ENVIRONMENTAL PROTECTIONAGENCY 40 CFR Part 52

Approval and Promulgationof Implementation~lks, State of. California, San JoaquinValley Unified Air Pollution Control District, New Source Review AGENCY: Environmental Protection Agency (EPA). ACTION: Proposed rule. SUMMAFtY: Under section 110(k)(6) of the CleanAir Act, EPA is proposing to correct our May 2004 final approval of revisions to the San JoaquinValley Unified Air ~dllution Control District portion of the California State ImplementationPlan. EPA is also proposing to take action on three amended District rules, one of which was submitted on March 7, 2008 and tde other two of which were submitted on March 17, 2009. Two of the submitted rules reflect revisions to approved District rules that provide for review of new and modified stationary sources ("new source review" or NSR) within the District, and the third reflects revisions to an approved District rule that provides a mechanism by which existing stationary sourcesmay be exempt from the requirement to secure a federally-mandated operating permit. The NSR rule revisions relate to exemptions frompermitting and from offsets for certain agricultural operations, to the establishment of NSR applicability and offset thresholds consistentwith a classification of "extreme" nonattainment for the ozone standard,

### and to the implementation of EPAfsNSR Reform Rules. With respect

/ ' 

### to the revised DistrictNSR rules, EPA isproposing a limited approval and limited disapprovalbecause, although the changes would strengthen the SIP, there are deficiencies in ) 

### enforceability that prevent full approval.With respect to the operating permit rule, EPA is proposing a full approval. ~astly, EPA is proposing to rescind certain obsoletepermitting requirements from the District portion of the.Californiaplan. If EPA were to finalize the limited approval and limited di'sapprovalaction, asproposed, then a sanctions clock, and EPAfsobligation to promulgate a Federal implementation plan, would be triggered because certain revisions to the District rules that are'thesubject of this action are requiredunder anti-backsliding principles established for the transition from the 1-hour to the 8-hour ozone standard. DATE:Any comments must arriveby [Insertdate 30days from the date of publication in the Federal Register]. ADDRESSES: Submit comments, identifiedby docket number EPA-R09- OAR-2010-0062, by one of the following methods: Federal eRulemaking Portal: www.regulations.gov. Follow the on-li,neinstructions. E-mail: R9airpermits@epa.gov. Mail or deliver: Gerardo ~ib/s(Air-3)

### , U.

### S. Environmental Protection Agency Region 

### IX, 75 

### Hawthorne Street, SanFrancisco, CA 

### 94105. Instructions: All commentswill be included in the public docket without change and may be made available online at

. ib

TI.j,,w. regulati.or:s.gov, including any personal informationprovided, unless the comment includes Confidential Business Information

(CBI) or other informationwhose disclosure is restrictedby statute. Information that you consider CBI or otherwise protected should be clearly identified as such and should not be submitted through ivivw.reauldt~ons.q~~ or e-mail. www.regulations.gov is an "anonymous access" system, and EPA will not know your identity or contact informationunless you provide it in the body of your comment. If you send e-mail directly to EPA, your e-mail 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: The index to the docket for this action is available

\ electronically 'at wi*;ibT.r.eg;ll.atio;?s.qov and in hard copy at EPA Region IX, 75 Hawthorne Street, San Francisco, California. While all documen'tsin the docket are listed in the index, some information may be publicly available only at the hard copy location (e.g.,copyrighted material), and somemay not be publicly available in either location (e.g.,CBI). To inspect the hard copy materials,please schedule an appointment during normalbusiness hours with the contact listed in the FOR FURTHER INFORMATION CONTACT sectionbelow. FOR FURTHER INFORMATION CONTACT: Laura Yannayon, Permits Off ice

(AIR-3),U.S. Environmental ProtectionAgency, Region 

### IX, (415)

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

### I. Regulatory Context 11. Correction of EPA's May 2004 FinalApproval A. CAA Legal Authority B. Background on DistrictNSR Rules 2020 and 2201and Related EPA Actions C. Correction of Erroneous Final Approval 111. The State's Submittals of Revised District Rules A. What rules did the State submit? B. Are there other versions of these rules? C. What are the purposes for revisions to these rules? 

### IV. EPA's Evaluation and Action on the Revised Rules A. How is EPA evaluating the rules? B. Do the rules meet the evaluation criteria? 1. Regulatory Context 2. Minor Source NSR Permitting Requirements 3. "Extreme" Ozone Area NSR Requirements4. EPA's NSR Reform Rules 

### 5. Other Changes to District Rules 2020 and 2201 6. Enforceability Considerations 7. Federally Enforceable Restriction on Potential to Emit 8. CAA Section 110(1) 9. Conclusion and ProposedAction on Submitted Rules V. Deletion of Obsolete Conditions on SIP Approvals VI. Proposed Action and Opportunity for Public Comment VII. Statutory and Executive Order Reviews I. RegulatoryContext On February 20, 2008 (73FR 9260),under sections 110(k)(2) and 110(k)(6)of the Clean Air Act (CAAor "Act"), we proposed to correct our May 2004 final approval of revisions to the San Joaquin Valley Unified Air PollutionControl District ("SJVUAPCD"

or "District") portion of the California State Implementation Plan ("SIP") and to approve revisions to two District rules submitted to EPA by the CaliforniaAir Resources Board (CARB)on c December 29, 2006.l The specificprovisions proposed for approval

The San Joaquin Valley includes all of San Joaquin, Stanislaus, Merced, Madera, Fresno, Kings and Tulare counties, and the western half of Kern County, in the State of California. The San Joaquin Valley is designated as a nonattainment area for the 1997 8-hour ozone national ambient air quality standard (NAAQS) and the 1997 fine particulate matter (PM2.5) NAAQS and is designated as attainment or unclassifiable for the other NAAQS. See 40 CFR 81.303. The area is further classified as "serious" for the 8-hour ozone NAAQS, but the State of California has submitted a request to reclassify the area to "extreme." See 74 FR 43654 (August 27, 2009) for EPA's proposed approval of the State's reclassification request. The San Joaquin Valley was further classified as an "extreme" area for the now-revoked 1-hour ozone NAAQSb included paragraph 6.20 of District Rule 2020 ("Exemptions") and paragraph 4.6.9 of District Rule 2201 ("Newand Modified Stationary Source Review Rule"). These provisions relate to review and permitting of new ormodified stationary sources

("NSR") specifically in connection with agricultural sources. We received substantive comments on our proposed rule, and, since publication of the February 2008 proposed rule, the District has adopted further revisions to Rules 2020 and 2201 that have been submitted to EPA for approval by CARB. The further amended District rules carry forward the revisions submitted on December 29, 2006 but reflect more recent changes by the District as well. In light of the comments on our February 2008 proposed rule, and the more recent submittals of District Rules '2020and 2201, we have decided not to take any further action on our February 2008 proposed rule, but rather to propose action anew. Published in today's Federal Register is a withdrawal of our February 20, 2008 proposed rule. 11. Correction of EPArsMay 2004 FinalApproval A. CAA Legal Authority Section 110(k)(6) of the CleanAir Act, as amended in 1990, provides: "Whenever the Administrator determines that the Administrator's action approving, disapproving, or promulgating any plan or plan revision (orpart thereof), area designation,

when EPA designated the area with respect to the 8-hour ozone NAAQS.redesignation, classification or reclassification was in error, the Administratormay in the samemanner as the approval, disapproval, or promulgation revise such action as appropriate without requiring any further submission from the State. Such determination and the basis thereof shall be provided to the State and the public." We interpret this provision to authorize the Agency ,tomake corrections to a promulgated regulationwhen it is shown to our satisfaction (orwe discover) that (1)we clearly erred by failing to consider or by inappropriately considering information made available to EPA at the time of the promulgation, or the informationmade available at the time of promulgation is subsequently demonstrated to have been clearly inadequate, and (2) other information persuasively supports a change in the regulation. See 71 FR 75690, at 75693 (December 18, 2006); 57 FR 56762, at 56763 (November30, 1992). 

### B. Background on District NSR Rules 2020 and 2201 andRelated EPA Actions EPA originally approved District NSR Rules 2020 ("Exemptions") and 2201 ("New and Modified Stationary Source Review Rule") into the California SIP on July 19, 2001 (66FR 37587).2 EPA's July 19, 2001 action was, however, a limited

- Rules 2020 and 2201 were adopted by the District tomeet NSR requirements under the Clean Air Act, as amended in 1990, for areas that have not attained the National Ambient Air Quality Standards (NAAQS).District Rules 2020 and8 approval and limited disapproval reflecting our conclusion that District Rules 2020 and 2201 could not be fully approved as meeting all applicable requirements because, among other reasons, District Rule 2020 exempted all agricultural sources from District permitting requirements. 

### 66 FR at 37590. At that time, District Rule 2020, citing California Health & Safety Code

(CH&SC)section 42310(e), included a permitting exclusion for "any equipment used in agricultural operations in the growing of crops or the raising of fowl or animals," except for certain orchard and citrus grove heaters in the southernportion of the Di~trict.~ Our limited disapproval stated that the District could not exempt major stationary sources or major modifications at existing major sources from NSR requirements and be found tomeet applicable CAA requirements.4 To correct this deficiency, the District adopted a revision to Rule 2020 which eliminated the agricultural permitting exemption in its entirety, and CARB submitted the revised Rule 2020 to EPA on December 23, 2002 as a revision to the California SIP. In response, on February 13, 2003, EPA proposed several

2201 replaced existing NSR rules from the individual county air pollution control districts that were combined into the San JoaquinValley Unified Air Pollution Control District ("District") in 1991. " For more information on the status of the state law exclusion from permitting for agricultural sources in the California SIP, please see the related proposed rule published in today's Federal Register. "District NSR permitting rules do not adopt the distinction between minor sources and major sources as set forthunder the CAA. District Rules 2020 and 2201 generally apply to both federal. minor and major stationary sources. Our limited approval and limited disapproval specified that the rule deficiency was exempting major agricultural sources and major modifications. See 65 FR9< actions regarding the exemption of agricultural sources from major source NSR permitting requirements. First, EPA proposed approval of revised District Rule 2020. See 68 FR 7330 (February 13, 2003).' In that notice, EPA specifically noted that "California Health & Safety Code 42310(e) continues to preclude the District, as well as all other districts in California, from permitting agricultural sources under either title I or title V of the CAA." See 68 FR 7330, at 7335. To address this issue, EPA published a proposal finding that California's statutory exemption of agricultural sources in CH&SC section 42310(e)xfrom major source NSR permitting rules violated the requirements of CAA section 110(a)(2)(E) 

### . See 68 FR 7327 (February 13, 2003). This action, titled "Finding of Substantial Inadequacy of Implementation Plan; Call for California State Implementation Plan Revision" (hereinafter "SIP Call"), determined that California lacked adequate legal authority to carry out its NSR permitting requirements because CH&SC section 42310(e) exempted major agricultural 'sources.EPA finalized the SIP Call on June 25, 2003, and thereby required California to submit the necessary assurances of authority by November 23, 2003 to support an affirmative finding by EPA under CAA section 110(a) (2)(E) 

### . If the State failed to submit the necessary

58252, at 58254 (September 28, 2000). 

## ' EPA alsopublished an Interim Final Determination that SJVUAPCD had corrected the July2001 limitedapproval deficiencies and EPA stayed or deferred the imposition of CAA sanctions on the District. See 68 FR 7321.assurances, then EPA indicated that the sanctions clock under CAA section 179 would be triggered.6See 68 

### FR 37746 (June25, 2003). Later that summer, the California legislature enacted Senate Bill (SB)700, which the Governor of California signed on September 22, 2003. SB 700 removed the wholesale exemption from permitting for agricultural sourcesprovided under CH&SC section 42310(e) and subjectedmajor agricultural sources topermitting requirements. SB 700,.however, retained exemptions for new source permitting for certainminor agricultural sources, and limited the ability to requireminor agricultural sources to obtain federal offsets.' Californianotified EPA of the legislature's action by letter dated November 3, 2003 thereby avoiding the triggering of a sanctions clock. California enclosed a copy of SB 700 with the November 3, 2003 letter.8

"n May 22, 2002, EPA issued a Notice of Deficiency for California's Title V program based on the exemption of agricultural sources from Title V permitting. See 67 FR 35990 (May22, 2002). EPAtsdecision was upheld..See California Farm Bureau Fed'n v, EPA, No. 02-73371 (9th Cir. July 15, 2003)(memorandum opinion)

### . AS explained in Section 1I.C below, sources with emissions below 50 percent of the major source threshold are exempt from permitting unless the District makes certain findings, while sources at or above 50percent of the major source threshold are subject to permitting unless the District makes certain findings. See CH&SC section 42301.16(b)and (c).In addition, offsets may not be required unless they meet the criteria for real, permanent, quantifiable, and enforceable emission reductions. See CH&SC section 42301.18(c). It is worth noting that EPA and California interpret CH&SC section 42301.16(a) to require all sources that emit or have the potential to emit at or above the major source threshold to be subject to new source permitting and offset requirements, as required by the Clean Air Act, without regard to the provisions of sections 42301.16(c) or 42301.18(c). Thus, an agricultural source with actual emissions less than 50percent of the major source threshold but potential emissions above the major source threshold is subject to new source permitting and offset requirements. "ee Letter from Bill Lockyer,Attorney General, California Office of the Attorney General, to Marianne Horinko, Acting Administrator, EPA, dated November 3, 2003.11 On May 17, 2004, EPA took final action approving the District's permitting rules, Rules 2020 and 2201, as proposed in February 2003. See 69 FR 27837 (May17, 2004). These rules, as approved by EPA, did not on their face exempt any agricultural

sources frompermitting or limit the applicability of offset requirements. EPA's final approval stated that the District had removed its exemption for agricultural sources and that the Btate had also "removed a similar blanket exemption, thereby providing the District with authority to require air permits for agricultural sources, including federally required NSR permits." See 69 FR 27837, at 27838. EPA's final approval cited SB 700 in a footnote, but did not note the limited scope of authority for permitting and offset requirementsunder SB 700,which allowed permitting of only certainminor agricultural sources. C. Correction ofErroneous Final Approval In this instance, we believe that our May 2004 final full approval of District Rules 2020 and 2201 was erroneous. For all SIP revisions, Statesmust provide evidence that the State has the necessary legal authority under State law to adopt and implement the plan. See CAA section 110(a)(2)(E); 40 CFR part 51, appendix V, section 2.l(c). Thus, to support the approval CARB

was required in December 2002 toprovide evidence that the District had the necessary legal authority under State law to implement Rules 2020 and 2201, which purported to require permitsand offsets for all agricultural sources. CARB could nob have C done so because CH&SC section 42310(e), applicable at that time, continued to preclude such authority under State law with respect to all agricultural sources. Nonetheless, we proposed to fully approve Rules 2020 and 2201 on February 13, 2003,with the expectation that the California legislaturewould act to remove CH&SC section 42310(e)'s exemption for agricultural sources thereby aligning

/ Rule 2020 with District authority under State law. 68 FR 7330

(Feb. 13, 2003). While the legislature did act shortly thereafter to remove the exemption formajor agricultural sources and major modifications at existing major agricultural sources, the legislature also retained the exemption from permitting for certainminor agricultural sources, leaving the words of Rule 2020 broader than the District's authority under State law. The legislature also exempted minor agricultural sources from obtaining offsetspending a determination that emissions reductions from such sources meet certain criteria, leaving Rule 2201, on its face, also at odds with State law. As noted above, on May 17, 2004, EPA took final action to approve District Rules 2020 and 2201, as proposed in February 2003. See 69 FR 27837 (May 17, 2004). We now understand that our final approval action on Rules 2020 and 2201 should have ensured that the authority in those rules was consistent with the1 13 authority granted by SB 700. At that time, since the ~istrict had made no findings to broaden (above50percent of the major source threshold) or narrow the permitting exemption (below50percent of the major source threshold), as allowed under SB 700 and now codified in CH&SC sections 42301.16(b) and (c),the permitting exemption provided by State law applied to minor agricultural

sourceswith actual emissions less than 50percent of the major source threshold, Thus, we should have limited our approval of Rule 2020 to exclude applicability to agricultural sources exempt from new source permitting under SB 700 (i.e.,minor sources with actual emissions less than 50percent of the major source threshold). Our approval of Rule 2201 should have been limited to provisions requiring offsets for major agricultural sources, because at the time, the District had not found emissions reductions from agricultural sources to meet the criteria for real, permanent, quantifiable, and enforceable emissions reductions and thus did not invoke the authority otherwise provided in SB 700 (and codified in CH&SC section 42301.18(c)) to impose an offset requirement on new or modified minor agricultural sources. Given that California submitted a copy of SB 700 in November 2003, we had information indicating that the District did not have the authority to implement Rules 2020 and2201 to the extent that the language of the rule appeared to allow (i,e,, to require permits and offsets from all new or14 modified agricultural sources, including those exempt under SB 700) prior to the time we took final action. We should have limited our approval of Rules 2020 and 2201 to conform with SB 700, and promulgated language in 40CFR part.52 codifying that limitation on our approval. We note that recent enforcement actions have been brought pursuant to the CAA's citizen suit provisions against minor agricultural sources in the District that have emissions less than 50percent of themajor source threshold for failure to apply for and receive a new or modified source permit. The District, however, does not have the authority under State law to issue such permits. The fact that such cases are being brought persuasively supports the need to correct our error in approving Rules 2020 and'2201in 2004. Therefore, pursuant to CAA section 110(k)(6), we are proposing to correct our error by limiting our approval of Rules 2020 and 2201 to apply only to the extent the District has authority under state law to require permits and offsets. Specifically, with respect to agricultural sources, we are approving Rule 2020 only to the extent it applies to agricultural sources subject to permitting under SB 700. Also and again with respect to agricultural sources, we are approving Rule 2201 only to the extent it requires offsets for new major sources and major modifications until certain criteria set forth in state law aremet. To codify this proposed error correction, we are proposing the following language to be added as a new section, 52.245, of 40 CFR part 52, subpart F ("California"): 52.245 New Source Review Rules (a)Approval of the,NewSource Review rules for the San JoaquinqValleyUnified Air Pollution Control District Rules 2020 and 2201 as approved May 17, 2004, is limited, as it relates to agricultural sources, to apply the permit requirement only (1)to agricultural sources with potential emissions at or above a major source applicability threshold and (2)to agricultural sources with actual emissions at or above 50percent of amajor source applicability threshold. The offset requirement, as it relates to agricultural sources, does not apply to new minor agricultural sources and minor modifications to agricultural sources. In section IV of this document, we are proposing a limited approval/limited disapproval on subsequent submittals of District Rules 2020 and 2201 that carry forward the agricultural-sourcerelated provisions for which we proposed action in February 2008, but that reflect subsequent additional changes made by the District to the rules. If we finalize this action, as proposed, we intend to codify the above language to clarify the status of affected sources that were constructed or were modified during the period extending from the effective date of our February 2004final rule e., June 16, 2004) through the effective date of our action on revised District Rules 2020 and 2201 as described in 'section IV of this document. 111. The State's Submittals of Revised District Rules A. What rules did the State submit? Table 1 lists the rules on which we are proposing action in this document with the dates that they were revised by the District and submitted to EPA by CARB.

\. TABLE 1.--SUBMITTEDRULES

On April 17, 2008, we found that the submittal of District Rule 2020met the completeness criteria in 40 CFR part 51 appendix 

### V, which must be met before formal EPA review. OnApril 20, 2009, we found the submittal of District Rules 2201 and 2530 to be complete. Local Agency
SJVUAPCD

SJVUAPCD

SJVUAPCD

B. Are there other versions of these rules? As discussed above, we approved a version of Rule 2020 into the SIP on May 17, 2004 (69FR 27837)

### . On December 29, 2006, CARB submitted an amended version of District Rule 2020. On December Rule #

2020

2201

2530 Rule Title Exemptions

New and Modified Stationary Source Review Rule Federally Enforceable Potential to Emit Amended
12/20/07

12/18/08

12i18/08 Submitted

03/07/08

03/17/09

03/17/0917 20, 2007, the District adopted further amendments to Rule 2020, and CARB submitted the further amended rule to us on March 7, 2008. The revision to District Rule 2020 that CARB submitted on December 29, 2006 was carried forwardwith the version that was submitted on March 7, 2008 and for which we propose action today. We also approved a version of Rule 2201 into the SIP on May 17, 2004 (69FR 27837). Since our May 2004 approval of Rule 2201 into the SIP, the District has amended the rule on four occasions. One of those amendments added paragraph 4.6.9 to the rule. On December 29, 2006, CARB submitted only paragraph 4.6.9 from District Rule 2201 to EPA. On December 18, 2008, the District adopted the latest amendments to Rule 2201. On March 17, 2009, CARB submitted this latest version of District Rule 2201 to

us. This latest version of District Rule 2020 that CARB submitted

on March 17, 2009 carries forward with it all of the changes, including new paragraph 4.6.9, that the District has made in the rule since our May 2004 approval. Prior to our 2004 approval of Rules 2020 and 2201, the SJVUAPCD portion of the California SIP included a broad exemption from permitting for all agricultural sources, citing CH&SC section 42310(e). See section 4.0 of District Rule 2020, as amended on September 17, 1998, submitted on October 27, 1998, and approved on July 19, 2001 at 66 FR 37587. Lastly, we approved a version of Rule 2530 into the SIP on18 April 26, 1996 (61FR 18500). Since EPA's 1996 approval of Rule 2530 into the SIP, the District has amended Rule 2530 twice, once

onApril 25, 2002 and then again on December 18, 2008. On March 17, 2009, CARB submitted this latest version of District Rule 2530 to us, and it includes all amendments to the rule by the District to date.

Section 110(a) of the CAA requires states to submit regulations that control volatile organic compounds, nitrogen oxides, particulate matter, and other air pollutants which harm human health and the environment. Permitting rules were developed

as part of the local air district's programs to control these pollutants. The purpose of District Rule 2020 ("Exemptions") is to specify emission units that are not required to obtain an Authority to Construct or Permit to Operate. Rule 2020 also specifies the recordkeeping requirements to verify such exemptions and outlines the compliance schedule for emission units that lose the exemption. Relative to the version of Rule 2020 that is approved into the SIP, the changeswould revise and clarify certain exemptions and conform the rule to existing state law by explicitly exempting certain agricultural sources from permitting requirements. Specifically, the changes in District Rule 2020would: Revise the existing exemption for steam generators, steam superheaters, water boilers, water heaters, steam cleaners, and closed indirect heat transfer systems that have a maximum input heat rating of fivemillion Btu per hour or less and that are fired exclusively on natural gas or liquefied petroleum gas (LPG) (seeparagraph 6.1.1 of the submitted rule). The existing exemption is limited to the types of equipment described above but also establishes the following specifications for both natural gas and LPG combusted by the equipment: "provided the fuel contains no

more than five percent by weight hydrocarbons 

## ...and no

more than 0.75 grains of total sulfur per 100 standard cubic feet of gas

## ...

## ."The revised exemption would establish separate specifications for natural gas and for LPG. The hydrocarbon content limit would remain five percent for natural gas but would drop to two percent for LPG. The sulfur content limit would increase from 0.75 grains, to 1.0 grain for natural gas, and to 15 grains (per100 standard cubic feet of gas). The revised exemption would require use of the latest versions of the relevant ASTM test methods. Clarify and tighten the existing exemption for certain types of transfer equipment, such as loading and unloading racks, and equipment used exclusively for the transfer of refined20 lubricating oil (seeparagraph 6.7 of the submitted rule). Specifically, with respect to crude oil, the existing exemption establishes a limiting specification in terms of specific gravity, and the revised exemption would add a second limiting specification in terms of True Vapor Pressure (TVP)and would establish certain test methods for determining the TVP of crude oil; and Conform District permit requirements to State law by explicitly exempting agricultural sources to the extent such

sources are exempt pursuant to CH&SC section 42301.16 (see paragraph 6.20 of the submitted rule). Section 42301.16(a) requires local air permittin'gauthorities to require permits for agricultural sources subject to the requirements of title I or title V of the federal Clean Air Act. Section 42301,16(b)similarly requires permits for all agricultural

sources unless specified findings are made at a public hearing or except as provided in section 42301.16(c). Section 42301.16(c) requires the District tomake specified findings at a public hearing prior to requiring permits for agricultural sources with emissions that are less than onehalf of any major source threshold. The net effect of this section is that all agricultural sources with actual emissions or a potential to emit at or above a major source applicability threshold are required to obtain a Districtpermit pursuant to CH&SC section 42301.16(a).Agricultural

sources with actual emissions at or above 50percent of a major source applicability threshold are required to obtain a District permit, unless the Districtmakes the findings specified by subsection (b).No permits are required for agricultural sources with actual emissions of less than 50 percent of anymajor source applicability thresholds, unless the District makes the findings specified in subsection (c), subject to the limitation in CH&SC section 42301(a). Thepurpose of District Rule 2201 ("Newand Modified Stationary Source Review Rule") is toprovide for the review of

new and modified stationary sources of air pollution and to provide mechanisms including emission trade-offs by which Authorities to Construct such sourcesmay be granted, without interfering with the attainment or maintenance of ambient air quality standards. District Rule 2201 is also intended toprovide for no net increase in emissions above specified thresholds from

new and modified stationary sources of all nonattainment pollutants and their precursors. Key features of District Rule 2201 include: Best Available Control Technology (BACT)': mandates emission controls to minimize emission increases above deminimis values.

While the District uses the term BACT as the level of control required, aEmission offsets: requires emissions above specified offset threshold levels to be mitigated with either concurrent reductions or past reductions which have been banked as emission reduction credits (ERCs). Public notification: a 30 or 45 day notice period prior to issuance of an Authority to Construct (ATC)to accept comments on projects that result in emissions above specified levels. Required elements for Authority to Construct, Permit to Operate and administrative requirements for processing NSR applications. As submitted on March 17, 2009, District Rule 2201 incorporates three major changes relative to the version of Rule 2201 that is approved into the SIP. First, amended District Rule 2201 would replace the term, "Major Modification," with two terms, "Federal major modification" and "SB 288 major modification." (See paragraphs 3.17 and 3.34 of the amended rule.) The former term incorporates EPArsNSR reform principles, and the latter term retains the pre-NSR reform approach to determining whether amodification is a major modification. Second, amended District Rule 2201 would incorporate the lower "major source" and "Federal major modification" emissions thresholds, and higher offset ratios, for the ozone precursors,

review of the definition has shown that it is equivalent to the requirements23 VOC and NO,, consistent with an "extreme" ozone classification.

(Seeparagraphs 3.17, 3.23, and 3.34 of the amended rule). Lastly, changes to District Rule 2201 would conform the rule to existing state law by exempting new ormodified agricultural

sources from offset requirements, unless the offsets are required by federal CAA requirements. (Seeparagraph 4.6.9 of the amended rule.) Other changes in amended Rule 2201 would: Tighten one of the conditions that qualify a replacement of "any article, machine, equipment, or other contrivance" as a "Routine Replacement;" the existing rule requires that such

a replacement, among other conditions, not result in an increase in permitting emissions from the "stationary source,"whereas, the modified definition of the term "routine replacement" requires no such increase from the "replacement unit(s) (seeparagraph 3.33.1 of the amended rule); Expressly extend the existing emission offset exemption for portable equipment to equipment registered in accordance with the provisions of District Rule 2250 (Permit-Exempt Equipment Registration) (see paragraph 4.6.3 of the amended rule). The existing exemption covers portable equipment registered under District Rule 2280 (Portable Equipment

for federal LAER.24 Registration) or under the Statewide Portable Equipment Registration Program. Existing District Rule 2020provides a permitting exemption for portable emissions units covered by

a valid registration under the above registration programs "or other equipment registration program approved by the APCO." District Rule 2250 is such a program, and thus, portable equipment registered under District Rule 2250 are exempt, not just from the emission offset requirement, but also from the requirement for a permit. However, the District expressly added a reference to equipment registered under District Rule 2250 in the emission offset exemption portion of Rule 2201 to provide consistency with similar exemptions for portable equipment and to avoid confusion; and Provide for a lower offset ratio (from 1.5 to 1.2) in the event EPA approves a demonstration that all existing major

sources of VOC and NO, in the San Joaquin Valley are equipped with BACT as defined in CAA section 169(3) (see paragraph 4.8.2 of the amended rule).This change amends the SIP to add the lower offset ratio provision contained in CAA section 182(e)(1).The lower offset ratio referred to in paragraph 4.8.2 has no current effect, because the required demonstration has not been submitted to EPA. Moreover, EPA would be reviewing any such demonstration,most likely as a25 SIP revision, and that review would include a review for compliance with the relevant statutory provision in CAA section 182(e)(1). Unlike District Rules 2020 and 2201, District Rule 2530 ("Federally Enforceable Potential to Emit") is not anNSR rule, but is a rule that relies on thresholds based on certain percentages of the major source thresholds established forNSR purposes as a basis to exempt sources from the requirements of Rule 2520 ("Federally Mandated Operating Permits"). Relative to the corresponding rule in the existing SIP, the amended rule would lower the thresholds below which sources of VOC orNO, are exempt from the requirements of Rule 2520 (seeparagraph 6.1 of the amended rule), would lower the thresholds below which sources
are exempt from certain recordkeeping and reporting requirements under Rule 2530 (seeparagraph 5.4.1.2 of the amended rule); and would lower certain alternative operational limits (see,e-g., paragraph 6.2.4 of the amended rule). IV. EPA1sEvaluation andAction 

### on the Rule Revisions

The rules that are the subject of this proposed action amend rules that EPA has previously approved as meeting the statutory and regulatory requirements for SIPS regarding minor NSR, major nonattainment NSR, and enforceability of permit conditions. Therefore, we have focused our review on the changes in the rules2 6 relative to the versions of the rules in the existing SIP to ensure the amended rules continue tomeet the applicable requirements, taking into account that, in some instances, such

as the "major source" threshold requirement, the applicable requirements have changed since we last acted on these rules. The relevant statutory provisions for our review of the submitted rules include CAA section 110(a),section 110(1), and section 182(e) and (f).Section 110(a) requires that SIP rules be enforceable, while section 110(1)precludes EPA approval of SIP revisions that would interfere with any applicable requirement concerning attainment and reasonable furtherprogress or any other applicable requirement of the Act. Section 182(e) (together with section 182(f)for NO,), requiresNSR SIPS in "extreme" nonattainment areas to define "major sources" in terms of 10 tons per year of VOC or NO,, to lower the threshold for "major modifications" to zero, and to increase the offset ratio to 1.5 to 1. In addition,we have reviewed the submitted rules for compliance with EPA implementing regulations for NSR, including 40 CFR 51.160 through 40 CFR 51.165. B. Do the rulesmeet the evaluation criteria? 1. Regulatory Context Other than rule clarifications and other minor revisions, the changes to the District's rules that are the subject of this action fall into four broad categories: changes affecting minor27

source NSR permitting requirements; changes relating to the area's extreme classification for the 1-hour ozone standard; changes relating toNSR Reform; and changes affecting the mechanism used by sources to avoid title V requirements. First, however, toprovide the proper context for evaluating the submitted changes in the District's rules, it is important to consider the designations and plan status for the valley with respect to the relevant national ambient air quality standards. Area designations for California are set forth in 40CFR 81.305 and shown in table 2,below. As shown in table 2, the San Joaquin Valley Air Basin is designated "nonattainment" for'the 1997 8- hour ozone standard. With respect toparticulate matter, the valley is designat'ed"attainment" for PMl0and "nonattainment" for PM2.5. TABLE 2.--SAN JOAQUIN VALLEY AREA DESIGNATIONS

Pollutant (Revoked) Ozone - 1-hour standard

Ozone - 1997 8- hour standard Respirable Particulate Matter (PMlo) Fine Particulate Matter (PM2.5) Carbon Monoxide Designation Nonattainment

Nonattainment Attainment

Nonattainment Attainment (4urban areas); Unclassifiable/ Attainment (restof valley) Classification Extreme (atthe time of designation for the 1997 8-hour ozone standard) seriousa Not Applicable

Not Applicable Not ApplicableAs to ozone, the valley is classified as a "serious" ozone nonattainment area for the 1997 8-hour ozone standard, but the State of California has requested reclassification of the area to "extreme." See 74 FR 43654 (August27, 2009)

### . The designation of

an area as "nonattainment" triggers certain SIP planning requirements, and on November 16, 2007, the State of California responded to those requirements by submitting the San Joaquin Valley 2008 Ozone Plan to EPA as a revision to the California SIP. EPA has not yet acted on the plan. Significantly, because,

as a general matter, the SIP requirements that applied by virtue of an area's classification for the now-revoked 1-hour ozone standard continue to apply to an 8-hour ozone nonattainment area,

we note that the San Joaquin Valley was designated as an "extreme" nonattainment area for the 1-hour ozone standard at the time of designation for the 8-hour ozone standard. Recently, EPA approved the San Joaquin Valley 2004 Ozone Plan, which had been developed to address the SIP requirements for "extreme" areas for the 1-hour ozone standard. As to PMlo,in 2008, EPA approved a redesignation request Nitrogen Dioxide Sulfur Dioxide

a The State of California has requested reclassification of the San Joaquin Valley to "extreme" for the 1997 8-hour ozone standard. See 74 FR 43654 (August27, 2009). Unclassifiable/Attainment Unclassifiable/Attainment Not Applicable Not Applicable29 for the area from "nonattainment" to "attainment".for the PMlo standard and also approved the San Joaquin Valley 2007 PMlo Maintenance Plan as a revision to the California SIP. See 73 FR 66759 (November 12, 2008). As to PM2.5,in 2005, EPA designated th'e valley "nonattainment" for the 1997 PM2.5standards. In response, on June 30, 2008, the State of California submitted the San Joaquin Valley 2008 PM2.5Plan as a revision to the California SIP. EPA has not yet taken action on the plan. More recently, EPA designated the valley as nonattainment for themore stringent 24- hour PM2.5 standard promulgated by EPA in 2006. See 74 FR 58688 (November 13, 2009)(Air Quality Designations for the 2006 PM2.5 NAAQS)

## . With respect to carbonmonoxide, the valley, outside of four urban areas, is designated as "unclassifiable/attainment." Bakersfield, Fresno,Modesto, and Stockton, the four urban areas where violations of the carbon monoxide standard had been monitored during the 1970's and 1980rs,were redesignated from "nonattainment" to "attainment" in 1998. Lastly, the valley is designated as unclassifiable or attainment for the nitrogen dioxide and sulfur dioxide standards. 2. Minor Source NSR Permitting Requirements a. General Considerations The amended ruleswould affect minor source NSR ("minor30 NSR") by revising an e2isting permitting exemption for certain natural-gas- or LPG-fired combustion and heat transfer systems

(seeparagraph 6.1 in submitted District Rule 2020), by exempting minor agricultural sources with emissions less than 50 percent of 

### - the major source threshold (seeparagraph 6.20 in submitted District Rule 2020) from permitting, and by exempting all new or modified minor agricultural sources from the offset requirement

(seeparagraph 4.6.9 of submitted District Rule 2201). The requirements in 40 CFR 51.160 ("Legallyenforceable procedures"), subsections (a)and (e)provide the basis for evaluating exemptions from NSR permitting. The basic purpose of NSR permitting is set forth in 40 CFR 51.160(a). Section 51.160(a)requires NSR SIPS to set forth legally enforceable procedures that enable the State or local agency to determine whether the construction or modification of a stationary source would result in a violation of applicable portions of the control strategy; or would result in interference with attainment or maintenance of a national standard in the State in which the proposed source ormodification is located or in a neighboring state. Section 51.160(e)provides that the procedures must identify types and sizes of stationary sources,which will be subject to review. We view this provision as allowing a State to exempt certain types and sizes of stationary sources so long as the prpgram continues to serve the purposes outlined in 40 CFR31 51.160(a). Thus, the revised exemption for certain natural gas or LPG-fired boilers, and the exemption from permitting for nonmajor agricultural sources whose actual emissions (excluding fugitive dust) are less than 50 percent of the major source thresholds are approvable so long as theminor source permitting program (i.e.,including the exemption) continues to provide the necessary information to allow the District to determine whether

new or modified stationary sourceswould result in a violation of applicable portions of the control strategyor would result in interference with attainment or maintenance of a national standard. In other words, exemptions are approvable if it can be shown that it is not necessary to review exempt sources in order tomeet the purposes of 40 CFR 51.160(a). Under 40 CFR 51.160, the District has discretion in conducting its minor source permitting program to exempt certain small sources and, under federal law,minor sources are not required to obtain offsets. Congress directed the States to exercise the primary responsibility under the CAA to tailor air quality control measures, includingminor source permitting programs, to the State's needs. See Train

### v. NRDC, 421 U.S. 60, 79 (1975)(Statesmake theprimary decisions over how to achieve CAA requirements); Union Electric Co. 

### v. EPA, 427 U.S. 246

(1976);Greenbaum

### v. EPA, 370 F.3d 527 (6thCir. 2006). b. Analysis32 With respect to certain smaller combustion and heat transfer systems (steam generators,water boilers, etc.), amended Rule 2020 revises the existing permitting exemption in paragraph 6.1.1 of the rule by providing separate fuel specifications for natural gas and LPG for those types of equipment eligible for the exemption. The hydrocarbon specificationwould remain unchanged for natural gas but would be tightened for LPG from fivepercent to two percent (byweight). With respect to sulfur content, the fuel specificationwould be relaxed from 0.75 grains (of total sulfur per 100 standard cubic feet of gas) to 1.0 grain (for natural gas) and 15 grains (for LPG). Theoretically, the effect of this change would be that certain combustion and heat transfer systems, that otherwise would be coveredby the permit requirement, would avoid NSR, and would not be subject to the applicable controls, such as BACT and offsets, thereby resulting in emissions increases thatmay ormay not be accounted for in regional plans intended to attain ormaintain the national standards. In response to a query from EPA concerning potential emissions impacts in the relaxation of the sulfur content specifications, the District explained how, notwithstanding the permitting exemption, certainprohibitory rules, such as Rule 4308 (Boilers, Steam Generators, and Process Heaters 0.075 to 2 MMBtu/hr) and Rule 4307 (Boilers,Steam Generators, and Process

### Heaters 2 to 5MMBtu/hr) would still apply. See the District's November 13, 2009memorandum, which we have placed in the docket for this rulemaking.Moreover, the District explained how, even if the BACT requirement were triggered by a source that otherwise would be exempt due to the relaxed sulfur content specification, BACT for emissions of sulfur oxides has historically been the use of LPG or natural gas,which is already a precondition for application of the exemption in the firstplace.1° We find the District's explanation sufficient to find that the relaxed sulfur content specification in amended Rule 2020, paragraph 6.1,would have no significant impact on emissions in thevalley. In evaluating the limited permitting exemption for agricultural sources for consistency with 40 CFR 51.160(a), EPA is taking into account the specificpollutants emitted from agricultural operations, relevant non-permitting requirements, and regional air qualityplans. First, California law defines "agricultural source" as a source of air pollution or group of

sources used in Che production of crops or the raising of fowl or animals located on contiguous property under common ownership or control that is a confined animal facility (e.g.,barn, corral, coop); is an internal combustion engineused in the production of crops or the raising of fowl or animals (e.g., irrigation pumps, but excluding nonroad vehicles such as tractors); or is a 

### titleV

If, inthe future, use of natural gas orLPG no longer represents BACT for

### source or is a source tha'tis otherwise subject to regulationby a district or the federal CleanAir Act. See CH&SC section 39011.5. As such, agricultural sources includeboth combustion

sources (such as, internal combustion engines and boilers) and non-combustion sources [e.g.,confined animal facilities and onand off-field vehicular activity (e.g.,tilling and harvesting)]. f 

### Among the non-combustion agricultural sources, someby their nature generate fugitive emissions such a tilling, harvesting, and vehicle travel over unpaved farm roads. Agricultural sources, as described above, emit volatile organic compounds (VOC),oxides of nitrogen (NO,), particulate matter (PMlo and PM2.5) 

### , and carbonmonoxide. As precursors for ozone, PMloand PM2.5,emissions ofNO, andVOC from agricultural

sources are not a local concernbut are logically evaluated from the standpoint of regional air qualityplanning efforts. Direct PMlo and PM2.5are both of local and regional concern and thus our evaluationmust consider both the potential for local exceedances of the standard due to the exemption, and for inconsistencywith regional control strategies for thesepollutants. Carbon monoxide is typically a pollutant of localized concern, and emissions of carbon monoxide from exempt agricultural sourceswould not be significant given the rural location of agricultural sites, which

are well away from the urban centers and high traffic densities

sulfur emissions, then this exemptionmay need to be re-evaluated.

### 35 historically associated with high ambient concentrations of carbonmonoxide in the valley, and the long record.ofattainment of the carbonmonoxide standard even within the urban centers of the va1le.y.A pollutant-specific evaluation of the exemption for particulate matter and ozone isprovided in the following paragraphs. ParticulateMatter. With respect to PMloand PM2.5,paragraph 6.20 of amended Rule 2020 would exempt agricultural operations with emissions up to 50 tons per year (assuming that 100 tons per year is the current applicable major source threshold based on the valley's current area designations for PMloand PM2.5).This ( 

### threshold value, however, excludes fugitive dust, and thus, the permitting exemptionwould extend to agricultural sources with overall actual emissions of PMloand PM2.5greater than 50 tons per year. Without application of some types of control measures,
we would have no basis to categorically concludethat such

sources would under no reasonably foreseeablecircumstances cause

or contribute to an exceedance of the PMlo or PM2.5 standard. However, because the District has adopted other rules that

serve to control the fugitivedust emissions from agricultural -sources,including those that would not require a permit due to the exemption in amended District Rule 2020, paragraph 6.20, we believethe exemption canbe approved consistent with 40 CFR 51.160 (a)and (e)

# . Specifically, District Rule 4550

### ("Conservation Management Practices") and the Districtf s Regulation VIII ("FugitivePMloProhibitions", particularly, Rules 8011 and 8081) act as non-permitting means to reduce fugitive dust emissions at agricultural sources that fall under the exemption and reduce the potential for localized exceedances of the PMloand PM2.5standards. As explained further below, as a general matter, District Rule 4550 covers on-field agricultural operations and is implemented through an applicationand District approval process, whereasbDistrictRules 8011 and 8081 cover offfield agricultural operations and are implemented as prohibitory rules. District Rule 4550 ("ConservationManagement .Practicesu) applies to agricultural operation sites locatedwithin the San JoaquinValley Air Basin and is intended to limit fugitivedust emissions from such sites. EPA approved Rule 4550 and associated List of ConservationManagement Practices (CMP List) into the California'SIPin 2006. See 71 FR 7683 (February14, 2006). Under the rule, an owner/operatormust implement the applicable CMPs 

### '

. 

### selected pursuant to section 6.2 (one CMP from the CMP list for each of the applicable CMP categories for each agricultural parcel of an agricultural operation site). An owner/operatormust prepare and submit a CMPApplication for each agric;ultural operation site to theAPCO for approval. A CMP Application approved by the APCO constitutes a CMP Plan, and owner/operators

### must implement the CMPs as contained in the CMP Plan. Exemptions in District Rule 4550 include agricultural operation siteswhere the total acreage of all agricultural parcels is less than 100 acres and exemptsAnimal Feeding Operations (AFOs)involving less than a certain number of animals: less than 500 mature dairy cows, less than 190 cattle, less than 55,000 turkeys, less than 125,000 chickens (otherthan laying hens), or less than 82,000 laying hens. The District's staff report on Rule 4550 (datedAugust 19, 2004) concludes that Rule 4550 (withits 100-acre exemption level) will apply to approximately 91percent of all irrigated farmland .inthe SJV. The District also estimated emissions from 100-acre farms to determine the emission impact of an exemption. District staff analyzed different commoditiesand determined that PMloemissions would be quite low for smaller farms, less than 1 ton per'year. See 71 FR 7683, at 7685 (February14, 2006). The District also

, 

### calculated the emissions impact of the size-based exemptions for animal feeding operations. Rule 4550 is expected to apply to 73% of dairy cows, 94% of feedlot cattle, and nearly all poultry operations in the valley. The District also determined that any sites qualifying for- the size-based cut-offs would have emissions no greater than 1 ton per year. See 71 FR 7683, at 7685 (February

. 

### 14, 2006). Such small farmswould not be expected to cause or contribute to localized exceedances of the PMloor PM2.5 standard.

### The Districtfs Regulation VIII ("Fugitive PMlo Prohibitions") is intended to reduce ambient concentrations of PMloby requiring actions to prevent, reduce ormitigate anthropogenic fugitivedust emissions frdm specified outdoor fugitive dust sources.Rule 8011 establishes generally applicable definitions, exemptions, requirements,administrative \ 

### requirements, recordkeeping requirements, and test methods under RegulationVIII. Rule 8081 ("Agricultural Sources") establishes specific requirements for off-field agricultural sources. EPA, approved RegulationVIII, including Rules 8011 and 8081, into the Cal'iforniaSIP in 2003 (68FR 8830, February 26, 2003) and approved RegulationVIII amendments into the ~alifornia SIP in 2006 (71FR 8461, February 17, 2006). District Rule 8081 applies to off-field agricultural ' 

### sources,which includes any agricultural source that meets the definition of: outdoor handling, storage and transport of bulk material; paved road;unpaved road; or unpaved vehicle/equipment traffic area. Under Rule 8081, an owner/operatormust " 

### sufficiently implement at least one of the control measures indicated in the rule to limit visible dust emissions (VDE)to 20% opacity or to stabilize the affected surface consistent with the requirements in Rule 8011. Together, implementation of the fugitivedust controlmeasures required under District Rule 4550 and Rules 8011 and 8081 provide EPA with a reasonable basis to

### conclude that agriculturaloperations that escape permitting under paragraph 6.20 of amended District Rule 2020would not cause or contribute to an exceedance of the PMloor PM2.5 standard. With respect to the regionalplanning context,we have reviewed the various approved and submitted San Joaquin Valley attainment ormaintenance plans cited above, and note that none of these plans rely upon NSR for agricultural sources less than 50percent of themajor source threshold. Further, for attainment - 

### planning purposes, growth in emissions from agricultural sources has been established by CARBfsarea source inventory growth methodologies, and no mitigation of that growth from an offsets requirement has been considered when determining the impact of the growth on the District's ability to achieve attainmentwith the standards.'' In contrast, emissions reductions from the prohibitory rules affecting agricultural sources, discussed above, are taken into account in the plan inventory projections. Because the plans do not rely on emission reductions from permitting of agricultural sources less than 50% of themajor

source threshold and not rely on offsets for new or modified minor agricultural sources, approval of the amended Rules 2020 and 2201 would be consistent with regionalplanning efforts to

11Also see the District's Clean Air Act section 110(1)analysis, entitled "San JoaquinValley Unified Air Pollution Control District Rules 2020 and 2201, as amended September 21, 2006, District's CleanAir Act 110(1) Analysis," dated November 20, 2007.

### attain and maintain theNAAQS.

? 

### Ozone. With respect to ozone precursors (VOCAND NO,), paragraph 6.20 of amended District Rule 2020would exempt agricultural operationswith "actual" emissions (i.e.,including fugitive

### emission^)^^ of less than 5 tonsper year based on an applicable major source threshold of 10 tonsper year.As such, the scope of the exemption therefore is limited to small-scale agricultural operations and is acceptable so long as the ozone plans for the valley do not count on permitting of such sources. As noted above, the regionalplans do not rely on emission reductions frompermitting of agricultural sources less than 50% of themajor source threshold nor do the plans rely on offsets for new or modified minor agricultural sources.13 

## '' The District's view on the whether CH&SC section 42301.16 (and cited in District Rule 2020, section 6.20) covers fugitive VOC emissions is found in the District's Final Staff Report (pageB-13, response to comment #19) on proposed amendments to Rule 2201 and Rule 2530 (dated December 18, 2008): "The District appreciates the opportunity to reiterate that, for the purposes of implementing CH&SC sections 40724.6(c) and 42301.16(c),all emissions, except for fugitive dust, must be included in calculations to determine district permitting requirements based on one-half of the major source thresholds. The statutory language of these sections is consistent,which read separately or in the interrelated nature in'whichthey were intended tobe read, and [sic] District's implementation adheres to this statutory language." Thus, fugitive VOC emissions are'includedin the determination of whether actual emissions from a minor agricultural operation are greater than 50% of the applicable major source threshold which, for VOC, is 10 tons per year, or, in ocher words, greater than 5 tons per year. l3Like fugitive dust and District Rules 4550, 8011, and 8081, emissions of NO, from certain types of equipment found at agricultural sources, such as boilers and internal combustion engines, are coveredby District prohibitory rules regardless of whether a given agricultural source is subject topermitting. Two such rules include District Rules 4308 and 4702. SIP-approved District Rule 4308 ("Boilers, Steam Generators, and ProcessHeaters") limit NO, emissions from boilers between 75,000Btu/hour and 2 million Btu/hour. See 72 FR 29886 (May 30, 2007). SIP-approvedDistrict Rule 4702 ("InternalCombustion Engines - Phase 2") limitsNO,, VOC, and carbon monoxide from internal combustion engines with rated brake horsepower greater than 50horsepower. See

### 3. 

### "Extreme" Ozone Area NSR Requirements Themost recent version of the District's NSR rules that EPA has approved-into.the SIPwas adopted by the District on December 19, 2002. Since that time, with respect to major sourcesand

, \ 

### major modifications, there have been two significant regulatory changes affecting the NSR rules in San Joaquin Valley: (1)EPAfs approval of t.heState of California's request to reclassify the San JoaquinValley to "extreme" for the 1-hour ozone standard, and (2)EPAfspromulgation of NSR Reform Rules. EPA approved the State of California's request to reclassify the San JoaquinValley to "extreme" for the 1-hour ozone standard in 2004. See 69 FR 20550 (April16, 2004). In doing so, EPA established a deadline of May 16, 2005 for submittal of revised DistrictNSR rules that reflect the requirements for "extreme" ozone nonattainment areas. For such areas, the relevant NSR requirements include a major source threshold of 10 tons per year of VOC or NOx [see CAA section 182(e)and 182(f)and 51.165(a)(1)(iv) 

### 1, the offset ratio is 1.5 to 1 [see CAA section 182:(e)(1)and 40CFR 51.165(a) (9) 

### 1, and any change at amajor stationary source which results in any increase in emissions from any discrete operation,unit, or other pollutant emitting activity at the source is considered amajor modification [see

73 FR 1819 (January 10, 2008). Such prohibitory rules further reduce the 'chance that agricultural sources that would be exempt from permitting under District Rule 2020, paragraph 4.6.9, might interfere with attainment or maintenance of the national standards.

### 42 CAA section 182 (e) (2)and 40 CFR 51.165(a) (1)(x)

### (E) ]

# . These NSR SIP requirementswill also apply once

### we approve the State of California's request to reclassify San JoaquinValley to "extreme" for the 8-hour ozone standard. As submitted on March 17, 2009, the VOC and NO, provisions in District Rule 2201 have been amended to include the 10 tonper year threshold (seesection 3.23 of amended Rule 2201), the 1.5

, 

### to 1 offset ratio (seesection 4.8.1 of amendedRule 2201), and the "any increase" threshold for major modifications (see 3.17.1.4 of amended Rule 2201). As such, District Rule 2201 has 

## - / 

### adequately been amended to reflect "extreme" ozone area r~quirements under the CAA and 40CFR 51.165. 4. EPA's NSR Reform Rules On December 31, 2002 (67FR 80186), EPA published final rule changes to 40CFR parts 51 and 52, regarding the CAAfsPSD and Nonattainment NSR programs relating tomajor sources and major modifications. On November 7, 2003 (68FR 63021),EPA published a notice of final action on the reconsideration of the December 31, 2002 final rule changes. The December 31, 2002, and the November 7, 2003, final actions are collectively referred to as the "2002 NSR Reform Rules." Thepurpose of this action is to propose to approve the SIP submittal from the State of California that includes rule changesmade as a result of EPAfs2002NSR Reform Rules.The 2002 NSR Reform Rules made changes to five areas of the NSR programs. In summary, the 2002Rules: (1)Provide a new method for determining baseline actual emissions; (2)adopt an actual-to-projected-actualmethodology for determining whether a major modification has occurred; (3) allow major stationary

sources to-complywith PlantwideApplicability Limitations (PALS) to avoid having a significant emissions increase that triggers the requirements of the major NSR program; (4)provided a new applicability provision for emissions units that are designated clean units; and (5)excludedpollution control projects (PCPs) from the definition of "physical change or change in the method of operation." On November 7, 2003 (68FR 63021), EPA published a notice of final action on its reconsiderationof the 2002 NSR

I Reform Rules, which added a definition for "replacement unit" and \ clarified an issue r.egardingPALS. For additional information on the 2002 NSR Reform Rules, see, 67 FR 80186 (December 31, 2002), and http://www.epa.yov/nsr. After the 2002NSR Reform Rules were finalized and effective (March 3, 2003), industry, state and environmental petitioners
3 challenged numerous aspects of the 2002 NSR Reform Rules, along with portions of EPAfs 1980NSR Rules (45FR 52676, August 7, 1980). On June 24, 2005, the United States Court of Appeals for the District of Columbia (D.C.Circuit Court) issued a decision

on the challenges to the 2002NSR Reform Rules. 

### New York 

### v.

### United States, 413 F.3d 3 (D.C.Cir..2005). In summary, the D.C.. Circuit Court vacated portions of the rules pertaining to clean units and PCPs, remanded a portion of the rules regarding recordkeeping and the term "reasonable possibility" found in 40 CFR 52.21(r) (6)and 40 CFR 51.166(r)(6),and either upheld or did not comment on the other provisions included as part of the 2002 NSR Reform Rules. On June 13, 2007 (72FR 32526), EPA took final action to revise the 2002 NSR Reform Rules to remove from federal - 

### law all provisions pertaining to clean units and the PCP exemption that were vacated by the D.C. Circuit Court. With regard to the remandedportions of the 2002 NSR Reform Rules related to recordkeeping,on December 21, 2007, EPA took final action to establish that a "reasonable possibility" applieswhere

source emissions equal or exceed 50 percent of the CAA NSR significant levels for any pollutant (72FR 72607). The "reasonablepossibility" provision identifies for sources and reviewing authorities the circumstancesunder which a major stationary source undergoing amodification that does not trigger major NSR must keep records. The 2002NSR Reform Rules require that states adopt and submit revisions to their SIP permitting programs implementing the minimum program elements of the 2002 NSR Reform Rules no later than January 2, 2006. State agencies may meet the \ 

### requirements of 40 CFR part 51 and the 2002NSR Reform Rules with

### different but equivalent regulations. As submitted on March 17, 2009, District Rule 2201 has been amended to provide for theminimum program elements of the 2002 NSR Reform Rules that remain in the wake of subsequent litigation and EPA rulemaking. The amended rule provides for the minimum program elements by replacinga singledefinition for "Major Modification" with two definitions, one for "Federal Major Modification" and the other for "SB 288 Major Modification." The former term captures the NSR Reform program elements (and the "any increase" emissions threshold required in "extreme" ozone areas), while the latter retains the pre-Reform approach to determining major modification status. Section 3.17.1 incorporates the new method for determining baseline actual emissions and the actual-to-projected-actual methodology for determining whether 

### a major modification has occurred. Section 3.17.2 incorporatesprovisions allowing major stationary sources to comply with PALS.Amended District Rule 2201 avoids any issue concerning potential SIP relaxations due to these changes, because, consistent with State law (SB288), the District retained the pre-reform requirements.The net effect of these changes are that the Districtwill now perform two separate major modification determinations,one to determine if the project will result in a SB 288 Major Modification and the other to determine if it will result in a Federal Major Modification. Under the

### revised rule, amodification of an existing stationary source would be required at a minimum tomeet the NSR SIP requirements that had applied prior to adoptionby the District of the 2002 NSR Reforms into Rule 2201, and may have to meet additionalNSR requirements if the modification is determined to be a Federal Major Modification. 5. Other Changes to District Rules 2020 and 2201 - 

### As described in section 1II.C of thisdocument, the District has made a number of changes to their NSR.Rules (i-e.,Rules 2020 and 2201) not directly related to fuel specifications, .agriculturalsources, "extreme" area requirements, or NSR Reform. These changes include clarification and tightening of an existing exemption for certain types of transfer equipment and equipment used exclusively for the transfer of refined lubricating oil (see paragraph 6.7 

### of amended Rule 2020); tightening of one of the conditions that qualify a replacement of equipment as "routine replacement" (seeparagraph 3.33.1 of amended Rule 2201); clarificat.ionof the scope of an existing emission offset exempti,on for portable equipment (seeparagraph 4.6.3 of amended Rule 2201); and provision for a lower offset ratio if and when EPA makes the necessary findings under CAA section 182(e)(1) (see paragraph 4.8.2 of amended Rule 2210).We find these changes to either be neutral or strengthening relative to the existing SIP and consistentwith all applicable requirements.6. Enforceability Considerations For the reasons given above, we find the amendments to District Rules 2020 and 2201 to be acceptable under applicable NSR regulations;however, SIP rulesmust also be enforceable [see CAA section 110(a)], and we find two specificdeficiencies related to enforceability of Rules 2020 and 2201 that prevent our full approval. These deficiencies arise from the ambiguity introduced by the references in both paragraph 6.20 (of Rule 2020) and paragraph 4.6.9 (ofRule 2201) to State law under circumstanceswhere the State law has not been submitted to EPA for approval into the SIP. Specifically, paragraph 6.20 (of Rule 2020) provides a permitting exemption for: "Agricultural sources, but only to the extent provided by California Health and Safety Code, Section 42301.16." In turn, CH&SC section 42301.16 requires districts to extend permitting requirements to all agricultural sources that are "major" under the CAA and to all "minor" agricultural sources with actual emissions one-half of the applicable major source emissions thresholds (or greater) for any air contaminant,but excluding fugitive dust. However, subsection

(b)of CH&SC section 42301.16 provides a means through which a district can extend the exemption from "one-half of any applicable emissions threshold" to the "major source" threshold if certain findings are made in a public hearing. Because CH&SC section 42301.16 is not included in the

### 48 , 

### California SIP, nor has California submitted the section to EPA , 

### for approval, the SIPwould be ambiguous as to the extent of the agricultural source permitting exemption if EPA were to approve submitted District Rule 2020 into the SIP. Effective enforcement of the permitting requirementswould rely on judicial notice of the statutory provision cited in the rule, and such judicial noticemay or may not be forthcoming. There is no need to rely on judicial notice when the District can eliminate the ambiguity by clearly stating the exemption for agricultural sources in District Rule 2020 or by submittingCH&SC section 42301.16 to EPA for approval into the SIP. Moreover, even if we could assume that judicial notice of the statutoryprovision would be taken, CH&SC section 42301.16by its terms allows for a relaxation of the onehalf ofmajor source permitting threshold for agricultural sources, and such relaxations should be reviewedby EPA under section 110 for approval as a SIP revision. Therefore, we are proposing a limited approval and limited disapproval of submitted Rule 2020.

\ 

### Paragraph 4.6.9 of submittedRule 2201 contains a similarlyambiguous reference to state law in listing emission offset exemptions: "Agricultural sources, to the extent provided by California Health and Safety Code, section 42301.18(c), except that nothing in this section shall circumvent the requirements of section 42301(a)." CH&SC section 42301.18(c) states: "A district

### may not require an agricultural source to obtain emissions' offsets for criteria pollutants for that source if emissions i 

### reductions from that sourcewould not meet the criteria for real, permanent, quantifiable, and enforceable emission reductions." Our understanding is that the District has noplans to require emissions offsets for new or modified agricultural sources unless such new or modified source is a "Major Source" or a "Federal Major Modification" as defined in another section of Rule 2201. Once again, there is no need for ambiguity in the applicability of the emissions offset exemption, and therefore, EPAis proposin'ga limited approval and limited disapproval of submitted Rule 2201. ) 7. 

### Federally EnforceablgRestriction on Potential to Emit District ~ule 2530 establishes limits to restrict the PTE of

a stationary source so that the sourcemay be exempt from the District's rule implementing Title V 

### operating permit requirements. The emission limits in section 6.1 of District Rule 2530 are intended to represent 50% of the applicable major source threshold.'14With the change in the valley's ozone classification to "extreme" for the 1-hour ozone standard, and the corresponding

-- 14 The approach in District Rule 2530 of establishing emission limits and alternative operational limits that are intended to represent percentages of the applicablemajor source threshold (50%for emission limits and 808 for alternative operational limits), as a mechanism to allow sources to avoid titleV permitting requirements, is consistent with EPA guidance on this subject as set forth in amemorandum dated January 25, 1995 from John S. Seitz, Director, Office of Air Quality Planning and Standards, titled, "Options for Limiting the Potential to Emit (PTE)of a Stationary SourceUnderlowering of the applicablemajor source threshold from 25 tons per year to 10 tons per year, it follows that the District has amended Rule 2530 to change the corresponding emission limit in section 6.1 to 5 tons per year of VOC or NO,, tomaintain the emission limit at 50% of the applicablemajor source threshold. Other emissions thresholds in District Rule 2530, such as those for exemptions from recordkeepingand reporting (20%of applicablemajor source threshold) and from reporting (25%of applicablemajor source threshold)have also been reduced accordingly. Certain alternative operational limits in section 6.2 of the rule, which were intended to allow sources using these types of limits to go up to 80% of the major source threshold (in actual emissions),were changed accordinglybut certain other limits in 

### I section 6.2were left unchanged or were changed by a lesser proportion. The District explained how the values that were not revised downwards inproportion to the drop in the major source thresholdmet the underlying purpose of the provision allowing alternative operational limits, i.e., allowing certain types of sources to go up to 80% of themajor source threshold (inactual emissions). For instance, the alterna,tiveoperational limit of 

# - 7,000,000 gallons per year of gasoline dispensed at gasoline dispensing facilitieswith phase 

### I and I1 vapor recovery systems,

Section 112andTitleV of theCleanAirAct (Act)."

### 51

as set forth inparagraph 6.2.1 of Rule 2530, was left unchanged because it still iswell below the.80% (of 10 tonsper year) threshold for underground storage tanks (16.9million gallons per year) and for above ground storage tanks (12.2 million gallons per year). See Districtmemorandum on Rule 2530 (datedDecember 18, 2009), which we have placed in the docket. Therefore,we find the changes to District Rule 2530 to be acceptable, and we propose to approve amended District Rule 2530,

as submitted on Marcli 17, 2009, as a revision to the California SIP. 8. CAA Section 110(1) The only remaining issue is whether this SIP revisionwould interfere with requirements'concerning attainment and reasonable further progress (orany other applicable CAA requirement)as set forth in CAA section 110(1).CAA section 110(1)provides: "Each revision to an implementationplan submittedby a State under this chapter shallbe adopted by such State after reasonable notice and pudlic hearing. The administrator shall not approve a revision of a plan if the revisionwould interfere with any applicable requirement concerning attainment and reasonable further progress (asdefined in section 7501 of this title) or any other applicable requirement of this chapter." 42U.S.C. 5 

### 7410(1) 

## . For the purposes of CAA section 110(1),we take into account

### the overall effect of the revisions included in this action. Given the wide application of the lowermajor source thresholds to all-typesof new ormodified stationary sources ofVOC and NO, and the limited extent of the exemptions frompermitting and offsets for certain types of agricultural sources,we find that the overall effect of the revisionswould strengthen the SIP, notwithstanding deficiencies identified above in enforceability. Moreover, we do not anticipate localized exceedances of the PMlo

or PM2.5 standards, due to thepermitting exemption for certain agricultural sources, given the application of non-permitting requirements in the SIP. Lastly,we note that the revisions are consistentwith the assumptions of the various air quality plans developed for the valley. Accordingly, we conclude that the revisions to Rules 2020, 2201, and 2530, if approved, would not interferewith any applicable requirements for attainment and reasonable further

I-- 

### progress or any other applicable requirement of the CAA 

### and are approvable under section 110(1). 9. 

### Conclusion and ProposedAction on Submitted Rules For the reasons given above, under CAA section 110(k)(2)and 301(a),we are proposing a limited approval and limited disapproval of amended Rules 2020 and 2201 because, although they would strengthen the SIP andmeet all but one of the applicable requirements for SIPs in general and NSR SIPs inparticular, theycontain certain deficiencies related to enforceability that prevent our full approval. The deficiency in Rule 2020 can be remedied by the District by revision of Rule 2020 by replacing the statutory .referenceto CH&SC section 42301.16 in paragraph 6.'20with a clear description of the sources covered by the exemption. The deficiency in Rule 2201 can be remedied by either submittal of the statutory provisions cited in paragraph 4.6.9 or by replacement of the references with a clear description of the applicability of the offset requirement to agricultural sources. For amended Rule 2530, we are proposing a full approval because we find that it has been appropriatelymodified to reflect the decrease in themajor source threshold forVOC and NOxconsistent with the area's "extreme" classification for the 1-hour ozone standard. V. Deletion of Obsolete Conditions on SIPApprovals In the 19801s,EPA placed conditions, including conditions related to NSR, on approvals of certain California nonattainment plans. As to certain San JoaquinValley plans, EPA approved the plans on the condition that the State of California submit revised NSR rules for the individual county-basedAir Pollution Control ~istricts(APCDs),then having jurisdiction in San Joaquin Valley, as revisions to the California SIP. These NSRrelated conditions are identified in table 

### 3,below, by applicable county, EPA action, and CFR citation. ,'

### 54 On September 23, 1999, in an actionproposing approval of previous versions of District Rules 2020 and 2201 (later supercededby a proposed rule published on September 28, 2000), we proposed to remove these conditions. See 64 FR 51493, at 51494

(September 23, 1999). Specifically,we proposed to delete the conditions set forth in 40CFR 52.232(a)(5)(i)(A), (a)(6)(i)(A),

- 

### (a)(10)(i)(A)

### , and (a)(11)(i)(A). In our September 1999proposed rule, we noted that the conditions required theprior county-basedAPCDs (nowcombined to form the San JoaquinValley Unified Air Pollution Control ~istrict)'~ to submit regulations consistent with EPA regulations that were current at the time the conditionswere established in 1981, 1982, and 1985. We also noted that the conditions aremoot today because the District has submitted revised NSR rules (i.e., Rules 2020 and 2201) that comply with EPAfscurrent regulations and the Clean Air Act, as amended in 1990. However, we did not include the removal of these obsolete NSR-related conditions in the subsequent final rule on May 17, 2004 (69FR 27837) fully approving the District's NSR rules, i.e., District Rules 2020 and

TABLE 3.--OBSOLETE CONDITIONS PROPOSED FOR DELETION



## "Kern County ACPD, one of the original county-based APCDs covering San Joaquin Valley, was not entirely consolidated into the current unified District, but its jurisdiction is no longer county-wide, and is limited to the eastern portion of the county.In today's document, we are addressing the same provisions in 40 CFR 52.232 as our 1999proposed rule, but we are not proposing exactly the same action as before. Today, we recognize that the condition in 40 CFR 52.232(a)(5)(i)(A)is obsolete as to Regulatory citation 40 CFR 52.232(a)(5)(i)(A) 40 CFR 52.232(a)(6)(i)

### (A)

40 CFR 52.232(a)(10)(i)(A)

J

40 CFR 52.232(a)(11)(i)(A) County 

# ern Countya

San Joaquin County Kings, Madera, Merced, Stanislaus, and Tulare Counties Fresno County

carbonmonoxide and ozone in light of the approval of District NSR rules in 2004 (69FR 27837,.May 17, 2004), the change in the a In today's document, we are proposing to remove the Kern County condition for carbon monoxide and ozone only. Conditional Approval Federal Register Citation 46 FR 42450 '(August 21, 1981) 47 FR 19694 (May7,' 1982), amended at 50 FR 7591 (~ebruary 25, 1985) 47 FR 19694 (May7, 1982)

47 FR 28617 (July1, 1982)

boundary for the l-hour ozone nonattainment boundary for San

. L Joaquin Valley (66FR 56476,November 8, 2001), and the redesignation of the East Kern County l-hour ozone nonattainment

area to attainment (69FR 21731,April 22, 2004). However, as to particulate matter, we find the condition to be unfulfilled because the Kern County APCD retains jurisdiction over a small portion of the San JoaquinValley planning area, the portion of

### the San JoaquinValley planning area over which Kern County APCD retains jurisdiction remains nonattainment for PM-10 (see73 FR 66759, November 12, 2008), and because we have yet to approve a revision to Kern CountyAPCD NSR ruLes that meet the condition in 40 CFR 52.232 (a) (5)(i)(A)

# . Therefore,we propose to amend 40 CFR 52.232(a)(5) (i) to remove the references to carbonmonoxide and

ozone only. We will retain the condition as to particulate matter <untilwe approve the Kern CountyAPCDfsnonattainment'~~~ rules for the East Kern County PMlononattainment area or until we approve a redesignationrequest for the East Kern PMlO area to "attainment." 

### We are also proposing to remove the conditions set forth in 40CFR 52.232 (a)(6)

### (i)(A), (a)(10)(i)

### (A).,and (a)(11)(i)(A) 

### as obsolete in light of the approval of District NSR rules in 2004

(69FR 27837, May 17, 2004).I6 

### Unlike Kern Co.unty,the counties subject to the conditions in 40 CFR 52.232(a)(6), (lo),and (11)

(i.e., San Joaquin, Kings, Madera, Merced, Stanislaus, Tulare, and Fresno) all lie entirely within District jurisdiction. If we finalize this aspect of this action as proposed, we will be \ 

### removing and reserving 40 CFR 52.232(a)(6), (a)(lo),and (a) (11) because the conditionsproposed for removal are the last conditions on approval that remain.

l6 The condition establish in 40 CFR 52.232(a)(11)also relates toVentura County, but removal of the condition is proper as toVentura County in light of EPA1ssubsequent approval of the Ventura County nonattainment NSR rules at 68 FR 9561 (February 28, 2003).

### VI. Proposed Action and Opportunity for Public Comment 

### For the reasons set forth above,we are proposing to correct \

### a previous approval of San JoaquinValley District NSR rules,

Rule 2020 ("Exemptions") and Rule 2210 ("Newand Modified Stationary Source Review Rule"), to approve amended District Rule 2530 ("Federally Enforceable Potential to Emit"), and to take a limited approval and limited approval action for amended District NSR Rules 2020 and 2201. More specifically,we areproposing to correct our May 2004 final approval of revisions to the San Joaquin Valley Unified Air Pollution Control District portion of the California State Implementation Plan under section 110(k)(6)of the Clean Air Act. We do so because, by virtue of information submittedby California to us in November 2003, we should have limitedour approval consistent with the legal authority provided in State law to air districts to permit, and require offsets for, new or modified agricultural sources. To correct our error, we are proposing the following language to be added as a new section, 52,245, of 40 CFR part 52, subpart F ("California"): 

### 52.245 New Source Review Rules (a)Approval of the New SourceReview rules for the San JoaquinValley Unified Air Pollution Control District Rules 2020 and 2201 as approvedMay 17, 2004, is limited, as it relates to agricultural sources, to apply the permitrequirement only (1) to agricultural sources with potential emissions at or above a major source applicability threshold and (2)to agricultural sourceswith actual emissions at or

, above 50percent of amajor source applicability threshold. The offset requirement, as it relates to agricultural sources, does not apply to new minor agricultural sources and minor modifications to agricultural sources. Under 

### CAA sections 110(k)(2)and 301(a),we are proposing a limited approval and limited disapproval of amended D-istrict Rules 2020 and 2201, as submitted on March 7, 2008 and March 17, 2009, respectively. The amended District Rules 2020 and 2201 would establish an exemption frompermitting, and from offsets, for certain minor agricultural operations, would establish applicability thresholds (for major sources and major modifications) and offset thresholds consistent with a classification of "extreme" for the ozone standard, and would implement NSR Reform. We are proposing a limited approval and limited disapproval, because, although the amended rulesmeet most of the applicable requirementsand strengthen the 

### SIP, they contain unacceptably ambiguous references to statutory provisions. With respect to amended District Rule 2530, as submitted on March 17, 2009, we are proposing full approval because we find that it has been appropriatelymodified to reflect the decrease

### in themajor source threshold forVOC and NO, consistent with an "extreme" classification. Lastly, EPA is proposing to rescind conditions placed on 1980's era approvals by EPA onvarious nonattainmentplans submitted by California for-theSan JoaquinValley that have become obsolete by EPA approval of subsequent revisions to the District's NSR rules. Therefore,we propose to amend 40 CFR 52.232(a)(5)(i) to remove the references to carbon monoxide and ' 

### ozone and to remove and reserve 40 CFR 52.232(a)(6), 

### .(a)(lo),and

If EPA were to finalize the limited approval and limited disapproval action, asproposed, then a sanctions clock, and EPAfsobligation to promulgate a Federal implementation plan, would be triggered because the revisions to the District rules for which a limited approval and limited disapproval is proposed

2 

### are required under anti-backsliding principles established for the transition from the 1-hour to the 8-hour ozone standard. We will accept comments from the public on this proposal for the next 30days. VII. Statutory and Executive Order Reviews A. Executive Order 

### 12866,Regulatory Planninq and Review 

### The Office of Management and Budget (OMB)has exempted this regulatory action from Executive Order 12866, entitled "Regulatory Planning and Review."B. Paperwork ReductionAct 

### This proposed action does not impose an information collection burden under theprovisions of the Paperwork Reduction Act, 44 

### U.S.C. 3501 et seq. Burden is defined at 5 

### CFR 1320.3(b). C. Regulatory Flexibility Act 

### The Regulatory FlexibilityAct (RFA)generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rulewill not have a significant economic impact on a substantialnumber of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. Thisproposed rule will not have a significant impact on a substantial number of small entities because SIP approvals under

- - - - --- - - - - 

### section 110 and subchapter I, part D of the Clean Air Act do not create any new requirementsbut simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities. Moyeover, due to the nature of the Federal-State relationshipunder the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness o$

### State action. The Clean Air Act forbids EPA to

### base its actions concerning SIPS on such grounds. Union Electric CO., V. U.S. EPA, 42.7U.S. 246, 255-66 L(1976);42U.S.C. 7410(a)

D. UnfundedMandates ReformAct 

### Under sections 202 of the Unfunded Mandates Reform Act of 1995 ("UnfundedMandatesAct"), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federalmandate - 

### that may result in estimated costs to State, local, or tribal governments in the aggregate; or to the private sector, of $100 < 

### million or more. Under section 205, EPAmust select themost cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments thatmay be significantly or uniquely impactedby the rule. EPA has determined that theproposed action does not include a Federalmandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This Federal action proposes to approve pre-existing requirementsunder State or local law, and imposes no n.ewrequirements.Accordingly,no 

### . additional costs to State, local, or tribal governments, or to the private sector, result from this action.E. Executive Order 13132, Federalism 

### Federalism (64FR 43255,Aug~st 10, 1999) revokes and replaces Executive Orders 12612 (Federalism)and 12875 (Enhancing the IntergovernmentalPartnership). Executive Order 13132 requires EPA to develop an accountable process to ensure "meaningful and timely inputby State and local officials in the

i development of regulatory policies that have federalism implications." "Policies that have federalism implications" is defined in the Executive Order to include regulations that have "substantial direct effects on the States, on the relationship between the national government and the States,.or on the distribution of power and responsibilities among the various levels of government." Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not requiredby statute, unless the Federal government provides the funds necessary topay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA alsomay not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation. This proposed rule will not have,substantial direct'effects

### 63

on the States, on the relationship between the national i 

### government and the states, or on the distribution ofpower and , / 

### responsibilities among the various levels of government, as specified in Executive Order 13132,because itmerely proposes to approve a State rule implementinga Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the CleanAir Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule. F. Executive Order 

### 13175,Coordinationwith Indian Tribal Governments 

### Executive Order 13175, entitled "Consultation and Coordination with Indian Tribal Governments" (65FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure "meaningful and timely input by tribal officials in the development of regulatory policies thet hive tribal implications." This proposed rule does not have tribal

- 

### implications, as specified in Executive Order 13175. It will not have substantial direct effects on tribal governments, on the relationship between the Federal governmept and Indian tribes, or
on the distribution ofpower and'responsibilities between the Federal government and Indian tribes. Thus, Executive Order 13175

p 

### does not apply to this rule. G. Executive Order 

### 13045, Protection of Children from

### 64 EnvironmentalHealthRisks and SafetyRisks 

### EPA interprets Executive Order 13045 (62FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045, because it proposes to approve a State rule implementing a Federal standard. 

### H. - Executive Order 

### 13211,Actions that SignificantlyAffect Energy Supply,Distqibution,or Use 

### This rule is not subject to Executive Order 13211, "Actions Concerning Regulations That SignificantlyAffect Energy Supply, Distribution, or Use" (66FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866. I. National Technology Transfer andAdvancementAct 

### Sectian 12 of the National Technology Transfer and Advancement Act (NTTAA)of 1995 requires 'Federalagencies to evaluate existing technical standards when developing a new regulation. To complywith NTTAA, EPA must consider and use "voluntary consensus standards" (VCS)if available and applicable when developing programs and policies unless doing sowould be

4 

### inconsistent with applicable law or otherwise impractical. The EPA believes that VCS are inapplicable to this action. Today's proposed action does not require the public to performactivities conduciveto the use ofVCS. Listof Subjectsin40 CFR Part52 Environmental protection, Air pollution control, Intergovernmental relations, Ozone,.Particulatematter, Reporting and recordkeeping requirements. 

### /*%/* 

## zo/o Dated:

~egion 

### IX.