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3.9832 Federal Register / Vol. 59, No. 149 / Thursday, August 4. 1994 / Rules and Regulations

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52

[AD-FRL-6023-3]

Selection of Sequence of Mandatory

Sanctions for Findings Made Pursuant

to Section 179 of the Clean Air Act

AGENCY: Environmental Protection

Agency (EPA).

ACTION: Final rule.

SUMMARY: The EPA is promulgating a

rule governing the order in which the

sanctions shall apply under the

mandatory sanctions provision of the

Clean Air Act (Act), as amended, after

EPA makes a finding of failure specific

to any State implementation plan (SIP)

or plan revision required under the

Act's nonattainment area provisions.

This final rule provides that the offset

sanction shall apply in an area 18

months after the date on which EPA

makes such a finding with regard to that

area and that the highway sanctions

shall apply in that area 6 months

following application of the offset

sanction. Once this rule is effective,

sanctions will apply automatically in

the sequence prescribed in all instances

in which sanctions are required

following applicable findings that EPA

has already made or that EPA will make

in the future, except when EPA

determines through a separate

rulemaking to change the sanction

sequence for one or more specific

circumstances. The public will have an

opportunity to comment on any such

separate rulemaking.

EFFECTIVE DATES: This action wil

become effective on September 6, 1994.

ADDRESS(ES): The public docket for this

action, A-93-28, is available for public

inspection and copying between 8:30

a.m. and 3:30 p.m., Monday through

Friday, at the Air and Radiation Docket

and Information Center, Room M-1500,

Waterside Mall, U.S. EPA, 401 M Street,

SW, Washington, DC 20460. A

reasonable fee may be charged for

copying.

FOR FURTHER INFORMATION CONTACT:

Mr. Christopher Stoneman, Sulfur

Dioxide/Particulate Matter Programs

Branch, Mail Drop 15, Office of Air

Quality Planning.and Standards, U.S.

EPA, Research Triangle Park, North

Carolina 27711, telephone (919) 541-

0823.

SUPPLEMENTARY INFORMATION: The

content of today's preamble is listed in

the following outline:

I. Background

A. Introduction

B. Consequences of State Failure

1. Section 179(a) Scope and Findings

2. Section 179(b) Sanctions

3. Applications and Timing of Section

179(b) Sanctions

C. Notice of Proposed Rulemaking

1. Proposal

2. Rationale for Sanction Order

3. Sanction Effectuation

4. Opportunity for Comment

II. Today's Action

A. Final Action

B. Summary of Comments and Responses

1. Sanction Sequence and Rationale

2. Sanction Effectuation

3. Sanction Clock Policy

4. Other Areas of Comment

C. Summary of Changes in Rule

1. Section 52.31(a)-Purpose

2. Section 52.31(b)-Definitions

3. Section 52.31(c)-Applicability

4. Section 52.31(d)-Sanction Application

Sequencing

5. Section 52.31(e--Available Sanctions

and Methods for Implementation

Ill. Implications of Today's Rulemaking

A. Implementation of the Sanctions

B. Areas Potentially Subject to Sanctions

IV. Miscellaneous

A. Executive Order 12866

B. Regulatory Flexibility Act

1. Proposal

2. Comments

3. Response

C. Paperwork Reduction Act

I. Background

A. Introduction

On October 1, 1993, EPA proposed a

rule (58 FR 51270) governing the

sequence of mandatory sanctions under,

section 179(a) (42 U.S.C. 7509(a)) of the

amended Act. The document included

extensive background on the Act, some

of which is briefly resummarized in this

background section because it relates

directly to the Act's sanction provisions.

The information not repeated concerns

the overview at pages 51270-2 of the

proposal provided on the Clean Air Act

Amendments of 1990 (1990

Amendments), title I requirements of

the Act, and EPA action on SIP's. This

background section also summarizes the

proposal and the rationale.

B. Consequences of State Failure

1. Section 179(a) Scope and Findings

The 1990 Amendments revised the

law concerning sanctions I to address

State failures to comply with the

IThe 1990 Amendments also revised the Act's

provisions concerning Federal implementation

plans (FIP's). Under section 110(c)(1), the FIP

requirement is triggered by an EPA finding that a

State has failed to make a required submittal or that

a received submittal does not satisfy the minimum

completeness criteria established under section

110(k)(1}(A), or an EPA disapproval of a SIP

submittal in whole or in part. However, since FIP's

are not the subject of this notice, these provisions are not addressed here.

requirements of the Act. Under section

179(a) of the Act, for any plan or plan

revision required under part D of title I

or required in response to a finding of

substantial SIP inadequacy under

section 110(k)(5) (42 U.S.C. 7410(k)(5)),2

the Act sets forth four findings 3 that

EPA can make, which may lead to the

application of one or both of the

sanctions specified under section 179(b)

(42 U.S.C. 7509(b)). The four findings

are: (1) A finding under section

179(a)(1) that a State has failed, for a

nonattainment area, to submit a SIP or

an element of a SIP, or that a submitted

SIP or.SIP element fails to meet the

completenesg criteria established

pursuant to section 110(k) (42 U.S.C.

7410(k)); (2) a finding under section

179(a)(2) where EPA disapproves a SIP

submission for a nonattainment' area

based on its failure to meet one or more

plan elements required by the Act; (3)

a finding under section 179(a)(3) that

the State has not made any other

submission required by the Act

(including an adequate maintenance

plan) or has made any other submission

that fails to meet the completeness

criteria or has made a required

submission that is disapproved by EPA

for not meeting the Act's requirements;

or (4) a finding under section 179(a)(4)

that a requirement of an approved plan

is not being implemented.

The EPA makes section 179(a)

findings of failure to submit and

findings of incompleteness via letters

from EPA Regional Administrators to

State governors or other State officers to

whom authority has been delegated. 4

The letter itself triggers the sanctions

clock. To make findings of failure to

submit and findings of incompleteness

under section 179(a)(1) and section

179(a)(3)(A), EPA is not required to go

through notice-and-comment

rulemaking.5 For section 179(a)(2) and

section 179(a)(3)(B) findings of

disapproval, the Federal Register

document in which EPA takes final

action disapproving the submittal (after

notice and comment) initiates the

sanctions clock. For section 179(a)(4)

2

A finding of substantial inadequacy under

section 110(k)(5)-known as a "SIP call"-is made

whenever EPA finds that a plan for any area is

substantially inadequate to attain or maintain the

relevant national ambient air quality standard

(NAAQSI. 3Section 179(a) refers to findings, disapprovals,

and determinations. These will all be referred to by

the one term "findings."

47-62, Finding of Failure to Submit a Required

State Implementation Plan or Any Other Required

Submission of the Act, Clean Air Act, Delegations

Manual, 12/13/91. 5Notice and comment considerations vis-a-vis

findings of failure to submit and incompleteness are

discussed in the proposal at page 51272, footnote

7. and in section IV.G. of this document.

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Federal Register 1* Vol.. 59;. No. 49; ' Thursday, August 4, 1994, f Rules and Regulations 39833

findings- of noniimplementation, the,

sanctionsclockstirts.when EPA makes.

a finding oknonimplementationin the,

Fedartgist tiroughtnotce-and

commentrulemaking. For both

disappromals and findings of

nonimplementatien, the cleck.actually

starts.on the date the final:Federal

Register actions are effective.

2. Setion 179(b) Sanctions,

Under-section l79(bXtwo.sanctions,

am available forselectin by EPA

following atsecdon: 179(a) finding;.One.

available'sanctibn is.a resfrictinu.on

highwayfunding,.as. provided: i. section

179(b}){j ( 42 U S.E. 7509(b)(1.)), which

is discussed ir the proposaLat pages.

51273;-5129'41.Theothernavailablesanction is tfie offset sanction, as.

providbdditsectibn 179(b)2) ('42.U:.S.C:

7509(b)(2)).which is also. discussedi in.

the proposal , atpage;512 4',-

3. Applicatibn and'Timing,of Sectibn

179(b), Sanctions

AlthougL application. of'section

179(bysanc ions may become

mandatory when, EPA makes a finding,

under section, 179(e f'( fthe-Statedoes

not correct the deficiencyt it is not

immediate,. Instead- section 179(a)

provides for a-sanction "clock," whicr

is.described in. theproposal'at page.

51274.. Genemlly under section- 179(a)'s

sanction dock,,tha.sanction selected-by;

EPA applies, ifthe deficiency that'

prompted the~findingisnot corrected

before the sanction clock expires. (The'

sanction clock is further discussedin

section L 3& ofthis, document)

C. Not ce of Proposed Bulemakihg,

1,..Proposallh'tfie'proposaF, EPA proposed-that

the sectibn- 179(b)(2): offset, sanction.

would appl ,ih an area,18months.fromthe dhfwhten EPA makes a. finding

under'sectibn 179(u). Fiirthermorej EPA

proposed! that'the-section 179(b)(I)'

highway, santion wouWiapplyrin an

area 6-months-folowing application of

the ofiet sanction Tie,EPA- proposed

to sequencethe application of sanctions

under section 179(h)lintlliimanner'ih,

all cases'unless EPA determines,

througt-iididvidualnr~tfie-and-comment

rulemalihg, that tie highway sanction

will apply. first:

The.proposal addtressedithe sequence

in whichsanctions shallapply asrequired under section 179(a) with,

respect tb,afindihg'madb'undbr'

6

lmadditom soction.1,79(aprovides.fbr an'air

polllitiogranmsmctian that applies to grantsttle

ERN mayjawardtundersection 105. However,.since

it is nora sanction provided'undbr section 1.7,9(b);.

it is not one of'the'sanctions dt'arautormaticall ,

apply under sectb'mi7.9(a),

subsections (.1-(4)-specific toany

implementatibn plbn or-plan revisibn

requiied' under part D or any'

implementation plhn or revision

required:underpart Dfound

substantially inadequate.pursuant to

section 110(k)(.5). In general, part D.

plans and plantrevisions are requii'ed for areas designated: nonattainment under

section 107.7'The prop'osaldid;not

encompass'findings EPA can, makeunder section, 179(b)' regarding SIP' ca.lMe

for non-partD plans-or plant revisions or

the sanction provisions-in section

110(m) of the Actl.:Ital'so-dbes not

encompass anyfindihgs EPA. may make

under other titlbsof'the-Act: (';g , section 502(d) for operating.permitt-ing

programs)'

2. Rationale. for Sanction- Order

At. pages 512T4;-51275 of the

proposal, EPA.,described!the purpose

sanctions can serve. Quefunction, i'sto

encourage:compliance with;the Act'h

requirements.. A second. function. of

sanctionsds.thprotct and preserve-air

quality in.areas until the dbfi.iency

prompting the sanctions.initiating

findincam be; corrected .

In the proposalat'page51275' for

three reasons,.EPA proposed.that,.asa.

general matter, the offset sanction.appy

at 18 months followed by the highway

sanctibn, 6.months thereafter. First, EPA

stated that conceptually the-offset

sanction'will, in generali, provide-a more

certain air quality benefit in theshorter

and longer termthan the-highway

sanctinm

Secand; the.proposar stated: the offset

sanction. provides.greater'potential for

more-significant air'quality pro ction

becausetit potentiall.. affects-alF

7While parrWDgenerally 'applies to.nonattainment. areas, some requirementsaxtend.to other areas; For

example,.sect ion 184(a).specifically, created at

enactmenran ozone transpnr'region, called'the

Northeast Okone:TransporrRegion.(NOTR:.whih,

is comprised af:several mid-Atlkntic and New.

England;States;and' tie.Consolldated Metropolitan. Statistical Area containing-the District of Columbia

(see "General Preamble for'the'Implementation of

Titb roE the Clean AikAot'Amendments:of 1990"

at pagp 13527'(67 FR 13498)). Though areas within some of these States may not be designated

nonattainment, the States must submit revisions to

their SIP's byertain.statutory deadlines to inclhdb

specific part D measures for these areas (e.g,, anHanced;vahlefiiihspection and maintenance

progrm., reasonablyavailable control.technology

firvolale. organic.compounds (VOC) sources), 8 Sectlon'ii,(m),ofthe Act grants-EPA.broad.

discretionaryauthority, to apply either sanction

listedihsection79(b)"atany timeonr'at.any time

aftehtheAdminttrator makes" a finding under

section 1.7.9(a) withlrespect, to any portion.of the

State. subjoct'to certain limitations (57 FR 44534,

Sept. 28, 1993): Theselbctionof'sancttbns being

mad.bBy thiitaatin,, however, does not apply to-tie

imposition of'sanctions-by EPAunder'seation

1104n)..Note thatsanction selection for section

1 r0(in)'f'fihdiigs w tille made through notice-andcomment'mlbmaking indbpendent from this'action.

categories of stationary sources and,

depending on' the pollutant(s) addi-essed

in the deficibncy prompting-the finding.

may affect all criteria pollutants (i.e..

pollutants forwhich EPA has'

promulgated national ambient air

quality standards.(NAAQS) such as

carbon monoxide (CO). PM-10

(partii:les with an aerodynamic diameter

less than or equal- to-a nominal 10'

micrometers), etc.). By contrast, the,

highway'sanction would affect onify

mobilb-sources and polhitants'emitted

bymobilesources. (Mobilesources'are'

not, for instance; regorded as significant

emitters'of'leed and sulfur-dioxide

(SO2)J " Third in additionto air-quality

consideratibns the, 2-to-1 offset sanctibn

is less complicated'to'implement and,

administer than-the highway sanction'

by its very nature and-because.ofthe,

manner in which. EPA intends to,

effectuate it, as discussed in: the

-proposal at pages.5T275-5.1277

In addition, EPAnoted- inthe

proposal! that it dbes'not regard

sanctionsas a. long-term solution to ai:r

quality problems:but rather intends.to

work with. States.to resolVe.deficiencies

as rapidly, as.possible;.Thus, by

applying, the offsetsanction. at 18.

months,,if the State corrects the:

deficiency, promptingthet finding, prior

to. 6 months. thereafter;. then. the highway

sanctiomwou'ld not apply and EPA and

other affected agentibs. (mostnotably

theDepartmentof'Transportatibn.

(MOT)): would:not bb: faced' with-ts

comparatively greater'implementation.

and administration burden.

The EPA, therefore, proposed, as a

general matter, that the offset sanction.

apply before the.highway, funding,

sanction following,a section 179(h),

finding., The EPA recognized, however.,

that ih specific.cases the particulhr

circumstances may lead EPA-to'

conclude that ilis more.appropriate-for

the highway sanction.to apply first.

Therefore., EPA has: specifically. noted

that it may gp through notice-andcomment rulbmaking.fbr the highway,

sanction, to apply after 1:8 months.and'

the offset sanction 6 months thereafter.

(The sanction sequence rationale. isfurther discussed in sectibn I.B.1. of

this document'.),

3..Sanction Effictuation.

At pages 51275-51277 of the

proposal', EPA describes how-the offset

sanction applies- and notes-that,,undbr -

the highway sanction,.EPA imposes a

prohibition- on approval by die Secretary

of DOT'of certain'highway.'projects-and

grants. Thus, the lighway sanction i's.

notdirectly implemented by EPA.

,However, EPA noted- that itis in the

HeinOnline -- 59 Fed. Reg. 39833 1994
39834 Federal Register / Vol. 59, No. 149 / Thursday, August 4, 1994 / Rules and Regulations

process of developing procedures with

DOT to provide for the coordinated

implementation of the highway

sanction. (Sanction effectuation is

further discussed in section ll.B.2 of this

document.)

4. Opportunity for Comment

As discussed above, under section

179(a), the Act requires that sanctions

apply if the deficiency that prompted

EPA*s finding is not corrected within

the timeframes prescribed. The only

discretion afforded EPA is which of the

two section 179(b) sanctions applies at

18 months and which 6 months

thereafter. The proposal noted that if in

the future EPA makes exceptions to this

rule, then in individual notice-andcomment rulemakings EPA will seek

comment on whether the highway

sanction shall apply after 18 months

and the offset sanction shall apply 6

months thereafter given the

circumstances at hand.

The proposal also noted that the

Administrative Procedure Act (APA)

provides citizens with a means that

could be used to petition EPA to

propose that the highway sanction

apply first. The APA, 5 U.S.C. 553(e),

provides that "Each agency (including

EPA) shall give an interested person the

right to petition for the issuance,

amendment, or repeal of a rule." This

provision could conceivably be invoked

by a citizen to petition EPA to propose

that the highway sanction apply first

with respect to a section 179(a) finding

covered by this action.

II. Today's Action

A. Final Action

By this document, EPA is

promulgating a rule which provides that

the section 179(b)(2) offset sanction

shall apply in an area 18 months from

the date when EPA makes a finding

under section 179(a) with regard to that

area if the deficiency prompting the

finding is not corrected within such

period. The final rule also provides that

the section 179(b)(1) highway sanction "

shall apply in an area 6 months

following application of the offset

sanction in cases where the deficiency

has still not been corrected within that

period. The section 179(b) sanctions

shall be sequenced in this manner in all

cases unless EPA proposes the highway

sanction to apply first through separate

notice-and-comment rulemaking. This

final rule applies to plan or plan

revisions required under part D but does

not apply to plans or.plan revisions

required under part D found

substantially inadequate pursuant to

section 110(k)(5). The proposed rule

applied to both types of SIP's; a

discussion of why the latter type of

SP's--commonly known as part D "SIP

calls"--are not covered by the final rule

is in section U.C.3. This rule also has the

immediate effect of applying the offset

sanction on September 6, 1994 in

affected areas for which the

Administrator has not determined that

the 18-month sanction clock has expired

by that date and for which the

deficiency prompting the finding has

not been corrected by that date.

Specifically, in the notice section of

today's Federal Register, EPA is

providing a list of areas that will be

potentially subject to sanctions on

September 6, 1994.

Note that the proposed rule did

include tables in which EPA intended to

list areas subject to sanctions. In the

final rule, EPA has removed the tables

from the rule and decided to provide

information on areas that will be

potentially subject to sanctions in the

separate notice mentioned above.

(Sections II.C.5. and III.B. below include

a discussion of why the tables were

removed from the proposed rule and

why such removal does not carry any

substantive significance.)

B. Summary of Comments and

Responses

With one exception, this section

consists of a brief summary of the

comments received on the proposal and

EPA's responses. A more detailed

summary of comments and EPA's

responses can be found in the docket in

a document entitled" Selection of

Sequence of Mandatory Sanctions for

Findings Made Pursuant to Section 179

of the Crean Air Act: DetailedSummary

of Comments and EPA's Responses"

(herein referred to as "Detailed

Summary of Comments"). The one

exception is for the sanction clock

policy; a detailed summary is provided

here, as well as in the companion

document, in order to fully explain in

the Federal Register the changes EPA

has made to the final rule in this area

and because of the complexity of this

issue.

1. Sanction Sequence and Rationale

a. Summary of Comments. The EPA's

proposal for the sequence of mandatory

sanctions and the rationale are provided

in sections I.C.1. and I.C.2. of this

document, as well as in the proposal at

pages 51274-5. The EPA received 14

comments on this part of the proposed

rule. Comments on the sanction

sequence and rationale can generally be

considered in four groups: (1)

Commenters who believe the sequence

should be reversed with the highway

sanction applying first, (2) commenters

who believe that EPA should determink

sanction order on a case-by-case basis,

(3) commenters who believe that the

nature of the deficiency should be

considered in determining sanction

sequence, and (4) commenters who

support the sequence as proposed.

Four commenters stated that the

sequence in which sanctions apply

should be reversed with the highway

sanction generally applying first.

Several of the commenters contend that

the highway sanction will be more

effective at compelling State correction

of SIP deficiencies because it would

have greater economic impact, and it

will be more effective at addressing

political and statewide failures. One

commenter disagrees with EPA's

rationale that the offset sanction is more

likely to produce a greater air quality

benefit, arguing instead that the

highway sanction better encourages

early State compliance. Several

commenters challenge EPA's rationale

that the offset sanction potentially

applies to all criteria pollutants; the

commenters argue that the fact that

stationary sources emit more types of

pollutants is irrelevant since, in the

proposed rule, the offset sanction

applies only to the pollutant(s) in the

deficiency. The commenters also raise

an argument that EPA's proposed

sequence unfairly burdens industry

when the SIP deficiency is State-caused

and that sources will be unfairly

penalized due to project location and

timing.

Four commenters believe that EPA.

should determine sanction order on a

case-by-case basis. These commenters

express concern that EPA's streamlined

approach provides insufficient notice of

sanctions and leaves many sanction

application details unclear. One

commenter argues that EPA should

streamline its own rulemaking processes

rather than deny notice to affected

parties. These commenters were also

concerned that general application of

the offset sanction would negatively

impact stationary sources. One

commenter argues economic

competitiveness and air quality will

deteriorate under he offset sanction.

Two commenters were concerned that

because of the length of the EPA

rulemaking process stationary sources

will bear the brunt of the sanction

burden.

Two commenters believe that the

nature of the SIP deficiency should be

considered in determining sanction

sequence. One commenter believes that

the sanction chosen should be linked to

the SIP deficiency and-that EPA must

conduct notice-and-comment

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Fitderal! Register' /'Vol. 59, No. 49. f Thursday, August 4, 1'994% /' Rules and Regurationrs 39835

rulemaking tb determinie whether the

highway sanction applies-fistt asto

specifiC'types.of SIPdeficiencies. The

commenter-is.concernedi that stationary

sources wif. bear the brunt-ofthe;

sanctions'burden'; and:thatthisresult_

could stifleieconomic development:,

Thre'commenters support thei

proposed sequence of sanctions. One

commenter supports the position-that

the link between, the-highway sanction.

and air qpslitbeiiefits-is uncertain and.

another commenter agrees.tht the offset

sanction:provides.a quantifiable and

more likely-air quality benefit.Another

commenter supported. EPA,'sconcerns

regarding the adninistrative.and

implementatio burdens-of the h.ghway

sanction as a basis for the offset sanction.

applying first.

b. Response to Comments: Ih. thisfinal

rule, EPA liasmaintained' th proposed

sanction sequence'wfth theoffset

sanctiongenerally,applyiig- first and the,

high-way'sanctibn second. The-EPA.

contibues-tbbelieve tliis~sequencei&

supportedby, tlleproposed;rat.ionales.

that. theogfset sanction (compared to the

highway sancti'on)will:

(K), Provi&a, more. certain. and. direct

air qualiy benefit,,

(2) Potentially affect more criteriapollutants;,and.

(3) Be easier'to-implement, and

adminisaer. The EPA disagrees- with the

comments.that highway sanctions, will

always:more effectivelyladdress.SIPrelated. deficiencies,and should,

therefore, be.generally applied first Inaddifion,.EPA does be]levetthat the

offset sanction~will more likely produce,

a net. air qpalitybenefit.. In some cases,.

the-offset sanation. may, be. more.

effectiveatresoLving SIP deficiencies.

For example,,inLan area that is.

undergoing significant economic.

growth,.the~offset sanction.could help.

bring pressure through stationary

sources:wishing.to expand, or locate in.

the areaand w1ich are faced with the

need for an additional, emission offset

increment..Furthermore, offsets.

achieved'by such asanction wnul

benefit air quality in the affected area.

However in particular instances, theEPA dbes-not deny that-theoffset

sanction may not be-as effective

because; fbr example; the-areimaybe.

economibmllr depressediandinot

experieneing grwtht. In, such a case,

there may be less aii-'quality'beneflt, and

perhaps less pressure to correct the,

deficiency in applying the offsetsanctiow first

Nbnetheless, overall EPt

A continues'to

believe:that conceptually'the offset

sanctioni(domparedfto the.higlway.

sanction) pmvides.a-more-certain;, direct

air quality benefit in the near and Ibng

term- and potentiall'y'covers more

pollutants. An increased new source

review (NSR}) offset ratio necessarily

reduces air'pollutant emissions as

sourcest modifW or locate, in, an areaunder the offset sanction. By contrast-,

the highway sanctibn may not directly

reduce- overall'motor vehicle emissions

in the near tbrm and-any air quality

benefits resulting from the highway'

sanction would beindirect, 'as

appli ation. of the highway sanction

would not necessarily prevent motorists

from driving, noreven necessarily result

in overall emissions reductions, at least

in the short term. The EPA recognizes

that in some instances-it may be more

appropriate for the highway sanction to

apply, to addiess' a political faillire and,

believes there are adequate mechanismsprovided under the rulbto address these

instances.9

The EPA did not intendto suggpst.in

the proposarthat the offset.sanction. will

applyjih every case, to all criteria

pollutants. The. offset sanction will.

apply, only to, all' criterih pollutants (and

their precursors), for which the area is

subject' thothe section 173'(42 U:S.C.

7503).offsetreqjuirement when the SIP'

deficileacy s.gneral' in nature.. When,

the finding is dpecific.to. one or more

pollutants.(andi its/thefr precursor(s)),.

the. sanctibn.applies only to. those

pollutants (hndlbr.precursorfs)). Thiestatement inthe proposar intndad that

the:offset can potentially. affict.all

criteria.polhtants,, either because. of

pollutant-specific findingp.or general

findings. Thismeans.that, regardless of

whether the finding is.pollutant-specific.

or. general,.the offset sanction. wili

generally applyp at least to the pollutants

of direct concern and, sometimes.to)

others-as-wellh On the: other hond,,the.

highway sanction will,potentially affect

only those piolhitants mobile sourcesemit signifibantly'and not. for-instance,,

lead or SO,. However,, EPA also realizes

that since.C0 nonattainment area

problems'are due primarily to.mobil'e

sources, arguably applicationi.of-the'

offset sanction may not address.themore. sigpificant sources, contributingto

CO nonattainment~probems,

Nonetheless,.the- offset sanction still

applies: to, CO' for. nonattainment NSR

purposes;and- thus, will:affect sources,.

subject to nonattainmenrNSR that wish

to locate. or, expand, in.a CO

nonattainment area; which, would

provide'some.airquality benefit in thearea under theoffset sanction.

Therefore;,EPA. continues tobeiev.e-that

9 As noted in section:.LC.-of this notice, under

the.APA.citdzens can petition.the EPA-for.

rulenakihg,to,propose the highway, sanction to

apply,,first.

ov~rall the qffset sanction is more likely

to produce a. greater air quality benefit

than the highway sanction. because,. as

sources: locae in an' area, direct

emission reductions will be achieved

through the 2-to-1 offset.for potentially

any of the criteria pollutants.

With, respect to imposing, sanctions on

a case-by-case-basis, EPA believes there

aretwo, main disadvantages to this

approach which. hare-led EPA to-reject

it. First, theindividhal, notice-and--

comment rulemakings'that wouldbe,

needed for implementing the sanctions

on a case-by-case basis would impose,

significant demands on EPA's resources.

These resources could, otherwise be

spent on activities' that more directly

serve the-gpa'ofthe Act-, namely, clean

air; Second', the'approach taken in the

final rulb will provide certainty and

sufficient notification to-the~parties

affectedabout the details-of sanction

applibation and' consistency in the

implbmentation" of' section, y179. These

details'are further-discussed'in section

III.A. and in-the'dbatal'ed. summary of

comments document.

Asto'establishing a rule-that links the

first sanction to'the-deficiency onwhich

the sanction is'based, EPAbelieves that

approach fails-to'consider'other

important considerations' with, respect to.

sanctions such- as which-sanctibn is

more-likely to'yield the greater air

quality benefit. The EPA believes, as a

general' matter, thatthe sanctibir that

results'fn the'greaterair-quality benefit

is' a more imlortant-considbration- than

selecting-the sanction sequence based'

priinarily-on the nature of the

deficiency. . At- the same, time; EPA recognizes that'

in some cases it'may be moreapproprihte-to apply-the, highway

sanetfon' first ifthe'circumstances of'the,

dbficiency warrant and the-offset

sanction is! unlikely, to'yield significant

air quality, benefits: The. EPA believes

therul4-provides the flexibility to, db so.

Additionally, EPA cannotpredi'ct,

across, all sanction findings, which

sanctibr- will more effbctitvely address

State inaction and thus couldi notbase,

the general sanction sequence proposal

on that factor: Ftndamentally, EPA has

based its, sanction, sequencingrationale,

primarily on the basis of whih sanction,

EPA believesis likelytoyield thegreater air quality benefit. It is

impossibleo-gpuge the impact since4he

uni ,erse-of areas which-willbe,

sanctionedand- for what duration are

not known

The-EPA dbes. not disagree that the

offset sanction has the, potenti'al to

impact industry-and that this.burden

maybe greater'oni'ndustry than on the

transportation sector.. However, by

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including the offset sanction in the Act,

Congress clearly intended thal certain

sources, by virtue of the timing and

location of their projects, would be

impacted.

2. Sanction Effectuation

A discussion of EPA's approach for

effectuating the offset and highway

sanctions is provided in section I.C.3. of

this document and at pages 51275-7 of

the proposal. The following is a brief

summary of major comments and EPA's

responses.

a. Major Comments. (1) Offset

Sanction. Comments on offset sanction

effectuation addressed both the source

and pollutant applicability aspects of

EPA's proposal. One commenter objects

to the timing of the applicability of the

offset sanction and believes EPA's

proposed approach is contrary to past

EPA practice. The commenter argues

that applying the increased offset ratio

to all sources that have not received a

permit as of the date the sanction begins

would stop many sources during the

permitting process for reasons beyond

their control. The commenter believes

that in the past EPA has avoided these

problems by applying tighter NSR

requirements Only where permit

applications were not complete when

the requirements became effective. The

commenter recommends EPA continue

with this approach.

Two comments concern the pollutant

applicability, of the offset sanction. One

commenter objects to the application of

the offset requirement to both ozone

precursors (nitrogen oxides (NOx) and

volatile organic compounds (VOC}) even

when the deficiency relates only to one

of the pollutants. In support, the

commenter notes the broad nature of

section 179 and the manner in which

NOx emissions are treated under the Act

vis-a-vis VOC emissions. Regarding PM10 precursors, the commenter argues

that the offset sanction should apply to

precursors only in those areas where

EPA has approved a PM-10 SIP control

strategy imposing the offset requirement

on PM-10 precursors.

Another commenter believes that

regardless of the SIP deficiency the

offset sanction should apply to all

criteria pollutants and precursors. In

support, the commenter argues that

section 179 references section 173,

which applies to all offset requirements

in title I of the Act, and that this reflects

a clear Congressional intent to apply the

offset sanction to these pollutants. The

commenter also believes that areas that

have not yet received a section 182(f)

(42 U.S.C. 7511a(f) NOx exemption

from the section 173 offset requirements

should remain subject to the increased

offset ratio for NOx until EPA grants an

exemption.

(2) Highway Sanction. One

commenter requests that the rule

include a requirement that EPA notify

several government entities of highway

sanctions to focus multi-agency

resources on resolving SIP deficiencies.

Another commenter believes that the

flow of flexible funds for certain

programs (e.g., congestion mitigation air

quality improvement program) should

continue to flow if sanctions apply

because the funds are important for

achieving the Act's goals by improving

transit.

b. Response to Comments.' (1) Offset

Sanction Applicability. Regarding offset

sanction source and pollutant

applicability, in the final rule, EPA has

maintained the approaches in the

proposal.

On source applicability, EPA believes

it is important to maximize the air

quality benefit of the offset sanction by

requiring that sources whose permits are

issued after the date the offset sanction

applies comply with a 2-to-1 emission

offset requirement. Contrary to the

comment, the source applicability

definition is not a departure from all

past EPA practices because historically

EPA has not always used the "complete

application" definition. (The different

source applicability definitions EPA has

used in the past are discussed in the

detailed response to comments

document.) Therefore, EPA believes that

past practice does not constrain it from

determining today that it is important to

enhance the effectiveness of the offset

sanction by defining source

applicability on a permit issuance basis.

Moreover, EPA believes that once the

offset sanction applies, it would be a

violation of the sanction for a permit to

be issued with an emission offset of less

than 2-to-1. The plain language of

section 179(a) and section 179(b)(2)

does not provide for nor contemplate

any grace period based on whether a

source has submitted a complete

application.

Regarding pollutant applicability of

the offset sanction, EPA believes the

proposed applicability is reasonably

supported and will have the potential to

effectively protect air quality. Section

179(b)(2) generally references the offset

requirements of section 173 and does

not restrict EPA's ability to base the

applicability of the sanction on a

pollutant or pollutants (and its/their

precursor(s)). Moreover, pollutantspecific application of the offset

sanction is consistent with the

requirements of section 179. Section

179(b)(2)'s language providing that "the

ratio of emission reductions to increased

emissions shall be at least 2 to,1" is

general enough such that EPA can

determine the most reasonable method

to apply the sanction. While section

179(b)(2) references the broader section

173 requirement, EPA believes it is

more reasonable, with one caveat,10 to

apply the offset sanction to the criteria

pollutants specifically related to the SIP

deficiency in question. Pollutantspecific application of the offset

sanction will encourage the State to

correct its SIP deficiencies and will

provide reductions in emissions of the

relevant pollutant in the interim,

without unnecessarily punishing

stationary sources in cases where the

State's program for other pollutants is

adequate.

Regarding ozone and PM-10

precursors, EPA is maintaining the

approach in the proposal that the

sanction applies to ozone and PM-10

precursors. The caveat to that general

rule has expanded in one minor respect

with respect to the ozone precursor

NOx. As provided in the proposed rule,

sources will need to achieve the

increased offset ratio for VOC and NOx

when the finding concerns an ozone

requirement unless EPA approves a

section 182(f) demonstration that the

Act's NOx nonattainment NSR

requirements should not apply. In

addition, EPA has added the exception

that if the area otherwise is not subject

to the section 173 offset requirement for

NOx (e.g., submarginal ozone

nonattainment areas), then sources in

that area would not be subject to that

requirement under the offset sanction

(see sections 182(1) and 182(b)(2)). This

exception is necessary in light of the

specific language of the offset provision,

which ties the offset sanction

specifically to offsets required under

section 173. For PM-10 precursors, EPA

has retained the caveat for cases in

which EPA has made a section 189(e)

(42 U.S.C. 7513a(e)) determination for

an area that PM-10 precursors are not

significant.

(2) Highway Sanction Effectuation,

The issues raised by the commenters are

not a subject of this rulemaking. The

DOT has primary responsibility for

implementing the highway sanction and

EPA is coordinating with DOT on the

development of procedures for that

purpose.

0Where the SIP deficiency is general, the offset

sanction applies to the criteria pollutant(s) (and its/

their precursor(s)) for which the area is required to

meet the section 173 NSR requirements. (This

pollutant applicability definition for general SIP

deficiencies is also discussed in section I1.C.5.

below.)

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3. Sanction Clock Policy

a. Summary of Proposal. In the

proposal, EPA described its proposed

policy with respect to the sanctions

clock at pages 51272-51273." Under

that interpretation, once the sanctions

clock has started upon EPA making a

finding under section 179(a), in order to

stop the clock, EPA must determine that

the State has corrected the deficiency

that prompted the finding. Similarly, to remove section 179(b) sanctions applied

under section 179(a), EPA must

determine that the State has come into

compliance by correcting the deficiency

that prompted the finding that resulted

in the application of one or both

sanctions.

For a finding that a State has failed to

submit a SIP or an element of a SIP, or

that the SIP or SIP element submitted

fails to meet the completeness criteria of

section 110(k), the proposal provided

that EPA will stop the sanctions clock

or remove any sanctions applied upon

EPA's determination that the State has

submitted the missing plan or plan

element and that the submittal meets

the completeness criteria established

pursuant to section 110(k)(1). Note that

EPA's July 9, 1992 SIP processing

guidance indicated that if the 18-month

sanction clock elapses during a

completeness review, sanctions would

not be imposed unless and until EPA

determined the plan to be incomplete.12

In such a case, the 18-month clock

would continue to run so that if EPA

determined the plan to be incomplete

after 18-months had elapsed, sanctions

would immediately apply.

The proposal provided that if EPA

disapproves a SIP submission based on

its failure to meet one or more plan

elements required by the Act, to correct

the deficiency for purposes of stopping

the sanctions clock or removing the

sanction, the State must submit a revised SIP to EPA and EPA must

approve that submittal pursuant to

section 110(k). For a finding that a

requirement of an approved plan is not

being implemented, the proposal

provided that the sanctions clock would

stop or sanctions would be removed

through notice-and-comment

rulemaking determining that the State is

II For general guidance on EPA's interpretation, at

the time of proposal, of how the sanctions clock

functions and what is necessary to stop it, see the

memorandum entitled "Processing of State

Implementation Plan (SIP) Submittals" from John

Calcagni to Air Division Directors, Regions I-X, July

9, 1992. A copy of this memorandum has been

placed in the docket for this rulemaking. 12 The policy also provided that, following

findings of nonsubmittal and incompleteness,

sanctions which had applied would continue to

apply upon State submittal until the submittal was determined to be complete.

implementing the approved plan or part

of a plan.

b. Summary of Comments. Two

commenters raise both practical and

legal issues with respect to the

proposal's sanction clock policy where

it indicates that EPA must fully approve

SIP submittals beforesanctions clocks

that are started by disapprovals can be

stopped.

The first commenter's practical

concern is time. With respect to a

sanctions clock started by a disapproval,

because of the length of the State's

regulatory development, approval and

adoption processes and EPA's review

period, the interpretation in the

proposed rule could result in sanctions

being imposed even if a State had fully

adopted and submitted the corrective

rule. Sanctions would remain in effect

until EPA finished its rulemaking

approving the corrected rule. The

commenter is concerned that the rule

could have an adverse impact solely

because EPA had not had time to act on

SIP revisions that are fully approvable.

The commenter further believes that

EPA's policy is not supported by the

language of the Act. The commenter

argues that the Act elsewhere explicitly

distinguishes between correcting the

deficiency and EPA's process of

approving a SIP. Section 110(c)(1)(B)

states that the Administrator must

'promulgate a Federal implementation

plan (FIP) within two years of SIP

disapproval "* * * unless the state

corrects the deficiency, and the'

Administrator approves the plan or plan

revision * * *." Section 179(a), though,

merely provides that sanctions shall

apply "unless such deficiency has been

corrected * * * and does not include

the phrase regarding EPA plan approval.

The commenter believes that EPA

cannot ignore the difference between

sections 110 and 179 because to don

would constitute "reading out" or

rendering meaningless the additional

phrase of section 110(c)(1)(B).

To support its legal argument, the

commenter states that principles of

statutory construction provide that

effect must be given to each word in a

statutory provision, and that every effort

must be made to avoid an interpretation

which renders other provisions of the

same statute inconsistent, meaningless,

or superfluous (Boise Cascade Corp. v.

United States Environmental Protection

Agency, 942 F.2d 1427, 1432 (9th Cir.

1991)). The commenter also notes that

* an agency cannot ignore or "read out"

part of a statute (Natural Resources

Defense Council v. United States

Environmental Protection Agency, 822

F.2d 104, 113 (D.C. Cir. 1987)).

As an alternative to EPA's proposal,

the commenter recommends that the

sanctions clock policy for disapprovals

follow the process in the proposal for

findings of nonsubmittal and

incompleteness. The commenter states

that under that alternative policy the

clock would be stopped if a new

submittal is received, pending EPA's

determination of whether the deficiency

has been corrected. The commenter

urges EPA to adopt a consistent policy

to stop sanction clocks in all cases upon

receiving a revised SIP submittal. If

EPA's preliminary review indicates the

deficiency has been corrected, then the

clock would remain stopped and EPA

would proceed to approve the plan

through rulemaking. If the deficiency

was not corrected initially, the clock

would restart via a letter to the State.

A second commenter raised similar

concerns with EPA's proposal that

actual approval was needed to stop a

sanctions clock started by a disapproval.

According to the commenter, the clock

should be suspended with the submittal

to EPA of a completed rulemaking and

remain suspended unless EPA

disapproves the SIP. The commenter

notes that EPA has the opportunity to

participate in the State's rulemaking

process to ensure'the deficiency is

corrected.

c. Response to Comments. In response

to the comments received, EPA

reevaluated its proposed sanction clock

policy and made two changes. 13

(1) Overview of Change One. For the

reasons stated in subsection (4) of this

section lI.B.3.c., EPA does not adopt the

exact approach set forth by the

commenters, which would actually stop

a sanctions clock started by a

disapproval upon State submittal of a

SIP. However, EPA has determined that

it is reasonable to temporarily defer

and/or stay the application of sanctions,

as appropriate,' 4 following SIP

disapprovals, where EPA proposes to

fully approve a SIP revision or proposes

to conditionally approve a SIP. 1

-

5 In

13The EPA is also making a clarification to the

sanction clock policy which is discussed in section

11.C.4. '

4

As discussed below under change two, the

proposed sanction clock policy specifically

provided for the deferral of sanctions during

completeness reviews of SIP's submitted following

nonsubmittal and incompleteness findings, but not

staying the sanctions The concept set forth here for

initial disapprovals and findings of failure to

implement is carried forth from this process

developed in the proposal for initial findings of

failure to submit or of incompleteness. In carrying

this concept over. EPA believes that it is logical and

necessary that if the effect of sanction application

is to be deferred that sanctions actually applied

should be stayed.

I Note that a proposed partial or limited approval

would not result in the deferral and/or staying of

Continued

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39838 Federal Register / Vol. 59, No. 149 / Thursday, August 4, 1994 / Rules and Regulations

addition, EPA has determined that such

deferral and/or staying of sanction

application is reasonable following

findings of nonimplementation t6 where

EPA proposes to find that a State is

implementing its SIP. Simultaneous

with such proposed approval or finding

of SIP implementation. EPA will issue

a separate, interim final determination

that the State has corrected the

deficiency that prompted the finding

that started the sanctions dock. In all

these cases, whether sanctions are

deferred and/or stayed depends on the

timing of EPA's proposed action vis-avis the sanction clocks.

For initial SIP disapprovals where

EPA subsequently fully approves the

revised SIP, sanctions would be

deferred andfor stayed unless and until

EPA's proposed full approval was

reversed by a proposed disapproval or

final disapproval of the revised SIP in

whole or in part. At .that point, the

interim final determination that the

deficiency had been corrected would be

rescinded or reversed. For initial SIP

disapprovals where EPA subsequently

proposes to conditionally approve the

revised SIP, sanctions would be

deferred and/or stayed unless and until

EPA reverses its proposed conditional

approval by a proposed disapproval or

final disapproval of the revised SIP in

whole or in part. For initial SIP

disapprovals where EPA subsequently

conditionally approves the revised SIP

in final, sanctions would be deferred

and/or stayed unless and until the

conditional approval converts to a

disapproval, or EPA proposes to

disapprove in whole or in part the

revised SIP the State submits to fulfill

the commitment in its conditionallyapproved SIP. '7 When any of these

events occur with respect to a proposed

or final conditional approval, the

the applicatiok of sanctions because such actions are associated with proposed partial or limited

.disapprovals, (For a discussion of partial and

limited approvals/disapprovals, see the

memorandum entitled "Processing of State

Implementation Plan (SIP) Submittals" from John

Calcagni to Air Division Directors, Regions I-X, July 9, 1992.)

16AIthough the comments focused on a clock

started by a disapproval, EPA has extended its

changes to a clock started by a finding of failure to

implement, finding no reason to treat findings of

failure to implement differently.

17On July, 9, 1992, EPA issued a policy that

included a discussion of how conditional approvals

convert to disapprovals (see memorandum entitled

"Processing of State Implementation Plan [SIP)

Submittals" from John Calcagni to Air Division

Directors. Regions I-X, July 9, 1992). But note that,

by this action, EPA is withdrawing the part of the

July 1992 guidance that addresses how conditional

approvals convert to disapprovals. In the near future, EPA intends to issue additional guidance to

address this aspect of the conditional approval

policy.

interim final determination that the

deficiency had been corrected would be

rescinded or reversed.

,For initial findings of

nonimplementation, sanctions would be

deferred and/or stayed unless and until

EPA reversed its proposed finding that

the State was implementing its SIP by

proposing to find or finally finding that

the State was not implementing its SIP

or by withdrawing its proposed finding

that the State was implementing its SIP.

At the point of that subsequent action,

the interim final determination that the

State had corrected the deficiency

would be rescinded or reversed.

(Exactly how the application of

sanctions would be deferred and/or

stayed following SIP disapprovals and

nonimplementation findings is

discussed in greater detail below in this

section. Change one is reflected in the

nile in § 52.31 (d)(2), (d)(3), and (d)(4].)

The rationale for the deferring and

staying of sanctions in these cases is

that the proposed full or conditional

approval or proposed finding that the

State is implementing its SIP would be

the basis for EPA's interim final

determination that the State has

corrected the deficiency. t When EPA

issues this proposal, the Agency

indicates that it believes it is more likely

than not that the State is complying

with the relevant requirements of the

Act. The EPA believes it would be

inequitable for sanctions to apply in

situations where EPA has made such an

affirmative finding, even though it is

only preliminary. Moreover, EPA

believes it would be unfair to apply

sanctions merely because the clock had

expired before EPA is able to take final

action on the submittal in these

situations given the length of the

rulemaking process. (2) Overview of Change Two. The

second change to the rule concerns the

guidance discussed in the preamble to

the proposed rule at page 51273,

footnote 9, where EPA indicated that if

the sanction clock started by a finding

.of failure to submit or incompleteness

expires during a completeness review

for a subsequent SIP submittal, the

sanction would not apply unless and

until EPA found the submittal

incomplete. In this instance, EPA

intended that the sanction clock would

not temporarily stop, but instead would

continue to run. During that time, EPA

would simply defer the application of

the sanction while it reviewed the SIP

submittal to determine whether or not

" The EPA's final conditional approval would

merely continue any stay or deferral initiated by

EPA's proposed conditional approval and EPA's

simultaneous interim final determination the

deficiency hasbeen corrected.

the State had corrected the deficiency

prompting the finding. Thus, if and

when EPA found the SIP incomplete

after expiration of the 18-month clock,

the sanction would apply on the date

EPA found the plan incomplete. 9

After further analysis of this aspect of

the sanction clock policy in the context

of addressing comments, EPA has

determined that it is inappropriate to

defer and/or stay sanctions when

sanction clocks elapse during review for

completeness of plans submitted by

States following findings of

nonsubmittal and incompleteness.

Therefore, EPA's rule provides that the

temporary deferral and staying of the

application of sanctions occurs only

when EPA takes an affirmative action in

which it indicates the Agency's belief

that the State has corrected the

deficiency prompting the finding (e.g.,

that the State has corrected the finding

of nonsubmittal or incompleieness). The

EPA believes this change is necessary

since, upon further reflection, EPA

realizes that in such a situation there

has been no prior affirmative action by

EPA preliminarily or finally

determining that the State has, in fact,

corrected the deficiency. A proposed

approval of a revised SIP following a

disapproval constitutes such an action

as does a proposed finding that a State,

is implementing its SIP following a

finding of nonimplementation.

However, mere EPA receipt of a SIP

submittal from a State following a

nonsubmittal or incompleteness finding

does not constitute such an action, since

EPA takes no affirmative action

preliminarily indicating that the State

has submitted a complete SIP, and there

is nothing to give rise to an interim final

determination that the State has

corrected the deficiency. Under this change, sanctions will

apply if a sanction clock expires during

a completeness review of a SIP

submitted following a nonsubmittal or

incompleteness finding. An example

illustrates the implications of this

change. Suppose EPA finds that a State

-failed to submit a SIP and then at month

17 the State submits a SIP which the

Agency then starts reviewing for

completeness. Month 18 arrives and

EPA is still reviewing the submittal.

Under the approach in the proposal,

application of the offset sanction at

month 18 would be deferred unless and

until EPA found the plan incomplete.

Under the final rule, the sanction will

apply at month 18 and only be lifted

'9 Note that this specific aspect of the proposed

sanction clock policy was not actually reflected in

the regulatory language of the proposed rule but was discussed in the preamble only.

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once EPA takes affirmative action

finding the plan complete.

For EPA to continue with the

proposed policy of deferring sanctions

following nonsubmittal and

incompleteness findings, EPA would

have to view mere receipt of a submittal

from the State as a preliminary

correction of the deficiency. However,

EPA's view is that receipt of a State plan

does not constitute an affirmative EPA

determination that' the revised SIP is

complete. 20 Therefore, it is

inappropriate to defer and/or stay

sanctions following nonsubmittal and

incompleteness findings. Furthermore,

once EPA has affirmatively determined

the plan is complete, any sanctions

clock or any applied sanctions would be

permanently stopped. Therefore, it is

inappropriate to defer or stay sanctions

following nonsubmittal and

incompleteness findings until EPA has

affirmatively determined the plan is

complete. 2

' The EPA believes this

change, as well as change one, makes

the Agency's approach in deferring and

staying the application of sanctions

more consistent with the requirements

of the Act.

2

OArguably, EPA could make an interim final

determination that the State's submittal is complete.

However, such an interim determination is

impractical and inappropriate for at least two reasons. One, the short time period provided under

the Act for EPA to make completeness

determinations (i.e., 60 days) indicate that Congress

did not intend for EPA (nor contemplate for EPA)

to make preliminary completeness determinations.

Two, the nature of the completeness review does

not lend itself to EPA making preliminary and final

determinations. The completeness review is

intended as a straightforward exercise to determine

if the SIP revision includes the basic elements to

warrant further review for overall adequacy.

Therefore, there is no room for a preliminary

determination; any review sufficient to make such a preliminary determination would be sufficient for

EPA's final completeness determination.

21 A clarification is being made in the final rule

which was not specifically addressed in the

proposed rule. Following nonsubmittal and

incompleteness findings, the final rule effectively

provides that sanction clocks can be stopped (and

sanctions lifted) only when EPA makes an affirmative completeness finding, and not when

SIP's become complete by operation of law

pursuant to section 110(k)(1)(B) of the Act. This

change is further discussed in section IlC.4. below.

(3) Scenarios Illustrating First Change.

The following five scenarios illustrate

how sanctions can be deferred and/or

stayed following SIP disapprovals and

nonimplementation findings. 22 They are

provided to clarify change one

discussed above. (Section III.A.

discusses how the States and the public

will be kept informed of the status of

,sanction application.)

First, if, before month 18, EPA

proposes to fully or conditionally

approve a plan or proposes to find that

a State is implementing its SIP and that

action is reversed 24 or more months

after the finding, at which time the 18-

month clock has expired, application of

the offset sanction is deferred until

EPA's proposed approval or-proposed

finding that the State is implementing

its SIP is reversed.23 For both types of

findings, the offset sanction applies on

the date EPA reverses its preliminary

finding. Following disapprovals, where

EPA proposed to fully approve the SIP,

22 Note that in the five cases discussed below in

the "scenarios illustrating first change," sanctions

would apply or reapply when a conditional

approval converts to a disapproval just as they do

when a proposed full approval is reversed to a disapproval. Note also that, unlike full approvals, the mandatory sanctions process would not cease upon final conditional approval. Following a disapproval, as indicated above, if EPA proposes full approval of the State's revised plan, resulting in the deferral and/or staying of sanction

application, and then takes final, full approval action, the mandatory sanctions process ceases. However, if the scenario were one where EPA was conditionally approving the plan, the final

conditional approval does not stop the mandatory sanction process because it does not represent EPA's final determination that the SIP is adequate. The EPA will make that determination when it

reviews the revised plan the State commits to

submitting as part of the conditional approval. Ultimately, of course, if the State fulfills its

commitment and EPA approves the State's plan revision, then any sanction clocks are permanently stopped and no sanctions are applied or reapplied. 23 This scenario assumes that EPA proposes

approval prior to 18 months and that EPA's positive finding is reversed after 24 months. In that instance,

after 24 months, only the 18-month clock has

expired (and not the 6-month clock) because the 6-

month clock is not triggered until the offset

sanction applies. (Section In.A. below discusses

how the section 179 sanction clocks function.)

Therefore, in this scenario, the 6-month clock does

not start until EPA reverses its positive finding after

24 months. The next paragraph and Figure 1 give an example of how this functions.

the reversal would be either a proposed

or final disapproval in whole or in part,

whichever occurs. Following

disapprovals, where EPA proposes to or

finally conditionally approves the SIP,

the reversal would occur as described in

subsection (1) above of this section

II.B.3.c. Following findings of

nonimplementation, the reversal would

be either a proposed or final finding,

whichever occurs, that the State was not

implementing its SIP. For both

disapprovals and nonimplementation

findings, the highway sanction applies 6

months from the date the offset sanction

applies, unless EPA determines within

that period that the State corrected the

deficiency prompting the finding. (This

scenario is provided for in the rule in

§ 52.31 (d)(2)(i), (d)(3)(i), and (d)(4)(i).)

The following discussion and Figure

1 provide an example of how this

process functions with respect to a

sanctions clock started by an initial

disapproval. The process would

function in the same manner where the

initial finding was a finding of failure to

implement. Suppose EPA issues a SIP

disapproval, initiating the section 179

sanction process. Suppose that the State

submits a revised SIP to EPA which

EPA proposes to fully or conditionally

approve, prior to 18 months from the

date the sanctions clock started. The

EPA would simultaneously issue an

interim final rule, making a finding that

the State has corrected the deficiency. In

that case, the application of the offset

sanction would be deferred. Now

suppose that, at month 25, EPA reverses

its preliminary determination. The

reversal would be a proposal to

disapprove the SIP in whole or in part

or a final disapproval of the SIP in

whole or in part. At month 25 (or, for

final actions, on the action's effective

date), the offset sanction applies. The

highway sanction then applies 6 months

later at month 31 (or, for final actions,

shortly thereafter, as appropriate), if

within that period EPA has notdetermined that the State has corrected

the deficiency.

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Figure 1: Case 1 for SIP Disapprovals

Per disapproval,

State submits

revised SIP to EPA

prior to month 18

Prior to month 18,

EPA proposes to

fully or conditionally

approve SIP and

makes interim final

determination

deficiency

corrected

18-month sanction

clock expires and

application of

offset sanction

deferred

At month 25, full or conditional

approval becomes

disapproval and EPA

determines

deficiency not

corrected

At month 25, (or

shortly thereafter

following final

actionsi, offset

sanction applies

At month 31.

highway sanction

applies (or shortly

thereafter

following final

actions), unless

EPA determines

State corrected

deficiency

BILLING CODE 6560-60-C

4

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Second, if EPA proposes (before

expiration of the 18-month sanctions

clock) to fully or conditionally approve

a plan or proposes to find that a State

is implementing its SIP and that

proposal action is reversed before the 6-

month clock expires that would have

followed upon application of the offset

sanction, application of the offset

sanction is deferred until such reversal

of EPA's proposed finding. The offset

sanction applies on the date EPA's

proposal finding is reversed (or, for final

actions, on the action's effective date).

The highway sanction then applies 6

months later if EPA has not determined

during that period that the State has

corrected the deficiency. (This scenario

is provided for in.the rule at §§ 52.31

(d)(2)(i), (d)(3)(i) and (d)(4)(i).)

The following discussion and Figure

2 provide an example of how this

process functions for a finding of

nonimplementation. 24 The process

would be the same for an initial

disapproval. Suppose EPA makes a

finding of nonimplementation, initiating

the section 179 sanction process.

Suppose that EPA, prior to the end of

the 18 month sanctions clock, proposes

to find that the State is implementing its

approved SIP. At the time of the

positive finding, EPA would

24This example is given for a finding of failure

to implement, whilethe other four examples are

given.for SIP disapprovals, for illustrative purposes

OTrly.

simultaneously issue an interim final

rule, finding that the State has corrected

the deficiency.

In this case, the application of the

offset sanction would be deferred unless

and until EPA reverses its proposed

positive finding. Now suppose that EPA,

at month 22, reverses its proposed

positive finding by withdrawing its

proposed finding that the State is

implementing its SIP. At month 22 (or,

for final actions, on the action's effective

date), the offset sanction applies. The

highway sanction then applies 6 months

later at month 28 (or, for final actions,

shortly thereafter, as appropriate), if

EPA has not determined that the State

has corrected the deficiency.

BILLING CODE 6560-O-P

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Figure 2: Case 2 for Findings of Nonimplementation

EPA makes finding

of

nonimplementation

Prior to month 18,

EPA proposes that

State is

implementing SIP

and makes interim

final determination

that deficiency

corrected

18-month sanction

clock expires and

application of --offset sanction

deferred

At month 22. EPA

proposes or finally

finds that the

State is not

implementing the

SIP and deficiency

has not been

corrected

At month 22, (or

.shortly thereafter

following final

actions), offset

sanction applies

IZLIZ1

At month 28 (or

shortly thereafter

following final

actions), highway

sanction applies

unless EPA

determines the

State corrected

deficiency

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'2

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Third, if EPA proposes (after month

18 but before expiration of the

subsequent 6-month sanctions clock) to

fully or conditionally approve a plan or

proposes to find that a State is

implementing its SIP, application of the

offset sanction is stayed unless and until

EPA's proposed positive finding is

reversed. (This scenario assumes that

EPA's reversal occurs before expitation

of the 6-month sanction clock.) For both

types of findings, the offset sanction

reapplies on the date EPA's preliminary

positive determination is reversed. The

highway sanction applies 6 months

from the date the offset sanction

initially applied, if EPA hasnot

determined that the State has corrected

thedeficiency prompting the finding.

(This scenario is provided for in the rule

at § 52.31 (d)(2)(ii), (d)(3)(ii) and

(d)(4)(ii).)

The following discussion and Figure

3 provide an example of how this

process functions for a SIP disapproval.

The process is the same where EPA has

made an initial finding of failure to

implement. Suppose EPA makes a SIP

disapproval, initiating the section 179

sanction process. Suppose that the State

submits a revised SIP which EPA, after

18 months but before the subsequent 6-

-month clock expires, proposes to fully

or conditionally approve. The EPA

would simultaneously issue an interim

final rile. finding that the State has

corrected the deficiency. In that case,

application of the offset sanction would

be stayed unless and until EPA's

proposed approval is reversed. Now

suppose that, at month 22, EPA reverses

its proposed approval. The reversal

would be.a prqposal to disapprove the

SIP in whole oroin part or a final

disapproval'of'the SIP in whole or in

part. At month 22 (or, for final actions,

on the action's effective date), the offset

sanction reapolies. The highway

sanction then applies at month 24, 6

months after the offset sanction

originally applied, unless EPA

determines that the State corrected the

deficiency within that period.

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Figure 3: Case 3 for SIP Disapprovals

At month 22, (or EPA shortly thereafter

disapproves .following final

SIP actions), offset

sanction re-applies

At month 24,

18-month sanction highway sanction

clock expires and applies, unless EPA offset sanction determines that

applies State corrected

deficiency

Per disapproval,

State submits

revised SIP to EPA

after month 18 but

before month 24

After month 18 but

before month 24, EPA proposes to fully or conditionally approve

SIP and makes interim

final determination

that deficiency

corrected.,

On date of EPA interim final

determination,

application of

offset sanction

stayed

At.month 22,

approval becomes

disapproval and 'EPA

determines

deficiency not

corrected

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Fourth, if EPA proposes (after month

18, but before the subsequent 6-month

sanctions clock expires) to fully or

conditionally approve a plan or

proposes to find that the State is

implementing its SIP, and EPA does not

take action reversing such positive

action until after the subsequent 6-

month clock expires, application of the

offset sanction is stayed and application

of the highway sanction is deferred

unless and until EPA's proposed

positive finding is reversed. The offset

sanction reapplies and the highway

sanction applies on the date EPA's

preliminary determination is reversed.

(This scenario is provided for in the rule

at §§ 52.31(d)(2)(ii), (d)(3)(ii) and (d)(4)(ii).)

The following discussion and Figure

4 provide an example of how this

process functions for a SIP disapproval..

The process functions in the same way

for an initial finding of failure to

'implement. Suppose EPA makes a SIP

disapproval, initiating the section 179

sanction process. Suppose that EPA,

after 18 months (but before the

subsequent 6-month clock expires),

proposes to fully or conditionally

approve the SIP. The EPA would

simultaneously issue an interim final

rule, finding that the State has corrected

the deficiency. In that case, application

of the offset sanction would be stayed

and application of the highway sanction

deferred at the time EPA makes its

positive finding. Now suppose that, at

month 26, EPA reverses its positive

finding. The reversal would be a

proposal to disapprove the SIP in whole

or in part or a final disapproval of the

SIP in whole or in part. At month 26 (or,

for final actions, on the action's effective

date), the offset sanction reapplies and

the highway sanction applies.

BILLING CODE 6560-60-P

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Figure 4: Ca

EPA,

disapproves

SIP

18-month sanction

clock expires and

offset sanction

applies

Per disapproval,

State submits

revised SIP to EPA

after month 18 but

before month 24

After month 18 but

before7 month 24, EPA proposes to fully or

conditionally approve

SIP and makes interim

final determination

that deficiency

corrected

On date of EPA interim final

determination,

application of

offset sanction

stayed

6-month sanction

clock expires and

application of.

highway sanction

deferred

se 4 for SIP Disapprovals

At month. Z6,.

approval become&

disapproval and EPA

determines.

deficlency, not

corrected

At month 26, (or

shortly thereafter

following final

actions), offset

sanction re-applies

and highway

sanction applies

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Lastly, the rule also provides that,

following a SIP disapproval or a finding

of failure to implement, if EPA proposes

after both sanctions clocks have expired

to fully or conditionally approve a plan

or proposes to find that a State is

implementing its SIP, application of the

offset and highway sanctions is stayed

unless and until EPA's proposed

positive finding is reversed. The offset

and highway sanctions reapply on the

date EPA's preliminary determination is

reversed. (This scenario is provided for

in the rule at § 52.31 (d)(2)(iii), (d)(3)(iii)

and (d)(4)(iii).)

The following discussion and Figure

5 provide an example of how this

process functions for a SIP disapproval.

The process functions the same for an

initial finding of failure to implement.

Suppose EPA disapproves a SIP,

initiating-the section 179 sanction

process. Suppose that the State submits

a revised SIP which EPA, at 25 months,

proposes to fully or conditionally

approve. The EPA would

simultaneously issue an interim final

rule, finding that the State has corrected

the deficiency. In that case, the

application of both sanctions would be

stayed on the date of the positive action.

Now suppose that, at month 30, EPA

reverses its proposed positive finding.

The reversal would be a proposal to

disapprove the SIP in whole or in part

or a final disapproval of the SIP in

whole or in part. At month 30 (or, for

final actions, on the action's effective

date), both sanctions reapply.

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I Figure 5:

18-month sanction

clock expires and

offset sanction

applies

6-month sanction

clock expires and

highway sanction

applies

Prior to month 25,

per disapproval,

State submits

revised SIP to EPA

At month 25, EPA proposes to fully -or conditionally

approve SIP and EPA determines

deficiency

corrected

On date of EPA

interim final

determination,

application of both

sanctions stayed

Case 5 for SIP Disapprovals

At month 3'0,

approaml become&

disapproval. and EPA

determines

deficiency not

correctei

At month 30, (or

shortly thereafter

following final

actions), both

sanctions re-apply

BILUNG CODE 6560-50-C

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In all cases following disapprovals

and findings of nonimplementation, the

sanctions clock stops permanently and

any sanctions applied are permanently lifted only when EPA completes final

notice-and-comment rulemaking action

fully approving the SIP revision or

finding that the State is implementing its SIP.25'

(4) Legal Basis and Rationale for

Change One. The EPA believes that its

policy clarification is consistent with

the statutory language of section 179

and that it is a reasonable interpretation

of that language. The EPA believes this

policy is consistent with the legal requirements of sectidn 179 of the Act

and section 553 of the APA. Section

179(a) of the Act requires sanctions to

apply 18 months after a deficiency

finding "unless such deficiency has

been corrected * * *," and requires that

sanctions apply "until the

Administrator determines that the State

has come into compliance * * *." The

EPA interprets this language to require

that EPA make a determination that the

State has corrected the deficiency before

permanently stopping the sanctions

clock or lifting sanctions. In the case of

a clock started by a disapproval, such a

determination would be represented by

a final, full approval. However, EPA

does not believe that section 179(a)

requires a final approval in order to

defer or stay the application of

sanctions, since the statutory language

speaks generally in terms of "correcting" deficiencies and

"determining" compliance without

explicitly linking those events to final

approval actions.

Regarding SIP disapprovals, EPA

recognizes the first commenter's

concern over timing and believes that

this policy clarification eliminates the

potential for sanctions applying in an

area when EPA has a submittal in house

for which EPA has determined that it is

more likely than not that the State has

corrected the deficiency that prompted

the original disapproval. Extending the

approach for disapprovals to findings of

nonimplementation also serves to avoid

applying sanctions when EPA has

proposed that a State is implementing

its approved SIP.

Consequently, EPA believes it is

consistent with section 179 to treat

proposed full approvals following

disapprovals 26 as the basis for deferring

25 These actions permanently stop the sanctions

clock and permanently remove sanctions because

such actions represent EPA's final determination

that the'State has met the requirements of the Act

and thus has corrected the deficiency that initiated

the sanctions process. 2

6The following discussion on EPA's legal

rationale and basis for staying and deferring

or staying the application of sanctions,

while not permanently stopping the

sanctions clock or permanently lifting

sanctions. The EPA also believes it is

consistent with section 179 for proposed

and final conditional approvals to be'the

basis for deferring and/or staying the

application of sanctions. 27 The proposed

full or conditional approval then forms

the basis for EPA to issue an interim

final determination, which EPA would

publish in a separate action in the

Federal Register contemporaneously

with the proposed approval notice, that

the State had corrected the deficiency

and come into compliance with the

requirements of the Act.2 8 While this

interim final determination would have

the effect of deferring or staying

sanctions, it would not have the final

effect of either approving the submitted

SIP revision, or permanently stopping-a

sanctions clock or permanently lifting

sanctions. The interim final

determination would be subject to

notice and comment and would have

effect only until either EPA made a final

determination that the deficiency was

corrected at the time of a final approval

of the SIP revision, or EPA reversed its

interim final determination at the time

EPA reverses its proposed full or

conditional approval. If an EPA

proposed full approval were reversed by

a proposed disapproval, the Agency

would publish a separate action in the

Federal Register withdrawing the

interim final determination (that the

State has corrected the deficiency)

conteinporaneously with the notice of 1

the proposed disapproval. If an EPA

proposed approval were reversed by a

.final disapproval, EPA would take final

action finding that the deficiency- has

not been corrected in the final

disapproval action. For an EPA

proposed conditional approval, a

reversal could occur by a proposed or

final disapproval. For an EPA final

conditional approval, a reversal would

occur when the conditional approval

converts to a disapproval through the

sanctions only explicitly addresses SIP

disapprovals but applies equally to findings of

nonimplementation. 2

'ln NRflC v. EPA, No. 92-1535, slip. op. at 18

(D.C. Cir. May 6, 1994), !he Court struck down

EPA's policy of conditionally approving committal

SIP's (i.e., SIP's consisting solely of a commitment).

However, the Court provided that "the conditional

approval mechanism was intended to provide EPA

with an alternative to disapproving substantive, but not entirely satisfactory, SIP's * * *." The EPA will

issue conditional approvals consistent with that

Court's opinibn. 2

1 Since a final conditional approval has the effect

of continuing the staying and/or deferring of

sanctions, upon final conditional approval. EPA

would not publish a second interim final

determination that the State has corrected the

deficiency (see footnote 18).

State's failing to submit a complete

revised SIP to which it committed or by

EPA's disapproval of the State's revised

SIP.

The EPA believes that this approach

is similar to the method courts

traditionally use to grant interim

equitable relief. Courts may grant

preliminary injunctions to parties that

the court determines are likely to

succeed on the merits of their case,

Where there is no adequate legal remedy

available, and where the public interest

would not be served in not granting the

injunction. Such injunctions may

typically last until the court has finally

decided the merits of the case, either for

or against the party granted the

injunction. Deferring or staying the

application of sanctions upon proposed

approval of a SIP revision is analogous,

in that an EPA proposed approval

represents EPA's view that it is more

likely than not that the State has

corrected the disapproval deficiency

and come into compliance with the

requirements of thn Act. Also, as SIP

approval actions generally require

notice-and-comment rulemaking before

they can become final, if a sanctions

clock is due to expire after proposed

approval but be'fore the Agency can

practicably fulfill its notice and

comment duties and grant final

approval, there is no other "remedy"

available to relieve the State from the

punishment of sanctions, even though it

is probable that the State has corrected

the deficiency.

Moreover, EPA does not believe,

following proposed approvals, that it

would be in the public interest for

sanctions to remain in effect, as at that

point the Agency believes that there is

nothing further that the State need do to

come into compliance, and thus there is

no further need for the deterrent effect

of sanctions. The EPA also believes that

in these situations it would be

especially unfair to States to begin the

application of sanctions where the only

reason the sanctions clock has not

permanently stopped is that the Agency

cannot 'complete its rulemaking process

to finally approve the SIP before

sanctions apply. Finally, EPA notes that

like the judicial preliminary injunction

model, this approach provides that

upon reversal of EPA's preliminary

assessment that the SIP revision is

approvable, and that, therefore, the

deficiency has not been corrected,

sanctions would be in effect as if the

interim final determination that the

State had corrected the deficiency had

never been made.

The EPA also believes that this

approach is consistent with the

requirements of section 553 of the APA.

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Generally, under the APA, agency

rulemaking affecting the rights of

individuals must comply with certain

minimum procedural requirements,

including publishing a notice of

proposed rulemaking in the Federal

Register and providing an opportunity

for the public to submit written

comments on the proposal, before-the

rulemaking can have final effect. The

EPA will not be providing an

opportunity for public comment before

those deferrals or stays are effective:

Consequently, EPA's approach may

appear to conflict with the requirements

of the APA. However, EPA will provide

an opportunity to comment on the

proposed approval that was the basis for

the interim final decision and will

provide an opportunity, after the fact,

for the public to comment on the

interim final decision. Thus, an

opportunity for comment will be

provided before any sanctions clock is

permanently stopped or any already

applied sanctions are permanently

lifted. In the context-of the SIP approval

rulemaking, and with respect to the

interim final rule, the public would

have an opportunity to comnuent on the

appropriateness of EPA's interim

determination that the State had

corrected the deficiency and on whether

the State should remain subject to

sanctions, even though the deferral or

stay is already effective.

The basis for allowing such an interim

final action stems from section 553(b)(B)

of the APA which provides that the

notice and opportunity for comment

requirements do not apply when the

Agency finds that those procedures are

"impracticable, unnecessary, or contrary

to the public interest." In the case of

sanctions, EPA believeg it would be

both impracticable and contrary to the

public interest to have to propose and

provide an opportunity to comment

before any relief is provided from the

effect of sanctions. First, until EPA

proposes approval of a SIP revision, the

Agency's first step in determining,

whether a State's SIP submittal meets

the requirements of the Act, EPA is not

in a position to propose that the State

has corrected the deficiency; thus, there

is no point in the process before

proposed approval at which EPA could

propose that the State has corrected the

deficiency and provide an opportunity

for meaningful public comment on the

issue. Second, as discussed above, EPA

believes it would be unfair to the State

and its citizens, and thus not in the

public interest, for sanctions to remain

in effect following an EPA proposed

approval, since at that point the Agency

has completed a thorough evaluation of

the State's SIP revision and publicly

stated its belief that the submittal is

approvable and that the State has

corrected the deficiency, but due to the

procedural requirements of the Act the

Agency has not yet been able to issue a

final approval. The EPA believes

sanctions coming into effect following

proposed approvals would

unnecessarily risk potential dislocation

in government programs and the

marketplace. The EPA also believes that

the risk of an inappropriate deferral or

stay would be comparatively small,

given the limited scope and duration

deferrals and stays would have and

given the rule's mechanism for making

sanctions effective upon reversal of its

initial determination that the Statehad

corrected the deficiency. Consequently,

EPA believes that the "good cause"

exception under the APA allows the

Agency to dispense with notice and

comment procedures before deferrals

and stays of sanctions become effective,

and that it is thus appropriate to

respond to the commenters with the

approach adopted in today's rule.

5) Responses to Other Comments.

The EPA does not support the

alternative proposed by the commenters

that EPA temporarily or permanently

stop the sanction clocks started by

disapprovals upon EPA receipt of a

submittal that the State believes corrects

the deficiency.

The EPA cannot determine whether

the State has corrected the deficiency

until it reviews the plan for adequacy.

If the sanction clock were temporarily or

permanently stopped upon mere

submission of a plan following any

section 179(a) disapproval (or finding of

nonimplementation) and not started

again until subsequent disapproval,

mandatory sanctions would then take

that much longer to have the effect of

encouraging State compliance and

protecting air quality in the area.

Temporarily or permanently stopping

the clock upon mere submission of a

plan could result in abuse of the system

by States knowingly submitting SIP's

that EPA cannot approve in order to

defer the application of sanctions. By

allowing such abuses, such an approach

would also be unfair to States which,

despite a good faith effort at developing

a corrective rule, are unable to avert

sanctions following disapproval. In

sum, under the revised policy, the

underlying requirement for stopping the

sanction clock is maintained: EPA must

take final action to fully approve a

submitted SIP revision or find that a

State is implementing its SIP in order to

permanently stop the sanctions clock

and permanently lift any sanctions. As

discussed above, EPA will defer an'dior

stay the application of sanctions when

it proposes a positive finding that forms

the basis for EPA to determine through

an interim final action that the

deficiency has been corrected; but in

these cases EPA will not temporarily orpermanently stop the underlying clock.

The EPA also believes that its

interpretation is legally supported under

the Act. Generally, section 179 states

that, "* * * unless such deficiency has

been corrected within 18 months after

the finding, disapproval, or

determination * * *" one of the

sanctions shall apply, as selected by the

Administrator. Section 110(c)(1) of the

Act requires EPA to promulgate a FIP at

any time within 2 years after the

Administrator finds that a State has not

made a required submission or has

made an incomplete submission, or

disapproves a plan submission, "unless

the State corrects the deficiency, and the

Administrator approves the plan or plan

revision, before the Administrator

promulgates such Federal

implementation plan. "

The running of the sanctions clock is

tied to the particular deficiency at issue.

For example, if the clock was triggered

by a finding of failure to submit or a

finding of incompleteness, the clock

will stop if EPA determines that the

State submits a complete plan; it is not

also necessary for the plan to be actually

approved to stop the clock. If the

complete submission is later

disapproved, then a new 18-month

clock will begin to run, as provided in

section 179(a), and will continue to run

until that deficiency is corrected with

an EPA approved plan. For the FIP

clock, in addition to the deficiency

being corrected, section 110(c)(1)

includes an additional criterion-EPA

SIP approval-that must be satisfied for

EPA not to have to promulgate a FIP

within 2 years of a finding of

nonsubmittal or incompleteness. The

explicit reference to an approval as an

added prerequisite-beyond "correcting

the deficiencyV- makes clear that, in

the context of failures to submit or

submission of incomplete plans, plan

approval is quite distinct from

"correcting the deficiency." Theref6re,

the Administrator's approval is distinct

from "correcting the deficiency" for

failure to submit and incompleteness.

Therefore, the fact that the "SIP

approval" language is redundant for

disapprovals, where SIP approval is part

of correcting the deficiency, does not

render that clause superfluous.

This interpretation of the section 179

sanction clock does not "read out" the

section 110(c) requirement, but rather

merely illustrates that following

disapprovals what is necessary to stop

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the sanction and FIP clocks is the same:

EPA approval of the SIP. (See EPA's July

9, 1992 SIP processing guidance, page

10.) However, as discussed above, this

is not the case for sanction clocks

started by a finding of failure to submit

or a finding of incompleteness. There,

the State can correct the deficiency

merely by submitting a SIP EPA finds

complete. This would stop the sanctions

clock. In these situations, the additional

step of EPA approval is required to stop

the FIP clock, under the plain language

of section 110(c)c(1).

Therefore, EPA's interpretation of

section 179(a) does not render the

provisions of section 110(c)(1)(B)

inconsistent, meaningless or

superfluous. The Boise Cascade case

cited by the commenter addressed a

situation in which one word, "promulgation," was argued by'

petitioners to have the same meaning as

another, "approval" (942 F.2d at 1342).

The court rejected that argument

because failing to distinguish between

the terms would have resulted either in

a conflict between two subsections of

the Clean Water Act or made

superfluous the use of "approval" in

another subsection (Id). Here, EPA's

interpretation of what is required to

correct a deficiency under section 179(a)

does not conflict with the requirement

for EPA approval to stop a FIP clock. It

logically follows that approval is

implicitly required to correct a

deficiency based on a disapproval, since

a State-cannot be considered to have

remedied the underlying flaw that led to

a disapproval until EPA has determined

that the State's attempt to-do so is

approvable. 29 The explicit language in

section 110(c)(1)(B) is necessary because

FIP clocks also may be started by a

finding of failure to submit or SIP

disapproval. Congress was explicitly

providing that in both these instances

EPA approval is required to stop a FTP

clock. Therefore, the reference in

section 110(c) to the need for EPA

approval still has meaning when the

initial failure was a failure to submit or

an incompleteness finding. Thus, EPA's

interpretation does not render

29

As discussed above, EPA believes it is

appropriate at the point of proposed approval to

contemporaneously issue an interim final

determination that'tha State has corrected the

deficiency for purposes of deferring or staying the

application of any sanctions that are due. Again,

this interim final determination would be subject to

the condition that EPA grant final approval to the

SIP, and would not have any final effect on the

actual approval action. If the subsequent condition

is not met (i.e.. if EPA's proposed approval is

reversed by a proposed or final disapproval), from

that point on the interim final determination would

have no effect and any sanctions required to be

applied would be applied.

superfluous the explicit language in

section 110(c)(1)(B).

Moreover, EPA's interpretation does

not ignore or "read out" of the statute

section'110(c)(1)(B) (NRDCv. USEPA,

822 F.2d at 113). That case addressed a

petitioner's attempt to ignore a specific

condition of the Clean Water Act's

applicability provision, which the court

viewed as an unacceptable method of

construing statutes (Id). Here, rather

than disregarding the requirement that

EPA approval is necessary to stop a FIP

clock, EPA is interpreting section 179(a)

to implicitly require that same element

to be satisfied before a sanctions clock

started for a disapproval can be stopped.

This in no way ignores the section

110(c)(1)(B) language for purposes of the

FIP clock, nor represents an attempt to

interpret the Act such that the language

of section 110(c)(1)(B) does not have full

effect. As stated 'above, the reference to

EPA approval in that section still has

meaning where the clock was started by

a finding of failure to submit or

incompleteness.

(5) Additional Comments Regarding

the Sanctions Clock.

(a) Comments. Another commenter

believes that the final rule should

provide for resetting the sanctions clock

whenever a State that had failed to

submit a timely SIP submits one, even

if the SIP is later found to be

incomplete. The commenter notes that

section 179 provides for an 18-month

period following one of four different

types of findings of inadequate State

action before sanctions can be imposed.

The commenter argues that EPA

illegally shortens this period by

combining into one, two types of

inadequate action under the same 18-

month period, and that the final rule

should provide for separate clocks for

each type of inadequate action.

Another commenter is concerned that

States may be tempted to view the 18-

month sanctions clock as additional

time in which to meet a deadline. The

commenter believes that Congress did

not intend that States that failed to

submit a timely SIP and later submitted

an inadequate SIP would have more

time before facing sanctions than States

that submitted a complete but

unapprovable SIP on time. While the

commenter agrees with EPA's policy

that incomplete submittals cannot

temporarily stop the sanctions clock, the

commenter believes the overall policy

rewards delay in completing programs.

The commenter believes that the final

rule should state that only EPA approval

of a final rule stops the clock.

(b) Responses. As noted above,

section 179 indicates that sanctions

apply within certain timeframes, unless

EPA determines that the deficiency that

prompted the finding starting the

sanctions clock has been corrected

within those timeframes. Therefore,

EPA believes the Act requires that

sanction clocks stop for findings of

failure to submit and findings of

incompleteness when EPA finds a

subsequently submitted SIP complete

(i.e., finds that the deficiency has been

corrected).

The EPA disagrees that a clock started

by a finding of failure to submit should

stop based on a mere submittal that may

or may not be complete. The Act

provides under section 110(k)(1)(C) that

where the Administrator determines

that a plan is incomplete the State is

treated as not having made the

submission. Based on this, EPA believes

that an affirmative finding that a SIP is

complete is necessary to cure a

nonsubmittal or incompleteness

deficiency and stop sanction clocks

initiated by such findings.30 This

interpretation is further supported by

the fact that a finding of failure to

submit and incompleteness are

provided for under the same provision

of sections 179(a)(1) and 179(a)(3)(A).

On the other hand, EPA does not

believe that it is appropriate to allow

only EPA approval to permanently stop

the sanction clock for all types of

findings. 3

' It is conceivable that a State

could abuse the system under the

process established in the final rule by

submitting a complete but inadequate

SIP at 17 months that stops a sanctions

clock that started based on a finding of

failure to submit or a finding of

incompleteness. Such an area could face

sanctions later than the State that

submitted a timely, complete but

unapprovable SIP. However, as

discussed above, EPA believes the

reference to "such deficiency"

immediately following the list of the

types of deficiency findings in section

179(a) indicates that sanctions clocks

will stop if and when the State corrects

the specific deficiency that prompted

the finding. Consequently, the running

and stopping of the clock is tied to the

particular deficiency at issue, and EPA

believes that it lacks the statutory

30As noted above in this section. this change is

reflected in the rule and is discussed in section

UlC.4. of this document.

31 As noted above, the commenter indicates that

it agrees with EPA's proposed policy that

incomplete submittals cannot temporarily stop the

sanctions clock. The EPA's proposed policy did not

state that incomplete submittals cannot temporarily

stop the sanctions clock. Rather, EPA's proposed

policy stated that incomplete submittals cannot

permanently stop the sanctions clock initiated by a finding of failure to submit or incompleteness.

Thus, in responding to the comment permanently

stop has been substituted for temporarily stop.

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authority to apply mandatory sanctions

under section 179 upon those States that

initially failed to make a submission

(through failure to submit or by virtue

of an incomplete submission) but which

have subsequently submitted a complete

plan. The submission of a complete plan

is sufficient to stop a clock started for

a failure to submit any or a complete

plan because at that point the State has

corrected the specific earlier deficiency

of not having submitted a complete

plan. Following this correction, the

plain language of section 179, does not

allow application of mandatory

sanctions due to the original deficiency.

but if the complete submission is later

disapproved, a new sanction clock will

begin to run and will continue to run

until-that specific deficiency is

corrected.32 The EPA believes that

overall its policy is consistent with the

language of section 179 and rational in

that it recognizes that what the State

must do to correct a deficiency relates

directly to the nature of the finding, and

that overall this policy will encourage

compliance with Act requirements. Finally, the Act contains due dates by

which the State is required to submit

certain SIP's. The EPA does not believe

that Congress established the 18-month

period before mandatory sanctions must

apply as a grace period in which States

have a legal right under section 179 to

submit SIP's after the relevant statutory

due date. In fact, EPA interprets section

110(m) of the Act as providing EPA with

the authority to " * * apply any of the

sanctions listed in section 179(b) at any

time (or at any time after) the

Administrator makes a finding,

disapproval, or determination under

* * * section 179(a) * * *." Therefore,

EPA is not precluded from taking more

aggressive action than required under

section 179 when States fail to correct

deficient plans.

4. Other Areas of Comment

This section addresses the reniaining

areas oi the proposal where comment

was received.

a. Lack of Good Faith Determination.

Under section 179(a), both the offset and

highway sanctions shall apply after 18

months if the Administrator finds a lack

of good faith on the part of the State. In

the proposal at page 51274, EPA

indicated that any finding of a lack of

good faith EPA makes under section

-12 Furthermore, it appears that the approach

articulated by this commenter (i.e., that sanctions

clocks and FtP clocks are both stopped by EPA

approval ofa revised SIP) would present the

problems recognized in reading out of section

11O(c)(1 the clause "the Administrator approves

the plan or plan revision" (Boise Cascade, 942 F.2d

at 1432. and NRDCv. EPA, 822 F.2d at 113).

179(a) will be subject to notice-andcomment rulemaking.

One commenter believes that the final

rule should define a "lack of good faith"

and require application of both

sanctions as a default where it exists.

The commenter believes that some

situations may require fact specific

judgment, while others are so extreme

that they presumptively prove the State

has decided not to make.a good faith

effort at complying. The commenter

believes that EPA need not undertake

notice-and-comment rulemaking with

respect to findings of a lack of good

faith. Another commenter believes that

the phrase "if the Administrator finds a

lack of good faith on the part of the '

State" is subjective and ambiguous and

needs defining.

In response to the comments, EPA

still believes findings of a lack of good

faith under section 179(a) must be

subject to notice-and-comment since it

is a discretionary action which requires

exercise of a substantial degree of

judgment on EPA's part. The public should have an opportunity to comment

on the basis for these actions. Further,

EPA does not yet have a policy on how

to further, define the Act's language, or

when and where it plans to make

findings of a lack of good faith other

than the case-by-case approach

described above. The notice-andcomment rulemaking will provide an

opportunity for the public to comment

on EPA's interpretation of a lack of good

faith in each case-specific circumstance.

b. Sanction Timing. The proposal at.

page 51272 indicated that since section

179(a) provides for automatic sanction

application once EPA has made the

selection, under this sanction sequence

rule sanctions will apply automatically

in the order prescribed herein in all

instances in which sanctions are

applied following findings under

section 179(a) (1)-(4) that EPA has

already made or that EPA will make'in

the future, except when EPA takes a

separate action to select a different

sequence of sanction application.

However, the proposal indicated that

where the sanction clock expires-for any

findings before this action is final and

effective and EPA has not taken

independent sanction selection action,

EPA interprets section 179(a) to provide

that sanctions shall not apply until EPA

makes the sanction selection through

notice-and-comment rulemaking, such

as this action.

• At page 51272 of the proposal EPA

also indicated that EPA intends to notify

States of the automatic sanctions by

letter and publish a document in the

Federal Register in which EPA amends

the language of the rule to indicate areas

subject to the applicable sanctions. The

proposal provided that if removal of

sanctions is warranted, EPA would

notify the State that sanctions are being

removed and amend the rule to reflect

that.

One commenter believes that EPA's

interpretation of section 179 is incorrect

and that section 179 unambiguously

requires sanction application within 18

months of a finding. The commenter

believes that Congress did not condition

EPA's mandatory sanction application

duty on completion of notice-andcomment rulemaking.

The plain reading of section 179(a) is

that sanctions, "as selected by the

Administrator," apply within certain

prescribed timeframes. The section does

not provide any guidance to EPA on

sanction application sequence. Given

this wide discretion, EPA believes that

it is necessary for sanction selection to

be subject to notice-and7comment in

order to provide for public comment.

The EPA interprets the phrase "as

selected by the Administrator" as words

of condition that must be met before

mandatory sanctions apply. Indeed,

EPA is undertaking this rulemaking to

satisfy the conditional duty so that

sanctions may apply automatically

when sanctions clocks expire.

The EPA is also conducting this

rulemaking to eliminate the future need

(except to reverse .the sanction

sequence) for individual rulemakings

for every finding with respect to part D

requirements. The EPA believes in the

long run this action will facilitate.

smooth application of sanctions to

encourage State compliance and protect

air quality,

c. Notice and Comment for

Nonsubmittal and Incompleteness

Findings. In the proposal at page 51272,

EPA's view was that notice-and- " comment is not required for findings of

failure to submit because of insufficient

time provided by the statute. Since EPA

has less than 60 days to determine

whether a State's submittal is complete,

and it is impossible to provide noticeand-comment in 60 days, EPA believes

that Congress clearly intended that EPA

should not go through notice-andcomment rulemaking prior to making

findings of failure to submit.

Additionally, EPA argued that even if

EPA's findings of failure to submit were

subject to APA rulemaking procedures,

EPA believed that the good cause

exception to the rulemaking

requirement applies (APA section

553(b)(B)). Section 553(b)(B)of the APA

provides that EPA need not provide

notice and an opportunity for comment

if EPA determines that notice and

comment are "impracticable.

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unnecessary, or contrary to the public

interest." The EPA argued that notice

and comment for findings of failure to

submit does not require any judgment

on the part of EPA and, therefore, is

unnecessary.

One commenter states that under the

APA, burdens such as sanctions cannot

be imposed without notice-andcomment. The commenter argues that

EPA provides no defense of its denial of

* public comment for findings of

incompleteness and cannot defend such

denial for findings of nonsubmittal and

incompleteness. The commenter. further

argues the judgment of whether a SIP

meets the SIP completeness criteria is

often debatable and discretionary..

Therefore, the commenter argues, the

public should be able to comment.

Another commenter believes that

EPA's proposal contradicts the spirit

and letter of the notice-and-comment

provisions in the Act. The commenter

argues the proposal. is contradictory on

when it allows for public comment in

some instances but not others.

In response to the comments, EPA

maintains that notice and comment is

not necessary for findings of failure to

submit and incompleteness. The 60

days the Act provides EPA to determine

whether a State submittal is complete

does not provide sufficient time to

conduct notice-and-comment

rulemaking prior to making findings of

failure to submit or findings of

incompleteness. The.EPA continues to

believe that the impossibility of

conducting notice-and-comment

rulemaking within the 60 days provided

for completeness decisions is itself

compelling evidence that Congress did

not intend such rulemaking. , , Additionally, EPA does not believe that

notice and comment are necessary for

findings of incompleteness because

section 110(k)(1)(B) does not

specifically require it. By enacting

section 110(k)(1) on completeness,

Congress was codifying an EPA practice

created in late 1989 in which EPA did

not provide notice-and-comment

rulemaking before making

incompleteness findings.33 By codifying - that practice and by not specifically

requiring anything more than the

process EPA already established,

33 Note that in promulgating the completeness

criteria, EPA noted that the purpose of the

completeness procedure is to "keep incomplete

packages out of the more extensive review.system

(i.e., rulemaking for approval), thereby saving both

EPA and the State valuable time" (54 FR 2138, 2139

(January 19. 1989)). Therefore, requiring rulemaking action to determine whether a SIP submittal is

complete would defeat the purpose of the

completeness criteria, which is to allow for a quick

rejection of those submittals that are "essentially

unreviewable" (ld).

Congress appears to have adopted EPA's

established process of making

completeness determinations by letter.

Moreover, EPA does not believe that the

completeness determination is highly

discretionary, but instead is a

straightforward exercise to assure a

State's submittal has all the basic

elements to warrant further review for

overall adequacy. Regarding the APA, EPA continues to

believe that even if EPA's findings of

failure to submit and incompleteness

were subject to rulemaking procedures

under the APA, the good cause

exception applies to such findings for

the reasons discussed above. It would

not be practicable to subject every

:completeness review to notice and

comment because of the limited time

afforded by the statute. It would also not

be in the public's iriterest because it

would impose a tremendous burden on

the Agency and divert resources from

more important substantive SIP reviews.

Regarding the consistency comment,

EPA believes that it is adhering to the

notice-and-comment provisions of the

amended Act and the APA. Where it is

appropriate, because the determination

requires EPA judgment, EPA provides

for notice and comment (i.e., for SIP

disapprovals or findings of

nonimplementation). Additionally, as

EPA has done via this action,when EPA

makes a sanction selection notice and

comment are also provided. On the

other hand, as discussed above, in other

cases sufficient time does not exist to

provide for notice and comment and the

determinations themselves require little,

if any, judgment. Finally, as discussed

in section II.C.3., the final rule does not

cover findings of substantial inadequacy

undersection 110(k)(5) for part D SIP's

(so-called SIP calls), which were

covered by the proposed rule, because

of concerns about adequate notice and

comment before sanctions are applied

for State failure to respond to a SIP call.

The EPA intends to develop an

alternative approach for applying

mandatory sanctions for State failure to

respond to SIP calls that provides for

notice and comment.

d. PM-I0 Waivers. The proposal did

not address the PM-10 waiver

provisions in section 188(f) of the Act.

The commenter expresses a. frustration

with the definition of PM-10 "significance" and argues that in the

West, PM-10 levels above the standard

are caused predominately by fugitive

dust and mobile sources. Therefore, the

commenter believes, applying 2-to-1

offsets to industrial sources will have a

negligible effect on PM-10 24-hour

concentrations.

A July 1992 draft addendum to the

General Preamble (57 FR 31477, July 16,

1.992) addresses several waiver policy

issues, including significance levels.

The EPA believes the comment period

for that policy, rather than this action

selecting sanctions, is the appropriate

forum for comments on that issue. The

EPA recognizes that in some

nonattainment areas industrial sources

may be less significant contributors. In

those cases,, EPA may decide to apply

the highway sanction first, which this

rule provides flexibility to do.

C. Summary of Changes in Rule

1. Section 52.31(a)-Purpose

Section 52.31(a) sets forth the purpose

of this'rulemaking, which is to establish

the sequence of sanctions required to

apply under section 179(a). The

substance of this provision was not

changed from the proposed rule.

2. Section 52.31(b)-Definitions

Section 52.31(b) sets forth the

definitions applicable under 40 CFR

52.31. The definitions of "Act" and

"1990 Amendments" are not

substantively changed. However, the

citations for these two definitions were

inadvertently switched and they now

correctly provide that the Act, is located

at 42 U.S.C. et seq. and the 1990

Amendments were set forth in Public

Law 101-549.

In addition, several definitions were

added. Since the regulation provides

that the offset sanction only applies to

the pollutant(s) that the finding

concerns and its precursors, EPA has

added a definition of "precursors." The

EPA has also added a definition of "ozone precursors" which specifically

identifies the two ozone precursorsVOC and NO,.

The EPA has added a new definition

for "affected area." This term,,while

used in the proposed rule (e.g., the

tables), was not previously defined.

Furthermore, its usage in the final rule

has been expanded; in many places the

word "area" has now been replaced by "affected area." The definition provides

that an "affected area" is the geographic

area subject to or covered by the Act

requirement that is the subject of the

finding and either, for purposes of the

offset and highway sanctions, is or is

within an area designated

nonattainment area pursuant to 42

U.S.C. 7407(d) or, for purposes of the

offset sanction, is or-is within an area

otherwise subject to the emission offset

requirements of 42 US.C. 7503. As used

in this rule, in conjunction with

§ 52.31(e) (1) and (2), the affected area

is the area potentially subject to a

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sanction based on a finding. The new

definition clarifies that the sanction

applies to the geographic area subject to

or covered by the requirement at issue

in the finding. This will usually be the

entire designated area, but in some

instances may be a portion of a

designated area. This point is made'

through the first portion of the

definition. Moreover, since the affected

area is the area in which a sanction

applies, it was necessary to limit the

definition to those areas that could be

subject to a sanction. Therefore, the

second portion of the definition restricts

the definition of "affected area" by

incorporating the geographic limits of

the highway and offset sanctions. First,

the highway sanction, as applied under

section 179(a), is limited to

nonattainment areas, since section

179(b)(1) provides that the highway

sanction may be "applicable to a

nonattainment area." -4 Second, by its

terms, the offset sanction has effect only

in those areas in which the offset

requirements of section 173 are required

to apply. (See 59 FR 1480 (January 11,

1994) for a further discussion of the

geographic applicability of section

179(b) sanctions.) This includes all

nonattainment areas. In addition, some

attainment and unclassified areas (e.g.,

those located in the NOTR could be

subject to the offset sanction,-since

those areas may be subject to the offset

requirements of section 173, even

though they are not designated

nonattainment (see section 184, for

example). Therefore, the second clause

of the definition limits affected areas to

nonattainment areas (which would be

subject to both the highway and offset

sanction) and areas otherwise subject to

the emission offset requirements of

section 173 (which would be subject to

the offset sanctions).

Three examples illustrate how this

definition applies. One, if EPA finds

that a State fails to submit a PM-10 plan

for a moderate PM-10 nonattainment

area pursuant to section 189(a) and the

State does not correct the deficiency

within 18 months, then, pursuant to this

rule, the offset sanction shall apply in

the PM-10 nonattainment area whose

boundaries are described in 40 CFR part

81. If 6 months later the deficiency

remains uncorrected, then the highway

sanction applies in the nonattainment

area as well. In both cases the sanction

applies only in the nonattainment area

because that is the geographic area

covered by the Act requirement.

34

Section 171(2) defines "nonattainment area" as

"an area which is designated'nonattainment' with

respect to (an air) pollutant within the meaning of

section 107(d)."

Two, if EPA finds a State fails to

submit a required SIP revision under the

Act for a requirement that applies to

only a portion of an area, then the

sanctions apply to the portion of the

area subject to the requirement and not

the whole area. For example, the

enhanced inspection and maintenance

plan requirement for serious, severe.

and extreme nonattainment areas

applies only to "each urbanized area (in

the nonattainment area) as defined by.

the Bureau of the Census, with a 1980

population of 200,000 or more" (see

section 182(c)(3)(A)). Section 184

provides that for all areas within the

NOTR, this requirement will apply to

urbanized areas with a population in

excess of 100,000. Therefore, this

requirement could apply to a smaller

area within a designated nonattainment,

attainment or unclassified area. If the

State fails to adopt the program for such

an area, the section 179 sanctions would

apply only to that smaller area. Finally, if EPA finds that a State

within the NOTR fails to submit a

reasonably available control technology

SIP for VOC required pursuant to

section 184(b)(1)(B) with respect to all

the sources in the State subject to this

requirement, and the State does not

correct the deficiency within 18 months,

then, pursuant to this rule, the offset

sanction would apply in the entire

State. If 6 months later the deficiency

remained uncorrected, then the highway

sanction would apply to all of the

nonattainment artas in the State. If there

were no designated nonattainment areas

within the State, the highway sanction

would not apply in that State.

The remaining definitions remain

substantively unchanged from those in

the proposed rule.

3. Section 52.31(c)-Applicability

Section 52.31(c) establishes the

applicability of the final rule. The

portions of § 52.31(c) setting forth the

findings that trigger the sanctions clock

remain unchanged as these portions

were taken directly from sections 179(a)

(1)-(4). Generally, these findings are

that a State has failed to submit a

required SIP or SIP element, has

submitted a SIP or SIP element that does

not meet EPA's completeness criteria,

has submitted a SIP that is not

approvable, or that the State is failing to

implement an approved SIP.

The portions of§ 52.31(c) indicating

the SIP requirements to which this rule

applies have been modified. The

proposal indicated the rule covers any

part D SIP or SIP revision required

under the Act, or any part D SIP or SIP

revision required in response to a

finding of substantial inadequacy under

section 110(k)(5). This section of the

final rule has been modified to cover

only part D SIP and SIP revisions and

not calls for part D SIP's or SIP revisions

under section 110(k)(5). The final rule

does not cover part D SIP calls because

of concerns about applying sanctions for

State failures to respond to such SIP

calls following EPA nonsubmittal

* findings without opportunity for notice

and comment. SIP calls are currently

not subject to notice-and-comment. The

public and affected sources must be

given notice and opportunity to

comment before SIP calls can have

binding effect as a result of a section

179(a) finding that a State has failed to

submit a SIP in response to a SIP call.

Thus, if this rule were to apply to State

failures to respond to SIP calls,

mandatory sanctions could apply

without an opportunity for such

comment before new obligations

become binding against affected

sources. This would be inconsistent

with the APA requirements of section

553. Therefore, as discussed in section

II.C.3., the final rule does not cover part

D SIP calls. The EPA will develop

another approach to address SIP calls,

providing an opportunity for notice and

comment before mandatory sanctions

apply for a State failure to respond to a

SIP call.

4. Section 52.31(d)-Sanction

Application Sequencing

Section 52.31(d)(1) is the heart of this

rule in that it establishes the order in

which the automatic sanctions under

section 179(a) shall apply. Several

clarifications have been made to the

section.

One, this provision now requires

affirmative EPA action to stop sanction

clocks and lift sanctions following

section 179(a) findings, including

nonsubmittal and incompleteness

findings. The EPA's proposed and final

sanction clock policy provides that,

following findings of nonsubmittal and

incompleteness, sanction clocks are

permanently stopped (and any sanctions

applied are permanently lifted) when

EPA finds the plan complete. Section

110(k)(1)(B) provides that a submittal is

deemed complete if a completeness

finding is not made by EPA within 6

months of EPA's receipt of the plan.

Under this clarification to § 52.31(d), a

SIP becoming complete by operation of

law will not be sufficient to stop

sanction clocks or for an area to avoid

sanctions. The EPA will need to

affirmatively determine that the SIP is

complete in order for the sanction clock

to stop and any sanctions to be lifted. I This policy clarification will

henceforth govern what is required to

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stop sanctions clocks and lift sanctions

following findings of nonsubmittal and

incompleteness, and the other section

179 findings. Prior to this policy

clarification, in certain cases EPA did

stop sanction clocks started by EPA

findings of failure to submit or

incompleteness by SIP submittals being

deemed complete "by operation of law."

The EPA believes that this approach

was consistent with EPA guidance at the

time and that it is appropriate to

grandfather these areas under EPA's

grandfathering guidance.

The EPA believes that after

consideration of its grandfathering

policy for SIP requirements 35 it is

permissible to grandfather these cases

from this policy clarification. The EPA's

general grandfathering guidance

provides that SIP revisions will remain

subject to the requirements in effect on

the date that the State adopts the SIP

revision, provided a complete, fully

adopted SIP revision is submitted

promptly, generally within 60 days of

the adoption. Since the policy

clarification is effective by this action

and all of the SIP submittals in question

were adopted more than 60 days prior

to September 6, 1994, under this general

grandfathering, these cases are

grandfathered. However, the guidance

includes several exceptions to the

general guidance which must be

addressed before an action is considered

by EPA to be grandfathered. The first exception concerns the

intent of the policy not to grandfather

SIP's submitted hurriedly to avoid new

requirements. In the cases at issue, such

action has not occurred on the part of

the State since 'the States have received

no early, formal notification that the

sanction clock policy is being clarified

in the manner it is today. The second exception to general

guidance on grandfathering concerns - situations where a court ruling has

explicitly changed a current Federal

requirement or has convinced EPA that

a previous requirement is no longer

supportable. Here no such court ruling

is at issue so no exception should be

made in this case.

The third exception is that the

Administrator may determine that

grandfathering is not appropriate under

a new policy. In this case, the

Administrator is determining that

grandfathering is appropriate. The fourth exception indicates that

grandfathering is not appropriate if it

would have an imminent and

35See "'Grandfathering' of Requirements for

Pending SIP Revisions," memorandum from Gerald

A. Emison to Air Division Director, Regions I-X,

June 27, 1988. This memorandum has been entered

in the docket for this rulemaking.

substantial adverse environmental effect

or could permanently foreclose use of

part D provisions such as sanctions. The

EPA does not believe that

grandfathering these areas from this

policy clarification will have an

imminent and substantial

environmental impact given the limited

number of areas and given that the

States' submittals must be adequate to

attain and maintain the relevant

r4AAQS before EPA can approve them.

In addition, this grandfathering does not

permanently foreclose the application of

sanctions in these areas should EPA,

through rulemaking, find the SIP

submittals inadequate to attain and

maintain the NAAQS and disapprove

them.

The fifth exception provides that

action on a SIP revision which comports

with the revised requirements but not

the original requirements may be based

on the revised requirements. In this

instance, this is indeed the case;

conceivably, one or more of those SIP's

deemed complete by operation of law

may have lacked one or more of the

elements needed for EPA to find a plan

affirmatively complete. Nonetheless,

EPA cannot fully approve a plan if any

of the required completeness elements

are lacking. For example, if a SIP

submittal lacks compliance/enforcement

strategies, one of technical elements

required for completeness, then EPA

could not fully approve the plan. . Therefore, while EPA is grandfathering

these SIP submittals from completeness,

EPA is not grandfathering these areas

from having adequate SIP's to attain and

maintain the standards.

The sixth exception raises a concern

as to whether grandfathering the SIP

from the requirements in question

would render the SIP as a whole

substantially inadequate.

Grandfathering these SIP submittals

from this policy does not raise direct

concern that doing so might render the

SIP's substantially inadequate since the

completeness review is not a review

-intended to pass judgement on the

adequacy of SIP's. Rather, it is intended

as a straightforward exercise to

determine whether the SIP's contain all

the technical and administrative

elements to warrant further review. As

discussed above, if any of these SIP

submittals deemed complete by

operation of law lack any such

elements, then such deficiency will be

reflected in EPA's determination as to

the SIP's adequacy to attain and

maintain the air quality standards.

The seventh exception concerns

certain classes of changes which are'

only indirectly related to attainment and

maintenance of the air quality

standards. Completeness reviews are

only indirectly related to attainment and

maintenance of the standards in that the

completeness review is not intended to

be review of the SIP's adequacy to meet

the standards. Therefore, the

grandfathering of these SIP submittals

from the policy clarification satisfies

this exception as well.

Two, the phrase "affected area" has

been substituted for "area." This is to

clarify that the sanction only applies in

affected areas, and not necessarily all

areas for which EPA makes a section

179(a) finding. (See the discussion of "affected area".under the definitions

sedtion above.) Three, the second

sentence regarding highway sanctions

has been clarified to provide that

correction of the deficiency "forming

the basis of the finding" is needed to

stop thd clock. This language is

consistent with the language included

in the proposal section 52.31(d)(1) for

the offset sanction in sentence I and

consistent with the interpretation

established in the preamble to the

proposed rule at pages 51272-51273.

This revision merely clarifies what

deficiency needs to be corrected in

order to stop the sanctions clock.

Finally, a new final sentence has been

added to the section. The sentence

provides that for clocks started by

rulemaking actions (i.e., disapprovals

and findings of failure to implement),

the date of the finding starting the clock

is the "effective date" of the action, not

necessarily the date it is signed or the'

date it is published in the Federal

Register. Since the disapproval or

finding of failure to implement is not

effective until the "effective date" of the

final action, the sanctions clock should

not start until such action is effective.

Upon further reflection, EPA

determined that the clarification should

be included in the rule in order to

ensure that the public is adequately

apprised of when the sanctions clock

has started for particular areas based on

a rulemaking action.

The EPA has revised the final rule to

add new sections §§ 52.31(d)(2), (d)(3),

and (d)(4). In response to comments,

these sections incorporate a revision

made to the rule concerning how and

when sanctions, not yet applied, may be

deferred and sanctions, already applied,

may be stayed. A complete discussion of

the revisions is set forth in section

II.B.3. above. These corrections concern

the circumstance where EPA has

disapproved a required submittal or

where EPA has found that a State has

failed to implement an approved SIP.

Sections 52.31(d)(2) and 52.31(d)(3) set

forth language concerning disapproved

SIP's and § 52.31(d)(4) sets forth the

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language regarding cases where EPA has

made a final finding of failure to

implement. For purposes of an initial

disapproval or an initial finding of

failure to implement for which EPA

subsequently proposes a positive

finding and issues an interim final rule

finding that the State has corrected the

deficiency, any sanctions resulting from

a clock that expires will be deferred and

any sanctions that have been applied

will be stayed. (A final conditional

approval would continue any stay or

deferral that resulted from a proposed

conditional approval.) This change

providing for a stay or deferral of

sanctions does not change the rule's

requirement that sanctions and

sanctions clocks are not permanently

stopped until EPA issues a final full

approval or determination that a State is

implementing its SIP.

Anew § 52.31(d)(5) has been added

which reaffirms what EPA-actions are

necessary for the mandatory sanctions

process to permanently cease.

Specifically, it provides that any

sanction clock will be permanently

stopped and sanctions applied, stayed

or deferred will be permanently lifted

upon a final EPA finding that the

deficiency forming the basis of the

finding has been corrected. For a

sanctions clock and applied sanctions

based on a finding of failure to submit

or incompleteness, a finding that the

deficiency has been corrected will occur

by letter from EPA to the governor. For

a sanctions clock or applied, stayed or

deferred sanctions based on a SIP

disapproval, a finding that the

deficiency has been corrected will occur

through a final notice in the Federal

Register fully approving the revised SIP.

For a sanctions clock or applied, stayed

or deferred sanctions based on a finding of nonimplementation, a finding that

the deficiency has been corrected will

occur through a final notice in the

Federal Register finding that the State is

implementing the approved SIP.

Section 52.31(d)(6) is essentially

unchanged from § 52.31(d)(2) of the

proposed rule. This section makes clear

that EPA may take rulemaking action in

any specific circumstance to reverse the

order in which sanctions will be applied

under section 179(a). In other words,

EPA can take rulemaking action so that

the highway sanction wouldapply after

18 months and the offset sanction 6

months thereafter. Two minor,

nonsubstantive, changes were made.

First, EPA replaced the phrase "the

EPA" with "the Administrator."

Second, EPA changed the term "should" to "shall" to more firmly

reflect the mandatory nature of the

sanctions

5. Section 52.31(e)-Available Sanctions

and Methods for Implementation

Section 52.31(e) sets forth the two

sanctions that are applied by section

179(a). This rule, as did the proposed

rule, interprets in greater detail the

offset sanction provided under section

179(b)(2).

Regarding § 52.31(e)(1), applicability

of the offset sanction, there have been

several changes that are intended to

more clearly capture the concepts in the

proposed rule and the preamble to the

proposed rule. The EPA has clarified the

applicability of the offset sanction to

PM-10 precursors, modified the rule for

PM-10 and ozone precursors, and

clarified the language in the rule

regarding the pollutant applicability of

the offset sanction when the SIP

deficiency in question is not specific to

a pollutant or pollutants. A discussion

of these changes in the context of the

specific sections follows.

The EPA-has revised § 52.31(e)(1)(i) in

several ways. First, EPA has removed

the offset sanction table from the rule,

and decided to provide the public

information on areas that will be

potentially subject to sanctions in a

separate Federal Register notice. As

EPA makes clear elsewhere in this

paragraph and the rule, the sanctions

automatically apply in the timeframes

prescribed under § 52.31(d), unless EPA

determines that the State has corrected

the relevant SIP deficiency forming the

basis of the finding. The EPA never

intended the inclusion of areas in a

table in this rule to be necessary for

sanctions to apply automatically. The

EPA does believe that it must provide

the public with as accurate information

as possible on areas that may face

sanctions and has elected to do so through notices in the Federal Register

rather than through a table in the body

of the rule. Substantively, there is no difference in the sense that areas will

face sanctions in the timeframes

prescribed under § 52.31(d) regardless of

whether they are listed in a table in the

rule or listed in a separate notice.

Second, EPA has added the clause "in

the timeframe prescribed under

§ 52.31(d) of this section on those

affected areas subject under § 52.31(d) to

the offset sanction of this section." As

noted above, sanctions apply

automatically regardless of whether

there is a table in the rule listing the

areas subject to sanctions. Thus, this

change was made to make it clear that

the sanctions apply within the time

frames set forth in § 52.31(d). To further

clarify this point, a second change to

proposed § 52.31(e)(1)(i) was to delete

"following" in the clause referencing

the offset ratio for pollutants and their

precursors. The reason for thischange is

because the table has been deleted and

thus no areas will be listed. The first

sentence of § 52.31(e)(1)(i) continues to

require that the 2 to I offsets be

achieved for the pollutant or pollutants

and any precursors for which the

finding is made. (For further discussion

of this issue, see section II.B.2.)

The EPA has added a second sentence

to § 52.31(e)(1)(i). This sentence is

partially derived from § 52.31(e)(1)(iv)

of the proposed rule. The purpose of

moving this sentence was to alleviate

redundancy in the proposed rule. The

first sentence of proposed

§ 52.31(e)(1)(iv) appeared to echo

proposed § 52.31(e)(1)(i) by stating that

offsets must be achieved for the.

pollutant(s) and its (their) precursors for

which the finding was made. Therefore,

EPA has not included the first sentence

of proposed § 52.31(e)(1)(iv) in the final

rule and has moved the second sentence

of proposed §52.31(e)(1)(iv) to final

§ 52.31(e)(1)(i). The sentence now

located as the second sentence of

§ 52.31(e)(1)(i) continues to provide that

if the underlying finding is not specific

to one or more pollutants and their

precursors, then the offset sanction shall

apply to all pollutants and, as relevant,

their precursors for which the area is

subject to the new source requirement of

section 173 of the Act. (See section

II.B.2. for further discussion of pollutant

applicability of the offset sanction.) This

provision, of course, would apply to any

area (nonattainment, attainment, or

unclassified) that is the subject of the

finding.

In its entirety, then, § 52.31(e)(1)(i)

now provides: (1) That the emission

offset sanction applies within the time

specified in § 52.31(d), even though the

rule now contains no offset sanction

table- (2) that the ratio of emission

reductions to increased emissions shall

be 2:1; and (3) that the offset ratio shall

apply to the one or more pollutants and

their precursors for which the § 52.31(c)

finding was made or to all pollutants

and their precursors (for which the area

is subject to the new source requirement

of section 173 of the Act) if the finding

was not pollutant specific. The EPA has added new

§ 52.31(e)(1)(ii) to specifically address

the issue of findings made with respect

to ozone and its two precursors, VOC

and NOx. This was discussed generally

in the preamble to the proposed rule at

page 51276, footnote 18, although no

specific language was included in the

proposed rule. The Act establishes

requirements for ozone nonattainment

areas, some of which are specific for

either VOC or NOx. However, since the

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general assumption is that both

precursors are critical to ozone

formation, EPA believes that even

though a finding may be specific as to

one ozone precursor, the offset sanction

should apply for both precursors.

However, there are two exceptions to

this general requirement, both of which

are based on the Act. First, affected

areas that are designated nonattainment

for ozone but that are not classified as

marginal, moderate, serious, severe or

extreme, are not required to achieve

offsets under section 173 for NOx. The

second exception is for affected areas

that have received a NOx exemption

from the NSR requirement pursuant to

section 182(f). These two exceptions

and the rationale for them are discussed

in section II.B.2. above. A new

§ 52.31(e)(1)(iii) sets up a similar

provision with respect to PM-10

precursors, which is also discussed in

more detail in section II.B.2. above.

Section 52.31(e)(1)(iv) of the final rule

has merely been renumbered. Section

52.31(e)(1)(iii) of the proposed rule

previously contained these

requirements and substantially remains

unchanged. The preamble to the

proposed rule at page 51276 provides

that this section requires States to apply

the offset sanction consistent with

amended section 173, regardless of

whether the State has approved NSR

rules consistent with section 173

requirements. The purpose of this

provision is to ensure that States that

have been delinquent in meeting the

NSR requirements of the amended Act

are not benefitted by applying sanctions

in accordance with NSR rules that are

more lenient than required by the Act or

by the absence of NSR requirements

within the State. Under this section,

therefore, all affected areas subject to

the offset sanctions would be subject to

similar requirements in achieving those

offsets, 'as specified in the amended Act.

Section 52.31(e)(1)(v) of this rule is

unchanged from § 52.31(e)(1)(v) of the

proposed rule. The purpose of this

provision is to establish when the

increased offset requirement will be

applied. As noted in section II.B.2.

above, EPA received numerous

comments on this issue. For purposes of

applying the offset sanction, EPA had

some flexibility in determining what

permits would be subject to the

increased offset requirement. As noted

in section II.B.2., numerous commenters

suggested other possibilities. For

example, some suggested that the

increased offset ratio only apply to

permits for which an application was

received after the date the offset

sanction applied. As stated more fully

in the detailed response to comments

document located in the docket, EPA

has determined that the offset sanction

should have immediate effects in

affected areas.

Section 52.31(e)(2) of the final rule

sets forth the highway sanction. Several

revisions have been made to this

section. As with § 52.31(e)(1)(i), EPA

has removed the highway sanction table

from § 52.31(e)(2) of the proposed rule

for the same reasons discussed above for

why the offset sanction table was

removed. Similarly, § 52.31(e)(2)

includes new language that directly

refers to the timing provisions of

§ 52.31(d). As with the similar revised

language in § 52.31(e)(1)(i), this is

merely to clarify that the highway

sanction applies with respect to the

times set forth in that subsection, even

though the area is not listed in a table

in the rule. In addition, a new sentence

has been added which specifies that the

highway sanction only applies to

affected areas that are also

nonattainment areas. Although this

issue was not specifically addressed in

the proposed rule, the proposed rule

and the preamble to the proposed rule

referred back to the section 179(b)(1)

highway sanction requirement of the

Act (58 FR 51274, 51279; § 51.32(e)(2) of

the proposed rule.) Section 179(b)(1)

states that "[tihe Administrator may

impose a prohibition, applicable to a

ndnattainment area * * *." Therefore,

EPA is incorporating this language,

which was merely referenced in the

proposed rule, into the final rule.

III. Implications of Today's Rulemaking

A. Implementation of the. Sanctions

Section 179(a) provides that unless

the deficiency prompting the finding

(i.e., nonsubmittal, disapproval, and

nonimplementation) has been corrected

within the time periods prescribed

therein one of the sanctions in section

179(b) "shall apply, as selected by the

Administrator." Under this final rule,

sanctions will apply automatically in

the sequence prescribed herein in all

instances in which mandatory sanctions

are applied under section 179(a)

following findings under section

179(a)(1)-(4) for part Dplans or plan

revisions that EPA has already made or

that EPA will make in the future, except

when EPA takes a separate action to

reverse the sanction sequence. However,

if the sanction clock has expired for any

findings before September 6, 1994, no

sanction has yet applied since EPA

interprets section 179(a) to provide that

sanctions shall not apply until EPA

makes the sanction selection through

notice-and-comment rulemaking. Since

this action constitutes the final sanction

selection rulemaking, the offset sanction

begins to apply on any areas for which

the sanction-clock has elapsed on

September 6, 1994. To understand the

timing of the application of mandatory

sanctions in these cases, it is first

necessary to clarify the discussion in the

proposal at p. 51274 on how the

sanction clocks function under section

179(a).

Section 179(a) sets up two distinct

sanction clocks. The Act states that if

the State does not correct the deficiency

within 18 months after a finding, one of

the two available sanctions shall apply,

as selected by the Administrator. It then

provides that if the deficiency has not

been corrected within 6 months

thereafter, then both available sanctions

shall apply. The EPA interprets this to

mean that the second sanction always

follows 6 months from the actual

application of first, regardless of

whether this would cause the

application of the second sanction to be

delayed beyond 24 months from the

date of the finding. Therefore, on

September 6, 1994 the offset sanction

shall apply on any area(s) for which an

18-month sanction clock has elapsed

and EPA has not determined that the

State has not corrected the deficiency.

Both sanctions shall then apply 6

months from that date if EPA has not

determined the deficiency has been

corrected by then.

The EPA intends to notify States of

the application and removal of section

179 mandatory sanctions (as provided

for in § 52.31(d) of this rule) before they

apply. In addition, in its actions on

submittals received after a section

179(a) finding, EPA will indicate what

the effect of its action is on the

sanctions clock and sanctions

application. The following discussion

explains how this Will occur, first

providing the examples where, prior to

18 months, EPA finally determines

whether the State has corrected the

deficiency prompting the finding, and

then providing examples where EPA

finally determines the deficiency has

been corrected after month 18.

In the cases where, prior to 18

months, EPA completes its action

determining that the State has corrected

the section 179(a) deficiency, sanctions

would not apply. The following two

examples address instances in which

EPA finally determines within 18

months of the finding that started the

sanctions clock whether the State has

corrected the deficiency and how EPA's

action finding the State corrected the

deficiency affects the sanction clock.

In the case where, within 18 months

following a finding of nonsubrnittal or

incompleteness, EPA determines

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whether a State's SIP submittal corrects

the deficiency prompting-the finding

(i.e., is complete or incomplete), EPA

will inform the State of whether the

sanctions clock is stopped when it

sends the completeness or

incompleteness letter to the State. If the

SIP submittal is incomplete, then the

letter will indicate that the sanctions

clock continues and that automatic

sanctions will apply as prescribed by

this rule. If the SIP submittal is

complete, then the letter will indicate

that the sanctions clock started by the

prior finding of failure to submit or

incompleteness permanently stops.

In the case where, within 18 months

following a SIP disapproval or finding

of nonimplementation, EPA determines

whether the State has corrected the

deficiency prompting the finding (i.e.,

whether the SIP is approvable or

whether the nonimplementation

deficiency has been corrected), EPA will

indicate whether the sanctions clock is

stopped when it takes final rulemaking

action on the SIP.3 6 If EPA finally

disapproves the SIP or finally

determines that the nonimplementation

deficiency has not been corrected, then

the Federal Register action will indicate

that the sanctions clock continues and

that automatic sanctions will apply as

prescribed by this rule. If EPA finally

approves the SIP or finally determines

that the nonimplementation deficiency

has been corrected, then the Federal

Register action wi:li indicate that the

sanctions clock started by the prior

disapproval or finding of

nonimplementation permanently stops. The following examples address how.

following the section 179(a) findings,

the States will be kept informed when

EPA's actions on revised SIP's are not

completed within 18 months of the

finding's deficiency. As provided in this

rule at § 52.31(d)(1) through (4), in

explaining how the States will be kept

informed, these examples address

sanctioi removal, as well as sanction

deferral and staying. In EPA interim final determinations

that the State has corrected the

deficiency, issued simultaneously with

EPA proposed approvals and proposed

findings that States are implementing

their SIP's (after EPA SIP disapprovals

or findings of nonimplementation), EPA

intends to notify interested parties,

3As discussed above in section Il.B.I., proposed

approval (or a proposal that the nonimplementation

deficiency had been corrected) following a SIP

disapproval or nonimplementation finding has the

effect of deferring and/or staying the application of

sanctions. In this case, though, such proposal action

would not have a deferral and/or staying effect

because it is'assumed (for the purposes of this

example) that EPA completes final rulemaking

action on the SIP within 18 months.

including States, of any deferral or

staying of sanctions that will result from

Federal Register actions proposing to

approve SIP's or to find that the State is

implementing its SIP, as provided for in

§ 52.31(d)(2), (3) and (4) of this rule. In

these cases, EPA will also indicate to all

interested parties whether sanctions are

removed, apply or reapply when it takes

subsequent final action on the plan in

the Federal Register If subsequently

EPA's proposed positive finding is

reversed, then in that action EPA will

indicate that sanctions apply or reapply,

as appropriate, and what sanctions, if

any, apply subsequently. If EPA

subsequently fully approves the revised

plan, then in that action EPA will

indicate that the sanctions clock

permanently stops and that any

sanctions previously applied due to the

original disapproval or finding of failure

to implement are removed.

In addition to these letters and

Federal Register actions, the EPA will

also periodically publish notices in the

Federal Register in which EPA will

provide the public with information on

areas for which EPA has made findings

and which, therefore, are likely to be

subject to the offset and highway

. sanctions. 37 If removal, staying, or

deferral of sanctions is warranted, EPA

will similarly provide the public with

- information that sanctions have either

been removed, stayed or deferred in the

area. Finally, to supplement the various

letters and actionsdiscussed above, EPA 'will provide information on the status of

sanction 12 findings on EPA's

Technology Transfer Network (TTN).aa

B. Areas Potentially Subject to

Sanctions

The EPA has made section 179(a)

findings of failure to submit and

incompleteness for numerous submittals

due under the amended Act. As

explained in section II.C.5 above, EPA

has elected to provide the public with

information on areas potentially subject

to sanctions in a separate notice that

appears in the notice section, of today's

Federal Register rather than in tables in

today's rule. Therefore, for further

information on areas likely to face

37 1n some cases. the letter and/or the action may

be combined with another action relating to the

submittal. For example, if following a disapproval

EPA proposes to approve a SIP at month 20 after

the offset sanction is in'place, the interim final

determination issued simultaneously with the

proposed approval action would also serve to notify

the public that application of the offset sanction has

been stayed.

3"The TTN is EPA's bulletin board system for -

making air quality information available to

interested parties. For questions on what

information is available on the TTN and how to access it, contact the systems operator (919) 541-

5384).

sanctions on September 6, 1994 see that

other notice.

IV. Miscellaneous

A. Executive Order 12866

Under Executive Order 12866 (Order),

(58 FR 51735 (October 4, 1993)) the

Agency must determine whether the

regulatory action is "significant" and

therefore subject to the Office of

Management and Budget (OMB) review

and the requirements of the Order. The

Order defines "significant regulatory

actions" as one that is likely to result in

a rule that may: (1) Have an annual

effect on the economy of $100 million

or more or adversely affect in a material

way the economy, a sector of the '

economy, productivity, competition,

jobs, the environment, public health or

safety, or State, local, or tribal

governm'ents or communities; (2) create

a serious inconsistency or otherwise

interface with an action taken or

planned by another agency; (3)

materially alter the budgetary impact of

entitlements, grants, user fees, or loan.

programs or the rights and obligations of

recipients thereof; or (4) raise novel or

policy issues arising out of legal

mandates, the President's priorities, or

the principles set forth in the Order.

• Pursuant to the terms of the Order,

OMB has notified EPA that it considers

this a "significant regulatory action"-

within the meaning of the Order. The

EPA has submitted this action to OMB

for review. Changes made in response toOMB suggestions or recommendations

will be documented in the public

record.

B. Regulatory Flexibility Act

1. Proposal

The proposal includes a discussion of

the impact of the rule on small entities

at pages 51277-8. The regulatory

flexibility analysis (RFA) (5 U.S.C. 600

et seq.) requires Federal agencies to

identify potentially adverse impacts of

Federal regulations upon small entities.

Agencies are required to perform an

RFA where the significant impacts are

t ossible on a substantial number of

small entities. Small entities include

small businesses: small not-for-profit

enterprises,' and governmental entities

with populations of less than 50,000.

Because this action will have some

impact, an initial RFA was prepared

pursuant to EPA-guidelines, which has

been placed in the docket to this

rulemaking. For the following three

reasons, EPA believes the impact of this

rule on small entities will be limited.

First, any impact that may occur from

the offset sanction is limited to sources

defined as "major" for nonattainment

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Federal Register / Vol. 59, No. 149 / Thursday, August 4, 1994 / Rules and Regulations 39859

NSR purposes, generally 100 tons per

year (TPY) or more ofa criteria

pollutant, except in the more serious

ozone nonattainment areas. The major

sources most likely to also be small

entities as defined pursuant to the RFA

are in these more serious ozone areas

where the major source TPY threshold

has been lowered under part D of title

I of the Act. Second, the amended Act

also increases the nonattainment NSR

offset ratio in the ozone nonattainment

areas. The ratio ranges from 1.1-to-1 to

1.5-to-1, depending on he severity of

the area's classification. Thus, any

impact the 2-to-1 offset sanction will

have may not be as significant in

precisely those ozone nonattainment

areas where small entities that are also

major sources are most likely to exist.

Third, as stated above, the only relevant

impact period is 6 months in duration,

since after that period the State will

either have become subject to both

sanctions or have corrected the

deficiency and been relieved from any

sanctions.

2. Comments

Section II.B.1. of this document

includes several comments concerning

the impact of the proposed rule. One

additional comment is summarized

here.

The commenter states that the

lowering of the major source threshold

under the Act exposes many more small

sources to control and the likelihood of

sanctions. The commenter believes that

many such small sources are small

businesses and that, contrary to the

analysis in the proposal, an increase in

the offset ratio of 0.5 could have a

significant impact on the ability of

businesses to find adequate offsets.

3. Response

The EPA believes that the final rule

will have some impact on small entities.

The lowering of the major source

threshold could expose more sources to

the offset safiction. The EPA does not

disagree that in individual cases an

.increase in the offset ratio could have a significant impact on a small business.

However, EPA believes that the impact

of this rule on small entities will be

limited for the second and third reaions

discussed above. Additionally, EPA

notes that the impact of this rule will

also be lessened by the provision in

final rules that provides for the deferral

and/or staying of the application of

sanctions in certain instances when EPA

believes it is more likely than not a

deficiency has been corrected (see

discussion in section II.B.3. of this

document). However, because this

action will have some impact, a final

RFA has been prepared pursuant to EPA

guidelines, which has been placed in

the docket to this rulemaking.

C. Paperwork Reduction Act

This rule does not contain any

information collection requirements

which require OMB approval under the

Paperwork Reduction Act (44 U.S.C.

3501 et seq.).

When the offset sanction applies,

sources subject to it will not incur an

additional information collection

burden because sources are already

required under the section 173 offset

requirements to obtain an emission

offset from between 1-to-1 and 1.5-to-1.

When the offset sanction applies, it

should not impose an additional

information collection burden because

sources will not have to provide any

information in permit applications

beyond that which is already required

in the absence of the sanction. (For the.

information collection burden of new

requirements of the amended Act for

nonattainment NSR and prevention of

significant deterioration, an information

collection request is being prepared to

support rulemaking changes to parts 51

and 52.)

When the highway sanction applies,

the Secretary of DOT is required to

determine which projects or grants

should not be affected by the sanction

and which, therefore, are exempt. This

determination will be based on

information readily available in existing

documentation gathered for the purpose

of evaluating the environmental, social,

and economic impacts of different

alternatives for transportation projects.

These analyses are required for the

preparation of environmental

assessments and impact statements

under the National Environmental

Policy Act (NEPA), (42 U.S.C. sec. 4321

et seq.). Historically, exemption

determinations by DOT for sanctions

have been based on such NEPA

documentation and have not

necessitated additional information

gathering and analysis by the States. In

addition, since under NEPA final

environmental documents must be

approved by DOT, in most cases the

NEPA documentation will already be in

DOT's possession. Therefore, EPA does

not believe that the highway sanction,

when applied, will impose an

additional information collection

burden on the States.

List of Subjects in 40 CFR Part 52

Environmental protection, Air

pollution control, Hydrocarbons,

Intergovernmental relations, Nitrogen

dioxide, Particulate matter, Reporting

and recordkeeping requirements, and

Sulfur dioxide.

Dated: July 21, 1994.

Carol M. Browner,

Administrator.

For the reasons set forth in the

preamble, part 52 of title 40, Code of

Federal Regulations, is amended as set

forth below:

PART 52-APPROVAL AND

PROMULGATION OF

IMPLEMENTATION PLANS

1. The authority citation for part 52 is

revised to read as follows:

Authority: 42 U.S.C. 7401-7671q.

Subpart A--[Amended]

2. Subpart A is amended by adding a

new § 52.31 to read as follows:

§ 52.31 Selection of sequence of

mandatory sanctions for findings made

pursuant to section 179 of the Clean Air

Act.

(a) Purpose. The purpose of this

section is to implement 42 U.S.C.

7509(a) of the Act, with respect to the

sequence in which sanctions will

automatically apply under 42 U.S.C.

7509(b), following a finding made by the

Administrator pursuant to 42 U.S.C.

7509(a).

(b) Definitions. All terms used in this

section, but not specifically defined

herein, shall have the meaning given

them in § 52.01.

(1) 1990 Amendments means the 1990

Amendments to the Clean Air Act (Pub.

L. No. 101-549, 104 Stat. 2399). (2) Act means Clean Air Act, as

amended in 1990 (42 U.S.C. 7401 et seq.

(1991)).

(3) Affected area means the

geographic area subject to or covered by

the Act requirement that is the subject

of the finding and either, for purposes

of the offset sanction under paragraph

(e)(1) of this section and the highway

sanction under paragraph (e)(2) of this

section, is or is within an area

designated nonattainment under 42

U.S.C. 7407(d) or, for purposes of the

offset sanction under paragraph (e)(1) of

this sections is or is within an area

otherwise subject to the emission offset

requirements of 42 U.S.C. 7503.

(4) Criteria pollutant means a

pollutant for which the Administrator

has promulgated a national ambient air

.quality standard pursuant to 42 U.S.C.

7409 (i.e., ozone, lead, sulfur dioxide,

particulate matter, carbon monoxide,

nitrogen dioxide).

(5) Findings or Finding refer(s) to one

or more of the findings, disapprovals,

and determinations described in

subsection 52.31 (c).

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