Jared&Blumenfeld,&Regional&Administrator,&EPA&Region&9&signed&the&following& proposed&rule&on&August&30,&2012,&and&EPA&is&submitting&it&for&publication&in& the& Federal'Register (FR).&While&we&have&taken&steps&to&ensure&the&accuracy& of&this&Internet&version&of&the&proposed&rule,&it&is¬&the&official&version& of&the&proposed&rule&for&purposes&of&public&comment.&Please&refer&to&the& official&version&in&a&forthcoming&FR&publication, which&will&appear&on&the& Government&Printing&Office's&FDsys&website& ( http://fdsys.gpo.gov/fdsys/search/home.action )&and&on&Regulations.gov& ( http://www.reg ulations.gov )&in& Docket&No.&EPA

Q R09

Q OAR
Q 2012

Q 07 13 .

6560 $ 50 $ P ENVIRONMENTAL&PROTECTION&AGENCY 40&CFR&Part&52 [ EPA $ R09 $ OAR $ 2012 $ 0713 ?&FRL $ ] Disapproval&of& Implementation&Plan Revision s ?& State&of& California?& South&Coast VMT&Emission s Offset& Demonstrations AGENCY:& Environmental&Protection&Agency&(EPA). ACTION:& Proposed&rule. SUMMARY :& EPA&is&p roposing&to&withdraw&its& final approval s of&
state implementation&plan&revisions&submitted&by&the&State&of& California&to&meet&the& vehicle

Q miles

Q traveled&emission s offset& requirement&under&the& Clean&Air&Act& for&the& Los&Angeles

Q South& Coast&Air&Basin&1

Q hour& and&8

Q hour& ozone& nonattainment&area s .&EPA& is&also&proposing&to&disapprove&the&same&plan&revisions .&EPA&is& proposing&th e&withdrawal&and&disapproval action s in&response&to& a&remand&by&the&Ninth&Circuit&Court&of&Appeal s&in& Association'of' Irritated'Residents'v.'EPA .& The&effect&of&this&action,&i f& fin alize d&as&proposed,&would&be&to&trigger deadlines&by&which& new&plan&revisions&meeting&the&applicable&requirements&must&be&2

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. submitted&by&the&State&of&California&and&approved&by& EPA&to& avoid&sanctions&and&to&avoid&an& obligation& on EPA&to&promulgate& a&federal&implementation&plan .& DATES :& Written&c omments&must&be&received&on&or&before&[ INSERT& DATE&30&DAYS&FROM&DATE&OF&PUBLICATION&IN&FEDERAL®ISTER ]. ADDRESSES :& Submit&comments,&identified&by& docket&number EPA
Q R09

Q OAR
Q 2012

Q 0713 ,&by&one&of&the&following&methods:

x Federal'eRulemaking'Portal : http://www.regulations.gov
.& Follow&the&on

Q line&instructions&for&submitting&comments.

x E
: mail : tax.wienke@epa.gov .

x Mail or'deliver : Wienke&Tax,&Air&Planning&Office,&U.S.& Environmental&Protection&Agency,&Region&9,&Mailcode&AIR

Q 2,& 75&Hawthorne&Street,&San&Francisco,&California&94105

Q 3901. Instructions : All&comments&will&be&included&in&the& public& docket&without&change&and&may&be&made&available&online&at& http://www.regulations.gov ,&including&any&personal&information& provided,&unless&the&comment&includes&information&claimed&to&be& Confidential&Business&Information&(CBI)&or&other&information& whose&disclosure&is&restricted&by&statute.& Information&that&you consider&CBI&or&otherwise&prot ected& should&be&clearly&identif i ed& as&such&and&should¬&be&submitted& through http://www.regulations.gov or&e Q mail.&The& http://www.regulations.gov :HEVLWHLVDQ3DQRQ\PRXV DFFHVV ́3

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. system,& and&EPA& will¬&know&your&identity&or&contact& information&unless&you&provide&it&in&the&body&of&your&comment.& If&you&send&an&e

Q mail&comment&directly&to&EPA,&your&e

Q mail& address&will&be&automatically&captured&and&included&as&part&of& the&publ ic& comment .&If&EPA&cannot&read&your&comment&due&to& technical&difficulties&and&cannot&contact&you&for&clarification,& EPA&may¬&be&able&to&consider&your&comment. Docket :& The&index&to&the& docket& for&this&action&is& available&electronically&on&the& http://www.regulations.gov Web& site&and&in&hard©&at&EPA&Region&IX,&75&Hawthorne&Street,&San& Francisco,&California,&94105. While&all&documents&in&the&docket&

are& listed&in&the&index,&some&information& may&be&publicly& availab le only&at&the&hard©&location&( e.g. ,©righted& material),&and&some&may¬&be&publicly&available&at&either& location&( e.g. ,&CBI ) .&To&inspect&the&hard©&materials,&please& schedule&an&appointment&during&normal&business&hours&with&the& contact&listed&in&the& FOR&FURTHER&INFORMATION&CONTACT section& below . FOR&FURTHER&INFORMATION&CONTACT :& Wienke&Tax,&Air&Planning& Office,&U.S.&Environm ental&Protection&Agency,&Region&9,&Mail& Code&AIR

Q 2,&75&Hawthorne&Street,&San&Francisco,&California& 94105

Q 3901,&415

Q 947

Q 4192,& tax.wienke@epa.gov .4

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. SUPPLEMENTARY&INFORMATION :& 7KURXJKRXWWKLVGRFXPHQW3ZH ́3XV ́ and 3RXU ́ refer&to& EPA . Table&of&Contents
I. Background A. Regulatory&Context B. South&Coast&Ozone&Designations&and&Classifications&and& Related&SIP&Revisions C.& /LWLJDWLRQRQ(3$¶V)LQDO$FWLRQRQ6RXWK&RDVW

Q Hour& Ozone&SIP D.& /LWLJDWLRQRQ(3$¶V)LQDO$FWLRQRQ6RXWK&RDVW

Q Hour& Ozone&SIP II. Proposed&Withdrawal&of&Previous&Approvals,&and&Proposed& Disapproval,&of&VMT&Emissions&Offset&Demonstrations
I II . Proposed&Action and&Request&for&Public&Comment
I V.& Statutory&and& Executive&Order&Reviews I. Background
A. Regulatory'Context The&Clean&Air&Act&(CAA&or&Act)&requires& EPA to&establish& national&ambient&air&quality&standards&(NAAQS or&"standards" )& for&certain&widespread&pollutants&that&cause&or&contribute&to& air&pollution&that&is reasonably&anticipated&to&endanger&public& health&or&welfare&(see§ions&108&and&109&of&the&CAA).5

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. In&1979,&under§ion&109&of&the&CAA,&EPA&established&a& primary&health

Q based&NAAQS&for&ozone 1 at&0.12&parts&per&million& (ppm)&averaged&over&a&1

Q hour&period.&See&44&FR&8220 g (February& 9,&1979). The&Act,&as&amended&in&1990,&required&EPA&to&designate& as&nonattainment&any&area&that& had&been&designated&as& nonattainment&before&the&1990&Amendments [ secti on&107(d)( 1)(C) of&the&Actg&56&FR&56694 g ( November&6,&1991) ] .&The&Act&further& classified& 1

Q hour&ozone&nonattainment areas,&based&on&the& severity&of&their&nonattainment&problem,&as&Marginal,&Moderate,& Serious,&Severe,&or&Extreme.& The&control&requirements&and&date&by&which&attainment&of& the& 1

Q hour&ozone&standard&was&to&be&achieved&varied&with&an& DUHD¶VFODVVLILFDWLRQ0DUJLQDODUHDVZHUHVXEMHFWWRWKHIHZHVW mandated&control&requirements&and&had&the&earliest&attainment& date,&Novemb er&15,&1993,&while&Extreme&areas&were&subject&to& the& most stringent&planning&requirements&and&were&provided& the&most time&to&attain&the&standard ,&until&November&15,&2010 .& The&!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 1&& Ground

Q level&ozone&or&smog&is&formed&when&oxides&of&nitrogen&(NO X ),& volatile&organic&compounds&(VOC),&and&oxygen&react&in&the&presence&of& sunlight,& generally&at&elevated&temperatures.&Strategies&for&reducing&smog& typically&require&reductions&in&both&VOC&and&NO X emissions. Ozone&causes& serious&health&problems&by&damaging&lung&tissue&and sensitizing&the&lungs&to& other&irritants.&When&inhaled,&even&at& very low&levels,&ozone&can&cause´& respiratory&problems,&aggravate asthma,&temporary decreases&in&lung capacity& of&15&to&20&percent in&healthy&adults,&inflammation&of&lung&tissue,&lead&to& hospital admissions&and&emergency&room&visits,&and&impair&the&bo dy's&immune system&defenses,&making&people&more&susceptible&to&respiratory illnesses,& including&bronchitis&and&pneumonia.6

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. various&ozone&planning&requirements&to&which&Extreme&ozone& nonattainment&areas& ar e& subject&are&set&forth&in§ion&172(c)& and§ion&182(a)

Q (e)&of&the&CAA.&Of&particular&importance&for& the&purposes&of&this&proposed&action,§ion&182(d)(1)(A)& requires&the&following: "Within&2&years&after&November&15,&1992,&the&State&shall& submit&a&r evision&that&identifies&and&adopts&specific& enforceable&transportation&control&strategies&and& transportation&control&measures&to&offset&any&growth&in& emissions&from&growth&in&vehicle&miles&traveled&or&numbers& of&vehicle&trips&in&such&area&and&to&attain&red uction&in& motor&vehicle&emissions&as&necessary,&in&combination&with& other&emission&reduction&requirements&of&this&subpart,&to& comply&with&the&requirements&of&subsection&(b)(2)(B)&and& (c)(2)(B)&of&this§ion&(pertaining&to&periodic&emissions& reduction&req uirements).&The&State& s hall&consider&measu res& specified&in§ion&7408(f)&of&this&title,&and&choose&from& among&and&implement&such&measures&as&necessary&to& demonstrate&attainment&with&the&national&ambient&air& quality&standardsg&in&considering&such&measures ,&the&State& should&ensure&adequate&access&to&downtown,&other& commercial,&and&residential&areas&and&should&avoid&measures&7

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. that&increase&or&related&emissions&and&congestion&rather& than&reduce&them." EPA&believes&that&it&is&appropriate&to treat&the&three& requ ired&elements&of section&182(d)(1)(A)&( i.e.,' offsetting emissions&growth,&attainment&of&the& rate
Q of

Q progress&( R OP) reduction,&and&attainment&of&the&ozone NAAQS)&as&separable.&As& to&the&first element&of&CAA§ion&182(d)(1)(A) ( i.e.,' offsetting&emissions& growth caused&by&growth&in&vehicle&miles& travelled&(VMT) ),&EPA ha d historically&interpreted&this&CAA provision&to&allow&areas&to&meet&the requirement&by& demonstrating&that emissions&from&motor&vehicles&decline each& year&through&the attainment&year. See ,&e. g., 57&FR&13498,&at& 13521

Q 15323 g (April&16,&1992).&This&proposed&rule&relates&only& to&the&first&element&of§ion&182(d)(1)(A)& ( i.e.,' offsetting emissions&growth caused&by&growth&in&VMT ).&Herein,&we&refer&to& this&element&as&the&Vehicle&Miles&Traveled&(VMT )&emissions& offset&requirement&("VMT&emissions&offset&requirement") and&the& demonstration&submitted&to&us&to&address&this&requirement&as&the& "VMT&emissions&offset&demonstration . " In&1997,&EPA&re placed&the&1

Q hour& ozone& standard&with&an& 8

Q hour&ozone& standard of&0.08&ppm.&See 62&FR&38856 g (July&18,&8

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. 1997). 2 We&promulgated&final&rules&to&implement&the&1997&8

Q hour&

ozone& standard in&two&phases.&The& " Phase&1 " rule,&which&was& issued&on&April&30,&2004 (69&FR&23951)& establishes,&among&other& things,&the&classification&structure&and&corresponding& attainment&deadlines,&as&well&as&the&anti

Q backsliding&principles& for&the&transition&from&the&1

Q hour&ozone&standard&to&the&8

Q hour& ozone&standard.& For&an&area&that&was&designated nonattainment& for&the&1

Q hour&ozone&standard&at&the&time&when&EPA&designated&it& as&nonattainment&for&the&1997&8

Q hour&ozone&standard as&part&of& the&initial&8

Q hour&ozone&designations ,&most&of&the&requirements& that&had&applied&by&virtue&of&the&area's&classifi cation&for&the& 1

Q hour&ozone&standard&continue&to&apply&even&after&revocation&of& the&1

Q hour&ozone&standard&(which&occurred&in&June&2005 for&most&

areas ).& See&40&CFR&51.905(a)(1)&and&40&CFR&51.900(f).& Thus,&for& example,&an&area&that& was&designated&nonattainme nt&and classified&as&Extreme&for&the&1

Q hour&ozone&standard& at&the&time& of&an&initial&designation&of&nonattainment&for&the&8

Q hour& standard& remains&subject&to&the&VMT&emissions&offset&requirement& under&CAA§ion&182(d)(1)(A)& for&the&1

Q hour&ozone&NAAQS& even if&the&area&would¬&otherwise&have&been&subject&to&that& particular&requirement&based&on&the&area's&classification&for&!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 2&& In&2008,&EPA& tightened&the&8

Q hour&ozone&NAAQS&to&0.075&ppm,&see 73&FR&16436 (March&27,&2008).&Today's&proposed&action&relates&only to&SIP&requirements& arising&from&the&classifications&and&designations&of&the&South&Coast&with& respect&to&the& 1979& 1

Q hour&ozone&and&1997&8

Q hour&ozone&standards.9

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. the&1997&8

Q hour&ozone&standard . See&40&CFR&51.905(a)(1)&and&40& CFR&51.900(f)(11). The&Phase&2&rule,&which&was&issued&on&November&29,&20 05 (70& FR&71612),& addresses&the&SIP&obligations&for&the&1997&8

Q hour&

ozone& standard.&Under&the&Phase&2&rule,&an&area that&is& designated&as&nonattainment&for&the&1997&8

Q hour&ozone&standard,& and&classified&under&subpart&2&(of&part&D&of&title&I&of&the& CAA),&is subject&to&the& requirements&of&subpart&2&that&apply&for& that&classification. See&40&CFR&51.902(a).&Among&the& requirements&for&areas&classified&as&Severe&or&Extreme&for&the& 1997&8

Q hour&ozone&standard&is&the&VMT& e missions& o ffset&

r equirement&under&CAA§io n&182(d)(1)(A).
B. South'Coast' Ozone' Designations'and'Classifications'and'Related' SIP'Revisions As¬ed&above,& t he& CAA ,&as&amended&in&1990,&required&EPA& to&des ignate&as&nonattainment any&area&that& had&been&designated& as&nonattainment&before&the&1990& Amendments .&The&CAA&also& required&EPA&to&classify& nonattainment area s as&Marginal,& Moderate,&Serious,&Severe,&or&Extreme&depending&upon&the&design& value&of&the& area.& On&November&6,&1991,&EPA&designated&the& Los& Angeles

Q South&Coast Air&Basin&Area&("South&Coast") 3 as&!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 3&& The&South&Coast&includes&Orange&County,&the&southwestern&two

Q thirds&of&Los& Angeles&County,& southwestern&San&Bernardino&County,&and&western&Riverside& County&(see&40&CFR&81.305).10

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. nonattainment& and&classified&it&as&Extreme& for&the& 1

Q hour&ozone& standard g&thus&the&area&had an&attainment&date&no&later&than& November&15,&2010&(56&FR&56694).&
T he& California&Air&Resources&Board&(CARB)&has&submitted&a&

num ber&of&SIP&revisions& over&the&years& for&the&South&Coast&Air& Basin&to&address&1

Q hour&ozone&SIP&planning&requirements.& Specifically,&i n&1994,& CARB& submitted&a&1

Q hour&ozone&SIP& that ,& among&other&things, includ ed&for&the&South&Coast an&attainment& demonstration,&R O P&demonstrations,&and&transportation&control& measures&(TCMs).&In&1997,&EPA&approved&the&1994& Ozone&SIP as&it& applied&to&the&South&Coast&for&the&1

Q hour&standard .&See&62&FR& 1 150 g (January&8,&1997). In&1997&and&1999,&CARB&submi tted&revisions&to&the&1994& South&Coast&1

Q Hour&Ozone&SIP,&including&revised&R O P& demonstrations,&and&a&revised&attainment&demonstration& ("1997/1999&South&Coast&1

Q Hour&Ozone&SIP") .&See&65&FR&18 903 g (April&10,&2000).&In&2004,&CARB&submitted&revisions&to&the& 19 97/1999&South&Coast&1

Q Hour&Ozone&SIP&("2003&S outh&Coast&1

Q Hour& Ozone&SIP").& In&2008,&the&2003&South&Coast&1

Q Hour&Ozone&SIP&was& supplemented&by&submittal&of&a& VMT&emissions&offset& demonstration 4 that&was&intended&to&comply&with&the&VMT& emissions&!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 4 Letter&from&Elaine&Chang,&Deputy&Executive&Officer,&South&Coast&Air&Quality& Management&District,&dated&September&10,&2008,&approved&at&40&CFR& 52.220(c)(339)(ii)(B)(2).11

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. o ffset& requ irement by&showing&that&there&would&be&no&upturn&in& HPLVVLRQVEHWZHHQWKHDUHD¶VEDVH\HDUIRUWKH6,3UHYLVLRQDQG WKHDUHD¶VDWWDLQPHQW\HDU,Q(3$GLVDSSURYHGWKHUHYLVHG
R OP demonstrations&and&attainment&demonstration&in&the&2003& South&Coast&1

Q H our&Ozone&SIP,&but&approved&the& VMT&emissions& offset&demonstration that&had&been&submitted&in&2008.&74&F R 10176 g (March&10,&2009). 5 With&respect&to&the&1997&8

Q hour&standard,&EPA&designated& the&South&Coast&as& nonattainment&and&classified&the&area&as& "Severe
Q 17,"&but&later&approved&a&request&by&California&to& reclassify&the&South&Coast&to&"Extreme."&See&69&FR&23858 g (April& 30,&2004)&and 75&FR&24409 g (May&5,&2010).& In&2007,&CARB& submitted&a&SIP&revision&to&address&the&8

Q hour&ozone&SIP& planning&requiremen ts&for&the South&Coast ("2007&South&Coast&8

Q hour&Ozone SIP").& The& 2007& South&Coast& 8

Q Hour&Ozone&SIP& included ,&among&many&other&elements,&a& VMT&emissions&offset& demonstration& addressing&the& VMT&emissions&offset& requirement!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 5&& In&response&to&comments&on&EPA's&proposal&to&partially&approve&and& partially&disapprove&the&2003&South&Coast&1

Q Hour&Ozone&SIP,&EPA&indicated& that&the&second&and&third&elements&of&CAA§ion&182(d)(1)(A)&were&satisfied& in&1997&when&EPA&approved&the&199 4&South&Coast&1

Q Hour&Ozone&SIP's& transportation&control&strategies&and&TCMs,&such&as&TCM

Q 1&( 3 Transportation& Improvements"),&which&includes&the&capital&and&non

Q capital&facilities,& projects,&and&programs&contained&in&the&Regional&Mobility&Element&and& program med&through&the&Regional&Transportation&Improvement&Program&(RTIP)& process&to&reduce&emissions,&in&the&same&action&in&which&EPA&approved&the& South&Coast&R O P&and&attainment&demonstrations.&See&74&F R 10176,&at&10179 g (March&10,&2009).12

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. under CAA§ion&182(d)(1)(A). 6 C onsistent&with&the&approach& used&for&the&demonstration&submitted&for&1

Q hour&ozone&purposes& in&2008,&the&2007&South&Coast&8

Q Hour&Ozone&SIP&show ed compliance& with&the&VMT&emissions&offset&requirement ,&as&then&interpreted& by&EPA, by&showing&that&aggregate&motor&vehicle&emissions&are& projected&to&decrease&each&year&from&the&base&year&through&the& attainment&year&(2024).&
In&M arch&2012,&EPA& approved&the&2007&South&Coast&8

Q Hour& Ozone&SIP,&including&the& VMT&emissions&offset& demonstrati on& addressing& the&VMT&emissions&offset&requirement&under& CAA& section&182(d)(1)(A) .& See&77&FR&12674 g (March&1,&2012 ).& C. /LWLJDWLRQRQ(3$¶V)LQDO$FWLRQRQ6RXWK&RDVW

: Hour' Ozone'SIP In&approving&the&VMT& emissions&offset&demonstration&that& was&submitted&by& the&South&Coast&Air&Quality&Management&District to&supplement the&2003&South&Coast&1

Q Hour&Ozone&SIP,&EPA&applied& its& then

Q longstanding&interpretation&of&the VMT&emissions&offset& requirement&under& CAA& sec tion&182(d)(1)(A) that& no& TCMs&are& necessary&if&aggregate&motor&vehicle&emissions&are&projected&to& decline&each&year&from&the&base&year&of&the&plan&to&the& attainment&year. See&74&FR&10176,&at&10179

Q 10180 g (March&10,&!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! 6&& See&pages&6

Q 23&and&6

Q 27&(table&6

Q 12)&of&the&Final&2007&Air&Quality& Management&Plan,&June&2007,&prepared&by&the&South&Coast&Air&Quality& Management&District.13

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. 2009).& (3$¶V 2009&approval&was& challenge d&in&the&U.S.&Court&of& Appeals&for&the&Ninth&Circuit ,&and,&in&2011,&the&c ourt&ruled& against&EPA,& determining&that& EPA&incorrectly&interpreted&the& statutory& SKUDVH3JURZWKLQHPLVVLRQV ́ in§ion&182(d)(1)(A)& DVPHDQLQJDJURZWKLQ3DJJUHJDWHPRWRUYHKLFOH HPLVVLRQV ́&& In& other&words,&the&court&ruled&that&additional&transportation& control&strategies&and&measures&are&required& whenever&vehicle& emissions are&projected&to&be&higher&than&they would&have&been& had&vehicle&miles traveled¬&increased,&even&when ag gregate& vehicle&emissions&are&actually decreasing. Association'of' Irritated'Residents'v.'EPA ,&632&F.3d&584,&at&596

Q 597&(9th&Cir.& 2011),&reprinted&as&amended&on&January&27,&2012 ,&686&F.3d&668,& further&amended&February&13,&2012&(" AIR'v.'EPA ") . Based&on&this&reasoning,&the&court&remanded&the&approval&of& the&VMT&emissions&offset&demonstration&back&to&EPA&for&further& proceedings&consistent&with&the&opinion.&In&May&2011,&EPA&filed& a&petition&for&panel&rehearing&requesting&the&court&to& reconsider&its decision&as&to&the&VMT&emissions&offset& requirement.&In&January&2012,&the&court&denied&the&request&and& issued&the&mandate&shortly&thereafter.&
D. /LWLJDWLRQRQ(3$¶V)LQDO$FWLRQ on'2007'South'Coast'8

: Hour' Ozone'SIP14

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. As&of&December&15,&2011, the&time&of&signa ture&on&the&final& rule&approving&the&2007&South&Coast&8

Q hour&Ozone&SIP,&the&court& had¬&yet&responded&to&our&petition&for&panel&rehearing&in& AIR' v.'EPA .&Notwithstanding&adverse&comments&on&the&proposed& approval&of&the&VMT&emissions&offset&demonstration&i n&the&2007& South&Coast&8

Q Hour&Ozone&SIP,&EPA&proceeded&to&approve&the& demonstration&on&the&basis&of&the&same&rationale&that&had&been& rejected&by&the&Ninth&Circuit&in&connection&with&the&VMT& emissions& offset&demonstration&submitted&as&part&of&the&2003& South Coast&1

Q Hour&Ozone&SIP.&The&final&rule&was&ultimately& published&on&March&1,&2012&(77&FR&12674).&Shortly&thereafter,& several&environmental&and&community&groups&filed&a&lawsuit&in& the&Ninth&Circuit&challenging&that&approval.& Communities'for'a' Better' Environment,'et'al . v.'EPA ,&No.&12

Q 71340.&& II. Proposed&Withdrawal& of&Previous&Approvals,&and&Proposed& Disapproval,&of& VMT&Emissions&Offset&Demonstrations As¬ed&above,&the&Ninth&Circuit&rejected&EPA's&long

Q standing&interpretation&of&the&first&element&of&se ction& 182(d)(1)(A)& that& s tates&could demonstrate&compliance& with&the&
VMT& e missions& o ffset&requirement& through&submittal&of&aggregate& motor&vehicle&emissions&estimates&showing&year

Q over Q year& declines&in&such&emissions . These&demonstrations formed&the& basis&for& our& consideration&and&approval&of&the§ion&15

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. 182(d)(1)(A)&VMT& emissions&offset& demonstrations& submitted&in& connection&with& the&2003&South&Coast& 1

Q Hour&Ozone&SIP and&the& 2007&South&Coast& 8

Q Hour&Ozone&SIP .& I QUHVSRQVHWRWKHFRXUW¶V

re jection&of&our&interpretation&of&the&Act&and& its& remand of&our& action&approving&the&VMT& emissions& offset& demonstration for&the& 1

Q hour&ozone&standard ,&we&are&proposing& the&following&two& actions . First,& we&are&proposing&to&withdraw&our&previous&approval& of& the& VMT& emissions& offset&demonstration in&our&March&8,& 2009& final&action& o n&the&2003&South&Coast&1

Q Hour&Ozone&SIP . Second,& we&are&proposing&to&withdraw&our&March 1,&2012&approval&of&the& portion of&the&2007&South&Coast& 8

Q Hour&Ozone&SIP& that&was& submitted&to address& the&VMT& e missions& o ffset&requirement&of& CAA& section&182(d)(1)(A). Withdrawal&of&our&approvals&of&the&two§ion&182(d)(1)(A)& demonstrations&would&remove&them&from&the&California&SIP&and&we& would&be&obligated&to&take&action&on&them&under§ion&1 10(k) ,& unless&the&State&were&to&also&withdraw&the&demonstrations&from& their&submissions&to&us . To&date,&the&State&has¬&withdrawn& these&demonstrations. Therefore,&in&this&action,&we&are& proposing&to&disapprove&them.&Specifically,& we&are&proposing&to& disa pprove& the&demonstrations&submitted&by&California&to& demonstrate&compliance&with&the&VMT& e missions& o ffset&requirement&16

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. under&CAA& section&182(d)(1)(A)& with&respect&to&the& 1

Q hour& and&8

Q hour& ozone& standards& because&they&are&predicated&on&EPA's& previous& interpretation&of§ion&182(d)(1)(A)&that&has&been& rejected&by&the&Ninth&Circuit .&The&demonstrations& are¬& consistent&with WKHFRXUW¶VUXOLQJ on the&requirements&of& section&182(d)(1)(A)&because&they fail&to&identify ,&compared&to& a&baseline&assuming&no& VMT&growth, the& level&of& increased& emissions& resulting solely& from VMT& growth& and&to&show&how&such& increased& emissions&have&been&offset&through&adoption& and& implementation&of&transportation&control&strategies&and& transportation&control&measures . III. Proposed& Action&and&Request&for&Public&Comment EPA&is&proposing to&withdraw& and&to&disapprove& our& final& approval s&of&SIP&revisions&submitted&by&the&State&of&California& to&demonstrate&compliance&with&the&VMT& e missions& o ffset& requirement&under&CAA& section&182(d)(1)(A )& with&respect&to&the& 1

Q hour& and&8

Q hour& ozone& standard s in&the&South&Coast& nonattainment&area.&EPA&is&proposing& this&action& in& response&to&

a decision&of&the&Ninth&Circuit&in& AIR v.'EPA .& Under§ion& 110(k)&of&the&Clean&Air&Act,&w e&are&proposing&to&disapprove& these& same& plan&elements because&they&reflect&an&approach&to& showing&compliance&with§ion&182(d)(1)(A)&that&was&reject ed by&the&court& as&inconsistent&with&the&CAA§ion&182(d)(1)(A)&17

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. VMT& e missions& o ffset&requirement .& Shoul d we&finalize& the& disapproval proposed&here ,& the&offset&sanction&in&CAA& section& 179(b)(2)&would&apply in&the& South&Coast&ozone&nonattainment& area&18&months&after& the&effective&date&of& the final& disapproval.&The&highway&funding&sanctio ns&in&CAA§ion& 179(b)(1)&would&apply&in&the&area&six months&after&the&offset& sanction&is&imposed.& These&sanctions&will&apply&unless&we&take& final&action&approving& SIP&revisions&meeting&the&relevant& requirements&of&the&CAA prior&to&the&time&the&sanctions&would& take&effect .&If&we&propose&approval&of&a&SIP&revision&meeting& the&relevant&requirements&of&the&CAA&and&determine&at&that&time& that&it&is&more&likely&than¬&the&deficiency&has&been& corrected,&sanctions&would&be&deferred .&See&40&CFR&52.31&which& sets&forth& when&sancti ons&apply&and&when&t hey&may&be&stopped&or& deferred. In&addition&to&the&sanctions,&CAA§ion&110 ( c)&provides& that&EPA&must&promulgate&a&federal&implementation&plan& addressing&the& deficiency&that&is&the&basis&for&this&disapproval two&years&after&the&effect ive&date&of& the disapproval& unless&we& have approve d a&revised&SIP&before&that&date. We&are&soliciting&comments&on&these&proposed&actions.& Comments&will&be&accepted&for 30&days&following&publication& o f18

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. this&proposal&in&the& Federal Register .& We&will&consider all& comments&in&our&final&rulemaking. I V.&Statutory&and&Executive&Order&Reviews A.'Executive'Order'12988,'Regulatory'Planning'and'Review The&Office&of&Management&and&Budget&(OMB)&has&exempted&this& regulatory&action&from&Executive&Order&128665,&entitled& 35HJXODWRU\3ODQQLQJDQG5HYLHZ ́ B.'Paperwork'Reduction'Act This&action&does¬&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'Reduct ion'Act The&Regulatory&Flexibility&Act&(RFA)&generally&requires&an& agency&to&conduct&a®ulatory&flexibility&analysis&of&any&rule& subject&to¬ice&and&comment&rulemaking&requirements&unless&the& agency&certifies&that&the&rule&will¬&have&a&significant&

e conomic&impact&on&a&substantial&number&of&small&entities.&Small& entities&include&small&businesses,&small¬

Q for

Q profit& enterprises,&and&small&governmental&jurisdictions.&& This&rule&will¬&have&a&significant&impact&on&a& substantial&number&of&small&entit ies&because&SIP&approvals&or& disapprovals&under§ion&110&and&subchapter&I,&part&D&of&the& Clean&Air&Act&do¬&create&any&new&requirements&but&simply&19

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. approve&or&disapprove&requirements&that&the&State&is&already& imposing.&Therefore,&because&th e proposed& withdrawal&of&previous& approvals&of&certain&SIP&revisions,&and&proposed& disapproval of& the&same,& do¬&create&any&new&requirements,&I&certify&that& this& proposed& action&will¬&have&a&significant&economic&impact& on&a&substantial&number&of&small&entities.& Moreover,&due&to&the& nature&of&the&Federal

Q 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

Q 66&(1976)g&42&U.S.C.&7410(a)(2). D.'Unfunded'Mandates'Reform'Act Under§ion&202&of&the&Unfunded&Mandates&Reform&Act&of& 38QIXQGHG0DQGDWHV$FW ́VLJQHGLQWRODZR n&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&costs&to&State,&local,&or&tribal& governments&in&the&aggregateg&or&to&the&private§or,&of $100& million&or&more.&Under§ion&205,&EPA&must&select&the&most& cost
Q 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&20

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. info rming&and&advising&any&small&governments&that&may&be& significantly&or&uniquely&impacted&by&the&rule. EPA&has&determined&that&the& proposed& withdrawal&and& disapproval&action&does¬&include&a&Federal&mandate&that&may& result&in&estimated&costs&of&$100&millio n&or&more&to&either& State,&local,&or&tribal&governments&in&the&aggregate,&or&to&the& private§or.&This&Federal&action& propose s to&withdraw& previous&approvals&of&certain&SIP&revisions,&and&proposes& disapproval of&the&same,&and& imposes&no&new&requirements. Accordingly,&no&additional&costs&to&State,&local,&or&tribal& governments,&or&to&the&private§or,&result&from&this& proposed& 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& 3PHDQLQJIXODQGWLPHO\LQSXWE\6WDWHDQGORFDORIILFLDOVLQWKH development&of®ulatory&policies&that&h ave&federalism& LPSOLFDWLRQV ́33ROLFLHVWKDWKDYHIHGHUDOLVPLPSOLFDWLRQV ́LV defined&in&the&Executive&Order&to&include®ulations&that&have& 3VXEVWDQWLDOGLUHFWHIIHFWVRQWKH6WDWHVRQWKHUHODWLRQVKLS between&the&national&government&and&the&States,&or& on&the&21

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. distribution&of&power&and&responsibilities&among&the&various& OHYHOVRIJRYHUQPHQW ́8QGHU([HFXWLYH2UGHU(3$PD\QRW issue&a®ulation&that&has&federalism&implications,&that& imposes&substantial&direct&compliance&costs,&and&that&is¬& requi red&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¬&issue&a®ulation&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®ulation. This&rule&will¬&have&substantial&dir ect&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& propose s&to withdraw& previous&approvals&of&certain&SIP&revisions&implementing&a& Federal&standard,&and&proposes& disapproval of& the&same,& and&does& not&alter&the&relationship&or&the&distribution&of&power&and& responsibilities&established&in&the&Clean&Air&Act.&Thus,&the&

r equirements&of§ion&6&of&the&Executive&Order&do¬&apply&to& this&rule.22

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. F.'Executive'Order'13175,'Coordination'with'Indian'Tribal' Governments ([HFXWLYH2UGHUHQWLWOHG3&RQVXOWDWLRQDQG &RRUGLQDWLRQZLWK,QGLDQ7ULEDO*RYHUQPHQWV ́)5
No vember&9,&2000),&requires&EPA&to&develop&an&accountable& SURFHVVWRHQVXUH3PHDQLQJIXODQGWLPHO\LQSXWE\WULEDO officials&in&the&development&of®ulatory&policies&that&have& WULEDOLPSOLFDWLRQV ́7KLVSURSRVHGUXOHGRHVQRWKDYHWULEDO implications,&as&sp ecified&in&Executive&Order&13175.&It&will¬& 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&a nd&Indian&tribes.&Thus,&Executive&Order& 13175&does¬&apply&to&this& proposed& 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&appl ying&only&to&those®ulatory&actions&that concern&health&or&safety&risks,&such&that&the&analysis&required& under§ion&5

Q 501&of&the&Executive&Order&has&the&potential&to& influence&the®ulation.&This&rule&is¬&subject&to&Executive& Order&13045,&because& it& proposes&to withdraw&previous&approvals&23

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. of&certain&SIP&revisions&implementing&a&federal&standard,&and& proposes& disapproval of&the&same . H.'Executive'Order'13211,'Actions'that'Significantly'Affect' Energy'Supply,'Distribution,'or'Use' This& proposed& rule&i s¬&subject&to&Executive&Order&13211,& 3$FWLRQV&RQFHUQLQJ5HJXODWLRQV7KDW6LJQLILFDQWO\$IIHFW(QHUJ\ 6XSSO\'LVWULEXWLRQRU8VH ́)50D\ because&it&is¬&a&significant®ulatory&action&under& Executive&Order&12866. I.'National'Te chnology'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&con sider&and&use& 3YROXQWDU\FRQVHQVXVVWDQGDUGV ́9&6LIDYDLODEOHDQG 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& pro posed& DFWLRQ7RGD\¶V proposed& action&does¬&require&the&public&to& perform&activities&conducive&to&the&use&of&VCS.24

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. J.' Executive'Order'12898: Federal'Actions'to'Address' Environmental'Justice'in'Minority'Populations'and'Low

: Income' Population Executive&Ord er&(EO)&12898&(59&FR&7629&(Feb.&16,&1994)) establishes&federal&executive&policy&on&environmental&justice.&& Its&main&provision&directs&federal&agencies,&to&the&greatest& extent&practicable&and&permitted&by&law,&to&make&environmental& justice&part&of&their& mission&by&identifying&and&addressing,&as& appropriate,&disproportionately&high&and&adverse&human&health&or& environmental&effects&of&their&programs,&policies,&and& activities&on&minority&populations&and&low

Q income&populations&in& the&United&States.
EPA& lacks&the&discretionary&authority&to&address& environmental&justice&in&this&proposed&rulemaking.&In&reviewing& SIP&submissions,&EPA's&role&is&to&approve&or&disapprove&state& choices,&based&on&the&criteria&of&the&Clean&Air&Act.& Accordingly,&this&action&merely& propose s to&withdraw&previous& approvals&of&certain&SIP&revisions,&and&proposes& disapproval of& the&same,& and&will¬&in

Q and

Q of&itself&create&any&new& requirements.&Accordingly,&it&does¬&provide&EPA&with&the& discretionary&authority&to&address,&as&appropri ate,& disproportionate&human&health&or&environmental&effects,&using&25

This&document&is&a&prepublication&version,&signed&by&Jared&Blumenfeld,& Regional&Administrator,&EPA&Region&9&on&August&30,&2012.&We&have&taken&steps& to& ensure&the&accuracy&of&this&version,&but&it&is¬&the&official&version. practicable&and&legally&permissible&methods,&under&Executive& Order&12898. List&of&Subjects&in&40&CFR&Part&52 Environmental&protection,&Air&pollution&control, Intergovernmental&relations,&Oz one,&Reporting&and&recordkeeping& requirements,&Volatile&organic&compounds. Authority :&42&U.S.C.&7401&et&seq.

____ August&30,&2012

____ /s/

_________________ Dated: Jared&Blumenfeld , Regional&Administrator, EPA& Region&IX.