.’’ Comment Letter at 22. 

Response 25: It appears that CSE is 

using the term ‘‘surplus’’ in this 

comment to mean something different 

from the requirement in 40 CFR 

51.165((a)(3)(ii)(C)(1)(i) that emission 

reductions be ‘‘surplus’’ to any other 

requirement of the CAA. In the context 

of evaluating the integrity of an NSR 

offset, EPA uses the term ‘‘surplus’’ to 

refer to any emission reduction that is 

not otherwise required by the CAA. See 

CAA 173(c); see also TSD at 7–9. 

Whether the District has attained any 

particular NAAQS or needs additional 

emission reductions as part of its plan 

for attaining a particular NAAQS is not 

relevant to the question whether a 

particular emission reduction is 

‘‘surplus’’ to other CAA requirements 

consistent with 40 CFR 

51.165(a)(3)(ii)(C)(1). Contrary to CSE’s 

contention that Rule 1315, ‘‘sets aside 

parts the SIP approved NSR program,’’ 

we are approving Rule 1315 based on 

our conclusion that it strengthens the 

SIP-approved NSR program by 

providing a detailed methodology for 

tracking credits within the District’s 

Offset Accounts. 

Comment 26: CSE titled this section 

of their comments ‘‘Allowing the 

District to Shift from a 1.5 to 1.0 Offset 

Ratio to a 1.2 to 1.0 Offset Ratio Violates 

the Act’’. CSE claims that ‘‘EPA has not 

determined that California BARCT and 

federal BACT are equivalent’’ and that 

‘‘federal BACT is a facility by facility 

approach and BARCT uses classes of 

categories’’ and therefore, they cannot 

be equivalent. Approval of a 1.2:1, 

rather than 1.5:1 offset ratio is an illegal 

shift and is therefore arbitrary and 

capricious. 

Response 26: We disagree as we are 

not approving any change in the offset 

ratios established in the District’s SIPapproved NSR program. Rule 1303— 

Requirements, currently requires all 

sources of VOC and NOX to provide 

offsets at a 1.2:1 ratio. EPA approved 

this ratio as part of our 1996 approval 

of the Districts NSR program based on 

our conclusion that the District’s 

program met the criteria for exemption 

from the requirement in CAA section 

182(e)(1) for a 1.5:1 offset ratio in 

extreme ozone nonattainment areas (61 

FR 64291, December 4, 1996). Nothing 

in our action today affects our prior 

action with respect to Rule 1303. To the 

extent CSE intended to challenge our 

approval of the 1.2:1 ratio in Rule 1303 

into the SIP in 1996, such a challenge 

is late. 

As CSE notes, Section 182(e)(1) of the 

CAA provides an exception to the 

requirement of a 1.5:1 offset ratio for 

ozone precursors in extreme nonattainment areas. This Section reads as 

follows: 

‘‘* * * shall be at least 1.5 to 1, except that 

if the State plan requires all existing major 

sources in the NA areas to use BACT as 

defined in section 7479(3) for the control of 

VOC, the ratio shall be at least 1.2:1.’’ 

We note that California state law 

requires all nonattainment areas to 

implement Best Available Retrofit 

Control Technology (BARCT).9 The 

District has adopted rules which require 

BARCT for all source categories that 

include major sources and many that 

apply to minor sources as well. These 

rules have been submitted and approved 

(or in the process of being approved) 

into the South Coast portion of the 

California SIP. Therefore the District 

does have requirements in their plan 

that require all existing major sources to 

use BARCT as defined in Rule 1302— 

Definitions. CSE provides the 

definitions of both terms—Federal 

BACT and California BARCT in their 

Comment Letter. A review of both terms 

shows that the definition of BARCT 

contains the same key elements of the 

Federal BACT definition, as noted 

below by the underlined text of the 

definition of BARCT: 

An air emission limitation that applies to 

existing sources and is based on the 

maximum degree of reduction achievable, 

taking into account environmental, energy, 

and economic impacts by each class or 

category of source. 

The application of both BACT and 

BARCT each result in ‘‘an air emission 

limitation,’’ ‘‘based on the maximum 

degree of reduction,’’ ‘‘taking into 

account environmental, energy, and 

economic impact,’’ ‘‘for such facility’’ 

(BACT) or ‘‘each class or category of 

source’’ (BARCT). 

The definition of BACT referenced in 

Section 182(e)(1) is from the new source 

review regulations, which only apply 

when a facility is new or makes a 

modification that increases emissions. 

The language in Section 182(e)(1) 

therefore specifically states that the 

requirement—to apply the Best 

Available Control Technology—also 

applies to existing major sources. This 

inherently means that any additional 

control must be applied on a retrofit 

basis, which is exactly what the 

California requirement to apply Best 

Available Retrofit Control Technology 

does. Since the District requires the 

implementation of BARCT on all major 

ozone pre-cursor sources, we continue 

to find that the provisions of Section 

182(e)(1) allow for approval of a NSR 

program that requires a 1.2:1, rather 

than 1.5:1 offset ratio of ozone 

precursors in the South Coast. 

Comment 27: CSE titled this section 

of their comments ‘‘EPA Failed to Show 

That This SIP Amendment Does Not 

Interfere With Attainment of the 1-hour 

Ozone Standard. CSE comments that 

EPA’s proposed approval of Rule 1315 

‘‘fails to make the assessment that this 

SIP revision will not interfere with 

attainment of the 1-hour ozone 

standard,’’ citing CAA section 110(l) 

and Hall v. EPA, 273 F.3d 1146, 1158 

(9th Cir. 2001). The comment states that 

the absence of such a ‘‘finding’’ violates 

‘‘bedrock statutory provisions and 

longstanding NSR case law * * *’’ CSE 

believes that EPA’s failure to assess this 

SIP revision for potential interference 

with the 1-hour ozone standard is 

particularly troubling in light of a recent 

Ninth Circuit decision that the current 

1-hour ozone plan is deficient to 

actually attain the 1-hour ozone 

standard, citing Association of Irritated 

Residents v. EPA. Comment Letter at 24. 

Response 27: EPA acknowledges that, 

for the proposed rule, the Agency did 

not evaluate whether the SIP revision 

would interfere with attainment of the 

1-hour ozone standard under CAA 

section 110(l). Given that the 1-hour 

ozone standard was revoked in 2005 

[see 40 CFR 50.9(b)], the potential issue 

to address under section 110(l) is not 

whether the SIP revision would 

interfere with attainment or RFP of the 

1-hour ozone NAAQS because the 1- 

hour ozone standard is no longer one of 

the NAAQS. Instead the issue to be 

addressed is whether the SIP revision 

would interfere with any other 

applicable requirement of the CAA, 

which in this case refers to the ‘‘antibacksliding’’ requirements [found in 40 

CFR 51.905(a)(1)(i)], which continue to 

apply in 8-hour ozone nonattainment 

areas (such as the South Coast) that had 

been a nonattainment area for the 1- 

hour ozone standard. Among the antibacksliding requirements is the 

requirement to have an approved 1-hour 

ozone attainment demonstration plan. 


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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Rules and Regulations 31213 

10 It appears that CSE simply summed the NOX

and VOC emissions estimates to arrive at its 55% 

and 10% figures, but this approach entirely 

overlooks the significant differences in the NOX

reductions and VOC reductions attributed to the 

long-term strategy in the 2007 AQMP, as well as the 

respective contributions of reductions in each 

pollutant to attainment of the ozone standards in 

the South Coast. 

The South Coast Air Basin has a 1- 

hour ozone attainment plan (referred to 

as the ‘‘1997/1999 South Coast Ozone 

SIP’’) that EPA approved in 2000 (65 FR 

18903, April 10, 2000) and this SIP 

revision would not interfere with that 

plan. However, the commenter is correct 

that a recent Ninth Circuit decision 

raises the possibility that, in light of 

deficiencies in the 1997/1999 South 

Coast Ozone SIP brought to EPA’s 

attention in 2003 (i.e., prior to 

revocation of the 1-hour ozone standard) 

and having nothing to do with NSR, 

EPA may find it necessary to develop 

and adopt a new 1-hour ozone 

attainment plan or require the State of 

California to do so, in response to the 

remand of that case. See, generally, 

Association of Irritated Residents v. 

EPA, No. 09–71383 and 09–71404, 

rehearing denied and amended opinion 

filed Jan. 27, 2012. EPA has not yet 

decided how the Agency intends to 

respond to the decision in Association 

of Irritated Residents, and although this 

SIP revision would not interfere with 

such a future plan, it would need to be 

taken into account in developing the 

emissions inventories and control 

strategies for such a 1-hour ozone 

attainment plan in much the same 

manner as has been done for the nowapproved South Coast 8-hour ozone and 

PM2.5 plans. 

Comment 28: CSE titled this section 

of their comments ‘‘It is Arbitrary and 

Capricious for This SIP Amendment to 

Allow for Vast Increases in Pollution 

Credits Given the Reliance on a Large 

‘Black Box’.’’ CSE’s final comment is 

that EPA cannot approve Rule 1315 

because the District has emissions 

reductions in its AQMPs ‘‘black box’’. 

Comment Letter at 24. CSE comments 

that the 2007 AQMP has 55% of the 

emission reductions needed to attain the 

8-hour ozone NAAQS in the ‘‘black 

box’’. CSE then states: ‘‘Given that there 

really is not a true framework for 

attaining the 8-hour ozone standard (e.g. 

reliance on speculative, undefined 

measures) on time combined with the 

recent failure of the region to attain the 

1-hour ozone standard, [footnote 

omitted] it is arbitrary and capricious 

for EPA to allow 1315 to move forward 

with the myriad of newly minted offsets 

that will be allowed to impede the 

already formidable task of actually 

closing the ‘‘black box’’ gap that 

currently exists. Even if the rosy 

assumptions in the TSD are accurate, 

adding 29 tpd (27 tpd VOC and 2 tpd 

NOX) of pre-2002 credits is 

approximately 10% of the emissions 

reductions needed to be met through 

black box reductions. This represents a 

significant amount of pollution that 

could be prevented, which would 

actually help push the region to attain 

the standard on time.’’ Comment Letter 

at 24–25. 

Response 28: We disagree with these 

assertions. First, with respect to the 

commenter’s contentions that the ‘‘black 

box’’ (which we refer to herein as the 

‘‘long-term strategy’’) in the 2007 AQMP 

accounts for 55% of the reductions 

needed to attain the 1997 8-hour ozone 

standard and that pre-2002 credits 

account for approximately 10% of these 

‘‘black box’’ reductions, these 

statements are factually incorrect. As we 

explained in our responses to similar 

comments on our proposal to approve 

the 2007 AQMP (referred to in that 

action as the ‘‘South Coast 2007 Ozone 

SIP’’), the correct amounts of the needed 

emission reductions attributed to the 

long-term strategy in the 2007 AQMP 

are 26% for NOX (241 of 910 tons per 

day (tpd) needed to attain) and 9% for 

VOC (40 of 461 tpd needed to attain). 

See 77 FR 12674, 12686 (March 1, 

2012). Thus, the pre-2002 base year 

emission reduction credits (2 tpd of 

NOX and 27 tpd of VOC) that the 

District added as growth into its 

projected inventories for the 2007 

AQMP constitute roughly 0.83% of the 

NOX reductions and 68% of the VOC 

reductions attributed to the long-term 

strategy in the 2007 AQMP.10

Second, we disagree with the 

commenter’s suggestion that the South 

Coast’s inclusion of a long-term strategy 

in the 2007 AQMP precludes our 

approval of Rule 1315 into the SIP or 

somehow renders our approval arbitrary 

and capricious. CAA section 182(e)(5) 

authorizes EPA to ‘‘approve provisions 

of an implementation plan for an 

Extreme Area which anticipate 

development of new control techniques 

or improvement of existing control 

technologies * * *’’ provided certain 

conditions have been met. 42 U.S.C. 

7511a(e)(5). EPA fully approved the 

2007 AQMP based, in part, on our 

conclusion that California had met the 

criteria for approval of a long-term 

strategy under CAA section 182(e)(5) for 

purposes of attaining the 1997 8-hour 

ozone standard (77 FR 12674 at 12686– 

12689) and our conclusion that the 

SCAQMD had accounted for existing 

pre-base year ERCs in the reasonable 

further progress (RFP) and attainment 

year inventories in the plan, consistent 

with the applicable requirements of part 

D, title I of the CAA and EPA’s 

implementing regulations in 40 CFR 

part 51 (77 FR 12674 at 12682). CSE 

provides no support for its contention 

that these elements of the 2007 AQMP 

preclude or undermine our approval of 

Rule 1315 into the SIP, nor any 

information indicating that approval of 

Rule 1315 would interfere with any 

applicable requirement concerning 

attainment and RFP or any other 

applicable requirement of the Act (see 

CAA 110(l)). 

Finally, to the extent the commenter 

intended to argue that the South Coast 

area’s failure to attain the 1-hour ozone 

NAAQS by the applicable attainment 

date precludes our approval of Rule 

1315 or somehow renders our approval 

arbitrary and capricious, we disagree. 

EPA’s recent determination that the 

South Coast area failed to attain the 1- 

hour ozone standards by its applicable 

attainment date of November 15, 2010 

(76 FR 82133, December 30, 2011) has 

no bearing on our action on Rule 1315, 

and the commenter provides no support 

for any argument otherwise. 

Comment 29: In CSE’s last portion of 

this comment, CSE reproduces Table 

4.1–4 from Subchapter 4.1 of the 

Districts Final Program Environmental 

Assessment (CEQA analysis) prepared 

for adoption of Rule 1315. Comment 

Letter at 25. Using data from this table, 

CSE states that the amount of potential 

ozone emissions increases from Rule 

1315 (16.99 tpd VOC in 2014 and 34.52 

tpd in 2023 and 1.29 tpd in NOX in 2014 

and 2.38 tpd in 2023) is ‘‘important 

because they represent a significant 

increase in the total projected 

emissions’’. (emphasis added) CSE then 

provides the total projected emission 

inventory for years 2014, 2020 and 2023 

from the 2007 AQMP, apparently to 

show that the values in Table 4.1.4 are 

a large percentage of the total projected 

emission inventory. CSE then states that 

EPA must ‘‘demonstrate what measures 

will replace this backsliding in emission 

reductions that will lead to attainment 

of all relevant standards,’’ and finally 

that ‘‘it is arbitrary and capricious for 

EPA to ignore the significant analysis 

prepared by the SCAQMD for the 

California Environmental Quality Act 

document for Rule 1315 that details the 

emissions and impacts associated with 

adopting this Rule.’’ 

Response 29: EPA disagrees with 

CSE’s characterization of the 

information provided in Subchapter 4.1 

of the District’s CEQA analysis. See 

‘‘Final Program Environmental 

Assessment for Re-Adoption of 


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31214 Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Rules and Regulations 

Proposed Rule 1315—Federal New 

Source Review Tracking System, 

Volume I, Subchapter 4.1, 

‘‘Environmental Impacts and Mitigation 

Measures—Air Quality’’ (January 7, 

2011) (Rule 1315 CEQA Analysis). The 

emissions data in Table 4.1–4 of this 

CEQA analysis, which CSE reproduced 

in Table 4.1–4 of its comment letter, 

provide conservative (high) estimates of 

total NOX and VOC stationary source 

emissions expected from 

implementation of Rule 1315. See Rule 

1315 CEQA Analysis at 4.1–9. The 2007 

AQMP includes all of these projected 

NOX and VOC emissions in the future 

projected inventories ‘‘with growth’’ for 

2014, 2020 and 2023. See 2007 AQMP, 

Table 2–8 of Appendix III. To the extent 

CSE intended to argue that 

implementation of Rule 1315 will 

increase the projected NOX and VOC 

emission inventories in the 2007 AQMP 

by the amounts specified in Table 4.1– 

4, this assertion is factually incorrect, as 

the emissions impacts identified in 

Table 4.1–4 of the Rule 1315 CEQA 

Analysis are already accounted for in 

the 2007 AQMP projected emission 

inventories. Alternatively, to the extent 

CSE intended to challenge the District’s 

inclusion of these additional NOX and 

VOC emissions in the projected 

emissions inventories underlying the 

2007 AQMP, such a challenge to the 

2007 AQMP is outside the scope of our 

action on Rule 1315. 

Comment 30: The South Coast Air 

Quality Management District submitted 

a comment letter in which the District 

stated that the legislative history of the 

1990 Amendments to the CAA 

specifically addressed the ability of a 

district to promulgate a rule that, in the 

aggregate produces equivalent or greater 

emissions reductions. Comment Letter 

at 1–2. The District also included a 

discussion of the importance of Rule 

1315 to the economic issues in the area 

and that many of the projects in the area 

that will use credits from the District’s 

Offset Accounts are environmentally 

beneficial. Comment Letter at 2–3. The 

District’s comment also referenced the 

Ninth Circuit’s decision in Natural 

Resources Defense Council v. South 

Coast Air Quality Management District, 

651 F.2d 1066 (9th Cir. 2011) which 

evaluated the District’s treatment of pre1990 credits in its Offset Accounts and 

‘‘concluded that the challenge to the 

pre-1990 offsets was moot’’. [citation 

omitted] The District stated: ‘‘Therefore, 

we conclude that EPA need not be 

concerned with any issues relating to 

pre-1990 offsets.’’ Comment Letter at 5. 

Finally, the District pointed to some 

specific language in EPA’s TSD that the 

District considered inaccurate. TSD at p. 

11. 

The District requested EPA to include 

in its final approval the following 

clarification: ‘‘The AQMP growth 

projections do not distinguish between 

new or modified sources and increased 

operations at existing sources. 

Therefore, the growth projections 

represent a maximum projected amount 

of demand for pre-base-year offsets. All 

growth from new and modified sources 

must necessarily be offset by pre-baseyear emission reductions. This is 

because post-base-year reductions could 

at most be used to replace themselves, 

and would not be available to support 

growth. Therefore, the AQMP growth 

projections represent maximum 

projected use of pre-base-year offsets.’’ 

Comment Letter at 5. The District’s 

comment also attached copies of 

hundreds of letters from local 

municipalities, organizations and 

businesses that supported State 

legislation that would allow the District 

to continue to issue credits from its 

Offset Accounts during preparation of 

CEQA documents. 

Response 30: EPA agrees with the 

District that Congress intended to allow 

the District to adopt a rule that in the 

aggregate that demonstrates an 

equivalent amount or greater emission 

reductions than would be required by 

the 1990 Amendments to the CAA. EPA 

appreciates the District’s statements 

about the importance of Rule 1315. 

These considerations may inform the 

policy choices that the District makes in 

choosing how to implement the 

requirements of the CAA. EPA makes 

note of the Ninth Circuit’s decision in 

NRDC v. SCAQMD. As discussed in a 

prior Response, EPA has also 

determined that the District’s treatment 

of pre-1990 credits in Rule 1315 is 

approvable. Finally, EPA agrees that the 

District’s language clarifies EPA’s intent 

with respect to approving the District’s 

inclusion of pre-base year credits in its 

inventories. Accordingly, we agree that 

‘‘[t]he AQMP growth projections do not 

distinguish between new or modified 

sources and increased operations at 

existing sources. Therefore, the growth 

projections represent a maximum 

projected amount of demand for prebase-year offsets. All growth from new 

and modified sources must necessarily 

be offset by pre-base-year emission 

reductions. This is because post-baseyear reductions could at most be used 

to replace themselves, and would not be 

available to support growth. Therefore, 

the AQMP growth projections represent 

maximum projected use of pre-base-year 

offsets.’’ EPA agrees that in both the 

2003 and 2007 AQMPs, the growth that 

the District adds represents the 

maximum projected use of pre-base year 

credits. EPA also takes note of the 

hundreds of pages attached to the 

District’s comment letter. 

Comment 31: California Council for 

Environmental and Economic Balance, 

the County Sanitation Districts of Los 

Angeles County and the Southern 

California Gas Company submitted 

comments on our proposed approval of 

Rule 1315. These comment letters 

express support for EPA’s proposed 

approval of Rule 1315. The comment 

letters also state that Rule 1315 is 

important for the area to continue to 

operate essential public services, such 

as installation of emergency generators 

at wastewater pumping plants. Finally, 

these comment letters ask EPA to 

finalize approval of Rule 1315 with an 

effective date that is shorter than 30 

days based on the good cause exception 

in section 553(d) of the Administrative 

Procedures Act. 

Response 31: EPA takes note of the 

support for final approval of Rule 1315. 

EPA also understands that as a result of 

State legislation the District may be 

precluding from issuing permits 

pursuant to Rule 1315 for a short period 

of time until the effective date of EPA’s 

final approval of Rule 1315. Although 

EPA understands that waiting for a 30 

day effective date to expire may place a 

burden on the District and local 

municipalities, utilities and business, 

EPA is declining at this time to provide 

a shorter effective date based on 5 U.S. 

C. 553(d)(3). 

III. EPA’s Final Action 

Under section 110(k)(3) of the Act, 

EPA is fully approving Rule 1315, as 

adopted February 4, 2011 and submitted 

on March 2, 2011, into the South Coast 

portion of the California SIP based on 

our conclusion that this SIP revision 

satisfies all applicable CAA 

requirements. 

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, EPA’s role is to approve 

State choices, provided that they meet 

the criteria of the Clean Air Act. 

Accordingly, this action merely 

approves State law as meeting Federal 

requirements and does not impose 

additional requirements beyond those 

imposed by State law. For that reason, 

this action: 


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Federal Register / Vol. 77, No. 102 / Friday, May 25, 2012 / Rules and Regulations 31215 

• Is not a ‘‘significant regulatory 

action’’ subject to review by the Office 

of Management and Budget under 

Executive Order 12866 (58 FR 51735, 

October 4, 1993); 

• 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 EPA with the 

discretionary authority to address, as 

appropriate, disproportionate human 

health or environmental effects, using 

practicable and legally permissible 

methods, under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, this proposed rule does not 

have tribal implications as specified by 

Executive Order 13175 (65 FR 67249, 

November 9, 2000), because the SIP is 

not approved to apply in Indian country 

located in the State and EPA notes that 

it will not impose substantial direct 

costs on tribal governments or preempt 

tribal law. 

The Congressional Review Act, 5 

U.S.C. 801 et seq., as added by the Small 

Business Regulatory Enforcement 

Fairness Act of 1996, generally provides 

that before a rule may take effect, the 

agency promulgating the rule must 

submit a rule report, which includes a 

copy of the rule, to each House of the 

Congress and to the Comptroller General 

of the United States. EPA will submit a 

report containing this action and other 

required information to the U.S. Senate, 

the U.S. House of Representatives, and 

the Comptroller General of the United 

States prior to publication of the rule in 

the Federal Register. A major rule 

cannot take effect until 60 days after it 

is published in the Federal Register. 

This action is not a ‘‘major rule’’ as 

defined by 5 U.S.C. 804(2). 

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 July 24, 2012. 

Filing a petition for reconsideration by 

the Administrator of this final rule does 

not affect the finality of this action 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 CAA 

section 307(b)(2).) 

List of Subjects in 40 CFR Part 52 

Air pollution control, Environmental 

protection, Incorporation by reference, 

Intergovernmental relations, Nitrogen 

dioxide, Ozone, Particulate matter, 

Reporting and recordkeeping 

requirements, Volatile organic 

compounds. 

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

Dated: April 26, 2012. 

Jared Blumenfeld, 

Regional Administrator, Region IX. 

Part 52, chapter I, title 40 of the Code 

of Federal Regulations is amended as 

follows: 

PART 52—[AMENDED] 

■ 1. The authority citation for part 52 

continues to read as follows: 

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

Subpart F—California 

■ 2. Section 52.220 is amended by 

adding paragraph (c)(403) to read as 

follows: 

§ 52.220 Identification of plan. 

* * * * * 

(c) * * * 

(403) A new rule for the following 

APCD was submitted on March 2, 2011, 

by the Governor’s designee. 

(i) Incorporation by reference. 

(A) South Coast Air Quality 

Management District. 

(1) Rule 1315, ‘‘Federal New Source 

Review Tracking System,’’ excluding 

paragraph (b)(2) and subdivisions (g) 

and (h), adopted on February 4, 2011. 

* * * * * 

[FR Doc. 2012–12500 Filed 5–24–12; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 300 

[EPA–HQ–SFUND–1990–0011; FRL–9676–7] 

National Oil and Hazardous 

Substances Pollution Contingency 

Plan; National Priorities List: Partial 

Deletion of the Ellsworth Air Force 

Base Superfund Site 

AGENCY: Environmental Protection 

Agency. 

ACTION: Final rule. 

SUMMARY: The Environmental Protection 

Agency (EPA) Region 8 announces the 

deletion of Operable Unit (OU) 1—the 

former Fire Protection Training Area 

(FPTA), along with two other Areas of 

Concern (AOC): the Gateway Lake Ash 

Study Area and the Pride Hangar Study 

Area of the Ellsworth Air Force Base 

(AFB) from the National Priorities List 

(NPL). The NPL, promulgated pursuant 

to section 105 of the Comprehensive 

Environmental Response, 

Compensation, and Liability Act 

(CERCLA) of 1980, as amended, is an 

appendix of the National Oil and 

Hazardous Substances Pollution 

Contingency Plan (NCP). This partial 

deletion pertains to the surface soil, 

unsaturated subsurface soil, surface 

water and sediments of Operable Unit 

(OU) 1, the Gateway Lake Ash Study 

Area, and the Pride Hangar Study Area. 

The groundwater medium associated 

with OU–11, Basewide Groundwater 

will remain on the NPL. The EPA and 

the State of South Dakota, through the 

Department of Environment and Natural 

Resources, have determined that all 

appropriate response actions under 

CERCLA, other than five-year reviews 

have been completed. However, the 

deletion of these parcels does not 

preclude future actions under 

Superfund. 

DATES: Effective Date: This action is 

effective May 25, 2012. 

ADDRESSES: Mr. John Dalton, 

Community Involvement Coordinator 

(8OC), U.S. EPA, Region 8, 1595 

Wynkoop St., Denver, CO 80202; 

telephone number 303–312–6601; fax 

number 303–312–6961; email address: 

dalton.john@epamail.epa.gov. 

EPA has established a docket for this 

action under Docket Identification No. 

EPA–HQ–SFUND–1990–0011. All 

documents in the docket are listed on 

the http://www.regulations.gov Web 

site. Although listed in the index, some 

information is not publicly available, 

i.e., Confidential Business Information 

or other information whose disclosure is 


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