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[Federal Register: January 13, 2010 (Volume 75, Number 8)]
[Rules and Regulations]               
[Page 1716-1723]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13ja10-13]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2009-0024; FRL-9097-2]

 
Revisions to the California State Implementation Plan, San 
Joaquin Valley Unified Air Pollution Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing a limited approval and limited disapproval 
of revisions to the San Joaquin Valley Unified Air Pollution Control 
District (SJVUAPCD) portion of the California State Implementation Plan 
(SIP). This action was proposed in the Federal Register on August 19, 
2009, and concerns a local fee rule that applies to major sources of 
volatile organic compound and nitrogen oxide emissions in the San 
Joaquin Valley ozone nonattainment area. Under authority of the Clean 
Air Act as amended in 1990 (CAA or the Act), this action simultaneously 
approves a local rule that regulates these emission sources and directs 
California to correct rule deficiencies.

DATES: Effective Date: This rule is effective on February 12, 2010.

ADDRESSES: EPA has established docket number EPA-R09-OAR-2009-0024 for 
this action. The index to the docket is available electronically at 
http://www.regulations.gov and in hard copy at EPA Region IX, 75 
Hawthorne Street, San Francisco, California. While all documents in the 
docket are listed in the index, some information may be publicly 
available only at the hard copy location (e.g., copyrighted material), 
and some may not be publicly available in either location (e.g., CBI). 
To inspect the hard copy materials, please schedule an appointment 
during normal business hours with the contact listed in the FOR FURTHER 
INFORMATION CONTACT section.

[[Page 1717]]


FOR FURTHER INFORMATION CONTACT: Mae Wang, EPA Region IX, (415) 947-
4124, wang.mae@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and 
``our'' refer to EPA.

Table of Contents

I. Proposed Action
II. Public Comments and EPA Responses
    A. Commenting Parties
    B. Summary of Comments and EPA Responses
    1. EPA Response to the Clean Air Act Advisory Committee Letter
    2. Consideration of Rule 3170 as an Alternative Program
    3. Exemption for Units That Begin Operation After the Attainment 
Year
    4. Exemption for ``Clean Emission Units''
    5. Defining the Baseline Period as the Attainment Year and the 
Immediately Preceding Year
    6. Allowing Averaging Over 2-5 Years To Establish Baseline 
Emissions
    7. Stationary Versus Mobile Sources
    8. Impacts of Rule 3170 on Small Businesses
    9. Unintended Consequences of Rule 3170
    10. Incorrect Statement of Baseline Emissions
    11. Ambiguity on Fees for Both VOCs and NOX
    12. Definition of ``Major Source''
    13. Sunset Provision for Section 185 Fees
III. EPA Action
IV. Statutory and Executive Order Reviews

I. Proposed Action

    On August 19, 2009 (74 FR 41826), EPA proposed a limited approval 
and limited disapproval of the following rule that was submitted for 
incorporation into the California SIP.

----------------------------------------------------------------------------------------------------------------
             Local agency                 Rule No.              Rule title               Adopted      Submitted
----------------------------------------------------------------------------------------------------------------
SJVUAPCD..............................         3170   Federally Mandated Ozone           05/16/02      08/06/02
                                                       Nonattainment Fee.
----------------------------------------------------------------------------------------------------------------

    We proposed a limited approval because we determined that this rule 
improves the SIP and is largely consistent with the relevant CAA 
requirements. We simultaneously proposed a limited disapproval because 
some rule provisions do not fully meet the statutory CAA section 185 
requirement. These provisions include the following:
    1. An exemption for units that begin operation after the attainment 
year.
    2. An exemption for any ``clean emission unit.''
    3. The definition of the baseline period as two consecutive years.
    4. The allowance of averaging baseline emissions over a period of 
2-5 years ``if those years are determined by the APCO as more 
representative of normal source operation.''
    5. An inappropriate definition of the term ``Major Source.'' Our 
proposed action contains more information on the basis for this 
rulemaking and on our evaluation of the submittal.

II. Public Comments and EPA Responses

A. Commenting Parties

    EPA's proposed action provided a 30-day public comment period. 
During this period, we received the following 12 comment letters from 
11 parties:
    1. American Chemistry Council, letter from Lorraine Gershman, dated 
September 18, 2009.
    2. American Petroleum Institute, letter from Ted Steichen, dated 
September 18, 2009.
    3. Association of Irritated Residents, letter from Brent Newell, 
Center on Race, Poverty, and the Environment, dated September 18, 2009.
    4. California Small Business Alliance, letter from William R. La 
Marr, dated August 11, 2009.
    5. The Clean Energy Group, letter from Michael Bradley, dated 
September 18, 2009.
    6. County Sanitation Districts of Los Angeles County, letter from 
Stephen R. Maguin and Gregory M. Adams, dated August 11, 2009.
    7. County Sanitation Districts of Los Angeles County, letter from 
Stephen R. Maguin and Gregory M. Adams, dated September 18, 2009.
    8. EarthJustice, letter from Paul Cort, dated September 18, 2009.
    9. San Joaquin Valley Unified APCD, letter from Seyed Sadredin, 
dated September 17, 2009.
    10. The Section 185 Working Group, letter from Jason C. Moore, 
Baker Botts, dated August 13, 2009.
    11. Southern California Air Quality Alliance, letter from Curtis L. 
Coleman, Esq., dated August 12, 2009.
    12. Western States Petroleum Association, letter from David R. 
Farabee, Pillsbury Winthrop Shaw Pittman LLP, dated September 18, 2009.

B. Summary of Comments and EPA Responses

    The comments and our responses are summarized below. The comments 
have been grouped into general categories.
1. EPA Response to the Clean Air Act Advisory Committee Letter
    On May 15, 2009, the Clean Air Act Advisory Committee (CAAAC) sent 
a letter to EPA Acting Assistant Administrator Elizabeth Craig 
regarding issues related to the implementation of CAA section 185. The 
CAAAC asked EPA to review and address whether it is ``legally 
permissible under either section 185 or 172(e) of the Clean Air Act for 
a State to exercise discretion'' to develop fee program SIPs employing 
one or more of a list of CAAAC-identified program options (see http://www.epa.gov/air/caaac/185wg).
    Comments: Several commenters specifically requested that EPA 
respond to the CAAAC letter prior to taking final action on SJVUAPCD 
Rule 3170. Commenters also suggested that EPA provide final guidance 
regarding flexibility under either CAA section 185 or 172(e) before 
disapproving any elements of SJVUAPCD Rule 3170.
    Response: EPA intends to respond more fully to the issues raised by 
the CAAAC letter. EPA, however, cannot delay action on SJVUAPCD Rule 
3170 because we are under a legal obligation to sign a Federal Register 
notice for our final action on Rule 3170 by December 11, 2009. This 
obligation is imposed by a consent decree between EPA and the Center 
for Race, Poverty and the Environment (CRPE) to settle CRPE's 
litigation alleging that EPA had failed to act on Rule 3170 in a timely 
manner. The consent decree was entered on August 18, 2009, by the U.S. 
District Court for the Northern District of California, case number 08-
cv-05650 CW.
    We note that CAA section 172(e) does not directly apply to the 
transition from the 1-hour ozone standard to the 1997 8-hour ozone 
standard because that provision applies only where the revised standard 
is less stringent than the standard it replaces. However, because the 
CAA does not directly address anti-backsliding where there is a new 
more stringent standard, EPA determined to apply the principles of CAA 
section 172(e) for purposes of addressing anti-backsliding for the 
transition from the 1-hour standard to the 1997 8-hour standard. EPA 
also notes that the State has not requested that EPA review Rule 3170 
pursuant to the principles in CAA section 172(e) and thus, for purposes 
of taking action on Rule 3170, it is not necessary for EPA to take a 
final position regarding

[[Page 1718]]

whether it could approve a substitute program for the program specified 
under CAA section 185.
2. Consideration of Rule 3170 as an Alternative Program
    CAAAC's May 15, 2009, letter identifies as a program option an 
exemption from fees for ``well-controlled'' sources. In our proposed 
action on Rule 3170, we noted this exemption as a basis for not being 
able to fully approve the rule as meeting section 185 of the Act. We 
further noted that the State has not requested that EPA review the SIP 
to determine whether it would be equivalent to CAA section 185 under 
the principles of section 172(e) and has not made a demonstration that 
the program it has submitted would ensure controls that are ``not less 
stringent'' than those required under section 185. Thus, we stated that 
we were not addressing whether it is legally permissible for a State to 
adopt an alternative program at least as stringent as a section 185 fee 
program, or if so, whether such alternative program could contain a 
clean unit exemption.
    Comments: One commenter encouraged EPA to work with SJVUAPCD to 
consider Rule 3170 as an alternative program under the provisions of 
CAA section 172(e). The commenter felt that this rule as written would 
encourage area-wide emission reductions and meet the goals of CAA 
section 185 without sacrificing stringency.
    One commenter stated that even if the District had submitted Rule 
3170 pursuant to 172(e), or attempts to make a 172(e) demonstration to 
justify the clean unit exemption or other deficiency, CAA section 
172(e) does not apply in this situation and cannot justify Rule 3170's 
failure to comply with CAA section 185. The commenter stated that 
section 172(e) only applies where EPA has relaxed a national primary 
ambient air quality standard (NAAQS). As a result, CAA section 172(e) 
does not support the exemptions in Rule 3170.
    Response: We agree with the comment that CAA section 172(e) does 
not directly apply where EPA has promulgated a more stringent NAAQS. 
However, as noted above, because the Act does not address the 
principles that apply when there is a transition to a more stringent 
NAAQS, EPA determined that it was reasonable to apply the principles in 
section 172(e). Thus, to the extent section 172(e) would authorize EPA 
to allow alternatives to statutory programs such as the fee program in 
CAA section 185, EPA's application of the principles in section 172(e) 
to the anti-backsliding requirements for the 1-hour standard would 
provide EPA with the discretion to authorize an alternative program. 
Also, as noted above, EPA has not yet stated whether it would approve 
such programs for purposes of the anti-backsliding requirements of the 
1-hour ozone standard.
    Because the State has not submitted the program as an alternative 
program consistent with the principles in CAA section 172(e), EPA is 
not required to take a position in this rulemaking on whether it would 
approve such alternatives or whether the submitted program is 
consistent with those principles. We will continue to work with the 
State to ensure that they adopt a program that is fully consistent with 
the requirements of the CAA.
3. Exemption for Units That Begin Operation After the Attainment Year
    Section 4.2 of SJVUAPCD Rule 3170 exempts units that begin 
operation after the attainment year. In its proposed action, EPA stated 
that CAA section 185 does not provide for an exemption for emission 
units that begin operation after the attainment year, so this exemption 
does not fully comply with the CAA. Rather, it requires ``each major 
source'' to pay the fee (see CAA section 185(a)).
    Comments: Several commenters disagreed with EPA's proposed action 
on this particular provision. They felt that this exemption is 
consistent with the CAA requirements and therefore should not be 
considered a deficiency. They also felt that imposing fees on these 
units would be an unfair burden, resulting in an unfair business 
environment. One commenter expressed that imposing fees on new units 
would only serve to hinder the ability of new, cleaner units to 
displace older, dirtier units. Another commenter expressed that while 
CAA section 185 does not provide an express exemption for new units, 
EPA has sufficient discretion to approve the new unit exemption in Rule 
3170.
    Two commenters agreed with EPA's proposed action on this particular 
provision. They felt that this exemption violates the requirements of 
CAA section 185 and is a rule deficiency that is a basis for 
disapproval of the rule. One commenter stated that the CAA section 185 
language is plain and unambiguous, and clearly does not allow such an 
exemption. The other commenter added that there is no statutory 
authority for splitting a stationary source into separate emission 
units for the purpose of determining fees.
    Response: CAA section 185 does not provide for an exemption for 
units beginning operation after the attainment year. Rather, it 
requires that ``each major stationary source'' must pay the fee and 
that the baseline emissions are those from the major source in the 
attainment year. The word ``each'' does not lend itself to an 
interpretation that would exclude new major sources or new units at 
existing major sources from the fee obligation. The equity concerns 
cannot override the statutory requirement.
4. Exemption for ``Clean Emission Units''
    Section 4.3 of SJVUAPCD Rule 3170 exempts any ``clean emission 
unit'' from the requirements of the rule. Section 3.6 defines a clean 
emission unit as a unit that is equipped with an emissions control 
technology that either has a minimum 95% control efficiency (85% for 
lean-burn internal combustion engines), or meets the requirements for 
achieved-in-practice Best Achievable Control Technology as accepted by 
the APCO during the 5 years immediately prior to the end of the 
attainment year. The District's staff report for Rule 3170 states that 
the exemption is intended to address ``the difficulty of reducing 
emissions from units with recently installed BACT.'' In its proposed 
action, EPA expressed that although EPA understands the District's 
intention, the exemption does not comply with CAA section 185, for the 
same reason as noted above for new emission units.
    Comments: Several commenters disagreed with EPA's proposed action 
on this particular provision. They felt that this exemption is 
consistent with the CAA requirements and therefore should not be 
considered a deficiency. Several commenters believe that Congress did 
not intend to impose fees on units that are already as clean as 
possible. The imposition of fees on these units may, in many cases, 
force a curtailment in operations to reduce emissions.
    Two commenters agreed with EPA's proposed action on this particular 
provision. They felt that this exemption violates CAA section 185 
requirements and is a rule deficiency that is a basis for disapproval 
of the rule. These commenters stated that the CAA section 185 language 
is plain and unambiguous, clearly does not allow such an exemption, 
that there is no suggestion in the CAA that the best controlled sources 
are entitled to any other ``reward'' or exemption, and that section 185 
is not a program to penalize only the less-regulated sources. One 
commenter expressed that Congress understood that the level of control 
among sources might vary because CAA section 185(b)(2)

[[Page 1719]]

specifies that the baseline comes from the lower of actuals or 
allowables, and that the allowables baseline is to be based on the 
emissions allowed ``under the permit'' unless the source has no permit 
and is only subject to limits provided under the SIP. The commenter 
stated that it would defeat this express language to exempt sources 
from paying a fee based on some arbitrary notion of being ``clean 
enough.''
    Response: As explained above, CAA section 185 mandates that the fee 
is paid by ``each'' major source based on the emissions from that 
source in the baseline year. There is nothing in the language of CAA 
section 185 that contemplates that certain sources or that certain 
emissions from a source are not subject to the fee.
5. Defining the Baseline Period as the Attainment Year and the 
Immediately Preceding Year
    Section 3.2.1 of Rule 3170 defines the baseline period as two 
consecutive years consisting of the attainment year and the year 
immediately prior to the attainment year. In contrast, CAA section 
185(b)(2) establishes the attainment year as the baseline period. While 
CAA section 185(b)(2) also provides discretion to calculate baseline 
emissions over a period of more than one calendar year, that option is 
limited to sources with emissions that are irregular, cyclical, or 
otherwise vary significantly from year to year. Thus, in its proposed 
action, EPA stated that section 3.2.1 of SJVUAPCD Rule 3170 is 
inconsistent with the CAA because it provides a different baseline than 
that required by the CAA (two years instead of one) regardless of 
whether the emissions are irregular, cyclical or vary significantly 
from year to year.
    Comments: Six commenters disagreed with EPA's proposed action on 
this particular provision. They felt that this provision is consistent 
with the CAA requirements as interpreted in a March 21, 2008 memorandum 
from William Harnett, Director of the Air Quality Policy Division, to 
the Regional Air Division Directors, entitled, ``Guidance on 
Establishing Emissions Baselines under Section 185 of the Clean Air Act 
(CAA) for Severe and Extreme Ozone Nonattainment Areas that Fail to 
Attain the 1-hour Ozone NAAQS by their Attainment Date,'' (``Section 
185 Baseline Guidance'') and therefore should not be considered a 
deficiency.\1\ Commenters objected to EPA's view that the five-year 
lookback option in SJVUAPCD Rule 3170 be available only upon a site-
specific consideration of representativeness or cyclicality. One 
commenter stated that NSR reform was enacted precisely to replace such 
a case-by-case review. The commenter also stated SJVUAPCD's approach 
was consistent with EPA's New Source Review approach for multi-year 
baselines. The commenter felt that a simple multi-year baseline would 
flexibly and efficiently satisfy the statutory language and intent.
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    \1\ EPA's Section 185 Baseline Guidance provides that an 
acceptable alternative baseline for sources whose emissions are 
irregular, cyclical, or otherwise vary significantly from year to 
year is the 10-year lookback period found in EPA's regulations for 
Prevention of Significant Deterioration of Air Quality (PSD) (40 CFR 
52.21(b)(48)).
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    Two commenters agreed with EPA's proposed action on this particular 
provision. They felt that this exemption violates the CAA section 185 
requirements and is a rule deficiency that is a basis for disapproval 
of the rule. One commenter stated that CAA section 185 language is 
plain and unambiguous, and clearly does not allow the baseline to be 
calculated over two years for all sources. The second commenter stated 
that section 3.2.1 of Rule 3170 should be revised to clarify that the 
baseline for most sources will be the emissions in the attainment year 
of 2010, and provide clear criteria for allowing sources to use an 
alternative baseline period.
    Response: The language of CAA section 185 provides EPA with 
discretion to issue guidance that would allow for the baseline period 
to be more than one calendar year. However, CAA section 185 allows EPA 
to do so only for sources whose emissions are irregular, cyclical, or 
otherwise vary significantly from year to year. EPA's Section 185 
Baseline Guidance referred to this connection by stating that, ``where 
source emissions are irregular, cyclical, or otherwise vary 
significantly, the CAA provides that the U.S. Environmental Protection 
Agency (EPA) may issue guidance providing an alternative method to 
calculate the baseline amount.'' EPA issued the Section 185 Baseline 
Guidance to provide guidance for an alternative method for calculating 
the emissions baseline in these situations. Hence, section 3.2.1 of 
Rule 3170 does not conform to CAA section 185 because it allows all 
sources to calculate their baseline over a two-year period, regardless 
of whether emissions are irregular, cyclical, or otherwise vary 
significantly.
6. Allowing Averaging Over 2-5 Years To Establish Baseline Emissions
    Section 3.2.2 of Rule 3170 allows averaging over 2-5 years to 
establish baseline emissions. CAA section 185(b)(2) states that EPA may 
issue guidance authorizing such an alternative method of calculating 
baseline emissions. EPA's Section 185 Baseline Guidance addresses the 
issue of alternative methods for calculating baseline emissions. The 
use of these alternative methods is associated with sources whose 
emissions are irregular, cyclical, or otherwise vary significantly from 
year to year. The averaging period allowed in section 3.2.2 of Rule 
3170 appears consistent with EPA's Section 185 Baseline Guidance. The 
language in section 3.2.2, however, allows such averaging ``if those 
years are determined by the APCO as more representative of normal 
source operation.'' In its proposed action, EPA stated that it 
considers this language as less stringent than the criteria in the CAA, 
and therefore the rule should be amended to specify use of the expanded 
averaging period only if a source's emissions are irregular, cyclical, 
or otherwise vary significantly from year to year.
    Comments: Several commenters disagreed with EPA's proposed action 
on this particular provision. They felt that this exemption is 
consistent with the CAA requirements and the Section 185 Baseline 
Guidance, and therefore should not be considered a deficiency. The 
SJVUAPCD stated that its intention in implementing this provision is 
that the criteria of being ``more representative of normal source 
operation'' would require a source to demonstrate to the satisfaction 
of the APCO that the emissions are irregular, cyclical, or otherwise 
vary significantly from year to year. One commenter disagreed with 
EPA's assessment that the phrase, ``more representative of normal 
source operation'' was less stringent that the CAA section 185 
language.
    Two commenters agreed with EPA's proposed action on this particular 
provision. They felt that this exemption violates the CAA section 185 
requirements and is a rule deficiency that is a basis for disapproval 
of the rule. One commenter stated that the CAA section 185 language is 
plain and unambiguous, and clearly does not allow such an exemption.
    Response: EPA disagrees that unlimited APCO discretion in 
determining normal source operation is consistent with CAA section 185. 
Rule 3170 does not specify any criteria for how the APCO would make a 
determination that a certain baseline is ``more representative of 
normal source operation'' than the baseline specified by CAA section 
185 (i.e., the attainment year). It is not clear that the APCO's

[[Page 1720]]

discretion would involve an assessment of whether a source's emissions 
are irregular, cyclical, or otherwise variable. Therefore, EPA 
continues to view the language in section 3.2.2 of Rule 3170 as a 
deficiency that needs to be corrected.
7. Stationary Versus Mobile Sources
    Comment: Several commenters stated that most ozone nonattainment 
areas classified as severe or extreme are now dominated by mobile 
source emissions, and that stationary sources are not the major 
contributor of emissions. Commenters stated that CAA section 185 is 
functionally obsolete and will result in substantial adverse financial 
impacts to facility operators with little or no air quality benefit. 
One commenter stated that individual sources do not have the ability to 
assure attainment of the standard; consequently, the fee is an 
unconstitutional bill of attainder.
    Response: The approach outlined in the CAA to reduce emissions in 
defined air basins acknowledges that no single source is responsible 
for an area's nonattainment, but that the total collective contribution 
of many individual sources affects an area's pollution problem. As 
such, the CAA extensively regulates both mobile sources and stationary 
sources. Whether or not CAA section 185 is functionally obsolete is an 
issue for Congress. As long as CAA section 185 remains the law, EPA's 
obligation is to ensure compliance with it. We disagree with the 
commenter that claims that since individual sources cannot ensure 
attainment of the ozone NAAQS, section 185 is an unconstitutional bill 
of attainder. Section 185 does not result in any party being declared 
guilty of a crime. Rather, it is a means of encouraging certain sources 
to reduce emissions of pollutants that contribute to unhealthy ambient 
ozone levels. The Courts have long held that the Commerce clause gives 
Congress the authority to regulate sources of air pollution. The fee 
provision of CAA section 185 acts as an incentive for major sources of 
air pollution to reduce emissions. Thus, it is a proper exercise of 
Congressional authority under the Commerce clause.
8. Impacts of Rule 3170 on Small Businesses
    Comment: Commenters stated that hundreds of small businesses will 
be affected by CAA section 185 requirements, as well as hospitals, 
medical centers, schools and other essential public services. 
Commenters stated that applying CAA section 185 fees to small 
businesses that are in compliance with all applicable regulations will 
demonstrate that the fees are unreasonable, expensive, and do nothing 
to reduce and assure emission reductions. One commenter stated that the 
fees would be inconsistent with the Small Business Regulatory 
Flexibility Act and that the fees should not be applied to businesses 
meeting the definition of ``small'' under CAA section 507.
    Response: Although CAA section 185 allows for exemptions for 
certain low-population areas (see section 185(e)), section 185 does not 
grant States or EPA discretion to exempt small businesses from the 
requirements of the program. The Regulatory Flexibility Act applies 
where EPA is promulgating regulations that may have a significant 
impact on a substantial number of small businesses. Here, it is the 
CAA, not EPA's action that imposes the fee on sources. Moreover, in 
this instance, EPA is not promulgating regulations, but rather 
reviewing a State plan. EPA does not have the authority to consider the 
impacts on small businesses that result from direct application of the 
statute or through applications of the State program. Moreover, even if 
EPA were promulgating a regulation that was determined to have a 
significant impact on a substantial number of small entities, we note 
that the RFA does not prohibit any specific regulatory result, as 
suggested by the commenters. Rather it only requires that the Agency 
take certain actions in order to fully consider the potential impacts 
of the regulation.
9. Unintended Consequences of Rule 3170
    Comment: One commenter stated that renewable energy facilities may 
need to reduce throughput as a result of CAA section 185 requirements 
and this would be contrary to efforts to reduce greenhouse gases and 
increase the penetration of renewable energy.
    Response: Sources have several ways to comply with the requirements 
of CAA section 185, and this could include reducing throughput to 
eliminate or reduce the fee amount. Regardless of the consequence of 
the manner in which a major source chooses to comply with the 
requirements, section 185 does not provide States or EPA with authority 
to exempt major stationary sources from complying with section 185.
10. Incorrect Statement of Baseline Emissions
    Comment: One commenter stated that section 5.1 of Rule 3170 needs 
to be revised to accurately define the baseline emissions to be used in 
the calculation of the fee amount. In addition, the definition of 
baseline emissions fails to include the possibility that a source will 
not have a permit issued for the attainment year, in which case the 
allowable emissions are to be based on the emissions allowed under the 
applicable implementation plan (see CAA section 185(b)(2)). While such 
circumstances may be rare, the District should include language that 
mirrors the statute to avoid any potential conflict.
    Response: While we think it is unlikely that any sources would not 
fall within the current definition, we agree with the commenter and 
recommend that the calculation in section 5.1 of Rule 3170 be revised 
to more closely conform to the language in CAA section 185. The 
definition of the variable ``B'' in the fee calculation should include 
the clarification that if no permit has been issued for the attainment 
year, then ``B'' should be the lower of the actual VOC or emissions 
during the baseline period, or the amount of VOC or NOX 
emissions allowed under the applicable implementation plan during the 
baseline period.
11. Ambiguity on Fees for Both VOCs and NOX
    Comment: One commenter expressed that the fee calculation in 
section 5.0 of Rule 3170 is ambiguous regarding whether the fee is due 
for VOCs and NOX, or just one or the other. Sources must pay 
a fee for both VOC emissions in excess of 80% of the VOC baseline 
emissions and NOX emissions in excess of 80% of the 
NOX baseline emissions. Section 5.0 of Rule 3170 should be 
revised to clarify this point.
    Response: EPA agrees that the fee is required for both VOC and 
NOX emissions. We believe that the District and sources 
understand the fee program applies to both VOC and NOX 
emissions, and that the language in section 5.1 of SJVUAPCD Rule 3170 
is sufficiently clear in that respect. For example, the District staff 
report for Rule 3170 contained a sample fee calculation which also made 
it clear that a separate fee would be assessed for VOC emissions and 
NOX emissions. While we do not believe any revisions to the 
rule are necessary, we recommend that SJVUAPCD consider whether further 
clarification might be helpful.
12. Definition of ``Major Source''
    Section 3.4 of Rule 3170 defines the term ``Major Source'' by 
referring to the definition in SJVUAPCD Rule 2201 (New and Modified 
Stationary Source Review Rule). The current SIP-approved

[[Page 1721]]

version of Rule 2201 was adopted by the SJVUAPCD on December 19, 2002, 
and approved by EPA on May 17, 2004 (69 FR 27837). This version of Rule 
2201 defines ``Major Source'' as a stationary source with VOC or 
NOX emissions of over 50,000 pounds per year (25 tons per 
year). The CAA defines the major source threshold as 10 tons per year 
for ozone nonattainment areas classified as extreme. The SJVUAPCD 
amended Rule 2201 on December 18, 2008, and submitted it for inclusion 
in the SIP on March 17, 2009. This amended version includes the 10 tons 
per year threshold, but has not been approved into the SIP. Therefore, 
in its proposed action, EPA stated that Rule 3170's reliance on Rule 
2201 to define major sources is not approvable at this time. If a 
version of Rule 2201 that contains the appropriate major source 
threshold is approved into the SIP prior to finalizing the proposed 
action, then section 3.4 would no longer be cited as a deficiency in 
Rule 3170.
    Comments: Several commenters disagreed with EPA's proposed action 
on this particular provision. They felt that this discrepancy would be 
resolved prior to the assessment or collection of any section 185 fees 
when Rule 2201 is approved into the SIP. One commenter also expressed 
that the thresholds in Rule 2201 are currently binding under State law, 
and therefore the ``Major Source'' definition in Rule 3170 should not 
be considered a deficiency that would result in the disapproval of the 
rule.
    Two commenters agreed with EPA's proposed action on this particular 
provision. One commenter felt that this definition is currently 
inconsistent with CAA requirements, noting that EPA has allowed Rule 
2201 to remain out of date for 5 years. However, in the current 
situation, the commenter agreed that this definition is a rule 
deficiency that is a basis for disapproval of the rule. One commenter 
added that the definition of ``Major Source'' in Rule 2201 does not 
match the definition in CAA section 182(e). For example, Rule 2201's 
definition excludes fugitive emissions for certain sources, only 
includes potential emissions from units with valid permits, and credits 
limits in authorities to construct that may or may not reflect actual 
emissions. As a result, the commenter felt that EPA is incorrect in 
suggesting that this deficiency will be resolved once the revised 
version of Rule 2201 is approved into the SIP. The commenter felt that 
section 3.4 of Rule 3170 should be revised to mirror the definition of 
``major source'' in CAA section 182(e), which includes all emissions of 
VOC or NOX, and looks at the larger of actual or potential 
emissions.
    Response: EPA disagrees with the statement that the December 18, 
2008, version of Rule 2201 is currently binding under State law. That 
version of the rule specifically states that it does not go into effect 
until EPA issues final approval of the rule into the SIP. The ``Major 
Source'' definition in Rule 3170 continues to be a deficiency until it 
is revised to be consistent with the CAA. Further, we agree that since 
we have not yet fully reviewed and acted on Rule 2201, we cannot say 
for a certainty that approval of that rule would eliminate any 
deficiency with respect to the definition of major sources under Rule 
3170. We will continue to work with the State to ensure that it 
develops a section 185 program that fully complies with the Act.
13. Sunset Provision for Section 185 Fees
    Comment: One commenter highlighted the need for EPA to address the 
legality and process of establishing a sunset provision for section 185 
fees, an issue identified in the CAAAC letter. Because the 1-hour ozone 
standard has been replaced with the 8-hour standard, EPA may not be 
able to make the findings necessary to redesignate an area as 
attainment for the 1-hour standard. This situation would require the 
imposition of fees indefinitely. The commenter feels that this issue 
must be resolved if EPA finalizes action on Rule 3170.
    Response: EPA is aware of the issue raised by the commenter and 
intends to address in future guidance or rulemaking the issue of when 
section 185 fees would no longer apply.

III. EPA Action

    No comments were submitted that change our assessment of the rule 
as described in our proposed action. Therefore, as authorized in 
sections 110(k)(3) and 301(a) of the Act, EPA is finalizing a limited 
approval of the submitted rule. This action incorporates the submitted 
rule into the California SIP, including those provisions identified as 
deficient. As authorized under section 110(k)(3), EPA is simultaneously 
finalizing a limited disapproval of the rule. As a result, sanctions 
will be imposed unless EPA approves subsequent SIP revisions that 
correct the rule deficiencies within 18 months of the effective date of 
this action. These sanctions will be imposed under section 179 of the 
Act according to 40 CFR 52.31. In addition, EPA must promulgate a 
Federal implementation plan (FIP) under section 110(c) unless we 
approve subsequent SIP revisions that correct the rule deficiencies 
within 24 months. Note that the submitted rule has been adopted by the 
SJVUAPCD, and EPA's final limited disapproval does not prevent the 
local agency from enforcing it.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order 12866, entitled ``Regulatory 
Planning and Review.''

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Burden is defined at 5 CFR 1320.3(b).

C. 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 rule will not have a significant impact on a substantial 
number of small entities because SIP approvals and limited approvals/
limited disapprovals 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 
this limited approval/limited disapproval action 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 
grounds. Union Electric Co., v. U.S. EPA, 427 U.S. 246, 255-66 (1976); 
42 U.S.C. 7410(a)(2).

D. Unfunded Mandates Reform Act

    Under sections 202 of the Unfunded Mandates Reform Act of 1995 
(``Unfunded Mandates Act''), signed into law on March 22, 1995, EPA 
must

[[Page 1722]]

prepare a budgetary impact statement to accompany any proposed or final 
rule that includes a Federal mandate that may result in estimated costs 
to State, local, or Tribal governments in the aggregate; or to the 
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 limited approval/limited disapproval 
action promulgated does not include a Federal mandate that may result 
in estimated 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.

E. Executive Order 13132, Federalism

    Federalism (64 FR 43255, August 10, 1999) revokes and replaces 
Executive Orders 12612 (Federalism) and 12875 (Enhancing the 
Intergovernmental Partnership). Executive Order 13132 requires EPA to 
develop an accountable process to ensure ``meaningful and timely input 
by State and local officials in the development of regulatory policies 
that have federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.'' Under Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. EPA also may not issue a regulation 
that has federalism implications and that preempts State law unless the 
Agency consults with State and local officials early in the process of 
developing the proposed regulation.
    This rule will not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government, as specified in Executive Order 13132, because it 
merely approves a State rule implementing a Federal standard, and does 
not alter the relationship or the distribution of power and 
responsibilities established in the Clean Air Act. Thus, the 
requirements of section 6 of the Executive Order do not apply to this 
rule.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by Tribal officials in the development of regulatory 
policies that have Tribal implications.'' This final rule does not have 
Tribal implications, as specified in Executive Order 13175. It will not 
have substantial direct effects on Tribal governments, on the 
relationship between the Federal government and Indian Tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian Tribes. Thus, Executive Order 13175 does not 
apply to this rule.

G. Executive Order 13045, Protection of Children From Environmental 
Health Risks and Safety Risks

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) 
as applying only to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
rule is not subject to Executive Order 13045, because it approves a 
State rule implementing a Federal standard.

H. Executive Order 13211, Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355, May 22, 2001) because it is not a 
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12 of the National Technology Transfer and Advancement Act 
(NTTAA) of 1995 requires Federal agencies to evaluate existing 
technical standards when developing a new regulation. To comply with 
NTTAA, EPA must consider and use ``voluntary consensus standards'' 
(VCS) if available and applicable when developing programs and policies 
unless doing so would be inconsistent with applicable law or otherwise 
impractical.
    The EPA believes that VCS are inapplicable to this action. Today's 
action does not require the public to perform activities conducive to 
the use of VCS.

J. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective February 12, 2010.

K. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by March 15, 2010. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Nitrogen dioxide, Ozone, 
Reporting and recordkeeping requirements, Volatile organic compounds.


[[Page 1723]]


    Dated: December 11, 2009.
Laura Yoshii,
Acting Regional Administrator, Region IX.

0
Part 52, Chapter I, Title 40 of the Code of Federal Regulations is 
amended as follows:

PART 52--[AMENDED]

0
1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart F--California

0
2. Section 52.220 is amended by adding paragraph (c)(303)(i)(C)(4) to 
read as follows:


Sec.  52.220  Identification of plan.

* * * * *
    (c) * * *
    (303) * * *
    (i) * * *
    (C) * * *
    (4) Rule 3170, ``Federally Mandated Ozone Nonattainment Fee,'' 
adopted on May 16, 2002.
* * * * *
[FR Doc. 2010-353 Filed 1-12-10; 8:45 am]
BILLING CODE 6560-50-P
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