74372 Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 

J. Executive Order 12898: Federal 

Actions To Address Environmental 

Justice in Minority Populations and 

Low-Income Populations 

Executive Order 12898 (59 FR 7629, 

February 16, 1994), establishes federal 

executive policy on environmental 

justice. Its main provision directs 

federal agencies, to the greatest extent 

practicable and permitted by law, to 

make environmental justice part of their 

mission by identifying and addressing, 

as appropriate, disproportionately high 

and adverse human health or 

environmental effects of their programs, 

policies, and activities on minority 

populations and low-income 

populations in the United States. 

We have determined that this final 

action will not have disproportionately 

high and adverse human health or 

environmental effects on minority or 

low-income populations because it 

increases the level of environmental 

protection for all affected populations 

without having any disproportionately 

high and adverse human health or 

environmental effects on any 

population, including any minority or 

low-income population. 

K. Congressional Review Act 

The Congressional Review Act, 5 

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

Business Regulatory Enforcement 

Fairness Act of 1996, does not apply 

because this action is not a ‘‘major rule’’ 

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

List of Subjects in 40 CFR Part 52 

Environmental protection, 

Incorporation by reference, Air 

pollution control, Incorporation by 

reference, Intergovernmental relations, 

Nitrogen dioxide, Particulate matter, 

Reporting and recordkeeping 

requirements, Sulfur oxides, Volatile 

organic compounds. 

Dated: October 30, 2012. 

Howard M. Cantor, 

Acting Regional Administrator, Region 8. 

For the reasons stated in the 

preamble, 40 CFR part 52 is amended as 

follows: 

PART 52—APPROVAL AND 

PROMULGATION OF 

IMPLEMENTATION PLANS 

■ 1. The authority citation for part 52 

continues to read as follows: 

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

Subpart TT—Utah 

■ 2. Section 52.2320 is amended by 

adding paragraph (c)(71) to read as 

follows: 

§ 52.2320 Identification of plan. 

* * * * * 

(c) * * * 

(71) On May 26, 2011 and September 

29, 2011, the State of Utah submitted 

revisions to its State Implementation 

Plan to incorporate the requirements of 

the regional haze program. 

(i) Incorporation by reference 

(A) Title R307 of the Utah 

Administrative Code—Environmental 

Quality, Air Quality, Rule R307–150— 

Emission Inventories, sections -1, 

Purpose and General Requirements, -2, 

Definitions, -3, Applicability, -5, Sources 

Identified in R307–150(3)(2), Large 

Major Source Inventory Requirements, 

-6, Sources Identified in R307–150–3(3), 

-7, Sources Identified in R307–150–3(4), 

Other Part 70 Sources, and -8, Exempted 

Hazardous Air Pollutants. Effective 

December 31, 2003; as published in the 

Utah State Bulletin December 1, 2003 

and January 15, 2004. 

(B) Title R307 of the Utah 

Administrative Code—Environmental 

Quality, Air Quality, Rule R307–150— 

Emission Inventories, section -4, Sulfur 

Dioxide Milestone Emission Inventory 

Requirements. Effective September 4, 

2008; as published in the Utah State 

Bulletin July 1, 2008 and October 1, 

2008. 

(C) Title R307 of the Utah 

Administrative Code—Environmental 

Quality, Air Quality, Rule R307–250— 

Western Backstop Sulfur Dioxide 

Trading Program, sections -1, Purpose, 

-3, WEB Trading Program Trigger, -10, 

Allowance Transfers, -11, Use of 

Allowances from a Previous Year, and 

-13, Special Penalty Provisions for the 

2018 Milestone. Effective December 31, 

2003; as published in the Utah State 

Bulletin December 1, 2003 and January 

15, 2004. 

(D) Title R307 of the Utah 

Administrative Code—Environmental 

Quality, Air Quality, Rule R307–250— 

Western Backstop Sulfur Dioxide 

Trading Program, sections -2, 

Definitions, -4, WEB Trading Program 

Applicability, -5, Account 

Representative for WEB Sources, -6, 

Registration, -7, Allowance Allocations, 

-8, Establishment of Accounts, -9, 

Monitoring, Recordkeeping, and 

Reporting, and -12, Compliance. 

Effective November 10, 2008; as 

published in the Utah State Bulletin 

October 1, 2008 and December 1, 2008. 

(ii) Additional materials 

(A) Section XX of the Utah Regional 

Haze State Implementation Plan. 

Effective April 7, 2011. Published in the 

Utah State Bulletin February 1, 2011. 

[FR Doc. 2012–29406 Filed 12–13–12; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R09–OAR–2011–0876; FRL–9736–6] 

Revisions to the California State 

Implementation Plan, South Coast Air 

Quality Management District 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Final rule. 

SUMMARY: In this action, EPA is 

finalizing approval of South Coast Air 

Quality Management District 

(SCAQMD) Rule 317, ‘‘Clean Air Act 

Non-Attainment Fee,’’ as a revision to 

SCAQMD’s portion of the California 

State Implementation Plan (SIP). This 

action was proposed in the Federal 

Register on January 12, 2012 and 

concerns volatile organic compounds 

(VOC) and oxides of nitrogen (NOX). 

Rule 317 is a local fee rule submitted to 

address section 185 of the Clean Air Act 

(CAA or Act) with respect to the 1-hour 

ozone standard for anti-backsliding 

purposes. EPA is finalizing approval of 

Rule 317 as an alternative to the 

program required by section 185 of the 

Act. EPA has determined that 

SCAQMD’s alternative fee-equivalent 

program is not less stringent than the 

program required by section 185, and, 

therefore, is approvable as an equivalent 

alternative program, consistent with the 

principles of section 172(e) of the Act. 

DATES: This rule will be effective on 

January 14, 2013. 

ADDRESSES: EPA has established docket 

number EPA–R09–OAR–2011–0876 for 

this action. Generally, documents in the 

docket for this action are available 

electronically at http:// 

www.regulations.gov or in hard copy at 

EPA Region IX, 75 Hawthorne Street, 

San Francisco, California. While all 

documents in the docket are listed at 

http://www.regulations.gov, some 

information may be publicly available 

only at the hard copy location (e.g., 

copyrighted material, large maps, multivolume reports), and some may not be 

available in either location (e.g., 

confidential business information 

(CBI)). To inspect the hard copy 

materials, please schedule an 

appointment during normal business 

hours with the contact listed in the FOR

FURTHER INFORMATION CONTACT section. 

FOR FURTHER INFORMATION CONTACT: Lily 

Wong, EPA Region IX, (415) 947–4114, 

wong.lily@epa.gov. 

SUPPLEMENTARY INFORMATION: 

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

and ‘‘our’’ refer to EPA. 

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Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 74373 

1Rule 317 specifies that the baseline for existing 

major stationary sources in the Salton Sea Air Basin 

is the attainment year, which is consistent with the 

express language in CAA section 185. EPA’s 

Technical Support Document (TSD) dated January 

4, 2012 provides greater detail on the various terms 

used to refer to the geographic area of the Salton 

Sea Air Basin that is in the SCAQMD. 2Rule 317 specifies that the baseline will be 

programmatically adjusted to account for regulatory 

effects between 2006 through 2010 and that actual 

emissions used to calculate the alternative baseline 

cannot exceed allowable emissions. 

Table of Contents 

I. Proposed Action 

II. Public Comments and EPA Responses 

III. EPA Action 

IV. Statutory and Executive Order Reviews 

I. Proposed Action 

EPA proposed to approve the 

following rule into the California SIP, in 

the Federal Register at 77 FR 1895, 

January 12, 2012. 

Local agency Rule No. Rule title Adopted Submitted 

SCAQMD ........................................................ 317 Clean Air Act Non-Attainment Fee ................ 02/04/2011 04/22/2011 

We proposed to approve this rule 

because we determined that it complies 

with the relevant CAA requirements and 

is approvable as an equivalent 

alternative to the program required by 

section 185 of the Act for the 1-hour 

ozone standard as an anti-backsliding 

measure. Our proposed action contains 

more information on the rule and our 

evaluation. 

II. Public Comments and EPA 

Responses 

EPA’s proposed action provided a 30- 

day public comment period. During this 

period, we received comments from 

several parties. Most comments 

supported our proposed action; 

Earthjustice submitted comments 

opposing our proposed action. The 

comments and our responses are 

summarized below. 

A. Rule 317 and Section 185 

1. Rule 317 and Section 185 Generally 

a. Comment: Earthjustice commented 

that Rule 317 does not impose fees on 

major stationary sources, but instead 

collects an equivalent amount from 

other sources including government 

grants. 

Response: We agree that section 185 

requires major stationary sources to pay 

fees; however, today’s action is to 

approve SCAQMD Rule 317 in the 

context of the revoked 1-hour ozone 

NAAQS. We conclude that Rule 317 is 

approvable into the California SIP as the 

District’s equivalent alternative program 

because we have determined that Rule 

317 contains provisions that ensure that 

the fee equivalency account will reflect 

expenditures that are at least equal to 

the amount that would otherwise be 

collected under section 185, and they 

ensure that the funds will be used to 

reduce ozone pollution. Specifically, 

Rule 317 contains requirements to 

calculate the section 185 fee obligation, 

establish a ‘‘section 172(e) fee 

equivalency account,’’ track qualified 

expenditures on pollution control 

projects, annually demonstrate 

equivalency, and provide for a backstop 

if equivalency cannot be demonstrated. 

We have therefore determined that Rule 

317 satisfies the requirements of CAA 

section 185, consistent with the 

principles of section 172(e). 

2. Rule 317 and Baseline Issues 

a. Comment: Earthjustice made 

several points relating to their general 

argument that the baseline used to 

determine the equivalent fee to be 

collected (and potentially to impose the 

fee if there is a shortfall) fails to comply 

with section 185. Another commenter 

supported Rule 317’s alternative 

baseline provisions. 

Response: Section 185(b)(2) 

authorizes EPA to issue guidance that 

allows the baseline to be the lower of 

average actuals or average allowables 

determined over more than one calendar 

year. Section 185(b)(2) further states that 

the guidance may provide that the 

average calculation for a specific source 

may be used if the source’s emissions 

are irregular, cyclical or otherwise vary 

significantly from year to year. Pursuant 

to these provisions, EPA developed and 

issued a memorandum to EPA Regional 

Air Division Directors, ‘‘Guidance on 

Establishing Emissions Baselines under 

Section 185 of the Clean Air Act (CAA) 

for Severe and Extreme Ozone 

Nonattainment Areas that Fail to Attain 

the 1-hour Ozone NAAQS by their 

Attainment Date,’’ William T. Harnett, 

Director, Air Quality Division, March 

21, 2008 (EPA’s Baseline Guidance). 

EPA’s Baseline Guidance suggests as an 

alternative baseline for sources whose 

annual emissions are ‘‘irregular, 

cyclical, or otherwise vary significantly 

from year to year,’’ the baseline 

calculation in EPA’s Prevention of 

Significant Deterioration (PSD) 

regulations at 40 CFR 52.21(b)(48). As 

explained in EPA’s Baseline Guidance, 

the PSD regulations allow a baseline to 

be calculated using ‘‘any 24-consecutive 

month period within the past 10 years 

(‘2-in-10’ concept) to calculate an 

average actual annual emissions rate 

(tons per year).’’ 

Rule 317 uses an alternative baseline 

to calculate the fees owed by all section 

185 sources in the South Coast Air 

Basin.1 Rather than calculating an 

alternative baseline for each source 

based on EPA’s 2-in-10 PSD concept, 

Rule 317 sets an alternative baseline for 

all sources in the South Coast Air Basin 

by defining the term ‘‘baseline 

emissions’’ to mean the average of each 

source’s actual emissions during a 

specific time period—fiscal years 2005– 

2006 and 2006–2007.2

Therefore, we agree that Rule 317’s 

baseline for sources in the South Coast 

Air Basin differs from the attainment 

year baseline set forth in section 185. 

We note, however, that we are 

approving SCAQMD Rule 317 in the 

context of the revoked 1-hour ozone 

NAAQS and that Rule 317 satisfies the 

requirements of CAA section 185, 

consistent with the principles of section 

172(e). We respond below to 

Earthjustice’s specific points regarding 

baseline issues. 

b. Comment: Earthjustice stated that 

the statute allows for an alternative 

baseline ‘‘for a specific source’’ if 

emissions are irregular, cyclical or 

otherwise vary significantly from year to 

year and allows for alternative baselines 

based on the nature of source-specific 

operations. The commenter stated that 

Rule 317 renders this source-specific 

test meaningless. The commenter 

contended that choosing the baseline 

should be a source-specific 

determination that accounts for the 

variability, cycle or irregularity of the 

emissions. The commenter stated that 

the District’s response to variability is a 

‘‘blanket approach’’ that has no 

connection to the source-specific 

findings required by the Act. The 

commenter stated that the District’s 

analysis shows that ‘‘all or nearly all’’ 

sources had emissions that varied and 

so undermines the claim that the 

variability was significant. 

Response: EPA disagrees with the 

commenter’s assertion that Rule 317 is 

inconsistent with section 185 because it 

does not utilize a ‘‘source-specific 

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74374 Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 

3SCAQMD’s formula for ‘‘V’’ (Variation in 

Emissions (or Irregularity)) = (Range of Emissions) 

÷ (Median Emissions Value). SCAQMD calculated 

‘‘V’’ for each of the 112 sources based on 10 years 

of actual emissions data. 

determination.’’ As described in EPA’s 

proposed action, SCAQMD looked at 

available emissions data for all 234 

sources subject to section 185 fees that 

reported actual emissions of at least 10 

tons per year in 2010 and found that all 

234 sources had some variability (see 

SCAQMD letter dated December 21, 

2011, Exhibit D). In addition, SCAQMD 

conducted a more detailed analysis for 

112 sources for which SCAQMD had ten 

consecutive years of actual emissions 

data. SCAQMD developed a 

mathematical formula to define and 

analyze variability.3 Applying this 

formula, SCAQMD found that 107 of the 

112 sources (or over 95% of the data set) 

had greater than 20 percent variability 

in emissions across a 10-year period. 

EPA also disagrees with the 

commenter’s argument that variability 

cannot be significant if it is experienced 

by all sources. The Act itself does not 

define the phrase ‘‘otherwise vary 

significantly from year to year;’’ 

therefore, EPA may supply a reasonable 

interpretation. SCAQMD separately 

considered the available information for 

each of the 234 sources and found that 

no source had consistent emissions. To 

the contrary, SCAQMD found that 

emissions for all sources varied from 

year to year. While some source’s 

emissions varied more than others, all 

evidenced some variation. Moreover, 

SCAQMD’s data shows that even 

sources with the smallest variation in 

emissions experienced a range of 

approximately 10 percent. As a practical 

matter, EPA notes that Rule 317’s 

baseline definition makes little 

difference with respect to sources that 

have less emissions variability because, 

as a matter of course, less variation in 

emissions means that those sources owe 

essentially the same amount under 

either section 185’s attainment year 

baseline or under Rule 317’s universal 

alternative baseline using years 2006– 

2007. 

c. Comment: Earthjustice stated that 

the District’s justification of its 

approach based on the PSD regulations 

is arbitrary. The commenter further 

contended that Section 185 does not 

refer to the new source review program, 

so the baseline provisions in the PSD 

regulations are irrelevant to interpreting 

section 185. 

Response: EPA disagrees with the 

comment that the District’s justification 

of its approach based on EPA’s PSD 

regulations is arbitrary because section 

185 does not refer to the new source 

review program. In fact, to establish the 

default baseline for calculating emission 

fees, section 185 refers to ‘‘the lower of 

the amount of actual VOC emissions 

(‘actuals’) or VOC emissions allowed 

under the permit applicable to the 

source * * * (‘allowables’) during the 

attainment year.’’ SCAQMD’s reference 

to the baseline established by EPA’s 

PSD regulations is also valid because 

EPA’s Baseline Guidance recommended 

the PSD 2-in-10 concept as an 

acceptable approach for states seeking to 

implement an alternative baseline in 

their section 185 fee programs. As 

explained in EPA’s Baseline Guidance, 

EPA’s rationale for the PSD 2-in-10 

concept was that it would allow a 

source ‘‘to consider a full business cycle 

in setting a baseline emissions rate that 

represents normal operation of the 

source for that time period.’’ Lastly, we 

note that the commenter has not 

recommended, and we are not aware of, 

a superior alternative to basing the 

approach on EPA’s PSD regulations. 

d. Comment: Earthjustice commented 

that the District’s analysis is not based 

on an assessment of the source itself and 

the nature of its operations, but on the 

broader impacts of the recession in the 

region. The commenter stated that the 

District’s approach of raising the 

baseline from the atypical low 

production year is counter to the 

purpose of section 185’s baseline 

requirement, which is to use the lowest 

level of emissions, whether actual or 

allowable. The commenter’s reasoning 

is that if emissions at these levels are 

not low enough to attain the standard, 

the fee should be imposed to incentivize 

an additional 20 percent reduction. The 

commenter contended that Rule 317 

undermines this objective—by raising 

the baseline level of emissions, a 20 

percent reduction is less likely to result 

in attainment. 

Response: EPA disagrees with the 

comment to the extent that it implies 

that the District inappropriately 

considered recessionary impacts on 

emissions when considering the 

appropriate baseline for Rule 317 or that 

the District acted inappropriately by not 

using the attainment year, 2010, as the 

baseline because it was an ‘‘atypical low 

production year.’’ Section 185 explicitly 

acknowledges the possibility that a fee 

program might need to adjust the 

baseline for emissions that are 

‘‘irregular, cyclical, or otherwise vary 

significantly from year to year.’’ 

EPA also disagrees with the 

comment’s implication that Rule 317 

undermines section 185’s objectives 

because it does not establish a baseline 

based on the lowest level of emissions 

and thus will not result in the same 

level of emissions reductions. Again, the 

comment fails to acknowledge that 

Congress explicitly authorized use of an 

alternative baseline based on emissions 

over a period of more than one year in 

cases where there are variations in 

emissions levels. It is reasonable to 

assume that Congress’s objectives in 

establishing the section 185 program 

were to allow for some discretion on the 

part of the regulatory agencies to 

account for practical realities that could 

arise during program implementation, 

even if the result might affect fees owed. 

Moreover, we believe that SCAQMD’s 

alternative baseline will result in 

emission reductions that are at least as 

significant as those that could be 

achieved under a source-by-source 

approach using EPA’s Baseline 

Guidance. As explained in our proposed 

action, SCAQMD had the reasonable 

expectation that since virtually all 

sources had significant variability, most 

if not all sources would request a 

different baseline than the attainment 

year. Instead of allowing each source to 

select its own alternative two-year 

baseline period (as would be allowed 

under EPA’s Baseline Guidance), Rule 

317 calculates the fee obligation based 

on each source’s emissions during 

Fiscal years 2005–2006 and Fiscal years 

2006–2007. SCAQMD’s analysis showed 

that its alternative baseline should be 

expected to result in more emission 

reductions than a fee program that used 

EPA’s Baseline Guidance because under 

the approach allowed by the Guidance, 

each individual source would likely 

choose the two-year period in which it 

had its highest emissions, thereby 

resulting in a higher threshold for 

triggering the assessment of section 185 

fees. Given the assumption that a source 

would pick the two consecutive years 

with the highest emissions, SCAQMD 

calculated such baselines from the 

historic data. SCAQMD’s analysis 

showed that the SCAQMD method 

resulted in aggregate baseline emissions 

that were 7,081 tons lower than that 

allowed under the EPA’s Baseline 

Guidance. (See SCAQMD letter dated 

December 21, 2011, Exhibit D). 

SCAQMD’s decision to establish an 

alternative baseline period for all 

sources is reasonable given that 

SCAQMD’s approach is more stringent 

than that allowed under EPA’s Baseline 

Guidance. Finally, we note that the 

commenter did not challenge EPA’s 

Baseline Guidance. 

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Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 74375 

B. EPA’s Authority To Approve 

Alternative Fee Rules That Differ From 

CAA Section 185 

1. Authority Under CAA and Case Law 

a. Comment: Earthjustice commented 

that nothing in the plain language of the 

Act, the ‘‘principles’’ behind that 

language, or South Coast Air Quality 

Management District v. EPA, 472 F.3d 

882 (D.C. Cir. 2006) gives EPA the 

power to rewrite the terms of section 

185. The commenter stated that EPA’s 

argument that it can invent alternatives 

that fail to comply with the plain 

language of section 185 has no statutory 

basis. Other commenters stated that 

section 172(e) provides authority for 

EPA to approve Rule 317 and alternative 

fee programs generally. 

Response: In a 2004 rulemaking 

governing implementation of the 1997 

8-hour ozone standard, EPA revoked the 

1-hour ozone standard effective June 15, 

2005. See Federal Register at 69 FR 

23858, April 30, 2004 and 69 FR 23951, 

April 30, 2004 (‘‘2004 Rule’’); see also, 

40 CFR 50.9(b). EPA’s revocation of the 

1-hour standard was upheld by the 

Court of Appeals for the District of 

Columbia Circuit. South Coast Air 

Quality Management District v. EPA, 

472 F.3d 882 (D.C. Cir. 2006) reh’g 

denied, 489 F.3d. 1245 (D.C. Cir.) 2007) 

(clarifying that the vacatur was limited 

to the issues on which the court granted 

the petitions for review)(‘‘South Coast’’). 

Thus, the 1-hour ozone standard that 

the District failed to attain by its 

attainment date no longer exists and a 

different standard now applies. 

Section 172(e) provides that, in the 

event of a relaxation of a primary 

NAAQS, EPA must promulgate 

regulations to require ‘‘controls’’ that are 

‘‘not less stringent’’ than the controls 

that applied to the area before the 

relaxation. EPA’s 8-hour ozone standard 

is recognized as a strengthening of the 

NAAQS, rather than a relaxation; 

however, EPA is applying the 

‘‘principles’’ of section 172(e) to prevent 

backsliding of air quality in the 

transition from regulation of ozone 

pollution using a 1-hour metric to an 

8-hour metric. Our application of the 

principles of section 172(e) in this 

context was upheld by the D.C. Circuit 

in the South Coast decision: ‘‘EPA 

retains the authority to revoke the onehour standard so long as adequate antibacksliding provisions are introduced.’’ 

South Coast, 472 F.3d at 899. Further, 

the court stated, that in light of the 

revocation, ‘‘[t]he only remaining 

requirements as to the one-hour NAAQS 

are the anti-backsliding limitations.’’ Id. 

As stated above, section 172(e) 

requires State Implementation Plans to 

contain ‘‘controls’’ that are ‘‘not less 

stringent’’ than the controls that applied 

to the area before the NAAQS revision. 

EPA’s 2004 Rule defined the term 

‘‘controls’’ in section 172(e) to exclude 

section 185. See 2004 Rule, 69 FR at 

24000. The D.C. Circuit ruled that EPA’s 

exclusion of section 185 from the list of 

‘‘controls’’ for Severe and Extreme nonattainment areas was improper and 

remanded that part of the rule back to 

EPA. See South Coast, 472 F.3d at 902– 

03. The court did not, however, address 

the specific issue of whether the 

principles of section 172(e) required 

section 185 itself or any other controls 

not less stringent, and section 172(e) 

clearly on its face allows such 

equivalent programs. Further, the court 

in NRDC v. EPA, 643 F.3d 311 (D.C. Cir. 

2011), specifically noted with respect to 

equivalent alternative programs that, 

‘‘neither the statute nor our case law 

obviously precludes [the equivalent 

program alternative.]’’ 643 F.3d at 321. 

In this rulemaking approving SCAQMD 

Rule 317, EPA is fully recognizing 

section 185 as a ‘‘control’’ that must be 

implemented through the application of 

the principles of section 172(e). As 

explained above, the D.C. Circuit stated 

that EPA must apply the principles of 

section 172(e) to non-attainment 

requirements such as section 185. Thus, 

we are following the D.C. Circuit’s 

holding that the principles of section 

172(e) apply in full to implement 185 

obligations. 

2. Applicability of Section 172(e) 

a. Comment: Earthjustice commented 

that CAA section 172(e) does not apply 

to this situation because EPA has 

adopted a more health protective ozone 

standard. According to the commenter, 

EPA acknowledges that section 172(e) 

by its terms does not authorize EPA’s 

action because the newer 8-hour ozone 

standard is not a relaxation of the prior 

1-hour ozone standard. The commenter 

asserted that EPA claims that its 

authority to permit States to avoid the 

express requirements of section 185 

derives from the ‘‘principles’’ of section 

172(e), but the commenter contended 

that there is no principle in the CAA 

that Congress intended to give EPA 

authority to rewrite the specific 

requirements of section 185 when EPA 

finds that the health impacts related to 

ozone exposure are even more 

dangerous than Congress believed when 

it adopted the detailed requirements in 

the 1990 Clean Air Act Amendments. 

Other commenters stated that section 

172(e) provides authority for EPA to 

approve Rule 317 and alternative fee 

programs generally. 

Response: The South Coast court 

agreed with the application of the 

principles of section 172(e) despite the 

fact that section 172(e) expressly refers 

to a ‘‘relaxation’’ of a NAAQS, whereas 

the transition from 1-hour to 8-hour is 

generally understood as increasing the 

stringency of the NAAQS. As the court 

stated, ‘‘Congress contemplated * * * 

the possibility that scientific advances 

would require amending the NAAQS. 

Section 109(d)(1) establishes as much 

and section 172(e) regulates what EPA 

must do with revoked restrictions * * * 

The only remaining requirements as to 

the one-hour NAAQS are the antibacksliding limitations.’’ South Coast, 

472 F.3d at 899 (citation omitted). 

3. Discretion in Title I, Part D, Subparts 

1 and 2 

a. Comment: Earthjustice commented 

that the Supreme Court in Whitman v. 

Am. Trucking Assns, interpreted the 

CAA as showing Congressional intent to 

limit EPA’s discretion. The commenter 

claimed that the D.C. Circuit in 

SCAQMD also held that EPA’s statutory 

interpretation maximizing agency 

discretion was contrary to the clear 

intent of Congress in enacting the 1990 

amendments. The commenter stated 

that EPA’s purported approach [with 

respect to 185] would allow EPA to 

immediately void the specific statutory 

scheme Congress intended to govern for 

decades. The commenter argued that 

where EPA has found that elevated 

1-hour ozone exposures remain a 

serious concern, EPA cannot reasonably 

claim that Congress meant to give EPA 

the discretion to revise the carefully 

prescribed statutory requirements like 

section 185 that Congress intended to 

address such exposures. The commenter 

stated that EPA proposed to accept a 

program other than that provided by 

Congress in section 185. The commenter 

concluded that given that Congress 

provided a specific program, EPA has 

no discretion to approve an alternative. 

Other commenters stated that the Act 

provides EPA with discretion to 

approve Rule 317 and alternative fee 

programs generally. 

Response: While one holding in 

Whitman v. Am. Trucking Assns, 531 

U.S. 457 (2001) stands for the general 

proposition that Congress intended to 

set forth prescriptive requirements for 

EPA and states, particularly the 

requirements contained in Subpart 2, 

the D.C. Circuit has noted that the Court 

did not consider the issue of how to 

implement Subpart 2 for the 1-hour 

standard after revocation. See, South 

Coast, 472 F.3d at 893 (‘‘when the 

Supreme Court assessed the 1997 Rule, 

it thought that the one- and eight-hour 

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74376 Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 

4 ‘‘Guidance on Developing Fee Programs 

Required by Clean Air Act Section 185 for the 

1-hour Ozone NAAQS, Stephen D. Page, Director, 

Office of Air Quality Planning and Standards, to 

Regional Air Division Directors, Regions I–X, Jan. 

5, 2010,’’ vacated, NRDC v. EPA, 643 F.3d 311 (D.C. 

Cir. 2011). 

5EPA previously articulated the dual nature of 

section 185 in its now-vacated section 185 

guidance. See id. at 4. Although the section 185 

guidance policy has been vacated, we agree with, 

and here in this notice and comment rulemaking 

adopt, its reasoning on this point. 

standards were to coexist.’’). Thus, the 

Court did not consider how section 

172(e)’s anti-backsliding requirements 

might be applied in the current context 

of a revoked NAAQS. 

We also believe that the commenter’s 

reliance on South Coast to argue that it 

precludes EPA’s use of section 172(e) 

principles to implement section 185 is 

similarly misplaced. The holding cited 

by the commenter relates to an entirely 

different issue than EPA’s discretion 

and authority under section 172(e)— 

whether EPA had properly allowed 

certain eight-hour ozone non-attainment 

areas to comply with Subpart 1 in lieu 

of Subpart 2. In fact, the South Coast 

court not only upheld EPA’s authority 

under section 109(d) to revise the 

NAAQS by revoking the 1-hour 

standard, it recognized its discretion 

and authority to then implement section 

172(e): 

Although Subpart 2 of the Act and its table 

1 rely upon the then-existing NAAQS of 0.12 

ppm, measured over a one-hour period, 

elsewhere the Act contemplates that EPA 

could change the NAAQS based upon its 

periodic review of ‘the latest scientific 

knowledge useful in indicating the kind and 

extent of all identifiable effects on public 

health’ that the pollutant may cause. CAA 

sections 108(a), 109(d), 42 U.S.C. 7408(a), 

7409(d). The Act provides that EPA may 

relax a NAAQS but in so doing, EPA must 

‘provide for controls which are not less 

stringent than the controls applicable to areas 

designated nonattainment before such 

relaxation.’ CAA 172(e), 42 U.S.C. 7502(e). 

South Coast, 472 F.3d at 888. 

Further, as noted above, EPA believes 

that South Coast supports our reliance 

on section 172(e) principles to approve 

Rule 317 as fulfilling section 185 

requirements for the revoked 1-hour 

standard. As the court stated, ‘‘EPA was 

not, as the Environmental petitioners 

contend, arbitrary and capricious in 

withdrawing the one-hour requirements, 

having found in 1997 that the eight-hour 

standard was ‘generally even more 

effective in limiting 1-hour exposures of 

concern than is the current 1-hour 

standard.’ * * * The only remaining 

requirements as to the one-hour NAAQS 

are the anti-backsliding limitations.’’ Id. 

(citation omitted). 

C. EPA’s Proposed Action and 

Consistency With Section 172(e) 

1. Statutory Analysis for Alternatives to 

a Section 185 Program 

a. Comment: Earthjustice commented 

that EPA’s different and inconsistent 

tests for determining ‘‘not less 

stringent’’ undermine the 

reasonableness of these options as valid 

interpretations of the Act. The 

commenter stated that EPA’s 

interpretation means that a program that 

achieves the same emission reductions 

as section 185 and a program that 

achieves fewer emission reductions than 

section 185 can both be considered ‘‘not 

less stringent.’’ However, stringency is 

either a measure of the emission 

reductions achieved or it is not. The 

commenter concluded that if it is, then 

a program that does not achieve 

equivalent reductions cannot pass the 

test. The commenter contended that 

EPA did not actually interpret the term 

‘‘stringent’’ and that it offers no basis for 

claiming that Congress intended this 

term to have different meanings and 

allow for different metrics for guarding 

against backsliding. Other commenters 

stated that EPA’s criteria for 

equivalency were reasonable and 

supported EPA’s proposal with respect 

to the concept of alternative section 185 

fee programs. 

Response: We believe that the three 

alternatives we identified in our 

proposed action (i.e., same emission 

reductions; same amount of revenue to 

be used to pay for emission reductions 

to further improve ozone air quality; a 

combination of the two) are reasonable 

and consistent with Congress’ intent. 

First, we note that Congress did not 

define the phrase ‘‘not less stringent’’ or 

the term ‘‘stringent’’ in the Act. EPA, 

therefore, may use its discretion and 

expertise to reasonably interpret section 

172(e). Furthermore, we note that the 

D.C. Circuit, in NRDC v. EPA, 643 F.3d 

311 (D.C. Cir. 2011), while finding that 

EPA’s guidance document providing our 

initial presentation of various 

alternatives to section 185 4 should have 

been promulgated through notice-andcomment rulemaking, declined to rule 

on whether the types of alternative 

programs we considered in connection 

with our proposed action on Rule 317 

were illegal, stating, ‘‘neither the statute 

nor our case law obviously precludes 

[the program alternative].’’ Id. at 321. 

We do not agree that evaluating a 

variety of metrics (e.g., fees, emissions 

reductions, or both) to determine 

whether a state’s alternative program 

meets section 172(e)’s ‘‘not less 

stringent’’ criterion undermines our 

interpretation. On its face, section 185 

results in assessing and collecting 

emissions fees, but the fact that section 

185 is also part of the ozone 

nonattainment requirements of Part D, 

Subpart 2, suggests that Congress also 

anticipated that section 185 might lead 

to emissions reductions that would 

improve air quality, and ultimately 

facilitate attainment of the 1-hour ozone 

standard.5 Thus, EPA believes it is 

reasonable to assess stringency of 

alternative programs on the basis of 

either the monetary or emissionsreduction aspects of section 185 or on 

the combination of both. 

Lastly, as discussed in our proposal, 

SCAQMD has demonstrated that Rule 

317 will result in a federally enforceable 

requirement to obtain funding for and 

make expenditures on air pollution 

reduction projects in amounts at least 

equal to the amounts that would 

otherwise be collected under section 

185. In addition, it is reasonable to 

expect that in one respect SCAQMD’s 

alternative program will achieve more 

emission reductions than direct 

implementation of section 185 because 

the funding that results from the 

District’s alternative program must be 

used on programs intended to reduce 

emissions, while section 185 has no 

such direct requirement. The comment 

suggests that EPA’s logic, if 

unreasonably extended, might 

theoretically lead it to approve a 

program that achieves fewer emission 

reductions than a program directly 

implemented under section 185. We are 

not doing that in this action, deciding 

whether to approve Rule 317 as it has 

been submitted to us. We also have no 

intention of doing so in the future. 

2. ‘‘Not Less Stringent’’ and Target of 

Fees 

a. Comment: Earthjustice commented 

that to be ‘‘not less stringent,’’ a control 

must be no less rigorous, strict, or severe 

and claimed that none of EPA’s 

alternatives meets this definition. The 

commenter stated that EPA’s 

description of the alternatives does not 

focus on ‘‘stringency’’ but on 

‘‘equivalency.’’ The commenter 

contended that Section 172(e) does not 

allow for ‘‘equivalent’’ controls; it 

requires controls to be ‘‘not less 

stringent.’’ 

Response: EPA interprets the criterion 

set forth in section 172(e), ‘‘not less 

stringent,’’ to mean that, in the context 

of the revoked 1-hour ozone NAAQS, an 

alternative control that is as stringent as 

a previously applicable control should 

be considered approvable. An 

alternative control that is equivalent to 

the applicable control still meets section 

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Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 74377 

6California Air Resources Board’s California 

Emissions Projection Analysis Model (CEPAM): 

2009 Almanac found at: http://www.arb.ca.gov/ 

app/emsinv/fcemssumcat2009.php. 

7 Ibid. 

8SCAQMD Rule 317 Final Staff Report; page 317– 

1. 

172(e)’s criterion, ‘‘not less stringent’’ 

because it is as stringent, and therefore 

not less stringent, than the applicable 

control. 

b. Comment: Earthjustice commented 

that Congress made deliberate choices 

as to which sources would be subject to 

penalties, the magnitude of those 

penalties and the duration of those 

penalties. The commenter stated that 

the purpose of Rule 317 is to avoid the 

stringent requirements of section 185 

and dilute the severity of the 185 

penalty on major industrial sources. The 

commenter averred that it is not 

possible to claim that Rule 317 is ‘‘not 

less stringent’’ than section 185 when 

that is the very purpose of the rule. 

Other commenters stated that Rule 317’s 

focus on mobile sources rather than 

stationary sources is appropriate and 

more likely to lead to emission 

reductions and attainment with the onehour ozone standard. 

Response: We agree that section 185 

requires major stationary sources to pay 

fees whereas Rule 317 does not; 

however, today’s action is to approve 

SCAQMD Rule 317 in the context of the 

revoked 1-hour ozone NAAQS, 

consistent with the principles of section 

172(e). By their very nature, the 

environmental outcomes that will be 

achieved by incentive-based programs 

(such as the fee programs envisioned by 

section 185) are difficult to predict with 

any precision, making the relative 

stringency of incentive-based programs 

difficult to evaluate. Thus, EPA’s review 

focuses on whether the District 

provided a reasonable comparison of 

relative stringency. In particular, it is 

difficult to assess the relative stringency 

of section 185 and Rule 317 based on a 

comparison of where or how the funds 

associated with the 185 and the 

alternative program come from. We 

acknowledge as reasonable the District’s 

decision, in developing an alternative 

fee program, to focus on mobile sources 

rather than stationary sources because 

emissions from mobile sources 

constitute approximately 90 percent of 

NOX emissions in SCAQMD.6

Moreover, it is clear that Rule 317, 

through the creation of a fee 

equivalency account that will be used to 

offset fees required under section 185, 

and a requirement to annually 

demonstrate and report equivalency, 

will result in a federally enforceable 

requirement to obtain funding for and 

make expenditures on air pollution 

reduction projects. Rule 317 contains 

provisions that ensure that the fee 

equivalency account will reflect 

expenditures that are at least equal to 

the amount that would otherwise be 

collected under section 185 and that 

ensure that the funds will be used to 

reduce ozone pollution. By one 

measure, Rule 317, which requires the 

expenditure of funds on projects that 

reduce ozone nonattainment, will be 

more effective than a section 185 fee 

program, which is not required to 

contain an enforceable requirement to 

spend funds to reduce air pollution, in 

producing actual air quality benefits. 

3. ‘‘Not Less Stringent’’ and Equivalent 

Funding 

a. Comment: Earthjustice commented 

that a program that raises an equivalent 

amount of money is not supported by 

section 185’s structure and legislative 

history. The commenter stated that 

section 185 was not intended as a 

revenue generating provision. The 

commenter concluded that nothing in 

the legislative history indicates that 

Congress’ intent was to collect a certain 

amount of money. 

Response: Section 185 explicitly 

mandates a specific fee, requires that the 

fee be indexed for inflation, establishes 

a baseline for measuring such fees, and 

authorizes an alternative baseline for 

use in calculating that fee. For those 

reasons, and the additional reasons 

discussed above, we believe that section 

185 has both monetary and emissionsrelated aspects and that it is reasonable 

for EPA to assess the stringency of 

alternative programs on the basis of 

either aspect of section 185 or on the 

combination of both. 

Rule 317 will result in a federally 

enforceable requirement to obtain 

funding and to spend those funds on 

ozone pollution reduction projects. In 

addition, we note that the District’s 

focus on alternative funding from 

programs that relate to mobile sources is 

reasonable in light of the fact that 

approximately 90 percent of NOX

emissions in the District are attributable 

to mobile sources.7 Thus, only 10 

percent of NOX emissions are caused by 

stationary sources, most of which are 

already subject to either best available 

retrofit control technology or best 

available control technology or lowest 

achievable emission rate requirements.8

Thus, Rule 317 by ensuring the 

expenditure of these funds on the 

primary causes of ozone nonattainment 

is likely to be more effective in 

producing real reductions in ozone 

pollution than a 185 fee program. 

4. ‘‘Not Less Stringent’’ and Equivalent 

Emission Reductions 

a. Comment: Earthjustice commented 

that the measure of equivalency should 

be section 185’s emission reduction 

incentive. The commenter contended 

that penalties end if an area is 

redesignated to attainment or a source 

reduces its emissions by 20 percent. The 

commenter pointed out that the D.C. 

Circuit noted, ‘‘[T]hese penalties are 

designed to constrain ozone pollution.’’ 

The commenter stated EPA should 

assess how Rule 317 will create 

incentives for major stationary sources 

to reduce emissions. Many commenters 

stated that most stationary sources have 

already installed air pollution controls 

such as best available control 

technology or best available retrofit 

technology. As a result, installation of 

additional controls would not be 

feasible. According to these 

commenters, to avoid fees, sources 

would curtail production, which would 

be harmful to the economy. In addition, 

curtailing production is not a realistic 

option for sources such as hospitals and 

providers of essential services. 

Response: Earthjustice correctly states 

that section 185 requires that fees must 

be paid until an area is redesignated to 

attainment for ozone and that section 

185 does not require fees from sources 

that reduce emissions by 20 percent 

(compared to emissions during the 

baseline period). Thus, one consequence 

of a section 185 fee program may be a 

reduction in VOC and/or NOX

emissions. However, EPA does not agree 

with Earthjustice’s comment to the 

extent it is saying that emission 

reductions are inevitable or must be the 

sole basis for determining whether an 

alternative program is ‘‘not less 

stringent’’ than a section 185 program. 

As we stated above, we believe the 

prospective stringency of an alternative 

program may be evaluated by comparing 

either the assessed fees (which are in 

turn used here to pay for emissions 

reductions) or emission reductions 

projected to be achieved from the 

proposed alternative program to the fees 

or emissions reductions directly 

attributable to application of section 185 

(or by comparing a combination of fees 

and reductions). 

In addition, Earthjustice’s comment 

does not acknowledge that section 185 

allows major sources to pay fees and not 

reduce emissions; consequently, the 

actual impact of the ‘‘incentive’’ 

underlying section 185 is uncertain, and 

must be acknowledged in any 

comparison to the effect of Rule 317. 

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74378 Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 

9 Ibid. pp. 5–6. 

Nevertheless, we note that Rule 317 

creates an incentive for the District to 

ensure that it obtains funding in an 

amount at least equal to the amount of 

fees that would be collected under 

section 185 and to use those funds to 

reduce ozone pollution, in order to 

annually demonstrate equivalency of 

the program. 

In response to the comments in 

support of our approval of Rule 317, we 

acknowledge that Rule 317 avoids 

possibly substantial burdens on major 

stationary sources within the District, 

some of which may be small businesses 

because of the 10 tons/year threshold for 

major stationary sources in the South 

Coast Air Basin. 

b. Comment: Section 185 is a marketbased policy device to internalize the 

external costs of pollution and thereby 

incentivize emission reductions at major 

stationary sources. The commenter 

argued that EPA must assess how the 

incentives in Rule 317 compare to the 

incentives in section 185. The 

commenter stated that this analysis 

would look at how a pollution tax might 

drive sources to improve controls. 

Response: We do not agree that the 

comparison of ‘‘incentives’’ or a 

pollution tax proposed by the 

commenter is the only approach to 

evaluating the relative stringency of an 

alternative program, as explained above. 

In addition, we note SCAQMD’s 

observation that many of the sources 

subject to the section 185 fee are not 

necessarily able to internalize the costs 

of the fees. These sources, which the 

District identified as refineries, utilities 

and sewage treatment plants, ‘‘are likely 

to have an inelastic response to fees 

* * * [and] are more likely to pass 

through any increased fee dollars to the 

consumer rather than curtail 

emissions.’’ 9 Moreover, we anticipate 

that Rule 317 will reduce ozone 

pollution in the District because it 

creates a federally enforceable 

requirement to demonstrate on an 

annual basis that it has obtained 

funding and made expenditures on 

projects related to improving ozone air 

quality. 

c. Comment: Earthjustice commented 

that Rule 317 severs the link between 

the fee and pollution levels by, for 

example, pre-funding the District’s fee 

equivalency account with government 

subsidies. The commenter stated that 

using taxpayer dollars creates no 

incentive to reduce pollution. Other 

commenters stated that Rule 317 

appropriately focuses on programs that 

will reduce emissions from mobile 

sources because they are primarily 

responsible for ozone pollution in the 

District. 

Response: As stated above, it is 

difficult to quantitatively compare any 

incentives created by section 185 or 

Rule 317. Section 185 explicitly requires 

fees from major stationary sources in 

Severe and Extreme ozone 

nonattainment areas as a penalty for 

failure to reach attainment by their 

attainment deadlines, but does not 

directly mandate emissions reductions. 

Rule 317 replaces the uncertain effect of 

the fee incentive with a direct obligation 

for the District to annually invest feeequivalent funding in projects designed 

to improve ozone levels. In the event the 

District fails to make this investment, 

Rule 317 includes a backstop provision 

requiring the District to adopt a rule to 

address any shortfall. In this context, we 

have determined that Rule 317 provides 

a ‘‘not less stringent’’ program structure. 

5. ‘‘Not Less Stringent’’ and Process for 

Revenues To Be Spent on Air Quality 

Programs’’ 

a. Comment: Earthjustice commented 

that EPA does not demonstrate that Rule 

317 establishes a process for revenues to 

be used to improve ozone air quality. 

The commenter concluded that Rule 

317 on its face includes no such 

process, and provides no detail or 

mechanism for assuring that the fees 

will result in actual emission reductions 

that will improve ozone air quality. The 

commenter stated that EPA has 

previously refused to give emission 

reduction credit for vague incentive 

programs and it is arbitrary for EPA to 

assume that Rule 317 will improve air 

quality without providing a basis for 

reaching a different conclusion. 

Response: EPA disagrees with the 

comment based on our determination 

that Rule 317 contains adequate 

provisions to ensure that the alternative 

funding will be used on programs that 

will improve ozone air quality. Rule 

317(c)(3) and (5) require the District to 

make an annual demonstration of 

equivalency and file an annual report 

with CARB and EPA that includes, 

among other things, a list of all facilities 

subject to section 185 and their fee 

obligations, and a listing of all programs 

and associated expenditures that were 

credited into the section 172(e) 

equivalency account. The listing of 

expenditures that were credited to the 

equivalency account must show the 

programs and program descriptions, a 

description of the funding, a 

certification of eligibility for each 

program and the expenditures 

themselves. In addition, Rule 317 

contains provisions to ensure the 

integrity of the demonstration process. 

For example, Rule 317(c)(1)(A) specifies 

various criteria for the types of programs 

that are eligible for credit, including 

requirements that the projects be 

‘‘surplus to the SIP,’’ designed to reduce 

VOC or NOX emissions, as well as a 

requirement that ‘‘only monies actually 

expended from qualified programs 

during a calendar year shall be 

credited.’’ 

In addition, the District’s Staff Report 

for Rule 317, at Attachment A, contains 

a listing of programs that the District has 

already identified as appropriate for use 

as credits in the section 172(e) 

equivalency account. These programs 

include school bus retrofits and 

replacements, liquefied natural gas 

truck replacements, and funding under 

AB2766, a state law that authorizes the 

collection of an additional $4 per motor 

vehicle registration to be used for 

programs to reduce motor vehicle 

pollution. 

Our basis for approving Rule 317 is 

that it is not less stringent than the 

requirements of section 185 because it 

will result in funds equal to the fees that 

would be collected under section 185. 

Additionally, we believe that 

SCAQMD’s alternative program will 

result in improvements in air quality 

since the funds will be used on projects 

that will reduce NOX and VOC 

emissions in the District. This finding is 

consistent with our actions referenced 

in the comment regarding other 

incentive programs. In those cases, we 

acknowledged that incentive programs 

would result in some emission 

reductions but noted that the air district 

had not adequately demonstrated a 

specific amount of reductions. 

Similarly, SCAQMD has not 

demonstrated a specific amount of 

emission reductions from the use of 

funds identified in Rule 317, but there 

is no reason to expect that it would be 

less than the reductions that might 

result from direct implementation of 

section 185, which does not require 

sources to reduce emissions and does 

not require that collected fees be 

directed towards emission reductions. 

Section 185 creates an incentive to 

reduce emissions but in some cases it 

may not work and may be punitive. In 

addition, section 185 does not require 

that the state use the funds collected for 

any particular purpose, making it 

unlikely that the funds will be used 

directly to reduce ozone formation. Rule 

317 will result in a federally enforceable 

requirement to obtain funding for and 

make expenditures on air pollution 

reduction projects in amounts at least 

equal to the amounts that would 

otherwise be collected under section 

185. In addition, it is reasonable to 

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Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 74379 

10See, ‘‘Improving Air Quality with Economic 

Incentive Programs,’’ January 2001 (EPA–452/R– 

01–001), available at: http://www.epa.gov/ttn/ 

oarpg/t1/memoranda/eipfin.pdf. 

11As the court held, ‘‘Specifically, EPA has an 

affirmative duty to ensure that California 

demonstrate attainment with the NAAQS, see 42 

U.S.C. 7410(a)(2)(A), 7502(c)(6), either by 

promulgating a FIP or evaluating the necessity of a 

SIP call.’’ Assoc’n of Irritated Residents v. EPA, 686 

F.3d 668, 677 (9th Cir. 2012). 

12Offsets are required by section 173(c) for the 

permitting of new and modified major stationary 

sources in nonattainment areas. 

13We note that Congress did include specific 

provisions to address a state’s failure to reach 

attainment by the applicable deadline, such as 

sections 172(c) (requiring contingency measures) 

and 179(d) (requiring plan revisions that include 

‘‘additional measures as the Administrator may 

reasonably prescribe, including all measures that 

that can be feasibly implemented in the area in light 

of technological achievability, costs, and any nonair 

quality and other air quality-related health and 

environmental impacts.’’) 

14EPA has explained that the failure to attain the 

revoked one-hour ozone standard does not trigger 

a requirement for a new attainment demonstration 

for the one-hour ozone standard under section 

179(c) and (d). See e.g., note 15 infra, and 76 FR 

82138–82139. 

15On December 30, 2011, EPA published in the 

Federal Register its ‘‘Determinations of Failure to 

Attain the One-Hour Standard,’’ for both the Los 

Angeles—South Coast Air Basin and the Southeast 

Desert Modified Air Quality Maintenance Area. 76 

FR 82133. In this action, which also pertains to the 

San Joaquin Valley Area, we explained that our 

determination of failure to attain the revoked onehour ozone standard does not trigger a requirement 

for a new attainment demonstration for the onehour ozone standard under section 179(c) and (d). 

Rather, we explained that we made these 

determinations under our authority in sections 

301(a) and 181(b)(2) to ensure implementation of 

measures we had previously identified as one-hour 

ozone anti-backsliding requirements, including 

contingency measures and section 185 fees. See e.g., 

76 FR 82138–82139. 

16EPA’s proposed SIP call explains in greater 

detail the legal basis for requiring the District to 

submit a new 1-hour ozone attainment plan. 

expect that in one respect SCAQMD’s 

alternative program will achieve more 

emission reductions than direct 

implementation of section 185 because 

the funding that results from the 

District’s alternative program must be 

used on programs intended to reduce 

emissions, while section 185 has no 

such direct requirement. 

6. Surplus Reductions 

a. Comment: Earthjustice commented 

that EPA’s analysis that Rule 317 will 

improve air quality because the fees are 

‘‘surplus’’ does not make sense. The 

commenter claimed that the District’s 1- 

hour ozone SIP failed to result in 

attainment of the standard and the 9th 

Circuit Court of Appeals has held that 

EPA should have disapproved the plan. 

Further, the commenter claimed the 

District does not have a meaningful plan 

for attaining the 1-hour ozone standard 

and all existing sources of funding have 

failed to provide ‘‘surplus’’ reductions 

that are not required for attainment. The 

commenter stated that the District has 

collected those fees and yet sources 

continue to emit at levels that have not 

provided for attainment. The 

commenter concluded that ‘‘Equivalent 

fees’’ credited to the District’s accounts 

do not improve air quality. One 

commenter stated that the programs that 

are surplus to the SIP are an appropriate 

part of an alternative fee program. 

Response: As explained in our 

proposal, Rule 317 specifies that 

expenditures used to offset section 185 

fee obligations via the Section 172(e) 

Fee Equivalency Account must be 

‘‘surplus’’ to the 1-hour ozone SIP and 

must be used on programs intended to 

reduce ozone formation. We explained 

that ‘‘surplus’’ reductions are those that 

are not relied upon nor assumed by the 

SIP to provide for reasonable further 

progress (RFP) or attainment.10 Our 

proposal also explained that we had 

reviewed the various funding sources 

identified by the District as ‘‘surplus’’ 

and confirmed that they were in fact 

surplus to the approved 1-hour ozone 

SIPs for the South Coast Air Basin (the 

1997/1999 Air Quality Management 

Plan) and the Southeast Desert Air 

Quality Management Area (1994 Air 

Quality Management Plan). 

We do not agree with the commenter’s 

characterization of the court’s holding 

in Assoc’n of Irritated Residents v. EPA. 

In particular, we disagree with the 

commenter’s statement that, ‘‘the Ninth 

Circuit Court of Appeals has held that 

EPA should have disapproved the plan’s 

flawed attainment demonstration.’’ In 

fact, the court’s ruling concerned EPA’s 

disapproval in 2009 of an attainment 

demonstration adopted by the District in 

2003 as an update to the approved 1997/ 

1999 SIP for the South Coast Air Basin. 

Because the District’s 2003 attainment 

demonstration indicated that the 1997/ 

1999 SIP was inadequate, the court held 

that EPA should take additional action 

to evaluate the adequacy of the 1997/ 

1999 SIP. The court also stated that 

EPA’s authority to evaluate the 

adequacy of the plan could arise either 

under CAA provisions for a Federal 

Implementation Plan or for a SIP call.11

The court, however, did not state that 

EPA should have disapproved the 1997/ 

1999 SIP or any part of it, nor did the 

court’s ruling invalidate or affect the 

legal status of the 1997/1999 SIP. 

Therefore, the 1997/1999 SIP remains in 

place as the approved 1-hour SIP for the 

South Coast Air Basin. 

We also disagree with the 

commenter’s conclusion that the 1997/ 

1999 SIP cannot be a basis to determine 

‘‘surplus’’ reductions because the 1997/ 

1999 SIP failed to result in attainment 

of the 1-hour standard. By extension, 

this argument would mean that a 

nonattainment area that fails to reach 

attainment by the applicable deadline 

would have no emissions that could 

ever be considered ‘‘surplus.’’ The loss 

of ‘‘surplus’’ emissions would result in 

potentially drastic consequences, such 

as the inability to issue or obtain offset 

credits and thus a virtual cessation of 

permitting activity for large industrial 

sources in nonattainment areas with 

missed attainment deadlines.12 If 

Congress had intended such a 

significant consequence for failure to 

reach attainment by an applicable 

deadline, Congress could have explicitly 

provided for such a result.13 14 Because 

Congress did not provide for the loss of 

all surplus emissions upon a state’s 

failure to attain a standard by an 

applicable attainment deadline, we 

believe that the 1997/1999 SIP, as the 

currently approved SIP, is a valid basis 

for determinations of ‘‘surplus’’ for 

purposes of the 1-hour ozone standard 

in the South Coast Air Basin. 

Nevertheless, EPA recognizes that the 

1997/1999 SIP did not result in 

attainment of the 1-hour ozone standard 

in the South Coast Air Basin.15

Following the holding in Assoc’n of 

Irritated Residents v. EPA that EPA 

must review the adequacy of the 1997/ 

1999 SIP, EPA initiated the SIP call 

process with a proposed finding of 

substantial inadequacy, as published at 

77 FR 58072, September 19, 2012.16 If 

finalized as proposed, the SIP call will 

require the District to submit, within 12 

months, a plan providing for attainment 

of the 1-hour ozone standard (‘‘1-hour 

ozone attainment plan’’). Upon approval 

by EPA, the new 1-hour ozone 

attainment plan will become the new 

basis for determining what reductions 

are ‘‘surplus.’’ 

EPA believes that Rule 317 is drafted 

with sufficient flexibility that the 

District will be able to continue to 

implement the rule by making 

determinations of surplus based on the 

new 1-hour ozone attainment plan. 

Specifically, Rule 317(c)(1)(i) specifies 

that the Section 172(e) Fee Equivalency 

Account can offset section 185 fee 

obligations with expenditures from 

qualified programs that are ‘‘surplus to 

the State Implementation Program for 

the federal 1-hour ozone standard. 

* * *’’ Thus, Rule 317’s requirements 

for crediting expenditures from 

qualified programs in the Section 172(e) 

Fee Equivalency Account, as well as the 

requirements for the annual 

demonstration and reporting of 

mstockstill on DSK4VPTVN1PROD with 

74380 Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 

17See EPA’s TSD dated January 4, 2012, which 

clarifies that the Riverside County portion of Salton 

Sea is the same geographic area as the Coachella 

Valley portion of the Southeast Desert Modified Air 

Quality Maintenance Area. 

equivalency, would accommodate a 

future 1-hour ozone attainment plan and 

the District will be able to continue to 

implement the equivalency program. 

D. Miscellaneous Comments 

a. Comment: One commenter 

recommended that EPA allow sources to 

apply the calculated section 185 fees to 

a number of projects at the major 

stationary source or at other sources in 

either the nonattainment area or upwind 

areas. The commenter suggested ten 

examples of eligible projects including 

installing emissions control technology, 

enhancing existing pollution control 

equipment, energy efficiency and 

renewable energy measures, lower 

emitting fuels, retirement or repowering 

of a higher emitting facility, mobile 

source retrofit program, clean vehicle 

fleets, and increasing mass transit 

ridership. 

Response: EPA is acting on 

SCAQMD’s Rule 317, which does not 

include these program features. If these 

program features are included in a 

specific SIP submittal for another 

alternative program, EPA would 

evaluate them at that time. 

b. Comment: Numerous commenters 

expressed concerns that if fees were 

assessed in a direct application of 

section 185, the fees would have a 

devastating effect on small businesses, 

jobs, and the economy in Southern 

California. Consequently, they 

supported SCAQMD’s approach in Rule 

317 and urged EPA to approve the rule. 

Response: We acknowledge the 

comments and the public’s interest in 

this issue. No response needed to these 

comments that support our proposed 

action. 

III. EPA Action 

EPA is finalizing approval of Rule 

317, ‘‘Clean Air Act Non-Attainment 

Fee,’’ as a revision to SCAQMD’s 

portion of the California SIP, and as a 

‘‘not less stringent’’ alternative to the 

program required by section 185 of the 

Act for anti-backsliding purposes with 

respect to the revoked 1-hour ozone 

standard. 

The comments submitted do not 

fundamentally change our assessment 

that Rule 317 complies with the relevant 

CAA requirements and associated EPA 

rules. Therefore, as authorized in 

section 110(k)(3) of the Act, EPA is fully 

approving Rule 317 into the California 

SIP as an equivalent alternative 

program, consistent with the principles 

of section 172(e) of the Act. Final 

approval of Rule 317 satisfies 

California’s obligation under sections 

182(d)(3), (e) and (f) to develop and 

submit a SIP revision for the South 

Coast Air Basin and the Riverside 

County portion of the Salton Sea Air 

Basin 17 1-hour ozone nonattainment 

areas to meet the requirements for a 

program not less stringent than that of 

section 185. Final approval of Rule 317 

also permanently terminates all 

sanctions and Federal Implementation 

Plan (FIP) implications associated with 

section 185 for the 1-hour ozone 

NAAQS and previous action (75 FR 232, 

January 5, 2010) regarding the South 

Coast Air Basin and the Riverside 

County portion of the Salton Sea Air 

Basin. 

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: 

• 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 

disproportionate human health or 

environmental effects with practical, 

appropriate, and legally permissible 

methods under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, this 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 February 12, 

2013. 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 section 

307(b)(2)). 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Incorporation by 

reference, Intergovernmental relations, 

Nitrogen dioxide, Ozone, Reporting and 

recordkeeping requirements, Volatile 

organic compounds. 

mstockstill on DSK4VPTVN1PROD with 

Federal Register / Vol. 77, No. 241 / Friday, December 14, 2012 / Rules and Regulations 74381 

Dated: September 20, 2012. 

Jared Blumenfeld, 

Regional Administrator, Region IX. 

Therefore, 40 CFR chapter I 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 and reserving paragraph (c)(417) 

and adding paragraph (c)(418) to read as 

follows: 

§ 52.220 Identification of plan. 

* * * * * 

(c) * * * 

(417) [Reserved] 

(418) New and amended regulation 

for the following APCD was submitted 

on April 22, 2011, by the Governor’s 

Designee. 

(i) Incorporation by Reference 

(A) South Coast Air Quality 

Management District 

(1) Rule 317, ‘‘Clean Air Act NonAttainment Fees,’’ amended on 

February 4, 2011. 

[FR Doc. 2012–29385 Filed 12–13–12; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 82 

[EPA–HQ–OAR–2011–0111; FRL–9757–5] 

RIN 2060–AQ84 

Protection of Stratospheric Ozone: 

Listing of Substitutes for Ozone 

Depleting Substances—Fire 

Suppression and Explosion Protection 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Withdrawal in part of direct 

final rule. 

SUMMARY: On September 19, 2012, the 

Federal Register published a direct final 

rule and a companion proposed rule 

issuing listings for three fire 

suppressants under EPA’s Significant 

New Alternatives Policy program. 

Because EPA received adverse comment 

concerning C7 Fluoroketone, we are 

withdrawing that part of the direct final 

rule that listed C7 Fluoroketone 

acceptable subject to narrowed use 

limits as a substitute for halon 1211. 

Other listings in that direct final rule 

will take effect on December 18, 2012. 

DATES: Effective December 14, 2012, 

EPA withdraws the entire entry for 

‘‘Streaming: C7 Fluoroketone as a 

substitute for Halon 1211’’ in Appendix 

S to Subpart G of Part 82 in the direct 

final rule published at 77 FR 58035, 

September 19, 2012. 

FOR FURTHER INFORMATION CONTACT: 

Bella Maranion, Stratospheric 

Protection Division, Office of 

Atmospheric Programs; Environmental 

Protection Agency, Mail Code 6205J, 

1200 Pennsylvania Avenue NW., 

Washington DC 20460; telephone 

number (202) 343–9749, fax number, 

(202) 343–2338; email address at 

maranion.bella@epa.gov. The published 

versions of notices and rulemakings 

under the SNAP program are available 

on EPA’s Stratospheric Ozone Web site 

at http://www.epa.gov/ozone/snap/regs. 

SUPPLEMENTARY INFORMATION: On 

September 19, 2012, the Federal 

Register published a direct final rule 

and a companion proposed rule issuing 

listings for three fire suppressants under 

EPA’s Significant New Alternatives 

Policy program (77 FR 58035). Because 

EPA received adverse comment 

concerning C7 Fluoroketone, we are 

withdrawing that part of the direct final 

rule that listed C7 Fluoroketone. 

The listing would have found C7 

Fluoroketone acceptable subject to 

narrowed use limits, as a substitute for 

halon 1211 for use as a streaming agent 

in portable fire extinguishers in 

nonresidential applications. We stated 

in that direct final rule that if we 

received adverse comment by October 

19, 2012, that we would publish a 

timely withdrawal in the Federal 

Register. We subsequently received one 

adverse comment on that part of the 

direct final rule, but no comments on 

the other listings in the direct final rule. 

The other listings in that direct final 

rule, finding Powdered Aerosol F and 

Powdered Aerosol G acceptable subject 

to use conditions as substitutes for 

halon 1301 for use as a total flooding 

agent in normally unoccupied areas, 

will take effect on December 18, 2012. 

EPA intends to address the adverse 

comment concerning C7 Fluoroketone 

in a subsequent final action, which will 

be based on the parallel proposed rule 

published on September 19, 2012 (77 FR 

58081). As stated in the direct final rule 

and the parallel proposed rule, we will 

not institute a second comment period 

on this action. 

Dated: December 5, 2012. 

Gina McCarthy, 

Assistant Administrator, Office of Air and 

Radiation. 

Accordingly, the entire entry for 

‘‘Streaming: C7 Fluoroketone as a 

substitute for Halon 1211’’ in Appendix 

S to Subpart G of Part 82 in the direct 

final rule published on September 19, 

2012 (77 FR 58035) is withdrawn as of 

December 14, 2012. 

[FR Doc. 2012–29984 Filed 12–13–12; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF HEALTH AND 

HUMAN SERVICES 

Centers for Medicare & Medicaid 

Services 

42 CFR Parts 438, 441, and 447 

[CMS–2370–CN] 

RIN 0938–AQ63 

Medicaid Program; Payments for 

Services Furnished by Certain Primary 

Care Physicians and Charges for 

Vaccine Administration Under the 

Vaccines for Children Program; 

Correction 

AGENCY: Centers for Medicare & 

Medicaid Services (CMS), HHS. 

ACTION: Final rule; correction. 

SUMMARY: This document corrects 

technical errors that appeared in the 

final rule published in the November 6, 

2012 Federal Register entitled 

‘‘Medicaid Program; Payments for 

Services Furnished by Certain Primary 

Care Physicians and Charges for Vaccine 

Administration under the Vaccines for 

Children Program.’’ 

DATES: Effective Date: The provisions of 

this final rule are effective on January 1, 

2013. 

FOR FURTHER INFORMATION CONTACT: 

Mary Cieslicki, (410) 786–4576, or 

Linda Tavener, (410) 786–3838, for 

issues related to payments for primary 

care physicians. 

Mary Beth Hance, (410) 786–4299, for 

issues related to charges for the 

administration of pediatric vaccines. 

SUPPLEMENTARY INFORMATION: 

I. Background 

In FR Doc. 2012–26507 of November 

6, 2012 (77 FR 66670), there were a 

number of technical errors that are 

identified and corrected in the 

Correction of Errors section below. The 

provisions in this correction document 

are effective as if they had been 

included in the document published 

November 6, 2012. Accordingly, the 

corrections are effective January 1, 2013. 

II. Summary of Errors 

In the November 6, 2012 final rule (77 

FR 66670), we inadvertently published 

mstockstill on DSK4VPTVN1PROD with