[Federal Register Volume 65, Number 11 (Tuesday, January 18, 2000)]
[Proposed Rules]
[Pages 2557-2560]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-1090]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 181-0199; FRL-6525-6]


Disapproval of Implementation Plans; California State 
Implementation Plan Revision, South Coast Air Quality Management 
District

AGENCY:  Environmental Protection Agency (EPA).

ACTION:  Proposed rule.

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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

[[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 
(NO<INF>X</INF>), 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.
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    \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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    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:
    <bullet> Purpose.
    <bullet> Applicability.
    <bullet> Definitions.
    <bullet> Requirements.
    <bullet> Issuance of MSERCs.
    <bullet> Rendering Engines Inoperable.
    <bullet> MSERC Calculation.
    <bullet> Use of MSERCs.
    <bullet> Recordkeeping Requirements.
    <bullet> Compliance Auditing and Enforcement.
    <bullet> Requirements for Public Notice.
    <bullet> Appeal of Disapproval of MSERC Issuance.
    <bullet> 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

[[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:
    <bullet> 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,
    <bullet> 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

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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.
[FR Doc. 00-1090 Filed 1-14-00; 8:45 am]
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