Federal Register / Vol. 77, No. 8 / Thursday, January 12, 2012 / Proposed Rules 1895 

Federal Register for detailed 

instructions on how to submit 

comments. 

FOR FURTHER INFORMATION CONTACT: 

Sean Lakeman, Regulatory Development 

Section, Air Planning Branch, Air, 

Pesticides and Toxics Management 

Division, U.S. Environmental Protection 

Agency, Region 4, 61 Forsyth Street 

SW., Atlanta, Georgia 30303–8960. The 

telephone number is (404) 562–9043. 

Mr. Lakeman can be reached via 

electronic mail at 

lakeman.sean@epa.gov. 

SUPPLEMENTARY INFORMATION: For 

additional information see the direct 

final rule which is published in the 

Rules Section of this Federal Register. 

A detailed rationale for the approval is 

set forth in the direct final rule. If no 

adverse comments are received in 

response to this rule, no further activity 

is contemplated. If EPA receives adverse 

comments, the direct final rule will be 

withdrawn and all public comments 

received will be addressed in a 

subsequent final rule based on this 

proposed rule. EPA will not institute a 

second comment period on this 

document. Any parties interested in 

commenting on this document should 

do so at this time. 

Dated: December 22, 2011. 

Gwendolyn Keyes Fleming, 

Regional Administrator, Region 4. 

[FR Doc. 2012–347 Filed 1–11–12; 8:45 am] 

BILLING CODE 6560–50–P 

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 52 

[EPA–R09–OAR–2011–0876; FRL–9617–9] 

Revisions to the California State 

Implementation Plan, South Coast Air 

Quality Management District 

AGENCY: Environmental Protection 

Agency (EPA). 

ACTION: Proposed rule. 

SUMMARY: In this action, we are 

proposing to approve South Coast Air 

Quality Management District 

(SCAQMD) Rule 317, ‘‘Clean Air Act 

Non-Attainment Fee,’’ as a revision to 

SCAQMD’s portion of the California 

State Implementation Plan (SIP). Rule 

317 is a local rule submitted to address 

section 185 of the Clean Air Act (CAA 

or Act). We are proposing that Rule 317, 

an equivalent alternative program, is not 

less stringent than the program required 

by section 185, and, therefore, is 

approvable, consistent with the 

principles of section 172(e) of the Act. 

As part of this action, we are inviting 

public comment on whether it is 

appropriate for EPA to consider 

equivalent alternative programs, and, if 

so, whether Rule 317 would constitute 

an approvable equivalent alternative 

program. We are taking comments on 

these proposals and plan to follow with 

a final action. 

DATES: Any comments must arrive by 

February 13, 2012. 

ADDRESSES: Submit comments, 

identified by docket number EPA–R09– 

OAR–2011–0876, by one of the 

following methods: 

1. Federal eRulemaking Portal: 

http://www.regulations.gov. Follow the 

on-line instructions. 

2. Email: steckel.andrew@epa.gov. 

3. Mail or deliver: Andrew Steckel 

(Air–4), U.S. Environmental Protection 

Agency Region IX, 75 Hawthorne Street, 

San Francisco, CA 94105–3901. 

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 

Confidential Business Information (CBI) 

or other information whose disclosure is 

restricted by statute. Information that 

you consider CBI or otherwise protected 

should be clearly identified as such and 

should not be submitted through 

http://www.regulations.gov or email. 

http://www.regulations.gov is an 

‘‘anonymous access’’ system, and EPA 

will not know your identity or contact 

information unless you provide it in the 

body of your comment. If you send 

email directly to EPA, your email 

address will be automatically captured 

and included as part of the public 

comment. If EPA cannot read your 

comment due to technical difficulties 

and cannot contact you for clarification, 

EPA may not be able to consider your 

comment. 

Docket: Generally, documents in the 

docket for this action are 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 at 

http://www.regulations.gov, some 

information may be publicly available 

only at the hard copy location (e.g., 

copyrighted material, large maps), 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. 

FOR FURTHER INFORMATION CONTACT: Lily 

Wong, EPA Region IX, (415) 947–4114, 

wong.lily@epa.gov. 

SUPPLEMENTARY INFORMATION: 

Throughout this document, ‘‘we,’’ ‘‘us’’ 

and ‘‘our’’ refer to EPA. 

Table of Contents 

I. What did the State submit? 

II. Are there other versions of this rule? 

III. What action is EPA taking? 

IV. Background 

V. What is the legal rationale for this action? 

VI. What is EPA’s analysis of SCAQMD’s 

alternative program? 

VII. Proposed Action 

VIII. Statutory and Executive Order Reviews 

I. What did the State submit? 

On February 4, 2011, SCAQMD 

adopted Rule 317, ‘‘Clean Air Act Nonattainment Fee,’’ to meet the 

requirements of CAA section 185. On 

April 22, 2011, the California Air 

Resources Board (CARB) submitted 

SCAQMD’s Rule 317 to EPA. On May 

19, 2011, EPA determined that the 

submittal met the completeness criteria 

in 40 CFR part 51 Appendix V, which 

must be met before formal EPA review. 

SCAQMD provided supplemental 

information in a letter dated 

December 21, 2011. 

II. Are there other versions of this rule? 

There are no previous versions of 

Rule 317 in the SIP. Although the 

SCAQMD adopted an earlier version of 

Rule 317 on December 5, 2008, that rule 

was never submitted to EPA for 

approval as a SIP revision. 

III. What action is EPA taking? 

EPA is proposing to approve Rule 317 

as a revision to SCAQMD’s portion of 

the California SIP. The purpose of Rule 

317 is to satisfy the requirements of 

sections 182 and 185 of the Act by 

utilizing an equivalency approach 

consistent with the principles of section 

172(e) of the Act. Under Rule 317, 

SCAQMD will track, calculate, analyze, 

and report to demonstrate that the 

requirements of section 185 of the Act 

have been met. Rule 317 includes: 

Calculation of CAA non-attainment 

(section 185) fee obligation, 

establishment of a ‘‘section 172(e) fee 

equivalency account,’’ an annual 

demonstration of equivalency, an 

annual preliminary determination of 

equivalency, reporting to CARB and 

EPA, and a backstop provision for 

failure to achieve equivalency. The 

‘‘section 172(e) fee equivalency 

account’’ will include funds from 

qualified programs that are surplus to 

the 1-hour ozone SIP and designed to 

result in direct reductions or facilitate 


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1 VOC help produce ground-level ozone and 

smog, which harm human health and the 

environment. NOX helps produce ground-level 

ozone, smog and particulate matter, which harm 

human health and the environment. 

2 ‘‘Riverside County portion of Southeast Desert 

Modified AQMA’’ is the same geographic area as 

‘‘Riverside County portion of the Salton Sea Air 

Basin’’ and Rule 317 uses the latter terminology. 

3EPA has previously set forth this reasoning in 

a memorandum from Stephen D. Page, Director, 

Office of Air Quality Planning and Standards, to Air 

Division Directors, ‘‘Guidance on Developing Fee 

Programs Required by Clean Air Act Section 185 for 

the 1-hour Ozone NAAQS,’’ January 5, 2010 

(‘‘Section 185 Guidance Memo’’). On July 1, 2011, 

the DC Circuit Court of Appeals vacated this 

guidance, on the ground that it was final agency 

action for which notice-and-comment rulemaking 

procedures were required. NRDC v. EPA, No. 10– 

1056, 2011 WL 2601560, C.A.D.C. 2011. EPA 

subsequently set forth this reasoning in a 

rulemaking action concerning an equivalent 

alternative 185 program submitted as a SIP revision 

to EPA by the State of California on behalf of the 

San Joaquin Valley Unified Air Pollution Control 

District (‘‘SJVUAPCD’’). 76 FR 45213 (July 28, 

2011). In so doing, we were applying the court’s 

directive to follow the rulemaking requirements set 

forth in the Administrative Procedures Act to 

inform consideration of section 185 and equivalent 

alternative programs. In this action regarding 

SCAQMD Rule 317, we are again applying the 

court’s directive to follow rulemaking requirements 

with respect to section 185 and equivalent 

alternative programs. 

4These types of programs were identified in our 

rulemaking action concerning SJVUAPCD’s 

alternative section 185 fee program 76 FR 45213 

(July 28, 2011). 

future reductions of VOC or NOX

emissions. 

In this action, EPA is also proposing 

to approve Rule 317 as an alternative to 

the program required by section 185 of 

the Act. We are proposing that 

SCAQMD’s equivalent alternative 

program is not less stringent than the 

program required by section 185, and, 

therefore, is approvable, consistent with 

the principles of section 172(e) of the 

Act as explained more fully below. We 

are taking comments on these proposals 

and plan to follow with a final action. 

IV. Background 

Section 185 Fees 

Under sections 182(d)(3), (e), (f) and 

185 of the Act, states with ozone 

nonattainment areas classified as Severe 

or Extreme are required to submit a 

revision to the SIP that would require 

major stationary sources of VOC or NOX

to pay a fee for each ton of VOC or NOX

emitted in excess of 80% of baseline 

emissions.1 Under section 185(a) of the 

Act, the SIP revision must provide that 

the fees be paid if the area to which the 

SIP revision applies has failed to attain 

the 1-hour ozone National Ambient Air 

Quality Standard (NAAQS or standard) 

by the applicable attainment date. A 

source’s baseline emissions are its 

actual emissions during the required 

attainment year. The fee rate is $5,000 

per ton in 1990 dollars, which must be 

adjusted for inflation based on the 

Consumer Price Index (CPI). 

South Coast Air Quality Management 

District 

There are two 1-hour ozone 

nonattainment areas within the 

jurisdiction of the SCAQMD: The Los 

Angeles-South Coast Air Basin Area 

(South Coast Air Basin) and the 

Coachella Valley region of Riverside 

County in the Southeast Desert 

Modified Air Quality Maintenance Area 

(Riverside County portion of Southeast 

Desert Modified AQMA).2 The South 

Coast Air Basin is an Extreme 

nonattainment area for the 1-hour ozone 

standard; the attainment year is 2010. 

The Riverside County portion of the 

Southeast Desert Modified AQMA is a 

Severe-17 nonattainment area for the 

1-hour ozone standard; the attainment 

year is 2007. Therefore, California was 

required under sections 182(d)(3), (e) 

and (f) to develop and submit a SIP 

revision meeting the requirements of 

section 185, which are discussed above. 

On December 30, 2011, we published 

a finding that the South Coast Air Basin 

and the Southeast Desert Modified 

AQMA failed to attain the 1-hour ozone 

standard by their applicable attainment 

dates (76 FR 82133). 

Pursuant to California law, the 

SCAQMD is responsible for developing 

rules, such as Rule 317, that are 

intended to meet CAA SIP requirements 

for the two nonattainment areas 

described above under SCAQMD 

jurisdiction. Such rules are then 

submitted to EPA after adoption by 

CARB, which is the State agency 

responsible for SIP matters on behalf of 

the State of California. On April 22, 

2011, CARB submitted Rule 317 to 

satisfy SCAQMD’s obligations under 

sections 182 and 185 of the Act. 

V. What is the legal rationale for 

equivalent alternative programs? 

EPA is proposing that states can meet 

the section 185 obligation arising from 

the revoked 1-hour ozone NAAQS 

through a SIP revision containing either 

the fee program prescribed in section 

185 of the Act, or an equivalent 

alternative program. As further 

explained below, EPA is proposing that 

an alternative program may be 

acceptable if EPA determines, through 

notice-and-comment rulemaking, that it 

is consistent with the principles of 

section 172(e) of the CAA and is not less 

stringent than a program prescribed by 

section 185.3

Section 172(e) is an anti-backsliding 

provision of the CAA that requires EPA 

to develop regulations to ensure that 

controls in a nonattainment area are 

‘‘not less stringent’’ than those that 

applied to the area before EPA revised 

a NAAQS to make it less stringent. In 

the Phase 1 Ozone Implementation Rule 

for the 1997 ozone NAAQS published 

on April 30, 2004 (69 FR 23951), EPA 

determined that although section 172(e) 

does not directly apply where EPA has 

strengthened the NAAQS, as it did in 

1997, it was reasonable to apply to the 

transition from the 1-hour NAAQS to 

the more stringent 1997 8-hour NAAQS, 

the same anti-backsliding principle that 

would apply to the relaxation of a 

standard. Thus, as part of applying the 

principles in section 172(e) for purposes 

of the transition from the 1-hour 

standard to the 1997 8-hour standard, 

EPA can either require states to retain 

programs that applied for purposes of 

the 1-hour standard, or can allow states 

to adopt equivalent alternative 

programs, but only if such alternatives 

are determined through notice-andcomment rulemaking to be ‘‘not less 

stringent’’ than the mandated program. 

EPA has previously identified three 

types of alternative programs that could 

satisfy the section 185 requirement: (i) 

Those that achieve the same emissions 

reductions; (ii) those that raise the same 

amount of revenue and establish a 

process where the funds would be used 

to pay for emission reductions that will 

further improve ozone air quality; and 

(iii) those that would be equivalent 

through a combination of both emission 

reductions and revenues.4

We are proposing today to determine 

through notice-and-comment 

rulemaking that states can demonstrate 

an alternative program’s equivalency by 

comparing expected fees and/or 

emissions reductions directly 

attributable to application of section 185 

to the expected fees, pollution control 

project funding, and/or emissions 

reductions from the proposed 

alternative program. Under an 

alternative program, states might opt to 

shift the fee burden from a specific set 

of major stationary sources to non-major 

sources, such as owners of mobile 

sources that also contribute to ozone 

formation. EPA also believes that 

alternative programs, if approved as 

‘‘not less stringent’’ than the section 185 

fee program, would encourage one-hour 

ozone NAAQS nonattainment areas to 

reach attainment as effectively and 

expeditiously as a section 185 fee 

program, if not more so, and therefore 

satisfy the CAA’s goal of attainment and 

maintenance of the NAAQS. 


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5By letter dated December 21, 2011, SCAQMD 

clarified that for the South Coast Air Basin 

equivalency demonstration, SCAQMD intends only 

to include expenditures that occurred in calendar 

years 2010 and forward. 

6Attachment A of Rule 317 identifies potential 

sources of funds for the section 172(e) fee 

equivalency account. These potential funding 

mechanisms include: Fees from motor vehicles 

pursuant to AB 118 and AB 27866 and federal 

grants to fund retrofitting of school buses and 

trucks. 

7 ‘‘Allowable’’ emissions are the amount of 

emissions that are allowed under the source’s 

permit, or if no such permit has been issued to the 

source for the attainment year, the amount of 

emissions allowed under the applicable attainment 

plan (CAA section 185(b)(2)). 

While section 185 focuses most 

directly on assessing emissions fees, we 

believe it is useful to interpret antibacksliding requirements for section 185 

within the context of the CAA’s ozone 

implementation provisions of subpart 2 

(which includes section 185). The 

subpart 2 provisions are designed to 

promote reductions of ozone-forming 

pollutant emissions to levels that 

achieve attainment of the ozone 

NAAQS. In this context, to satisfy the 

anti-backsliding requirements for 

section 185 associated with the 1-hour 

NAAQS we believe it is appropriate for 

states to implement equivalent 

alternative programs that maintain a 

focus on achieving further emission 

reductions, whether that occurs through 

the incentives created by fees levied on 

pollution sources or other funding of 

pollution control projects, or some 

combination of both. For any alternative 

program adopted by a state, the state’s 

demonstration that the program is not 

less stringent should consist of 

comparing expected fees and/or 

emission reductions directly attributable 

to application of section 185 to the 

expected fees, pollution control project 

funding, and/or emissions reductions 

from the proposed alternative program. 

For a valid demonstration to ensure 

equivalency, the state’s submissions 

should not underestimate the expected 

fees and/or emission reductions from 

the section 185 fee program, nor 

overestimate the expected fees, 

pollution control project funding, and/ 

or emission reductions associated with 

the proposed alternative program. 

We also note that the structure 

established in Subparts 1 and 2 of the 

CAA recognizes that successful 

achievement of clean air goals depends 

in great part on the development by 

states of clean air plans that that are 

specifically tailored to the nature of the 

air pollution sources in each state. The 

Act recognizes that states are best suited 

to design plans that will be most 

effective. Allowing states to put forward 

an equivalent program under the 

circumstances that pertain here, and 

under the authority of 172(e), is 

consistent with this principle of the Act. 

In sum, in order for EPA to approve 

an alternative program as satisfying the 

1-hour ozone section 185 fee program 

SIP revision requirement, the state must 

demonstrate that the alternative 

program is not less stringent than the 

otherwise applicable section 185 fee 

program by collecting fees from owner/ 

operators of pollution sources, 

providing funding for emissions 

reduction projects, and/or providing 

direct emissions reductions equal to or 

exceeding the expected results of the 

otherwise applicable section 185 fee 

program. We are inviting public 

comment on whether it is appropriate 

for EPA to consider equivalent 

alternative programs, and, if so, whether 

Rule 317 would constitute an 

approvable equivalent alternative 

program. 

VI. What is EPA’s analysis of 

SCAQMD’s alternative program? 

Summary of SCAQMD’s Alternative 

Program 

In today’s action, we are proposing to 

approve SCAQMD Rule 317 as an 

equivalent alternative program that 

satisfies the section 185 requirement 

under the principles of section 172(e). 

Further information regarding Rule 317 

is set forth below and in EPA’s 

Technical Support Document (TSD) for 

this action. 

The purpose of Rule 317 is to satisfy 

the requirements of section 185 of the 

Act by utilizing an equivalency 

approach consistent with the principles 

of 172(e) of the Act. Under Rule 317, 

SCAQMD will track, calculate, analyze, 

and report to demonstrate that the 

requirements of section 185 of the Act 

have been met. Rule 317 includes: 

Calculation of CAA non-attainment 

(section 185) fee obligation; 

establishment of a ‘‘section 172(e) fee 

equivalency account’’ to track qualified 

expenditures on pollution control 

projects; an annual demonstration of 

equivalency; an annual preliminary 

determination of equivalency; reporting 

to CARB and EPA; and a backstop 

provision for failure to achieve 

equivalency. 

As described above, there are two 

1-hour ozone nonattainment areas 

within the jurisdiction of the SCAQMD. 

By letter dated December 21, 2011, 

SCAQMD clarified that they intend to 

provide separate equivalency 

demonstrations for the two nonattainment areas in that the equivalency 

analyses will compare fee obligations 

within each non-attainment area to 

expenditures within the same nonattainment area. 

SCAQMD will establish a ‘‘section 

172(e) fee equivalency account’’ that 

will be credited with expenditures from 

qualified programs that meet the criteria 

in section (c)(1)(A) of Rule 317: (i) 

Surplus to the 1-hour ozone SIP and 

approved by the District, CARB, and 

EPA as being surplus to the SIP; (ii) 

designed to result in direct VOC or NOX

reductions in SCAQMD, or to facilitate 

future VOC or NOX reductions in 

SCAQMD through vehicle/engine 

fueling infrastructure or advanced 

technology development efforts for 

implementation within the next 10 

years, or for other uses approved by 

EPA; (iii) expenditures occurring only 

in calendar years subsequent to 2008 

from eligible projects; 5 and (iv) only 

monies actually expended from 

qualified programs during a calendar 

year shall be credited. Rule 317 

provides that the equivalency account 

may be pre-funded with expenditures 

from the programs listed in Attachment 

A of the rule.6

SCAQMD will annually calculate the 

total amount of major stationary source 

fees that would have been assessed in 

the prior calendar year under a direct 

implementation of section 185 of the 

Act. A fee is calculated for each major 

stationary source whose actual 

emissions of VOC or NOX exceed 80% 

of its baseline emissions. The fee rate is 

$5,000 per ton in 1990 dollars, which 

must be adjusted for inflation based on 

the Consumer Price Index (CPI). 

While CAA section 185 requires 

baseline emissions to be based on the 

lower of the source’s actual or 

allowable 7 emissions during the 

attainment year, it also allows the use of 

an alternative period as provided in 

EPA guidance. Rule 317 specifies that 

baseline emissions of an existing source 

in the South Coast Air Basin will be 

based on an average of the source’s 

actual emissions during fiscal years 

2005–06 and 2006–07 (which are not to 

exceed allowable emissions), and would 

be programmatically adjusted by 

SCAQMD to take into account the 

effects of new requirements or 

regulations from 2006 to 2010. In the 

Salton Sea Air Basin, an existing 

source’s baseline emissions are its 

reported emissions during 2007, the 

attainment year for the Southeast Desert 

Modified AQMA. Rule 317 also 

specifies that, for sources that become 

subject to the rule after the attainment 

year, baseline emissions are based on 

allowable limits in the applicable 

implementation plan or potential to 


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8This guidance can be found at: http:// 

www.epa.gov/ttn/oarpg/t1/memoranda/ 

20080321_harnett_emissions_basline.pdf. 

emit, or holdings of RECLAIM Trading 

Credits. 

SCAQMD will annually demonstrate 

that the funds in the section 172(e) fee 

equivalency account for the prior year 

are equal to or greater than the CAA 

non-attainment (section 185) fee 

obligation that would have been 

assessed for the prior year. 

SCAQMD will also annually project 

whether adequate funding is expected to 

be available in the section 172(e) fee 

equivalency account in the current year 

in accordance with the equation in 

section (c)(4) of the rule. This 

preliminary determination of 

equivalency requires the projection to 

show that the amount of funds in the fee 

equivalency account are at least 110% 

of the previous year’s fee obligation, 

which serves as a surrogate for the 

current year’s fee obligation. 

SCAQMD will annually report to 

CARB and EPA on the results of the 

demonstration of equivalency and 

preliminary determination of 

equivalency, as well as information on 

facilities’ fee obligations, programs and 

expenditures included in the fee 

equivalency account, and any surplus 

funding carried over to the subsequent 

calendar year. 

If the annual demonstration of 

equivalency fails to show sufficient 

funds in the section 172(e) fee 

equivalency account for the prior year, 

or the preliminary determination of 

equivalency shows that adequate 

funding may not be available in the 

current year, then Rule 317 requires the 

SCAQMD Executive Officer (EO) to 

submit to the Governing Board within 

90 days of the finding a back-stop rule 

that would require the EO to collect 

and/or track adequate fees for any 

shortfall. The Governing Board is 

required to act on the backstop rule 

within 120 days of the funding 

inadequacy finding. 

If SCAQMD adopts a backstop rule 

applicable to major stationary sources, 

Rule 317 states that the backstop rule 

would include provisions that allow 

sources to request an alternate baseline 

period and multi-site aggregation of 

baseline and emissions. Rule 317 also 

states that stationary sources paying 

such fees in the backstop rule shall 

receive a credit for annual operating fees 

and annual operating emission fees paid 

to SCAQMD. 

EPA’s TSD has more information 

about SCAQMD’s equivalent alternative 

program. 

How is EPA evaluating SCAQMD’s 

alternative program? 

Generally, SIP rules must be 

enforceable (see section 110(a) of the 

Act). Guidance and policy documents 

that we use to evaluate enforceability 

requirements consistently include the 

following: 

1. ‘‘Issues Relating to VOC Regulation 

Cutpoints, Deficiencies, and 

Deviations,’’ EPA, May 25, 1988 (the 

Bluebook). 

2. ‘‘Guidance Document for Correcting 

Common VOC & Other Rule 

Deficiencies,’’ EPA Region 9, August 21, 

2001 (the Little Bluebook). 

3. ‘‘State Implementation Plans; 

Nitrogen Oxides Supplement to the 

General Preamble; Clean Air Act 

Amendments of 1990 Implementation of 

Title I; Proposed Rule,’’ (the NOX

Supplement), 57 FR 55620, November 

25, 1992. 

4. ‘‘Review of State Implementation 

Plans and Revisions for Enforceability 

and Legal Sufficiency; Section 110: 

State Implementation Plans,’’ EPA, 

September 23, 1987 Memorandum. 

Also, SIP revisions must not interfere 

with any applicable requirement 

concerning attainment and reasonable 

further progress (RFP) or any other 

applicable requirement of the Act (CAA 

section 110(l)). 

SCAQMD’s equivalent alternative 

program must also be evaluated against 

section 185 of the Act, as described 

above under section III of this 

document. EPA also developed the 

following guidance on establishing 

baselines as allowed by section 185: 

5. 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,’’ March 21, 2008.8

Does SCAQMD’s alternative program 

meet the evaluation criteria? 

As described below, we are proposing 

to find that SCAQMD’s equivalent 

alternative program is consistent with 

the relevant policy and guidance 

regarding enforceability, SIP revisions, 

and sections 172(e) and 185 of the Act. 

One initial step in the equivalency 

demonstration is to determine the 

benchmark for comparison, i.e., the 

amount of fees that would have been 

collected under direct implementation 

of section 185. A fee is calculated for 

each major stationary source whose 

actual emissions of VOC or NOX exceed 

80% of its baseline emissions. Rule 317 

reflects the method for calculation of the 

fee set out in section 185(b)(1) of the 

Act. 

Section 185 specifies that baseline 

emissions are the lower of a source’s 

actual or allowable emissions during the 

attainment year. Section 185 and EPA’s 

March 21, 2008 baseline guidance 

memorandum provide for determining 

baseline emissions over a longer period 

if a source’s emissions are irregular, 

cyclical, or otherwise vary significantly 

from year to year. 

Rule 317 defines baseline emissions 

for most existing stationary sources in 

the South Coast Air Basin as an average 

of actual emissions from two years 

(fiscal years 2005–2006, and 2006– 

2007), not to exceed allowable 

emissions, and programmatically 

adjusted to account for regulatory effects 

between 2006 through 2010 for the 

South Coast Air Basin. SCAQMD’s staff 

report for Rule 317 explains that 

SCAQMD selected this two-year 

baseline period as more representative 

of typical production and emissions 

because it occurred before the economic 

recession that began in 2008 and that 

using 2010 attainment year actual 

emissions as the baseline year would 

lock sources to an atypical low 

production year. SCAQMD provided 

data on various indicators such as Gross 

Domestic Product, regional 

employment, and usage of fuels and 

coatings and solvents to show the 

recessionary effects on emissions 

throughout the area. 

By letter dated December 21, 2011, 

SCAQMD provided source-specific 

emissions data and analyses that 

showed that all or almost all sources 

had emissions that varied from year to 

year. SCAQMD’s letter states that the 

selection of fiscal years 2005–2006 and 

2006–2007 as the baseline period for all 

major stationary sources results in an 

alternative baseline amount that is 

conservative but more representative of 

typical emissions. SCAQMD explains 

that under EPA’s 2008 baseline 

guidance, sources are allowed to choose 

any recent historical 24-month 

consecutive period, including a period 

chosen by the source. See 40 CFR 

52.21(48). SCAQMD’s analyses show 

that the District’s selected baseline 

period results in a lower baseline 

overall than would result from a 

regulatory approach that would allow 

sources to propose their own baseline. 

A lower baseline amount is conservative 

because it establishes a lower threshold 

for calculating the assessment of section 

185 fees. EPA agrees the emissions 

baseline provisions of Rule 317 are 

appropriate. EPA’s TSD has more 

information on the alternative baseline. 


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9This SIP was approved by EPA on April 10, 

2000 (see 65 FR 18903). 

10This SIP was approved by EPA on January 8, 

1997 (see 62 FR 1150). 

11 ‘‘Surplus’’ is discussed in EPA’s guidance, 

‘‘Improving Air Quality with Economic Incentive 

Programs’’ published on January 2001 (EPA–452/R– 

01–001) and available at http://www.epa.gov/ttn/ 

oarpg/t1/memoranda/eipfin.pdf. 

12When SCAQMD adopted Rule 317, the 

programs listed in Attachment C were identified as 

‘‘potential’’ programs for inclusion in the 172(e) 

equivalency account because SCAQMD did not 

have sufficient time to make a surplus 

determination. Subsequent to rule adoption, 

SCAQMD concluded in their letter dated December 

21, 2011 that the programs listed in Attachment C 

of the staff report are also surplus. Exhibit B of 

SCAQMD’s December 21, 2011 letter included all 

programs that were previously included in 

Attachments B and C of the February 2011 staff 

report. 

Rule 317 requires SCAQMD to 

establish a ‘‘section 172(e) fee 

equivalency account’’ that will be 

credited with expenditures from 

qualified programs that meet the criteria 

outlined in section (c)(1)(A) of the rule. 

One criterion is whether the 

expenditures, which result in emission 

reductions, are surplus to the 1-hour 

ozone SIP. The approved 1-hour ozone 

SIP in the South Coast Air Basin is the 

1997 Air Quality Management Plan, as 

revised in 1999.9 The approved 1-hour 

ozone SIP in the Southeast Desert 

Modified AQMA is the 1994 Air Quality 

Management Plan.10

Surplus reductions are those that are 

not relied upon in the SIP, i.e., 

reductions that are not required nor 

assumed by the SIP to provide for RFP 

or attainment.11 At the time of rule 

adoption, SCAQMD identified three 

preliminary lists of qualified 

programs—Rule 317 Attachment A, 

‘‘List of Programs Pre-funding Section 

172(e) Fee Equivalency Account,’’ 

Attachment B in the staff report, ‘‘List 

of Potential Section 172(e) Fee 

Equivalent Account Funding Programs 

for Post-2011,’’ and Attachment C in the 

staff report, ‘‘List of Potential Future 

Section 172(e) Fee Equivalent Account 

(Credit) Programs.’’ 

By letter dated December 21, 2011, 

SCAQMD updated the lists of qualified 

programs, which are attached to the 

letter as Exhibit A ‘‘Qualified Programs 

and Estimated Actual Expenditures for 

2010 and 2011 Pre-funding the Section 

172(e) Fee Equivalency Account’’ and 

Exhibit B ‘‘Qualified Programs 

Providing On-Going Funding for Post2010 to Section 172(e) Fee Equivalent 

Account.12 ’’ The December 201l letter 

also elaborates on the bases for the 

conclusion that listed programs are 

surplus and meet the criteria at Rule 

317(c)(1)(A). EPA has reviewed this 

documentation and agrees with 

SCAQMD that the programs previously 

listed in Attachment A of Rule 317 and 

Attachments B and C of the staff report 

and listed as Exhibits A and B to the 

December 21, 2011 letter are surplus. 

This determination, with respect to 

these programs only, addresses section 

(c)(1)(A)(i) of the rule, which requires 

EPA’s approval that the qualified 

programs are surplus to the SIP. Future 

determinations of ‘‘surplus’’ may be 

necessary if SCAQMD relies on 

programs or expenditures other than 

those identified in Exhibits A and B of 

the December 21, 2011 letter to offset 

section 185 fee obligations. 

Rule 317 requires that expenditures 

from qualified programs result in direct 

reductions or facilitate future reductions 

of VOC or NOX emissions. In contrast, 

section 185 of the Act requires states to 

assess fees on stationary sources but 

does not require that the fees be used for 

activities beneficial in reducing ozone 

formation. We believe this requirement 

in Rule 317 to use the surplus funds for 

reducing ozone formation will result in 

further progress toward attainment. 

SCAQMD is required to demonstrate 

equivalency for the previous year’s fee 

obligation in accordance with section 

(c)(3) of the rule and report the results 

to CARB and EPA. Equivalency is 

demonstrated if the funds in the section 

172(e) fee equivalency account are equal 

to or greater than the CAA nonattainment (section 185) fee obligation 

that would have been assessed for the 

prior year. The rule includes the correct 

equation to demonstrate equivalency. 

If equivalency is demonstrated and 

there are ‘‘unused’’ expenditures that 

exceeded the amount of the fee 

obligations, those ‘‘unused’’ funds are 

carried forward into the following 

assessment year. Since the expenditures 

have been determined to be surplus and 

there have been no other changes to the 

SIP for the 1-hour ozone standard, 

carrying these funds forward into the 

following year is acceptable because 

they would remain surplus. Also, if the 

expenditure occurred in a year prior to 

its use in an equivalency demonstration, 

the emission reductions would occur 

earlier, which is environmentally 

beneficial. 

As an added measure to demonstrate 

equivalency, Rule 317 also has a 

forward-looking measure to estimate 

whether equivalency will likely be 

demonstrated. SCAQMD is required to 

preliminarily determine if expenditures 

in the section 172(e) fee equivalency 

account are at least 110% of the 

previous year’s fee obligation, which 

serves as a surrogate for the current 

year’s fee obligation. If the preliminary 

determination does not project 

equivalency in accordance with the 

rule, that would trigger the requirement 

for SCAQMD to adopt a backstop rule in 

advance of the actual equivalency 

demonstration. We believe this measure 

provides an additional checkpoint for 

ensuring equivalency. 

If SCAQMD fails to either 

demonstrate equivalency or the 

preliminary determination of 

equivalency does not show 

expenditures in the account at least 

equal to 110% of the estimated fee 

obligation, Rule 317 requires the EO to 

submit, within 90 days of the 

determination, a backstop measure to 

the Governing Board. Rule 317 also 

requires the Governing Board to act on 

the measure within 120 days of the 

determination, to either collect and/or 

track adequate fees to address the 

shortfall. 

Rule 317 identifies certain elements to 

be included in a major stationary source 

backstop rule. If the backstop rule 

requires major stationary sources to pay 

fees, Rule 317 states that the backstop 

rule would allow sources to receive a 

credit for fees paid for operating fees 

and annual operating emissions fees. 

Title V regulations at 40 CFR 70 require 

the assessment of fees sufficient to cover 

Title V program costs. While any 

backstop rule would need to ensure that 

this fee credit provision would not 

adversely affect funds needed to cover 

Title V program costs, this issue 

ultimately needs to be addressed in the 

rulemaking process for the backstop 

rule. 

Lastly, Rule 317 applies to SCAQMD 

and requires SCAQMD to follow the 

procedures to make the equivalency 

demonstration and to adopt a backstop 

rule to make up any shortfall if 

equivalency is not initially 

demonstrated. These provisions, if 

approved into the SIP, would be 

enforceable against SCAQMD. 

In conclusion, Rule 317 requires 

SCAQMD to demonstrate on an annual 

basis, in accordance with the principles 

of section 172(e), that its alternative 

CAA section 185 program is not less 

stringent than the program prescribed 

by CAA section 185. EPA therefore 

proposes to approve Rule 317 as 

satisfying the 1-hour ozone section 185 

fee program requirements. The TSD has 

more information on our evaluation. 

VII. Proposed Action 

Because EPA believes SCAQMD Rule 

317 fulfills all relevant requirements, we 

are proposing to approve Rule 317 as a 

SIP revision under section 110(k)(3) of 

the Act. EPA believes that SCAQMD’s 

equivalent alternative program is not 

less stringent than the requirements set 

forth in section 185 of the Act; therefore 


pmangrum on DSK3VPTVN1PROD with PROPOSALS
1900 Federal Register / Vol. 77, No. 8 / Thursday, January 12, 2012 / Proposed Rules 

we are proposing to approve SCAQMD’s 

alternative program as fulfilling the 

requirements of sections 182, 185 and 

172(e) of the Act. If finalized as 

proposed, this action would 

permanently terminate all CAA Section 

110(c) Federal Implementation Plan 

(FIP) implications associated with our 

January 5, 2010 Finding of Failure to 

Submit a SIP revision to satisfy section 

185 requirements for the SCAQMD (75 

FR 232). We will accept comments from 

the public on these proposals for the 

next 30 days. 

VIII. Statutory and Executive Order 

Reviews 

Under the Clean Air Act, the 

Administrator is required to approve a 

SIP submission that complies with the 

provisions of the Act and applicable 

Federal regulations. 42 U.S.C. 7410(k); 

40 CFR 52.02(a). Thus, in reviewing SIP 

submissions, EPA’s role is to approve 

State choices, provided that they meet 

the criteria of the Clean Air Act. 

Accordingly, this proposed action 

merely proposes to approve State law as 

meeting Federal requirements and does 

not impose additional requirements 

beyond those imposed by State law. For 

that reason, this proposed action: 

• Is not a ‘‘significant regulatory 

action’’ subject to review by the Office 

of Management and Budget under 

Executive Order 12866 (58 FR 51735, 

October 4, 1993); 

• Does not impose an information 

collection burden under the provisions 

of the Paperwork Reduction Act (44 

U.S.C. 3501 et seq.); 

• Is certified as not having a 

significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act 

(5 U.S.C. 601 et seq.); 

• Does not contain any unfunded 

mandate or significantly or uniquely 

affect small governments, as described 

in the Unfunded Mandates Reform Act 

of 1995 (Pub. L. 104–4); 

• Does not have Federalism 

implications as specified in Executive 

Order 13132 (64 FR 43255, August 10, 

1999); 

• Is not an economically significant 

regulatory action based on health or 

safety risks subject to Executive Order 

13045 (62 FR 19885, April 23, 1997); 

• Is not a significant regulatory action 

subject to Executive Order 13211 (66 FR 

28355, May 22, 2001); 

• Is not subject to requirements of 

section 12(d) of the National 

Technology Transfer and Advancement 

Act of 1995 (15 U.S.C. 272 note) because 

application of those requirements would 

be inconsistent with the Clean Air Act; 

and 

• Does not provide EPA with the 

discretionary authority to address 

disproportionate human health or 

environmental effects with practical, 

appropriate, and legally permissible 

methods under Executive Order 12898 

(59 FR 7629, February 16, 1994). 

In addition, this proposed action does 

not have tribal implications as specified 

by Executive Order 13175 (65 FR 67249, 

November 9, 2000), because the SIP is 

not approved to apply in Indian country 

located in the State, and EPA notes that 

it will not impose substantial direct 

costs on tribal governments or preempt 

tribal law. 

List of Subjects in 40 CFR Part 52 

Environmental protection, Air 

pollution control, Intergovernmental 

relations, Nitrogen dioxide, Ozone, 

Reporting and recordkeeping 

requirements, Volatile organic 

compounds. 

Authority: 42 U.S.C. 7401 et seq. 

Dated: January 4, 2012. 

Jared Blumenfeld, 

Regional Administrator, Region IX. 

[FR Doc. 2012–447 Filed 1–11–12; 8:45 am] 

BILLING CODE 6560–50–P 

DEPARTMENT OF THE INTERIOR 

Fish and Wildlife Service 

50 CFR Part 17 

[Docket No. FWS–R8–ES–2011–0105; 

4500030113] 

Endangered and Threatened Wildlife 

and Plants; 90-Day Finding on a 

Petition To List the Humboldt Marten 

as Endangered or Threatened 

AGENCY: Fish and Wildlife Service, 

Interior. 

ACTION: Notice of petition finding and 

initiation of status review. 

SUMMARY: We, the U.S. Fish and 

Wildlife Service (Service), announce a 

90-day finding on a petition to list the 

Humboldt marten (Martes americana 

humboldtensis) as endangered or 

threatened and designate critical habitat 

under the Endangered Species Act of 

1973, as amended (Act). Based on our 

review, we find that the petition 

presents substantial scientific or 

commercial information indicating that 

listing the Humboldt marten may be 

warranted. Therefore, with the 

publication of this notice, we are 

initiating a review of the status of the 

Humboldt marten to determine if listing 

is warranted. To ensure that this status 

review is comprehensive, we are 

requesting scientific and commercial 

data and other information regarding the 

Humboldt marten. Based on the status 

review, we will issue a 12-month 

finding on the petition, which will 

address whether the petitioned action is 

warranted, as provided in section 

4(b)(3)(B) of the Act. 

DATES: To allow us adequate time to 

conduct this review, we request that we 

receive information on or before March 

12, 2012. The deadline for submitting an 

electronic comment using the Federal 

eRulemaking Portal (see ADDRESSES

section, below) is 11:59 p.m. Eastern 

Time on this date. After March 12, 2012, 

you must submit information directly to 

the Field Office (see FOR FURTHER

INFORMATION CONTACT section below). 

Please note that we might not be able to 

address or incorporate information that 

we receive after the above requested 

date. 

ADDRESSES: You may submit 

information by one of the following 

methods: 

(1) Electronically: Go to the Federal 

eRulemaking Portal: http:// 

www.regulations.gov. In the Enter 

Keyword or ID box, enter Docket No. 

FWS–R8–ES–2011–0105, which is the 

docket number for this action. Then 

click on the Search button. You may 

submit a comment by clicking on ‘‘Send 

a Comment or Submission.’’ 

(2) By hard copy: Submit by U.S. mail 

or hand-delivery to: Public Comments 

Processing, Attn: FWS–R8–ES–2011– 

0105; Division of Policy and Directives 

Management; U.S. Fish and Wildlife 

Service; 4401 N. Fairfax Drive, MS 

2042–PDM; Arlington, VA 22203. 

We will post all information we 

receive on http://www.regulations.gov. 

This generally means that we will post 

any personal identifying information 

you provide us (see the Request for 

Information section below for more 

details). 

FOR FURTHER INFORMATION CONTACT: 

Nancy J. Finley, Field Supervisor; by 

mail at Arcata Fish and Wildlife Office, 

1655 Heindon Road, Arcata, CA 95521; 

by telephone at (707) 822–7201; or by 

facsimile at (707) 822–8411. If you use 

a telecommunications device for the 

deaf (TDD), please call the Federal 

Information Relay Service (FIRS) at 

(800) 877–8339. 

SUPPLEMENTARY INFORMATION: 

Request for Information 

When we make a finding that a 

petition presents substantial 

information indicating that listing a 

species may be warranted, we are 

required to promptly review the status 

of the species (status review). For the 


pmangrum on DSK3VPTVN1PROD with PROPOSALS