# AGENCY:

 Environmental Protection Agency (EPA). 

# ACTION:

 Proposed rule. 

# SUMMARY:

                         The EPA is proposing to disapprove Rule 1623 of the South Coast Air Quality Management District (SCAQMD) which has been submitted as a revision to the State Implementation Plan (SIP). Rule 1623—Credits for Lawn and Garden Equipment provides a mechanism for issuing mobile source emission reduction credits (MSERCs) to entities who voluntarily either sell or replace old engine-powered lawn and garden                         Start Printed Page 2558                        equipment with new low- or zero-emission lawn and garden equipment. The EPA is proposing disapproval because Rule 1623 does not meet several federal requirements including the requirement that emission reductions be real, quantifiable, enforceable, and surplus. This action is being taken under section 110 of the Clean Air Act, as amended in 1990 (the Act).                     

# DATES: 

Comments must be received on or before February 2, 2000. 

# ADDRESSES: 

Comments may be mailed to: Air Planning Office, (AIR-2), Air Division, U.S. Environmental Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901. 

Copies of the rule revisions and EPA's evaluation report of the rule are available for public inspection at EPA's Region 9 office during normal business hours. Copies of the submitted rule revisions are also available for inspection at the following locations: 

California Air Resources Board, 2020 L Street, Sacramento, CA 95814 

South Coast Air Quality Management District, 21865 E. Copley Drive, Diamond Bar, California 91765-4182 

# FOR FURTHER INFORMATION CONTACT:

 Roxanne Johnson, Air Planning Office (AIR-2), Air Division, U.S. Environmental Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901, (415) 744-1225. 

# SUPPLEMENTARY INFORMATION:

  

## I. Applicability 

The rule being proposed for disapproval and exclusion from the California SIP is: South Coast Air Quality Management District (SCAQMD) Rule 1623—Credits for Clean Lawn and Garden Equipment. This rule was submitted by the California Air Resources Board to EPA on August 28, 1996. 

## II. Background 

The Act broadly encourages, and under certain circumstances Title I of the Act mandates, States to develop and facilitate market-based approaches for achieving the environmental goals of the Act for attainment and maintenance of the National Ambient Air Quality Standards (NAAQS), and to meet associated emission reduction milestones. EPA has developed comprehensive guidance and rules (as required by the Act) for States and individual sources to follow in designing and adopting such programs for inclusion in SIPs. The Economic Incentive Program (EIP) Rules (40 CFR part 51, subpart U) provide a broad framework for the development and use of a wide variety of incentive strategies for stationary, area, and/or mobile sources. One such approach is the generation and trading of emission reduction credits (ERCs), which historically have been allowed under guidance provided in the 1986 Emission Trading Policy Statement (see 51 FR 43631, December 4, 1986). In certain areas where emission control costs for stationary sources may be high relative to mobile source control costs, creating EIPs which allow for the trading of emission reduction credits from mobile sources to stationary sources can be beneficial. 

This document addresses EPA's proposed action for SCAQMD Rule 1623—Credits for Clean Lawn and Garden Equipment. SCAQMD adopted Rule 1623 on May 10, 1996. 

                    Rule 1623 provides a mechanism by which stationary source emission and ridesharing requirements (Rule 2202 companies) can be met through the use of volatile organic compound (VOC), oxides of nitrogen (NOX), carbon monoxide (CO), and particulate matter (PM) emission reductions generated from mobile sources. Any entity interested in participating in Rule 1623 could implement one of three strategies to generate credits: (1) Before January 1, 1999, permanently scrap and replace existing lawn and garden equipment with equipment which meets the 1995 California Emission Standards for Utility and Lawn and Garden Engines; (2) permanently scrap and replace existing gasoline-powered lawn and garden equipment with new low- or zero-emission equipment; or (3) after May 10, 1996 and prior to January 1, 1999, direct sale to an end user of new low-emission lawn and garden equipment, or on or after January 1, 1991, direct sale to an end user of new zero-emission equipment.                 

Rule 1623 is a voluntary program, and the exact emission reductions are unknown. EPA can only approve Rule 1623 in the SIP, if the reductions are surplus and are quantifiable. Rule 1623 lacks documentation supporting that the implementation of Rule 1623 will result in an accelerated rate of equipment retirement beyond that which would occur from normal retirement and turnover. This is necessary to show that the claimed reductions are in fact surplus. 

EPA sent a letter (dated November 5, 1999) to the SCAQMD Executive Officer relaying some of the significant deficiencies in their submitted Rule. Our letter to SCAQMD also restated that SCAQMD may wish to withdraw Rule 1623 from EPA's consideration for inclusion in the SIP under section 110 of the Act while we jointly develop solutions to the issues EPA had identified. The following is EPA's evaluation and proposed action for this rule. 

## III. EPA Evaluation and Proposed Action 

In determining the approvability of a rule, EPA must evaluate the rule for consistency with the requirements of the CAA and EPA regulations, as found in section 110 of the CAA and 40 CFR part 51 (Requirements for Preparation, Adoption, and Submittal of Implementation Plans). The EPA interpretation of these requirements have formed the basis for today's action. 

                    For the purpose of assisting State and local agencies in developing economic incentive programs, EPA prepared guidance applicable to these programs in Subpart U—Economic Incentive Programs, found at 40 CFR 51.490 to 51.494 (EIP). In general, these guidance documents have been set forth to ensure that rules are fully enforceable and strengthen or maintain the SIP. The EIP is based on the underlying requirements of the Act and specifies requirements for these types of programs. EPA released a Draft EIP Guidance document in September 1999 for public comment. The 1994 EIP rule still remains in effect for mandatory [1]                                          EIPs. When the Draft EIP Guidance is final, it will update the guidance the 1994 EIP rule provides for developing discretionary EIPs.                 

There is currently no version of SCAQMD Rule 1623—Credits for Clean Lawn and Garden Equipment in the SIP. The submitted Rule includes the following provisions: 

- Purpose.
- Applicability.
- Definitions.
- Requirements.
- Issuance of MSERCs.
- Rendering Engines Inoperable.
- MSERC Calculation.
- Use of MSERCs.
- Recordkeeping Requirements.
- Compliance Auditing and Enforcement.
- Requirements for Public Notice.
- Appeal of Disapproval of MSERC Issuance.
- Relationship to Intercredit Trading.

                    EPA has evaluated the submitted rule and has determined that it is not consistent with the CAA, EPA regulations, and EPA policy. EPA believes Rule 1623 allows much Executive Officer discretion (e.g., Executive Officer may revise the credit                     Start Printed Page 2559                    life, approves conversion of MSERCs to RTCs, audits files, etc.). Additionally, Rule 1623 did not demonstrate that the implementation of Rule 1623 will result in an accelerated rate of equipment retirement beyond that which would occur from normal retirement and turnover. This is necessary to show that the claimed reductions are in fact surplus. Therefore, SCAQMD Rule 1623—Credits for Clean Lawn and Garden Equipment is being proposed for disapproval under section 110(k)(3) of the CAA as not meeting the requirements of section 110(a) and ­part D.                 

EPA's concerns with Rule 1623 which lead to our proposed disapproval are:

- The lack of real, quantifiable, enforceable, and surplus emission reductions generated under the program (see 40 CFR 51.493  and section I.C. of the preamble to the EIP— 59 FR 16690-16717 , April 7, 1994) being used as substitutes for more credible means of control at stationary sources, 
- The lack of a mechanism to review Rule 1623's program effectiveness (see 40 CFR 51.493(f) ), 

EPA believes that some of these concerns individually are adequate to propose disapproval of Rule 1623; taken together, they compel EPA's action. For a detailed discussion of our concerns, please see the TSD, October, 1999. 

This revision is not required by the Act. Therefore, this proposed disapproval action does not impose sanctions for failure to meet Act requirements. 

                    The EPA is soliciting public comment on the proposed action discussed in this document or on other relevant matters. These comments will be considered before taking final action. Interested parties may participate in the Federal rulemaking procedure by submitting written comments to the EPA Regional Office listed in the                     **ADDRESSES**                     section of this document.                 

As Rule 1623 is a substitute for existing requirements, EPA does not believe that our disapproval of the program will have any effect on air quality in the South Coast Air Basin. Regulated entities which may have been using Rule 1623 to comply with control technology requirements have the opportunity to apply control or otherwise comply directly (in the case of ridesharing requirements) in lieu of purchasing credits generated under Rule 1623. 

## IV. Administrative Requirements 

### A. Executive Order 12866

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, Regulatory Planning and Review. 

### B. Executive Order 12875

Under Executive Order 12875, Enhancing the Intergovernmental Partnership, EPA may not issue a regulation that is not required by statute and that creates a mandate upon a State, local or tribal government, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by those governments, or EPA consults with those governments. If EPA complies by consulting, Executive Order 12875 requires EPA to provide to the Office of Management and Budget a description of the extent of EPA's prior consultation with representatives of affected State, local and tribal governments, the nature of their concerns, copies of any written communications from the governments, and a statement supporting the need to issue the regulation. In addition, Executive Order 12875 requires EPA to develop an effective process permitting elected officials and other representatives of State, local and tribal governments “to provide meaningful and timely input in the development of regulatory proposals containing significant unfunded mandates.” Today's rule does not create a mandate on State, local or tribal governments. The rule does not impose any enforceable duties on these entities. Accordingly, the requirements of section 1(a) of Executive Order 12875 do not apply to this rule. 

### C. Executive Order 13045

Protection of Children from Environmental Health Risks and Safety Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) Is determined to be “economically significant” as defined under Executive Order 12866, and (2) concerns an environmental health or safety risk that EPA has reason to believe may have a disproportionate effect on children. If the regulatory action meets both criteria, the Agency must evaluate the environmental health or safety effects of the planned rule on children, and explain why the planned regulation is preferable to other potentially effective and reasonably feasible alternatives considered by the Agency. This rule is not subject to Executive Order 13045 because it is does not involve decisions intended to mitigate environmental health or safety risks. 

### D. Executive Order 13084

Under Executive Order 13084, Consultation and Coordination with Indian Tribal Governments, EPA may not issue a regulation that is not required by statute, that significantly or uniquely affects the communities of Indian tribal governments, and that imposes substantial direct compliance costs on those communities, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by the tribal governments, or EPA consults with those governments. If EPA complies by consulting, Executive Order 13084 requires EPA to provide to the Office of Management and Budget, in a separately identified section of the preamble to the rule, a description of the extent of EPA's prior consultation with representatives of affected tribal governments, a summary of the nature of their concerns, and a statement supporting the need to issue the regulation. In addition, Executive Order 13084 requires EPA to develop an effective process permitting elected officials and other representatives of Indian tribal governments to provide meaningful and timely input in the development of regulatory policies on matters that significantly or uniquely affect their communities.” Today's rule does not significantly or uniquely affect the communities of Indian tribal governments. Accordingly, the requirements of section 3(b) of Executive Order 13084 do not apply to this rule. 

### E. Regulatory Flexibility Act 

                    The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. This final rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities. Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of state action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such                     Start Printed Page 2560                    grounds.                     *Union Electric Co.,*                    v.                     *U.S. EPA,*                    427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).                 

### F. Unfunded Mandates 

Under section 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated annual costs to State, local, or tribal governments in the aggregate; or to private sector, of $100 million or more. Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule. 

EPA has determined that the approval action promulgated does not include a Federal mandate that may result in estimated annual costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action approves pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action. 

# List of Subjects in 40 CFR Part 52

- Environmental protection
- Air pollution control
- Intergovernmental relations
- Oxides of nitrogen
- Ozone
- Particulate matter
- Reporting and recordkeeping requirements
- Volatile organic compounds

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

Dated: January 7, 2000. 

Felicia Marcus, 

Regional Administrator, Region IX. 

# Footnotes

1.                             A mandatory EIP is a program that the Clean Air Act requires a State to adopt. A discretionary EIP is a program that a State or Tribe elects to adopt.                    
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[FR Doc. 00-1090 Filed 1-14-00; 8:45 am] 

BILLING CODE 6560-50-P