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Citation: 79 Fed. Reg. 28650 2014

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### Federal Register/Vol. 79, No. 96/Monday, May 19, 2014/Proposed Rules

Regulations section ofthisFederal Register, we are approving these local rules in a direct final action without prior proposal because we believe these SIP revisions are not controversial. Ifwe receive adverse comments, however, we will publish a timely withdrawal ofthe direct final rule and address the
comments in subsequent action based

onthis proposed rule. Please note that ifwe receive adverse comment on an amendment, paragraph, or section of this rule and ifthat provision may be severed from the remainder ofthe rule,

we may adopt as final those provisions ofthe rule that are notthe subject ofan adverse comment.

We do not plan to open a second
comment period, so anyone interested in commenting should do so atthis time. Ifwe do notreceive adverse comments, no further activity is planned. For further information, please

see the direct final action.

Dated: March 21, 2014. Jared Blumenfeld, RegionalAdministrator, RegionIX. [FRDoe. 2014-11428 Filed 5-16-14; 8:45 am]
BILLING CODE 6560-50-P

ENVIRONMENTAL PROTECTION

AGENCY

40 CFR Part 52 [EPA-R09-OAR-2013-0754; FRL-9911-01- Region-9]

Revisiontothe California State Implementation Plan; San Joaquin Valley Unified AirPollution Control District;Quantification of Emission Reductions From Incentive Programs

AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.

SUMMARY: The Environmental Protection Agency isproposing to approve a regulation submitted for incorporation into the SanJoaquin Valley UnifiedAir Pollution Control District (SJVUAPCD

orDistrict) portion ofthe California State Implementation Plan (SIP). This regulation establishes requirements and procedures for the District's quantification ofemission reductions achieved through incentive funding programs implemented in the San Joaquin Valley. The effect ofthis action would be to make these requirements andprocedures federally enforceable as part ofthe California SIP. We are taking
comments on this proposal and planto follow with a final action. DATES: Written comments must be received on orbefore June 18, 2014. ADDRESSES: Submit your comments, identified by Docket ID Number EPAR09-OAR-2013-0754, by one ofthe following methods: 1.http://www.regulations.gov: Follow the on-line instructions for submitting

comments.

2. Email:steckel.andrew@epa.gov.
3.Fax:415-947-3579. 4. Mailordeliver:Andrew Steckel (AIR-4), U.S. Environmental Protection Agency, Region IX, 75 Hawthorne Street, SanFrancisco, CA 94105-3901. Deliveries are onlyaccepted during the Regional Office's normal hours of operation.

Instructions:All comments will be included in the public docket without change and maybe made available online athttp://www.regulations.gov, including any personal information provided, unless the comment includes Confidential Business Information (CBI)

or otherinformation whose disclosure is restricted bystatute. Information that
you consider CBI or otherwise protected should be clearly identified as such and should not be submitted through http:// www.regulations.govor email. http:// www.regulations.govis an anonymous

access system, and EPA will not know your identity or contact information unless you provide itin the body of
your comment. Ifyou send email directly to EPA, your email address will be automatically captured and included

as part ofthepublic comment. IfEPA
cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA maynot be able toconsider your comment.

Docket:Generally, documents in the docket for this action are available electronically at www.regulations.gov and in hard copy at EPA Region IX, 75 Hawthorne Street, San Francisco, California. While all documents inthe docket are listed at www.regulations.gov,some information may be publicly available only atthe hard copy location (e.g., copyrighted material, large maps), and some may not be publicly available in either location (e.g., CBI). To inspectthe hard copy materials, please schedule an appointment during normalbusiness hours with the contact listed in the FOR
FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Idalia Perez, EPA Region IX, perez.idalia@epa.gov, (415) 972-3248.

SUPPLEMENTARY INFORMATION: Throughout this document, "we," "us" and "our" refer to EPA.

Table of Contents

I.Background II. The State's Submittal III. EPA's Evaluation ofthe State's Submittal A. SIPProcedural Requirements B. EPA Policy onEconomic Incentives C. Sections 110(1) and 193 oftheAct IV. Proposed Action and PublicComment V. Statutory and Executive Order Reviews
I. Background

The SanJoaquin Valley (SJV) 1is currently designated as nonattainment for several ofthe national ambient air quality standards (NAAQS) promulgated by EPAunder the Clean Air Act (CAA) for ozone and fine particulate matter (PM2. 5).See 40 CFR 81.305. Despite numerous airpollution control measures and programs that the SJVUAPCD has implemented over the
years to reduce air pollution, the SJV continues to experience some ofthe
worst air quality inthe nation. See,e.g., 76 FR 57846 (September 16, 2011) (discussingCalifornia ozone plan for SJV) and 76 FR 41338 (July 13, 2011) (discussingCalifornia PM2.5plan for SJV). As a result,the District has increasingly relied upon incentive programs and other innovative strategies
to reduce air pollution inthe SJV. See SanJoaquin Valley Unified Air Pollution Control District, "Final Staff Report: Proposed Rule 9610 (State Implementation Plan Creditfor Emission Reductions Generated through Incentive Programs)," dated June 20, 2013 ("Rule 9610 StaffReport") at 2,3.

In recent years, federal, state andlocal governments havebegun to use a broader array oftools to manage environmental quality, including market-based economic incentives and other innovative strategies to reduce air pollution. Economic incentives are defined broadly as instruments thatuse financial means to motivate polluters to reduce thehealth and environmental risks posed by their facilities, processes,

orproducts. See U.S. EPA (Office of Policy, Economics, and Innovation) and National Center for Environmental Economics, "The United States Experience withEconomic Incentives for Protecting the Environment," EPA240-R-01-001, January 2001, Executive Summary. In light ofthe increasing incremental cost associated with further stationary and mobile source emissions reductions in many nonattainment
areas, EPA supports and encourages the development ofinnovative approaches
to air quality improvement, including economic incentives, to supplement traditional regulatory programs. See, e.g., "Guidance on Incorporating

1 The SJV encompasses over 23,000 square miles and includes all orpart ofeight counties in California's central valley: SanJoaquin, Stanislaus, Merced, Madera, Fresno, Tulare, Kings, and the valley portion ofKern. 28650Federal Register/Vol. 79, No. 96/Monday, May 19, 2014/Proposed Rules

Voluntary Mobile Source Emission Reduction Programs in State Implementation Plans (SIPs)," October 24, 1997 ("1997 VMEP"); "Incorporating Emerging and Voluntary Measures in a State Implementation Plan (SIP)," September 2004 ("2004 Emerging and Voluntary Measures Guidance"); and "Guidance on Incorporating Bundled Measures in a State Implementation Plan," August 16, 2005 ("2005 Bundled Measures Guidance").

To qualify for emission reduction credit in a SIP,however, economic incentive programs and other innovative emission reduction control measures must satisfy certain minimum CAA requirements for SIP creditability. See id. In priorrulemaking actions on several California SIP submissions, EPA has noted that California's incentive programs would not qualify for SIP emission reduction credit without the requisite demonstration ofSIP creditability. See, e.g., 76 FR 69896 at 69915 (November 9, 2011) (finalaction

on SJV PM2
.5 SIP for 1997 PM2. 5 NAAQS) and 76 FR 26609 at 26613 (May 9, 2011) (finalaction on SJVUAPCD Rule 9510, "Indirect Source Review (ISR)"). The SJVUAPCD's stated intent in adopting Rule 9610 was to establish a regulatory framework to address these requirements for SIP creditability and obtain SIP emission reduction credit for incentive programs implemented in the SJV, including the Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program), theProposition 1B: Goods Movement Emission Reduction Program (Prop 1B Program), and the Environmental Quality Incentives Program (EQIP) implemented by the U.S. Department ofAgriculture. See Rule 9610 StaffReport at 2-13.

The Carl Moyer Program is a California grantprogram established in 1998 thatprovides funding to encourage the voluntary purchase ofcleaner-thanrequired engines, equipment, and other emission reduction technologies. See generallyCARB, "The Carl Moyer Program Guidelines, Approved Revisions 2011," Release Date: February 8, 2013, atChapter 1 (available electronicallyathttp://www.arb.ca.govl msprog/moyer/moyer.htm).In itsfirst 12 years, the Carl Moyer Program provided over $680 million in state and local funds to reduce air pollution from equipment statewide, e.g.,by replacing older trucks with newer, cleaner trucks, retrofitting controls on existing engines, and encouraging the early retirement of older, more polluting vehicles. Id.

The Prop 1B Program is a California grant program established in 2007, as a result ofState bond funding approved byvoters, which provides $1 billion in funding to CARB to reduce air pollution emissions and health risks from freight
movement alongCalifornia's priority trade corridors. Under the enabling legislation (California Senate Bill 88 and Assembly Bill 201 (2007)), CARB awards grants to fund projects proposed by local agencies that are involved in freight movement or air quality improvements associated with goods
movement activities. Upon receipt of such grants, the local agencies are then responsible for providing financial incentives to owners ofequipment used in freight movement to upgrade to cleaner technologies, consistent with
program guidelines adoptedby CARB. Seegenerally"Strategic Growth Plan Bond Accountability, Goods Movement Emission Reduction Program," Approved February 27, 2008 (available electronicallyathttp://www.arb.ca.govl bonds/gmbond/docs/gm_ accountabilitywith links 2-27-08.pdf).

The U.S. Department ofAgriculture (USDA)administers the Environmental Quality Incentives Program (EQIP), which Congress established under section 334 ofthe Federal Agriculture Improvement and Reform Act of 1996 (Pub.L. 104-12, 16 U.S.C. 3839aa3839aa-9). USDA has delegated authority to administer the programto the Natural Resources Conservation Service (NRCS). 7 CFR 2.61(a)(13)(viii). The purpose ofEQIP isto promote agricultural production, forest management, and environmental quality

as compatible goals, and to optimize environmental benefits. 16 U.S.C. 3839aa. Through this voluntary
program, NRCS assists enrolled agricultural producers inimplementing conservation measures on their private land to address soil, water, air, and related natural resources concerns, wildlife habitat, surface and groundwater conservation, and related natural resource concerns. 7CFR 1466.1(a). The financial and technical assistance provided by NRCSunder the
program helps producers comply with environmental regulations and enhance agricultural and forested lands in a costeffective and environmentally beneficial

manner. Id.Funding for EQIP is currently authorized by section 2601(a)(5) oftheAgricultural Act of 2014 (Pub. L. 113-79, 16 U.S.C. 3841(a)(5).2

Since 1992, theDistrict has disbursed

over $500 million in incentive funds through the Carl Moyer and Prop 1B programs, which hasbeen matchedby

over $400 million in cost-sharing investments by participants and has resulted in the retrofit or replacement of hundreds oftrucks, buses, tractors, forklifts and other equipment operating in the SJV. See 2013 Annual Demonstration Report at 4 and Data Sheet. Similarly, since 2009, NRCShas provided over $105 million in incentive grants through EQIP to replace over one thousand high-emitting pieces offarm equipment in the SJV. See Rule 9610 StaffReport at 11 and 2013 Annual Demonstration Report, Appendix B.

II. The State's Submittal

Table 1lists therule addressed by this proposal with the dates that itwas adopted by the SJVUAPCD and submitted by the California Air Resources Board (CARB).

TABLE 1-SUBMITTED RULE

Local agency Rule No. Rule title Adopted Submitted

SJVUAPCD

........... 9610 State Implementation Plan Credit for Emission Reductions Generated 06/20/13 06/26/13 through Incentive Programs.

On December 26, 2013, the submittal for SJVUAPCD Rule 9610 was deemed by operation oflaw under CAA section 110(k)(1)(B) to meet the minimum completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPAreview.

2See email dated March 31, 2014, from Stephanie April 23, 2014, from Joshua Schnell, USDA Office Johnson, USDA Office ofGeneral Counsel, to Kerry ofGeneral Counsel, to Jeanhee Hong, USEPA Drake,EPA Region 9, Air Division, and email dated Rule 9610 establishes requirements andprocedures for theDistrict to quantify, for air quality planning
purposes, emission reductions achieved

Region 9, Office of Regional Counsel, RE: "Summaries of 1619 andEQIP". 28651

### Federal Register/Vol. 79, No. 96/Monday, May 19, 2014/Proposed Rules

through implementation ofincentive programs in the SanJoaquin Valley. The statedpurpose oftherule isto "provide

an administrative mechanism for the District to receive credit towards State Implementation Plan requirements for emission reductions achieved inthe San Joaquin Valley Air Basin through incentive programs administered by" the District,NRCS, or CARB. Rule 9610, section 1.0; seealsoRule 9610 Staff Report at 12.

Rule 9610 contains several key components designed to establish a regulatory framework for the District's quantification ofemission reductions achieved through incentive programs andto provide opportunities forEPA, CARB, and the public toreview and
comment on the District's evaluations

on an annualbasis. First, the rule establishes definitions ofkey terms that applyto theDistrict's evaluations and actions under Rule 9610, including definitions for theterms "surplus," "quantifiable," "enforceable," and "permanent." See Rule 9610, section 2.0. Asexplained elsewhere inthis notice, these terms apply to all discretionary EIPs and innovative

measures that are relied on for SIP purposes and are intended to ensure that such programs andmeasures comply with the Act.

Second, the rule identifies a number ofincentive program "guidelines" 3 that specify, among other things, the terms and conditions that apply to each grant ofincentive funds under three specific incentive funding programs implemented in the SJV: (1)The Carl Moyer Memorial Air Quality Standards Attainment Program (Carl Moyer Program), which is implementedjointly by CARB and the District; (2)the California Proposition 1B Goods Movement Emission Reduction Program (Prop 1B Program), also implemented jointlyby CARB and the District; and (3) the Environmental Quality Incentives Program (EQIP), implemented by NRCS. SeeRule 9610, section 3.1.

Third, the rule contains provisions requiring the District to make publicly available a "Manual ofProcedures" that identifies each oftheincentive program guidelines the District uses to quantify emission reductions under Rule 9610, i.e., any guidelines specifically listed under section 3.1 ofthe rule and any additional program guidelines not specifically listed that satisfy the

3Rule 9610 defines the term "incentive program guidelines" as "administrative procedures, quantification methodologies, eligibility criteria,
cost effectiveness criteria, reporting practices, and/

or otherprocedures and methodologies used to implement incentive programs." Rule 9610, section
2.15. conditions in section 3.2. SeeRule 9610, sections 3.2 and 3.3.

Fourth, the rule contains provisions requiring the District to submit each
year to CARB and EPA, following public review, an "annual demonstration report" thatprovides updated information on emission reductions achieved in the SJV through these incentive programs and the District's progress in satisfying related SIP commitments. See Rule 9610, section 4.0.

Finally, Rule 9610 specifies minimum requirements that theDistrict must address in each SIP submittal thatrelies

on projections ofemission reductions from incentive programs to satisfy CAA requirements. Among other things, each such SIP submittal must contain a demonstration thatthe applicable incentive program guidelines provide for "SIP-creditable emission reductions" (i.e.,emission reductions that are surplus, quantifiable, enforceable, and

ermanent)4 andmust contain an "enforceable commitment" on the District's part totrack emission reductions on an annual basis and to adopt and submit substitute measures to EPAby a date certain ifthere is any shortfall in required emission reductions. SeeRule 9610, section 7.0;

see alsoRule 9610 StaffReport at 23.

In sum, Rule 9610 establishes an administrative mechanism designed to

ensure that each SIP submittal in which the District relies upon emission reductions achieved through implementation ofincentive programs in the SJV will adequately address the requirements ofthe Act.The rule does
not establish any emission limitation, control measure, or other requirement that applies directly to an emission

source (e.g., any farm or truck thatisthe subject ofan incentive grant).5As discussed elsewhere in this notice, the requirements and procedures in the rule apply only to theDistrict and lay the groundwork for the District's incorporation ofincentive programs into air quality plans going forward. These requirements and procedures would become federally enforceable against the District upon EPA's final approval ofthe rule into the California SIP.

4Rule 9610 defines the term "SIP-creditable emission reduction" to mean "reductions of emissions achieved through incentive programs that

are Surplus, Quantifiable, Enforceable, and Permanent, asthose terms are defined in thisrule."
Rule 9610, section 2.25.

5Accordingly, Rule 9610 is not intended to implement the reasonably available control technology (RACT) standard orany othercontrol standard under the Act. III. EPA's Evaluation ofthe State's Submittal

A. SIPProcedural Requirements
Sections 110(a)(2) and 110(1) ofthe Act require that revisions to a SIP be adopted by the State after reasonable notice and public hearing. EPA has promulgated specific procedural requirements for SIP revisions in 40 CFR part 51, subpart F. These requirements include publication of notices, by prominent advertisement in the relevant geographic area, ofa public hearing on the proposed revisions, a public comment period ofat least 30 days, and an opportunity for a public hearing.

CARB's June 26, 2013 SIP submittal includes public process documentation for Rule 9610, including documentation ofa duly noticed public hearing held by the District onJune 20, 2013 on the proposed rule. OnJune 26, 2013, CARB adopted SJVUAPCD Rule 9610 as a revision to the California SIP and submitted it to EPA for actionpursuant to CAA section 110(k) ofthe Act. We find thatthe process followed by the SJVUAPCD andCARB in adopting Rule 9610 complies with the procedural requirements for SIP revisions under CAA section 110 and EPA's implementing regulations.

B. EPAPolicyonEconomicIncentives

The CAA explicitly provides for the

use ofeconomic incentives as one tool for states to use to achieve attainment of the NAAQS. See,e.g., CAA section 110(a)(2)(A) (requiringthateach SIP "include enforceable emission limitations and other control measures, means, or techniques (including economic incentives such as fees, marketable permits, and auctions of emissions rights), as well as schedules andtimetables for compliance, as may be necessary or appropriate to meetthe applicable requirements of [the Act]");

seealsosections 172(c)(6), 183(e)(4). Economic incentive programs (EIPs)use market-based strategies to encourage the reduction ofemissions from stationary,
area, and/or mobile sources in an efficient manner. EPA has promulgated regulations for statutory EIPs required under section 182(g) ofthe Act and has issued guidance for discretionary EIPs.6 See 59 FR 16690 (April 7, 1994) (codified at 40 CFR part 51, subpart U) and "Improving Air Quality with Economic Incentive Programs," U.S.

6A "discretionary economic incentive program"
is "any EIP submitted to EPA as animplementation plan revision forpurposes otherthan tocomply with the statutory requirements ofsections 182(g)(3), 182(g)(5), 187(d)(3), or 187(g)ofthe Act."
40 CFR 51.491. 

### 28652Federal Register/Vol. 79, No. 96/Monday, May 19, 2014/Proposed Rules

EPA, Office ofAir and Radiation, January 2001 (EPA-452/R-01-001) ("2001 EIPGuidance").

In light ofthe increasing incremental
costassociated with further stationary andmobile source emissions reductions andthe difficulty ofidentifying such additional sources ofemissions reductions in many areas, EPA encourages innovative approaches to generating emissions reductions through EIPs and other nontraditional measures andprograms, including "voluntary" and "emerging" measures. Seegenerally 1997 VMEP; "Guidance on SIP Credits for Emission Reductions from ElectricSector Energy Efficiency and Renewable Energy Measures," August 5, 2004 ("2004 Electric-Sector Guidance"); 2004 Emerging and Voluntary Measures Guidance; 2005 Bundled Measures Guidance; "Roadmap for Incorporating Energy Efficiency/Renewable Energy Policies and Programs into State and Tribal Implementation Plans," July 2012 ("2012 EE/RE Guidance"); and "Diesel Retrofits: Quantifying and Using Their Emission Benefits in SIPs and Conformity," February 2014 ("2014 Diesel Retrofits Guidance"). EPA recognizes, however, that these nontraditional measures raise novel issues related to enforceability and quantification ofthe associated emission reductions. Accordingly, EPA's policies addressing nontraditional measures provide for

some flexibility in meeting established SIP requirements for enforceability and quantification, provided the State takes clear responsibility for ensuring thatthe emission reductions necessary tomeet applicable CAA requirements are achieved. See, e.g., 1997 VMEP at 5-7; 2004 Emerging and Voluntary Measures Guidance at 9; 2005 Bundled Measures Guidance at 7;and 2012 EE/RE Guidance at 37-38.

Importantly, EPA has consistently statedthat nontraditional emission reduction measures submitted to satisfy SIP requirements under the Act must be accompanied by appropriate enforceable "backstop" commitments from the State
to monitor emission reductions achieved and to rectify shortfalls in a timely manner. See,e.g., 1997 VMEP at 4-5; 2004 Emerging and Voluntary Measures Guidance at 8-12; 2005 Bundled Measures Guidance at 7-12; and 2004 Electric-Sector Guidance at 6- 7.For example, where a SIP submittal relies on emission reductions achieved through a program dependent on voluntary actions thatthe State does not directly implement, the State must be obligated tomonitor, assess and report

onthe implementation ofthe program andthe associated emission reductions, and to remedy emission reduction shortfalls in a timely manner should the voluntary measure not achieve the projected emission reductions. See 1997 VMEP at 6-7.

We provide belowa summary ofour evaluation ofRule 9610 and the extent to which the requirements and procedures contained in the rule establish a framework for development ofSIP submittals that satisfy the requirements ofthe Act, as interpreted in EPA policy on discretionary EIPs and other nontraditional emission reduction

measures. In addition to reviewing the rule itself,EPAhas reviewed several of the incentive program "guidelines" identified in the rule and inthe District's supporting materials. Although these incentive program guidelines themselves are not part of Rule 9610, 7 EPAhas evaluated them as supporting material for the SIP submittal because the quantification protocols and otherprogram requirements specified in these guidelines inform EPA's review ofthe criteria and procedures set out inRule 9610. Our Technical Support Document (TSD) contains a more detailed evaluation ofthe rule and each ofthe three incentive programs thatit addresses, including the applicable guidelines. EPA will review each SIP submittal developed pursuant to Rule 9610 on a case-by-case basis,following notice-and-comment rulemaking, to determine whether the applicable requirements ofthe Act are met.
1.Programmatic "Integrity Elements"

Where a State relies upon a discretionary EIP or othernontraditional emission reduction measure in a SIP submittal, EPA evaluates the programmatic elements ofthe measure to determine whether the resulting emission reductions are quantifiable, surplus,enforceableandpermanent. See,e.g., 2001 EIP Guidance at Section 4.1. These four fundamental "integrity elements," which apply to all discretionary EIPs and other innovative

measures relied on for SIP purposes, are designed toensure that suchprograms and measures satisfy the applicable requirements ofthe Act. See,e.g., 2001 EIP Guidance at Section 4.1; 1997 VMEP
at 6-7; 2004 Emerging and Voluntary Measures Guidance at 3-4; and 2014 Diesel Retrofits Guidance at 27-29. EPA has generally defined the four fundamental integrity elements for

7The guidelines themselves arenot subject to EPA action under CAA section 110(k)as they are neither contained within Rule 9610 nor incorporated by reference therein, and the Statehas
not separately submitted any ofthese guidelines for approval into the SIP. discretionary EIPs and other innovative emission reduction programs as follows:

* Quantifiable: Emission reductions

are quantifiable ifthey are measured in

areliable manner and canbe replicated;

* Surplus:Emission reductions are surplus ifthey are not otherwise required by orassumed in a SIP-related program (e.g., an attainment or reasonable further progress plan or a transportation conformity demonstration), any other adopted State air quality program, a consent decree, or

afederal rule designed to reduce emission ofacriteria pollutant or its precursors (e.g., anew source performance standard or federal mobile

source requirement); additionally, emission reductions are "surplus" only for the remaining useful life ofthe vehicle, engine, or equipment being replaced. * Enforceable: Emission reductions and other required actions are enforceable ifthey are independently verifiable; program violations are defined; those liable canbe identified; the State and EPA may apply penalties and secure appropriate corrective action where applicable; citizens have access to all emissions-related information obtained from participating sources; and the required reductions/actions are practicably enforceable consistent with EPA guidance on practical enforceability.

* Permanent: Emission reductions are permanent ifthe State and EPA can

ensure that thereductions occur for as long as they are relied upon in the SIP; the time period that the emission reductions are used in the SIP canbe no longer than the remaining useful life of the retrofitted or replaced engine, vehicle, or equipment.

See 2001 EIP Guidance at Section 4.1; 1997 VMEP at 6-7; 2004 Emerging and Voluntary Measures Guidance at 3-4; and 2014 Diesel Retrofits Guidance at 27-29.

Rule 9610 contains specific definitions for each ofthese terms that

are consistent with EPA policy. First, with respect tothe term "quantifiable," the rule states that "emission reductions

are quantifiable ifthey can be reliably determined through the use ofwellestablished, publicly available emission factors and calculation methodologies." Rule 9610, section 2.23. This definition

ensures that the District will treat as "quantifiable" onlythose emission reductions thatcan consistently be measured in a reliable manner using widely available methods and assumptions, consistent with EPA's policy definition ofthis term.

Second, withrespect to the term "surplus," Rule 9610 states that 28653

### Federal Register/Vol. 79, No. 96/Monday, May 19, 2014/Proposed Rules

"emission reductions are surplus when they are not otherwise required by any federal, state, or local regulation, or other legal mandate, and are in excess ofthe baseline emission inventories underlying a SIP attainment demonstration." Rule 9610, section 2.27. This definition ensures that the District will treat as "surplus" only those emission reductions that are not otherwise required byor assumed in a SIP-related program (e.g., an attainment

orreasonable further progress plan or a transportation conformity demonstration), any other adopted State

orlocal regulation, a consent decree, or

afederal rule designed to reduce emission ofa criteria pollutant or its
precursors, consistent with EPA'spolicy definition ofthis term.

Third, withrespect to the term "enforceable," Rule 9610 states that "emission reductions are enforceable if the incentive program includes provisions for ensuring the following: [1] The emission reductions are independently and practicably verifiable through inspections, monitoring, and/or other mechanisms; [2] Incentive program violations are defined through legally binding contracts, including identifying the party or parties responsible for ensuring that emission reductions are achieved; [3] Grantees are obligated to provide all records needed to demonstrate that emission reductions are achieved; and [4] The public has access to all emissions-related information for reductions claimed in the annual demonstration report, as outlined in Section 4.0 [ofthe rule]." Rule 9610, section 2.8. Consistent with EPA's policy definition ofthe term "enforceable," this definition ensures that theDistrict will treat as "enforceable" only those emission reductions thatcan, as a practical matter, be independently verified and that result from a program or measure that defines violations clearly, allows for identification ofresponsible parties, requires grantees toprovide allrecords needed to demonstrate thatemission reductions are achieved, and provides for public access to emissions-related information.

Finally, withrespect to the term "permanent," Rule 9610 states that "emission reductions are permanent if actions are taken to physically destroy

orpermanently disable existing or baseline equipment orvehicles, or to permanently amend practices to ensure the reduction ofemissions for the duration oftheproject life." Rule 9610, section 2.18. This definition ensures that theDistrict will treat as "permanent" only those emission reductions for which both the State/ District and EPA can ensure thatthe reductions will occur for as long asthey

are relied upon in the SIP, consistent with EPA's policy definition ofthis
term.

These definitions in Rule 9610 adequately represent the four fundamental "integrity elements" that EPA has defined as guidelines for discretionary EIPs and other innovative emission reduction programs. Under Rule 9610, theterm "SIP-creditable emission reductions" 8 incorporates these integrity elements and is atthe

core ofthe key substantive requirements in the rule. For example, sections 3.1 and 3.2 ofRule 9610 require the District
to quantify emission reductions in accordance with incentive program guidelines that "provide for SIPcreditableemissionreductions";section 7.0 identifies required SIP elements "[w]here the District intends to rely on projections ofSIP-creditable emission reductionsunderthis rule to satisfy a federal Clean Air Act SIP requirement"; and section 4.0 requires the District to "annually prepare a report that demonstrates the quantity ofSIPcreditableemissionreductions."Rule 9610, sections 3.0, 4.0, 7.0. These provisions in Rule 9610 ensure that, in each SIP submittal thatrelies on an incentive program and in each subsequent annual demonstration report, the District willbe obligated to demonstrate thatthe emission reductions relied upon to satisfy SIP requirements are surplus, quantifiable, enforceable, and permanent.

Rule 9610 does not specify the requirements that govern the incentive programs themselves and instead makes clear thatthe program "guidelines," which specify (among other things) the
terms and conditions that applyto each grant offunds to an owner/operator of

an emission source, contain the provisions necessary to determine whether a particular incentive program provides for "SIP-creditable emission reductions." For example, section 3.1 of the rule requires theDistrict to quantify emission reductions in accordance with specified "incentive program guidelines that provide for SIP-creditable emission reductions," and similarly section 3.2
states thatthe District may quantify emission reductions using other guidelines "provided the District submits to EPA, pursuant to Section 7.0,

a demonstration thateach such guideline provides for SIP-creditable emission reductions." Rule 9610, sections 3.1 and 3.2. Inthe TSD accompanying this proposed rule, EPA

8See n.4, supra. has evaluated the guidelines listed in section 3.1 ofthe rule, together with several guidelines listed in the District's "Manual ofProcedures," for consistency with the four integrity elements. Although EPA is notproposing to take any particular action on these guidelines, 9we provide our evaluation ofthem as a preliminary guide to assist the District in its effort to address CAA requirements in SIP submittals thatrely

on incentive programs going forward.

Many ofthe guidelines that we have reviewed establish emission reduction quantification protocols, reporting requirements, administrative procedures, and other requirements that

are generally consistent with EPA's recommendations for nontraditional emission reduction programs. EPA will review each SIP submittal developed pursuant to Rule 9610 on a case-by-case basis, following notice-and-comment rulemaking, to determine whether the applicable requirements ofthe Act are met.
2.Required Components ofSIP Submittals

EPA policies identify several key components that shouldbe included in each SIP submittal thatrelies on anEIP

or other innovative emission reduction program, to ensure that theprogram satisfies therequirements ofthe Act. First, the SIP submittal should contain

a demonstration thatthe emission reductions resulting from the program

are quantifiable, surplus, enforceable and permanent and should include reliable methodologies for quantifying the emission reductions 10-i.e., assumptions and protocols for measuring emission reductions thatcan be understood and replicatedby different users. See, e.g., 1997 VMEP at 6-9; 2001 EIP Guidance at 34-36 and 61-67; 2004 Emerging and Voluntary Measures Guidance at 2-4; and 2014 Diesel Retrofits Guidance at 27-29; see alsodiscussion above in Section III.B.1 ("Programmatic 'integrity elements').

Second, the SIP submittal should include enforceable commitments by the State to monitor emission reductions

9 See n. 7, supra. 10To account for uncertainties inthe emission
reduction estimates, EPA recommends that states apply an appropriate downward "adjustment" to calculations ofprojected emission reductions. See,
e.g., 2004 Emerging and Voluntary Measures Guidance at 16 (identifying an assumed discount of 20percent) and 1997 VMEP at 7.The actual amount ofthe discount factor should reflect: (1) The degree
ofuncertainty associated with quantifying the emissions reductions from the measures; (2) the

amount ofthe emissions reductions being credited in the SIP; and (3) the degree ofuncertainty associated with verifying the emissions reductions actually achieved by the measure(s). See 2005
Bundled Measures Guidance at 16. 28654Federal Register/Vol. 79, No. 96/Monday, May 19, 2014/Proposed Rules

achieved and to rectify any shortfall in required emission reductions in atimely

manner. See, e.g., 1997 VMEP at 5-7; 2005 Bundled Measures Guidance at 7, 11-12, and 22; and 2014 Diesel Retrofits Guidance at 28, 31-32. EPApolicy places clear responsibility onthe State
to ensure thatthe emission reductions necessary tomeet applicable CAA requirements are achieved. Seeid. To this end, the State's commitment should

ensure that any shortfall in required emission reductions will be corrected as

soon as possible, and generally no later than 1year afterthe State learns ofa shortfall. See 2005 Bundled Measures Guidance at 11 and 2004 Emerging and Voluntary Measures Guidance at 12. Importantly, however, ifthe emission reductions from the measure are necessary to show attainment or reasonable further progress (RFP), the deadline for correcting a shortfall
cannot extend past the statutory attainment or RFP milestone date forthe nonattainment area. Seeid.

Third, the SIP submittal should include documentation that clearly shows howthe emission reductions will be addressed in the emissions inventory, RFP plan, and attainment or maintenance plan, as applicable. See,
e.g., 1997 VMEP at 8-9 and 2014 Diesel Retrofits Guidance at 27. Such documentation is important for purpose ofdemonstrating thatthe program or

measure is consistent with SIP attainment, RFP, or maintenance requirements and other applicable requirements oftheAct. See id. For example, to address potential doublecounting ofemission reductions, the SIP submittal should explain how the State will ensure that emission reductions already accounted for in the projected "baseline" emissions underlying an attainment or RFP demonstration will
not also be relied upon for SIP credit in the control strategy. See 2005 Bundled Measures Guidance at 24 ("emission reductions are not surplus for []an attainment demonstration ifthey have alreadybeen assumed in that same attainment demonstration") and 2004 EE/RE Guidance at 13-14 (notingthat
states may seek SIP credit only for emission reduction measures "beyond [those] already included in the baseline assumptions").

Finally, the SIP submittal must demonstrate thatthe State has adequate funding, personnel, implementation authority, and other resources to implement theprogram/measure on schedule. SeeCAA section 110(a)(2)(E)(i) (requiring that each SIP provide "necessary assurances thatthe State [orlocal government as appropriate] will have adequate personnel, funding, and authority under State (and,as appropriate, local)law to carry out such implementation plan * * * );seealso 1997 VMEP at 7; 2005 Bundled Measures Guidance at 22, 26; and 2014 Diesel Retrofits Guidance at 29-30.

Rule 9610 contains several provisions designed toensure that each SIP submittal in which the District seeks to rely on incentive programs for emission reduction credit will contain the necessary components and supporting documentation described in these policies. First, under section 7.0, each SIP submittal in which the District relies on projected emission reductions from incentive programs must "contain

a demonstration thatthe applicable incentive program guideline(s) continues to provide for SIP-creditable emission reductions"-i.e., emission reductions that are surplus, quantifiable, enforceable, and permanent." See Rule 9610, section 7.0. This demonstration
must identify the specificguideline(s) applicable tothe relevant projects (by title, year, and relevant chapters) and provide the District's rationale for concluding that the identified reductions are "SIP-creditable emission reductions" in accordance with the requirements ofRule 9610. EPA expects that the District's integrity demonstration will reflect appropriate adjustments to emission reduction calculations to account for uncertainties in the emission reduction estimates, in particular where the District seeks to rely on incentive programs forlarger
amounts ofSIP credit and/orthere is a high degree ofuncertainty in the means for verifying the emissions reductions actually achieved. See 2005 Bundled Measures Guidance at 16 ("[t]hegreater the uncertainty or amount ofreductions claimed, the greater the appropriate adjustment factor"). Additionally, consistent with the definition of "SIPcreditable emission reductions" inthe rule, the demonstration must show that reliance on the identified Carl Moyer Program source categories for SIP emission reduction credit is consistent with SIP attainment, RFP, or maintenance requirements.

For the specific guidelines currently identified in the District's Manual of Procedures (including a number ofthose listed under section 3.1 ofRule 9610),

we expect the District to rely as appropriate on thetechnical discussion in EPA's TSD, which contains EPA's preliminary assessment ofwhether the specified guidelines provide for SIPcreditable emission reductions and whether additional documentation is

11 See n.4, supra. needed to ensure the integrity ofthe emission reductions. Forall other guidelines not specifically addressed in the TSD, EPA commits to work with the District to develop the necessary demonstrations consistent with the requirements ofRule 9610 andthe CAA, in the context ofspecific SIP submittals that rely on emission reductions quantified pursuant tothose guidelines.

Second, section 7.0 ofRule 9610 requires that each SIP submittal in which the District relies on projected emission reductions from incentive programs contain an "enforceable commitment" that: (1)Identifies incentive program guidelines used to generate projected SIP-creditable emission reductions; (2)identifies emission reductions not to exceed the
amount projected tobe achieved through the use of secured or reasonably anticipated incentive program funding andthe estimated availability of emission reduction projects and willing participants, (3)is specifically adopted by theDistrict as part ofthe SIP and accounted for in the annual demonstration reports, and (4) states that "ifeither the District or EPA finds that there is a SIP shortfall for a particular year, theDistrict will adopt and submit to EPA,by specified dates, substitute rules and measures thatwill achieve equivalent emission reductions

as expeditiously as practicable and no later than any applicable implementation deadline in the [CAA]

orEPA's implementing regulations." Rule 9610, sections 7.1-7.4; seealso Rule 9610 StaffReport at 23. To ensure that any necessary substitute measures

are implemented by the statutory implementation deadline(s), we note that each SIP commitment should identify specific dates, well in advance ofthe applicable implementation deadline(s), by when the Districtwill determine whether a SIP shortfall necessitates the development of substitute measures.

Third, each SIP submittal in which the District relies on projected emission reductions from incentive programs must "identify specific amounts ofSIPcreditable emission reductions for a particular year or years in the relevant SIP." Rule 9610, section 7.0. For example, iftheDistrict intends to seek SIP credit in an ozone attainment plan for NOx emission reductions achieved through the Carl Moyer program, the

ozone SIP submittal must specifically identify, among other things, the years for which theDistrict isrelying on those NOx reductions; the amounts ofNOx reductions projected tobe achieved in each ofthose years; the specific source categories relied on to achieve those 28655

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NOx reductions; and the specific Carl Moyer Program guidelines applicable to those source categories (identifiedby title, year, and relevant chapters). Consistent with the definition of"SIPcreditable emission reductions" in the rule, the SIP submittal must include a demonstration thatreliance onthe identified Carl Moyer Program source categories for SIP emission reduction credit is consistent with SIP attainment, RFP, or maintenance requirements for the relevant years (e.g., thatthere is no double-counting ofemission reductions).

Finally, withrespect to the required demonstration thatthe State has adequate funding, personnel, implementation authority, and other

resources toimplement the program/

measure on schedule, this is a statutory requirement that isnot specifically addressed by Rule 9610 but nonetheless applies to each SIP submitted by a State. SeeCAA section 110(a)(2)(E)(i). Once the State submits an adequate demonstration thatthe State andDistrict have adequate personnel, funding, and legal authority to carry outtheir implementation responsibilities with respect to therelevant incentive programs, we expect thatfuture SIP submittals may rely, as appropriate, on suchprior demonstration to satisfy this requirement.

3.Procedures for Public Disclosure of Information

Like all other SIP control measures, discretionary incentive programs and other innovative emission reduction

measures relied on for SIP purposes must ensure that EPA and the public have access to emission data in accordance with the requirements of section 114 ofthe CAA and EPA's implementing regulations in 40 CFR section 2.301. See,e.g., 2001 EIP Guidance at 59, 60 and 2004 Emerging andVoluntary Measures Guidance at 23 (AttachmentA). To this end, EPAhas recommended that discretionary EIPs contain program components such as the following: (1)Requirements for participants to disclose violations to the responsible state/local agency in an annual certification ofcompliance or non-compliance; (2)requirements for

sources thatviolate program provisions
to notify the affected community ofthe violations; (3)procedures for the responsible state/local agency to compile these disclosures into an annual comprehensive report on emissions andviolations; and (4) procedures to submit these reports to EPA and make them available to the public. See id. EPA has also recommended that states disclose information in a manner thatis transparent, allowing the public to easily and accurately calculate the emissions ofthe participating sources or

source categories and to adequately

assess the effectiveness ofthe program. Seeid.

Rule 9610 contains several provisions designed toensure that EPA and the public have access to adequate information regarding the specific incentive programs and associated emission reductions that the District intends torely upon for SIP purposes. First, under section 3.3 ofthe rule, the District is required to make publicly available a "Manual ofProcedures" 12 that includes each ofthe incentive program guidelines theDistrict uses to quantify emission reductions under Rule 9610, i.e.,both those guidelines specifically listed under section 3.1 of the rule and any additional program guidelines not specifically listed that satisfy certain conditions. SeeRule 9610, section 3.3; seealso section 3.2 (allowing for use ofother guidelines not listed in section 3.1 "provided the District submits to EPA, pursuant to Section 7.0, a demonstration that each such guideline provides for SIPcreditable emission reductions * * "). Under subsection 3.3.2, the Manual of Procedures must "include[] a description ofhow the incentive program guidelines ensure that incentive program emission reductions

are SIP-creditable." EPA expects that the information in the MOP, together with theproject-specific information in the annual demonstration reports, will enable the public to calculate the emission reductions for each project relied upon for emission reduction credit in a SIP. Second, under section 4.0 ofRule 9610, each year the District must prepare an "annual demonstration report" thatprovides updated information on emission reductions achieved through implementation of incentive programs in the SJV and includes the following: (1)Adescription ofeach incentive program guideline used by theDistrict, NRCS, or CARB to implement those programs that the District seeks torely upon for SIP
purposes; (2)information about the

12CARB's initialRule 9610 SIP submittal
included aManual ofProcedures dated June 20, 2013, which the Districthad made publicly available during its rulemaking process. On March 4, 2014, the District submitted arevised and clarified Manual of Procedures. Throughout this proposed rule,references to the Manual of Procedures (or "MOP") are to the revised version submitted March 4, 2014 (datedJanuary 31, 2014), which is available in the docket for this rulemaking and online athttp://www.valleyair.org/MOP/ mop961 idx.htm. types and quantities ofemission reductions generated through these
programs (e.g.,the specific pollutants at issue, the years thatthe emission reductions occur, the relevant funding amounts, and the project types); (3) adjustments toemission reductions calculated for prior annual demonstration reports, as necessary to reflect updated project information or the adoption ofnew local, state, or federal requirements; (4) identification ofSIP commitments adopted by the District that ithas satisfied, in whole or in part, through SIP-creditable emission reductions; (5) specific information concerning each project 13 relied upon for emission reductions (includingthe unique project identification number, project location, project type, and project life); (6) identification ofprojects that do not satisfy contractual requirements; and additional project details as necessary to demonstrate that the emission reductions relied upon for SIP purposes are surplus, quantifiable, enforceable, and permanent. SeeRule 9610, sections 4.0-4.6. Under section 5.0 ofRule 9610, the District must submitthis annual demonstration report andinformation described in section 4.0 ofthe rule toboth CARB and EPA no later than August 31 ofeach year, after providing an opportunity for public review ofa draft report, and the final report must be madepublicly available

onthe District's Web site. SeeRule 9610, sections 5.1-5.3.

EPA hasreviewed the "2013 Annual Demonstration Report" 14 submitted by the District as supporting material for Rule 9610 andbelieves it contains most, though not all, ofthe information required by Section 4.0 ofRule 9610.15 To ensure thatEPA and otherinterested parties can track the District's progress

13

Section 2.19 ofRule 9610 defines the term "project" as follows: "for purposes ofthis rule, actions taken toreduce emissions through incentive
programs, as contracted between the Grantee and the District, NRCS, orCARB using incentive
program guidelines at the time of contracting. Such actions include,but are notlimited to, replacements, retrofits, new purchases, new practices, and repower."

14

CARB's initial Rule 9610 SIPsubmittal included a "2013 Annual Demonstration Report" dated June 20, 2013, which theDistrict had made publicly available (in draft form) during its rulemaking process. OnFebruary 20, 2014, the District submitted arevised annual demonstration report containing technical clarifications
recommended byEPA. See "2013 Annual Demonstration Report," dated January 31, 2014. Throughout this proposed rule, references to the "2013 Annual Demonstration Report" are to the revised version dated January 31, 2014. For informational purposes, however, weprovideboth versions ofthe reportin the docket for this rulemaking.

15Our TSD provides a detailed evaluation ofthe 2013 Annual Demonstration Report andour recommendations for improvement. 

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in satisfying its SIP commitments, we expect that going forward each annual demonstration report will identify the specific projects (byunique project identification number)that the District has relied upon for emission reduction credit in aparticular SIP,including necessary adjustments to emission reduction calculations.16 SeeRule 9610, Section 4.3 and Section 4.5. EPA believes that a listofindividual projects relied upon for each specific SIP would enable EPA andthe publicto enforce the District's SIP emission reduction commitments butrequests public
comment on other possible mechanisms for tracking compliance with SIP commitments through the annual demonstration reports.

Finally, under section 6.1 ofRule 9610, "[a]ll documents created and/or used in implementing the requirements ofSection 4.0 shall be kept and maintained as required by the applicable incentive program guidelines" and "shall be made available for public review" consistent with the requirements ofthe California Public Records Act andrelated requirements. See Rule 9610, section 6.1. Additionally, the annual demonstration report must include information regarding the process for public review ofsuch records. See id. Consistent with this requirement, the 2013 Annual Demonstration Report submitted by the District states that the public may request documents created and/orused in implementing the requirements ofSection 4.0 (ofRule 9610) through theDistrict's Public Records Release Request form, which is available on the District Web site. See 2013 Annual Demonstration Report at 8.

Rule 9610 appears to contain one exception to the general public disclosure requirement in section 6.1 that applies only to documents associated with NRCS's implementation oftheEQIP program. Section 6.2 ofRule 9610 states that "[r]ecords relatedto implementation ofthe NRCS Program Combustion System Improvement of Mobile Engines incentive program are prohibited from mandatory disclosure, pursuant to the Federal Food Security Act of 1985 (7U.S.C. 608d(2))." Wenote that 7U.S.C. section 608d(2) concerns

16The key purpose ofthe annual demonstration report is to specifically document the District's
progress in achievingnecessary emission reductions and to enable EPA and citizens to enforce the SIP emission reduction commitments by requesting project-specific documentation. It is not necessary, however, for the list ofprojects relied on in aparticular SIPto be identical from year to year,

as the Districtmay appropriately eliminate those projects found to be in violation ofcontract requirements orotherwise not achieving expected emission reductions. See Rule 9610, Section 4.3. information relating to "marketing agreements" and "marketing order programs" under the Agricultural Adjustment Act (7U.S.C. 601 et.seq.) and does not apply to the NRCS's implementation ofEQIP. The key statutory provision that governs disclosure ofinformation submitted by agricultural producers or owners of agricultural land to participate in EQIP is section 1619 ofthe Food, Conservation, and Energy Act of2008 (Pub.L. 110-246, 7 U.S.C. 8791). 17 See email dated April 23, 2014, from Joshua Schnell, USDA, to Jeanhee Hong,EPA Region 9, RE: "Summaries of 1619 and EQIP." We discuss below this statutory provision and certain information that

we understand NRCS may make publicly available consistent with this provision.

Under section 1619 ofthe Food, Conservation, and Energy Act of2008 (Pub.L. 110-246, 7U.S.C. 8791), Congress hasprohibited the Secretary of USDA and any officer or employee of USDA from disclosing "information provided by an agricultural producer or

owner ofagricultural land concerning the agricultural operation, farming or conservation practices, or the land itself, in order to participate in" a USDA program. 7U.S.C. 8791. Any contractor

or cooperator ofthe USDA is similarly prohibited from disclosing such information. Id. There are several exceptions to this prohibition, including that USDA may disclose information if it istransformed into a statistical or aggregate form without naming any individual owner, operator or producer

or aspecific datagathering site. See email dated March 31, 2014, from Stephanie Johnson, USDA, to Kerry Drake, EPA Region 9, RE: "Summaries of 1619 and EQIP."

Taking these statutory prohibitions into account, in March 2014, NRCS, EPA, CARB and the District signed the "Addendum to the December 2010 Statement ofPrinciples Regarding the Approach to State Implementation Plan Creditability ofAgricultural Equipment Replacement Incentive Programs Implemented by the USDA Natural Resources Conservation Service and the San Joaquin Valley Air Pollution Control District" ("2014 Addendum"). The purpose ofthe 2014 Addendum is
to identify information and documentation that NRCS will, consistent with its statutory responsibilities under 7U.S.C. 8791, make publicly available to ensure that EPA and the District can carry out their

17The generalFreedomofInformationAct exemptions in5 U.S.C. section 552(b) also apply to EQIP information. respective implementation responsibilities under the CAA and Rule 9610. Among other things, the 2014 Addendum states that NRCS will provide toEPA and the District an annual report thatincludes information regarding emission reductions achieved by individual EQIP projects and that will be certified by theNRCS California State Conservationist. Webelieve the certified annual reports described in the 2014 Addendum, which NRCS has agreed to submit to EPA and the District by March 31 ofeach year, will provide information adequate to enable the District, EPA, and the public to verify the emissions ofparticipating sources andto adequately assess the effectiveness ofthe EQIP program.

To avoid confusion, however, EPA stronglyrecommends thatthe District revise section 6.2 ofRule 9610 at its earliest opportunity toremove the incorrect reference to 7U.S.C. section 608d(2) and to provide an accurate description ofNRCS's statutory obligations with respect to disclosure of information under 7U.S.C. section 8791.

Our TSD contains a more detailed discussion ofthe 2014 Addendum and EPA's understanding ofthe informationsharing activities that the signatory agencies have agreed to undertake, to enable thepublic toverify emission reductions relied upon for SIP purposes. SeeTSD at 10-11. Additionally, the TSD contains a more detailed evaluation ofboth the 2013 Annual Demonstration Report and the Manual ofProcedures andprovides recommendations for improvement to ensure thatthese documents provide the information necessary to satisfy CAA requirements concerning public availability of emission data. SeeTSD at 52-55.

4. Provisions To Measure and Track Programmatic Results

EPA recommends that each SIP submittal thatrelies on an EIP or other innovative emission reduction program contain specific evaluation procedures
to retrospectively determine the overall effectiveness ofthe program and procedures tocorrect emissions projections as appropriate. See, e.g., 1997 VMEP at 9; 2001 EIP Guidance at 70-76; 2005 Bundled Measures Guidance at 17-20; and 2014 Diesel Retrofits Guidance at 33. Forexample, EPA recommends that the SIP submittal include a State commitment to conduct
program evaluations at least once every 3years, to determine whether the program is in fact achieving projected emissions benefits; a schedule for submittingthe results ofthese evaluations to EPA, following 

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opportunities for public comment; and "reconciliation procedures" to correct any differences between forecasted and actual emission reductions. Seeid.

Rule 9610 establishes procedures for the District to annually report onthe emission reductions achieved through specified incentive programs and to evaluate programmatic effectiveness on

aperiodic basis. Specifically, the provisions concerning annual demonstration reports under section 4.0 ofthe rule contain both substantive and procedural requirements for the District's development and submission ofthese reports to EPA. See discussion above in Section III.B.3 ("Procedures for public disclosure ofinformation"). Additionally, under section 4.7 ofthe rule, the District is required to "perform

aretrospective assessment ofthe performance ofits incentive program to evaluate overall incentive program performance and develop recommendations for future enhancements to incentive program implementation" and toinclude in this
assessment "a summary ofthe public
process to receive comments on the draft [annual demonstration] report, as required by Section 5.0." Rule 9610, section 4.7.

EPA supports the District's effort to keep EPA, CARB, and the public informed ofits incentive program evaluations onan annual basis through the annual demonstration reports developed pursuant to section 4.0 of Rule 9610. Itis not clear,however, what
sortof "retrospective assessment" the District intends toconduct under section 4.7ofthe rule and howthis provision differs, ifat all, from the requirements of section 4.0. We recommend thatthe Districtrevise section 4.7 to clarify itsprocedures for evaluating program performance and whether itwill retrospectively assess onlythose incentive programs thatit directly implements, or whether the District will also assess the performance ofthe EQIP program implemented by NRCS and/or incentive programs implemented by CARB. Our TSD provides more detailed recommendations for these program evaluations. Aspreviously explained, EPA will review each SIP submittal developed pursuant to Rule 9610 on a case-by-case basis, following notice-andcomment rulemaking, to determine whether the applicable requirements of the Act are met.
C. Sections110(1) and 193 oftheAct

Section 110(1) ofthe CAA prohibits EPA from approving any SIP revision that would interfere with any applicable requirement concerning attainment and RFP or any other applicable CAA requirement. Rule 9610 does not establish any emission limitation, control measure, or other requirement that applies directly to an emission

source or thatis necessary to meet CAA requirements. Additionally, therule does not revise any requirement in the applicable SIP. The requirements and procedures in Rule 9610 apply onlyto the District and are designed to ensure that each SIP submittal in which the District relies upon emission reductions achieved through incentive programs in the SJVwill adequately address the requirements ofthe Act.Nothing in Rule 9610 supplants the applicable requirements ofthe CAA.18 We propose to determine that our approval ofRule 9610 would comply with CAA section 110(1) because the proposed SIP revision would not interfere with the on-going
process for ensuring that requirements for attainment oftheNAAQS and other CAA provisions are met. Section 193 oftheAct does not apply
to this proposed actionbecause Rule 9610 does not modify any SIP-approved control requirement in effect before November 15, 1990.

IV. Proposed Action and Public Comment

Under section 110(k)(3) oftheAct, EPA isproposing to fully approve the submitted rule as a revision to the California SIP. We will accept comments from the public on this proposed actionuntil the date noted in the DATES section above.

V. Statutoryand Executive Order Reviews

Under the Clean Air Act,the Administrator is required to approve a SIP submission that complies with the provisions ofthe Act and applicable Federal regulations (42 U.S.C. 7410(k); 40 CFR 52.02(a)). Thus, in reviewing SIP submissions, EPA's role isto approve State choices, provided that theymeet the criteria ofthe Clean AirAct. Accordingly, this proposed action merely proposes to approve State law as meeting Federal requirements and does
not impose additional requirements beyond those imposedby State law. For that reason, this proposed action: 0 Is not a "significant regulatory action" subject toreview by the Office ofManagement and Budget under Executive Order 12866 (58 FR 51735, (October4, 1993);

18EPA will review each SIPsubmittal developed pursuant to Rule 9610 on a case-by-case basis, following notice-and-comment rulemaking, to determine whether the applicable requirements of the Act are met. * does not impose an information collection burden under the provisions ofthePaperwork 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 orsignificantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of1995 (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 actionbased onhealth 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 (66FR 28355 (May 22, 2001));

* is not subject to requirements of Section 12(d) ofthe National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application ofthose 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 isnot approved to apply in Indian country located in the State, and EPA
notes thatit willnot impose substantial direct costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFRPart52

Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Reporting andrecordkeeping requirements.

Authority: 42 U.S.C. 7401 etseq.
Dated: May 6, 2014. Jared Blumenfeld, RegionalAdministrator, RegionIX.
[FRDoc. 2014-11481 Filed 5-16-14; 8:45 am]

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