```

[Federal Register Volume 81, Number 156 (Friday, August 12, 2016)]
[Rules and Regulations]
[Pages 53300-53308]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-18903]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2015-0489; FRL-9950-19-Region 9]

Revision to the California State Implementation Plan; San Joaquin 
Valley; Demonstration of Creditable Emission Reductions From Economic 
Incentive Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is finalizing a 
limited approval and limited disapproval of a demonstration of 
creditable emission reductions submitted by California for approval 
into the San Joaquin Valley (SJV) portion of the California State 
Implementation Plan (SIP). This SIP submittal demonstrates that certain 
state incentive funding programs have achieved specified amounts of 
reductions in emissions of nitrogen oxides (NOX) and fine 
particulate matter (PM2.5) in the SJV area by 2014. The 
effect of this action would be to approve specific amounts of emission 
reductions for credit toward an emission reduction commitment in the 
California SIP. We are approving these emission reductions under the 
Clean Air Act (CAA or the Act).

DATES: This rule is effective on September 30, 2016.

ADDRESSES: The EPA has established docket number EPA-R09-OAR-2015-0489 
for this action. Generally, documents in the docket for this action are 
available electronically at http://www.regulations.gov or in hard copy 
at EPA Region IX, 75 Hawthorne Street, San Francisco, California 94105-
3901. While all documents in the docket are listed at http://www.regulations.gov, some information may be publicly available only at 
the hard copy location (e.g., copyrighted material, large maps, multi-
volume reports), and some may not be available in either location 
(e.g., confidential business information (CBI)). To inspect the hard 
copy materials, please schedule an appointment during normal business 
hours with the contact listed in the FOR FURTHER INFORMATION CONTACT 
section.

FOR FURTHER INFORMATION CONTACT: Idalia P[eacute]rez, EPA Region IX, 
(415) 972 3248, Perez.Idalia@epa.gov.

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and 
``our'' refer to the EPA.

Table of Contents

I. Proposed Action
II. Public Comments and EPA Responses
III. EPA Action
IV. Statutory and Executive Order Reviews

I. Proposed Action

    On August 24, 2015 (80 FR 51147), the EPA proposed to approve the 
``Report on Reductions Achieved from Incentive-based Emission Reduction 
Measures in the San Joaquin Valley'' (Emission Reduction Report) and, 
based on California's documentation therein of actions taken by 
grantees in accordance with the identified incentive program 
guidelines, to approve 7.8 tpd of NOX emission reductions 
and 0.2 tpd of PM2.5 emission reductions for credit toward 
the State's 2014 emission reduction commitments in its 2008 plan to 
provide for attainment of the 1997 PM2.5 National Ambient 
Air Quality Standards (NAAQS) in the San Joaquin Valley (hereafter 
``2008 PM2.5 Plan'').\1\ The California Air Resources Board 
(CARB) adopted the Emission Reduction Report on October 24, 2014 and 
submitted it to EPA as a revision to the California SIP on November 17, 
2014. We proposed to approve the Emission Reduction Report based on a 
determination that it satisfied the applicable CAA requirements. Our 
proposed action contains more information on the Emission Reduction 
Report and our evaluation.
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    \1\ The 2014 emission reduction commitments are codified at 40 
CFR 52.220(c)(356)(ii)(B)(2) and 52.220(c)(392)(ii)(A)(2). 76 FR 
69896, 69926 (November 9, 2011).
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II. Public Comments and EPA Responses

    The EPA's proposed action provided a 30-day public comment period. 
During this period, we received comments from Adenike Adeyeye, 
Earthjustice, by email dated and received September 16, 2015. The 
comments and our responses are summarized below.
    Comment 1: Earthjustice asserts that the emission reductions 
identified in the Emission Reduction Report are not enforceable by the 
public and therefore should not be approved into the SIP. According to 
Earthjustice, the Carl Moyer program allows air districts to enter into 
emission reduction agreements with grant recipients, with CARB added to 
contracts as a third party with enforcement rights, but does not enable 
the public to enforce these emission reduction agreements entered into 
among CARB, the air district, and the grant recipient. Earthjustice 
argues that the EPA's enforceability criteria require that citizens 
have access to all emissions-related information obtained from 
participating sources and be able to file suit against a responsible 
entity for violations, and that the Emission Reduction Report does not 
meet these criteria.
    Response 1: We agree with the commenter's statement that the public 
cannot enforce the agreements entered into among CARB, an air district 
and a grant recipient but disagree with the commenter's suggestion that 
this renders the Emission Reduction Report inconsistent with the EPA's 
enforceability criteria. This Emission Reduction Report was submitted 
to demonstrate that that a portion of the emission reductions required 
under a previously approved SIP commitment have in fact been achieved--
not to satisfy a future emission reduction requirement--and thus it 
does not need to provide a citizen enforcement mechanism.
    As we explained in our proposed rule, where a state relies on a 
discretionary economic incentive program (EIP) or other voluntary 
measure to satisfy an attainment planning requirement under the CAA 
(e.g., to demonstrate that specific amounts of emission reductions will 
occur by a future milestone date),

[[Page 53301]]

the state must take responsibility for assuring that SIP emission 
reduction requirements are met through an enforceable commitment, which 
becomes federally enforceable upon approval into the SIP. 80 FR 51147, 
51150. Thus, had CARB submitted the Emission Reduction Report to 
satisfy a future emission reduction requirement under the CAA, an 
enforceable state commitment to assure that the required emission 
reductions occur would be necessary to satisfy the Act's enforceability 
requirements. The purpose of the Emission Reduction Report, however, is 
to demonstrate that a portion of the emission reductions required under 
a previously-approved SIP commitment have in fact been achieved, not to 
satisfy a future emission reduction requirement. See id. at 51150-
51151. Accordingly, it is not necessary to require the State to submit, 
as part of this particular SIP submission, additional commitments to 
achieve future emission reductions.
    The EPA evaluated the Emission Reduction Report in accordance with 
the Agency's guidance on discretionary EIPs. See 80 FR 51147, 51149-50 
(citing, inter alia, U.S. EPA, ``Improving Air Quality with Economic 
Incentive Programs,'' January 2001 (hereafter ``2001 EIP Guidance'')). 
A discretionary EIP uses market-based strategies to encourage the 
reduction of emissions from stationary, area, and/or mobile sources in 
an efficient manner. See 2001 EIP Guidance at 3. To qualify for 
approval as a discretionary EIP, emission reductions or actions leading 
to reductions must be enforceable either by the State or by the EPA, 
and the State must be directly responsible for ensuring that program 
elements are implemented. See id. at 157-158 (states may use the 2001 
EIP Guidance where ``[a]ctions and/or emission reductions by 
identifiable sources are enforceable by [the State] and/or by the 
EPA'').
    A ``financial mechanism EIP'' is an EIP that indirectly reduces 
emissions by increasing costs for high emitting activities--e.g., 
through subsidies targeted at promoting pollution-reducing activities 
or products. See 2001 EIP Guidance at 119-122. The EPA has identified 
several attributes that may make subsidy financial mechanism EIPs 
successful, including: (1) The relevant governmental body possesses 
legal authority to provide subsidies; (2) the subsidies address 
activities reasonably related to actual emissions or potential 
emissions; (3) where projected emission reductions are based on changes 
in behavior, methods for verifying that such reductions have taken 
place to the degree projected are generally accepted as unbiased and 
trustworthy; and (4) if needed, adequate penalty provisions are in 
place to ensure that the subsidy is used as expected. See 2001 EIP 
Guidance at 27 (``Attributes That Make Subsidy Financial Mechanism EIPs 
Successful'').
    As explained further in Response 2 below, the portions of the 
Proposition 1B: Goods Movement Emission Reduction Program (Prop 1B 
program) and Carl Moyer Memorial Air Quality Standards Attainment 
Program (Carl Moyer Program) guidelines discussed in the Emission 
Reduction Report are consistent with the EPA's recommendations for 
``financial mechanism EIPs'' in the 2001 EIP Guidance. First, CARB and 
the District are directly responsible for ensuring that the Prop 1B 
program and Carl Moyer Program are implemented in accordance with State 
law. See 2010 Prop 1B guidelines at 1-4 (``Overview'') and 2011 Carl 
Moyer Program Guidelines at Chapter 1 (``Program Overview''). Second, 
the incentive programs discussed in the Emission Reduction Report 
address actions reasonably related to actual air pollutant emissions, 
e.g., by requiring grant recipients to purchase and operate newer, 
cleaner vehicles or equipment in place of older, more-polluting 
vehicles or equipment, subject to detailed contract requirements. 
Third, the relevant portions of the 2008 and 2010 Prop 1B guidelines 
and the 2005, 2008 and 2011 Carl Moyer Program Guidelines establish a 
number of methods for verifying that projected emission reductions have 
taken place through compliance with the terms and conditions of each 
funding contract. Finally, under the applicable guidelines, actions by 
grantees that lead to emission reductions are directly enforceable by 
the State and/or the District--e.g., CARB and/or the District may 
assess fiscal penalties and take certain corrective actions where 
contract violations are identified. Consistent with the EPA's 
recommendations for ``financial mechanisms EIPs,'' these provisions in 
the 2008 and 2010 Prop 1B guidelines and the 2005, 2008 and 2011 Carl 
Moyer Program Guidelines are adequate to ensure that program funds are 
used as expected--i.e., to reduce emissions from higher-polluting 
vehicles and equipment by replacing them with newer, lower-polluting 
equipment and vehicles. Based on our more detailed evaluations of 11 
randomly selected projects from among those listed in the Emission 
Reduction Report, we find that the projects identified in the Emission 
Reduction Report were implemented as required under the applicable 
program guidelines and achieved the emission reductions projected for 
those projects, with the exception of one source category. See Response 
2.
    In sum, although an enforceable state commitment would ordinarily 
be necessary for a SIP submission that relies on a discretionary EIP to 
satisfy CAA enforceability requirements, such a commitment is not 
necessary in this case because the Emission Reduction Report was not 
submitted to satisfy a future emission reduction requirement and, 
instead, demonstrates only that certain Prop 1B program and Carl Moyer 
Program incentive projects achieved specified amounts of emission 
reductions in the past. The portions of the Prop 1B program and Carl 
Moyer Program guidelines that apply to the identified incentive 
projects ensure that program funds are used as expected and that the 
EPA and citizens have access to all emissions-related information 
obtained from participating sources. Based on our review of the 
available project records for a subset of the projects identified in 
the Emission Reduction Report, we find that the identified projects 
achieved the necessary emission reductions, with the exception of one 
source category discussed further below. Therefore, it is not necessary 
for the Emission Reduction Report to provide a mechanism for citizen 
suits against a responsible entity.
    Comment 2: Earthjustice argues that, based on the information 
presented in the Emission Reduction Report, citizens cannot even obtain 
the information necessary to quantify and verify emission reductions. 
For example, Earthjustice states that the total project life for each 
stationary and portable farm engine funded through the Carl Moyer 
program varies from two years to ten years and that project life 
varies, in part, because emission reductions cannot be counted as 
surplus after the compliance date for a regulation applicable to that 
project. Earthjustice states that CARB is required to ensure that 
emission reductions from projects are no longer counted as SIP-
creditable emission reductions after that compliance date but argues 
that ``[n]either EPA nor the public has any way of knowing whether or 
not these projects were counted during only the years in which they 
were surplus because CARB does not provide enough information to 
determine a project's compliance date.''
    According to Earthjustice, to determine whether the stationary and 
portable farm engine projects were counted only for the years during 
which

[[Page 53302]]

they could be considered surplus, one would need to know: What type of 
engine was used as a replacement; the horsepower of the engine used as 
a replacement; tier of the original agricultural engine; and fleetwide 
particulate matter (PM) levels.
    Response 2: We disagree with the commenter's claim that citizens 
cannot obtain the information necessary to quantify and verify emission 
reductions. As we explained in the technical support document 
supporting our proposed rule and as explained in further detail below, 
the emission reductions identified in the Emission Reduction Report can 
be independently verified and the public has access to emissions-
related information due to several requirements in the 2008 and 2010 
Prop 1B guidelines and the 2005, 2008 and 2011 Carl Moyer Program 
guidelines. See U.S. EPA Region 9, Air Division, ``Technical Support 
Document for EPA's Notice of Proposed Rulemaking for the California 
State Implementation Plan, Report on Reductions Achieved from 
Incentive-Based Emission Reduction Measures in the San Joaquin 
Valley,'' August 2015 (``Proposal TSD'') at 7-15. We discuss the 
relevant guideline provisions in more detail below.
    First, actions required of grantees under the applicable portions 
of the Prop 1B and Carl Moyer Program guidelines are independently 
verifiable through (1) pre-project and post-project on-site inspections 
(with photographic documentation) that the District and/or CARB must 
carry out pursuant to the applicable guidelines, and (2) documents that 
each grantee is required to maintain and/or submit to the District in 
accordance with detailed contract provisions. See generally 2008 Prop 
1B guidelines at Section III.D (``Local Agency Project Implementation 
Requirements''), Section IV (``General Equipment Project 
Requirements''), and Appendix A, Section C (``Recordkeeping 
Requirements'') and Section D (``Annual Reporting Requirements''); 2010 
Prop 1B guidelines at Section IV.A (``Project Implementation 
Requirements''), Section VI (``General Equipment Project 
Requirements''), and Appendix A, Section F (``Recordkeeping 
Requirements'') and Section G (``Annual Reporting Requirements''); 2005 
Carl Moyer Guidelines, Part I, Chapter 2 (``Administration of the Carl 
Moyer Program''); 2008 Carl Moyer Guidelines, Part III (``Program 
Administration'') and 2011 Carl Moyer Program Guidelines, Part I, 
Chapter 3 (``Program Administration'').
    For example, the 2008 and 2010 Prop 1B guidelines require, among 
other things, that (1) all project applications include documentation 
of current equipment and activity information (e.g. engine make, model, 
horsepower and fuel type, annual vehicle miles of travel (VMT) in 
California, and estimated percentage of annual VMT in trade corridors); 
(2) that the District conduct a ``pre-inspection'' of each application 
deemed eligible for funding, to verify information regarding the 
baseline engine, vehicle, or equipment; (3) that the District conduct a 
``post-inspection'' of each funded project to record, among other 
things, identifiers and specifications for the new engine/equipment 
(e.g., Vehicle Identification Numbers (VIN) for new trucks, serial 
numbers for new engines), and verification that the new engine/
equipment is operational and consistent with the old/replaced 
equipment, where applicable; and (4) that the District's pre-inspection 
and post-inspection project files include photographic documentation of 
each piece of equipment being inspected, including an engine serial 
number, visible distinguishing identification (e.g., a license plate), 
and a full view of the equipment. See 2008 Prop 1B guidelines at 
Section III.D.8 (``Equipment project pre-inspections'), Section 
III.D.14 (``Equipment project post-inspections''), Section IV.D 
(``Equipment Project Application Requirements'') and Appendix A, 
Section F (``Application Information''); 2010 Prop 1B guidelines at 
Section IV.A.10 (``Equipment project pre-inspections''), Section 
IV.A.16 (``Equipment project post-inspections''), Section VI.D 
(``Equipment Project Application Requirements'') and Appendix A, 
Section F (``Application Information''); see also Proposal TSD at 14-
15.
    Similarly, the 2005, 2008 and 2011 Carl Moyer Program Guidelines 
require, among other things, that (1) all project applications include 
documentation of existing engine usage in previous years (e.g. miles 
traveled, hours operated, or fuel consumed per year); (2) that the 
District conduct a ``pre-inspection'' of each application deemed 
eligible for funding, to verify information regarding the baseline 
engine, vehicle, or equipment; (3) that the District conduct a ``post-
inspection'' of each funded project to record, among other things, 
information regarding the new engines, vehicles/equipment, and retrofit 
devices as needed to provide a basis for emission calculations and to 
ensure contract enforceability; and (4) that the District's pre-
inspection and post-project files include photographic documentation of 
the engine, vehicle, or equipment information, including a legible 
serial number and/or other identifying markings. See 2005 Carl Moyer 
Program Guidelines, Part I, Chapter 2 at Section V.D (``Project 
Applications''), Section IX.A (``Pre-Inspection''), and Section IX.B 
(``Post-Inspection''); 2008 Carl Moyer Program Guidelines, Part III, 
Part II at Section 26 (``Minimum Project Application Requirements''), 
Section 30 (``Project Pre-Inspections''), and Section 31 (``Post-
Inspection''); 2011 Carl Moyer Program Guidelines, Part I, Chapter 3, 
at Section W (``Minimum Project Application Requirements''), Section AA 
(``Project Pre-Inspection''), and Section BB (``Project Post-
Inspection''); see also Proposal TSD at 8-9.
    Second, the applicable portions of the 2008 and 2010 Prop 1B 
guidelines and the 2005, 2008 and 2011 Carl Moyer Program guidelines 
specifically define the required elements of each contract and the 
types of actions that constitute violations of such contracts. For 
example, under the 2008 and 2010 Prop 1B guidelines, each equipment 
project contract must include: (1) A unique ``tracking number''; (2) 
the equipment owner's contact information; (3) the original application 
submitted by the equipment owner; (4) requirements for the equipment 
owner to submit reports to the local agency annually or biennially; (5) 
the equipment owner's agreement to allow ongoing evaluations and audits 
of equipment and documentation by the District, CARB, or their 
designated representative(s); and (6) requirements for the equipment 
owner to retain all records pertaining to the program (i.e., invoices, 
contracts, and correspondence) for at least two years after the 
equipment project ends or three years after final payment, whichever is 
later. See 2008 Prop 1B guidelines at Section III.D.10 (``Equipment 
project contracts'') and 2010 Prop 1B guidelines at Section IV.A.11 
(``Equipment project contracts''); see also Proposal TSD at 14-15. 
Additionally, under the same guidelines, the following actions (among 
others) are specifically identified as contract violations: (1) Failure 
to meet the terms and conditions of an executed equipment project 
contract, including equipment operating conditions and geographic 
restrictions; (2) failure to allow for an electronic monitoring device 
or tampering with an installed device or data; (3) insufficient, 
incomplete, or faulty equipment project documentation; and (4) failure 
to provide required documentation or reports in a timely manner. See 
2008 Prop 1B guidelines at Section IV.G

[[Page 53303]]

(``Equipment Project Non-Performance'') and 2010 Prop 1B guidelines at 
VI.I (``Equipment Project Non-Performance''); see also Proposal TSD at 
14-15.
    Similarly, under the 2005, 2008 and 2011 Carl Moyer Program 
Guidelines, each equipment project contract must include: (1) The name 
and contact information of the grantee; (2) specified timeframes for 
``project completion'' (the date the project post-inspection confirms 
that the project has become operational) and ``project implementation'' 
(the project life used in the project cost-effectiveness calculation); 
(3) detailed information on both baseline and new vehicles, equipment, 
and/or engines, including documentation adequate to establish 
historical annual usage; (4) requirements for the grantee to maintain 
the vehicle, equipment and/or engine according to the manufacturer's 
specifications for the life of the project; (5) annual reporting 
requirements; (6) a provision authorizing the District, CARB, and their 
designees to conduct fiscal audits and to inspect the project engine, 
vehicle, and/or equipment and associated records during the contract 
term, and (7) requirements to maintain and retain project records for 
at least two years after contract expiration or three years after final 
project payment, whichever is later. See 2005 Carl Moyer Program 
Guidelines, Part I, Chapter 2 at Section VIII (``Minimum Contract 
Requirements''); 2008 Carl Moyer Program Guidelines, Part III, Part III 
at Section 29 (``Minimum Contract Requirements''); and 2011 Carl Moyer 
Program Guidelines, Part I, Chapter 3 at Section Z (``Minimum Contract 
Requirements''). Additionally, the 2011 Carl Moyer Program Guidelines 
explicitly require that each contract ``specify that by executing the 
contract, the grantee understands and agrees to operate the vehicle, 
equipment, and/or engine according to the terms of the contract'' and 
describe the potential repercussions to the grantee for non-compliance 
with contract requirements. See 2011 Carl Moyer Program Guidelines, 
Part I, Chapter 3 at Section Z.11 (``Repercussions for Non-
Performance'') and Section FF (``Nonperforming Projects''); see also 
2005 Carl Moyer Program Guidelines, Part I, Chapter 2 at Section VIII.G 
(``Repercussions for Nonperformance''); and 2008 Carl Moyer Program 
Guidelines, Part III, Part III at Section 35 (``Nonperforming 
Projects''). The 2011 Carl Moyer Program Guidelines also specifically 
identify types of actions on the part of the District that CARB may 
treat as violations of program requirements--e.g., misuse of Carl Moyer 
Program funds and insufficient, incomplete, or inaccurate project 
documentation. See 2011 Carl Moyer Program Guidelines at Section U 
(``Program Non-Performance'').
    Third, the applicable portions of the Prop 1B guidelines and Carl 
Moyer Program guidelines require that all grantees submit specific 
types of project records to the District and also require the District 
to maintain such records for specified periods of time. Specifically, 
as discussed above, under the 2008 Prop 1B guidelines, the 2010 Prop 1B 
guidelines, and the 2005, 2008 and 2011 Carl Moyer Program guidelines, 
each contract executed by the District must require the grantee to 
maintain project records for at least two years after contract 
expiration or three years after final project payment, whichever is 
later, and to submit annual or biennial reports to the District. See 
2008 Prop 1B guidelines at Section III.D.10 (``Equipment project 
contracts''), 2010 Prop 1B guidelines at Section IV.A.11 (``Equipment 
project contracts''), 2005 Carl Moyer Program Guidelines, Part I, 
Chapter 2 at Section VIII (``Minimum Contract Requirements''); 2008 
Carl Moyer Program Guidelines, Part III, Part III at Section 29 
(``Minimum Contract Requirements''); and 2011 Carl Moyer Program 
Guidelines, Part I, Chapter 3 at Section Z (``Minimum Contract 
Requirements''); see also Proposal TSD at 8-9 and 14-15. Additionally, 
the 2008 Prop 1B guidelines require the District to retain all 
``program records'' (e.g., invoices, contracts, and correspondence) for 
at least two years after the project ends or three years after final 
payment, whichever is later. See 2008 Prop 1B guidelines, Chapter II, 
Section D.10.b (``General Program provisions''). The 2010 Prop 1B 
guidelines require the District to retain ``program records'' for 35 
years after the bond issuance date providing the funds for the grant, 
or to send all records to CARB by the end date of the grant agreement. 
See 2010 Prop 1B guidelines, Chapter II, Section E.10.b (``General 
Program provisions''). Under the Carl Moyer Program Guidelines, the 
District must keep each ``project file'' for a minimum of two years 
after the end of the contract term or a minimum of three years after 
final payment, whichever is later. See 2011 Carl Moyer Program 
Guidelines, Chapter 3, Section V (``ARB Audit of Air Districts'') at 3-
25. A ``project file'' generally includes a copy of the application, a 
completed pre- and post-inspection form, and the annual reports 
submitted by the grantee. See id. at Section X.6, Section AA.4, Section 
BB.1.(G), and Section DD.3. These requirements of the Carl Moyer 
Program and Prop 1B guidelines ensure that grantees submit, and that 
the District maintains, project documents sufficient for the EPA and 
the public to verify the emission reductions attributed to these 
projects in the Emission Reduction Report.
    To demonstrate how the public can quantify and verify the emission 
reductions identified in the Emission Reduction Report, we randomly 
selected 0.5% of the projects in Appendix H of the Emission Reduction 
Report and requested that CARB provide to us the information necessary 
to verify the emission reduction calculations for these projects. From 
Appendix H.1, which lists the Carl Moyer projects included in the 
Emission Reduction Report, we randomly selected the projects identified 
in Table 1.

                                      Table 1--Selection of Carl Moyer Projects From the Emission Reduction Report
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                                                                                               Post
       Project No.           Carl Moyer      Source category           Technology           inspection     Project life      2014 NOX       2014 PM2.5
                           Guideline year                                                      date                            (tpy)           (tpy)
--------------------------------------------------------------------------------------------------------------------------------------------------------
G-0014-A.................            2008  Off-Road Equipment-- Retrofit................        12/28/10               5           0.000           0.018
                                            Construction.
S-1301...................            2005  Off-Road Equipment-- Repower.................        10/16/09               7           2.610           0.092
                                            Mobile                                              08/17/09               7           4.040           0.120
                                            Agricultural.
C-2570...................            2005  Stationary and       Repower.................        01/12/10              10           9.880           0.331
                                            Portable                                            01/12/10               5           7.070           0.129
                                            Agricultural
                                            Engines.

[[Page 53304]]

 
C-14205..................            2011  Stationary and       Repower.................        04/25/14              10           1.570           0.055
                                            Portable
                                            Agricultural
                                            Engines.
--------------------------------------------------------------------------------------------------------------------------------------------------------

    From Appendix H.2, which lists the Prop 1B Heavy Duty Diesel Truck 
Replacement projects included in the Emission Reduction Report, we 
randomly selected the projects identified in Table 2.

                    Table 2--Selection of Prop 1B Projects From the Emission Reduction Report
----------------------------------------------------------------------------------------------------------------
                                                                         Post-
       Equipment project ID             Prop 1B      Contract term    inspection       2014 NOX      2014 PM2.5
                                    Guideline year                       date          (lbs/yr)       (lbs/yr)
----------------------------------------------------------------------------------------------------------------
G08GMCT1_03079....................            2010               5        01/02/13    10281.31771    229.6259777
G08GMCT1_00642....................            2010               5        08/21/12     1724.9954     164.035448
G08GMCT1_02930....................            2010               5        07/25/13        0            0
G07GMCT3_01246....................            2008               5        06/01/10     8012.6276     235.703448
G07GMCT3_00301....................            2008               5        09/30/10      394.2153      22.0965876
G07GMCT3_00437....................            2008               5        01/01/11     3756.22742    110.4951004
G07GMCT3_00377....................            2008               5        03/04/11     2909.28645     92.691702
----------------------------------------------------------------------------------------------------------------

    We independently calculated the emission reductions for the 
selected projects using additional project information submitted by 
CARB at our request and found that the emission reduction calculations 
for all of the selected projects were replicable, with the exception of 
one project that was erroneously included in the Emission Reduction 
Report and accounted for 0 reductions. See U.S. EPA Region 9, 
Memorandum to File dated April 26, 2016, ``Sample emission reduction 
calculations for selected Carl Moyer and Prop 1B projects,'' Docket No. 
EPA-R09-OAR-2015-0489 and references therein. Additionally, at our 
request, CARB submitted the project application, grant agreement and 
documentation of destruction for one Carl Moyer Program project 
(Project Number C-2570, Stationary and Portable Agricultural Engines, 
Repower, 2005 Carl Moyer Guidelines) and one Prop 1B Program project 
(Equipment Project ID G07GMCT3_01246, Heavy Duty Diesel Truck 
Replacement, 2008 Prop 1B Guidelines). See email dated April 19, 2016, 
from Sylvia Vanderspek (CARB) to Jeanhee Hong (USEPA Region 9), 
including attachments. We evaluated the information contained in these 
project records to verify CARB's emission reduction calculations in the 
Emission Reduction Report.
    For Carl Moyer project C-2570, the project application contains 
information about the existing and new engine (including engine make, 
model year, horsepower, and tier), engine function and type (e.g., 
stationary or portable), the project life, the hours of operation, and 
percentage of usage in the San Joaquin Valley. See San Joaquin Unified 
Valley Air Pollution Control District (SJVUAPCD), Application C-2570, 
Heavy-Duty Engine Program Agricultural Pump Engine Component, Diesel 
Engine to Electric Motor Repower Option (``Carl Moyer Application C-
2570'') at section 2, section 3 and accompanying table (``For Internal 
Use Only'')).\2\ The project agreement, which is the contract between 
the grantee and the SJVUAPCD, includes a description of the engines, a 
requirement to destroy the existing engine, the duration of the terms 
of the agreement, annual reporting requirements, a noncompliance 
provision for reporting, and provisions concerning District audits. See 
SJVUAPCD, Agreement C-2570, Heavy-Duty Engine Emission Reduction 
Incentive Program Funding Agreement (Electric Agricultural Pump Motor 
Repower), July 30, 2009 (``Carl Moyer Agreement C-2570'') at section 2, 
section 3, section 5, section 6, and section 21. Finally, pre- and 
post-inspection monitoring reports for project C-2570 include 
photographic evidence of engine information and destruction of the old 
engine. See Heavy-Duty Program Monitoring Report, pre-inspection and 
post inspection, project number C-2570 (``Carl Moyer Monitoring Reports 
C-2570''). Consistent with the requirements of the 2005 Carl Moyer 
Program guidelines at Part I, chapter 2, sections V.D, VIII, and IX, 
these project records contain all of the information necessary to 
verify whether project C-2570 was implemented as required and achieved 
the emission reductions calculated for this project.
---------------------------------------------------------------------------

    \2\ Personal information has been redacted from each document 
for privacy reasons.
---------------------------------------------------------------------------

    Similarly, for Prop 1B project G07GMCT3_01246, the project 
application contains information about the existing and new engine 
(including engine make, model year, gross vehicle weight rating (GVWR), 
Vehicle Identification Number (VIN), and horsepower), the annual 
vehicle-miles-traveled (VMT) for both the existing and new engine, and 
percentage of usage in the San Joaquin Valley. See SJVUAPCD, 
Application P-0442,\3\ Proposition 1B: Good Movement Emission Reduction 
Program Component, Truck Replacement (``Prop 1B Application 
G07GMCT3_01246'') at sections 2-4.\4\ The project agreement, which is 
the contract between the grantee and the SJVUAPCD, includes a 
description of the existing and new engines, a requirement to destroy 
the existing engine, the duration of the terms of the

[[Page 53305]]

agreement, annual reporting requirements, nonperformance provisions, 
and provisions concerning District audits. See SJVUAPCD, Agreement P-
0442-A, Proposition 1B: Goods Movement Emission Reduction Program 
Funding Agreement (Truck Replacement), March 16, 2010 (``Prop 1B 
Agreement G07GMCT3_01246'') at sections 2, 3, 5, 6.F, 7, 12, and 23. 
Finally, post-inspection monitoring reports for project G07GMCT3_01246 
include photographic evidence of engine information and destruction of 
the old engine. See Proposition 1B Program Truck Replacement Option, 
Exist (Old) Truck Post-Monitoring Inspection, Project Number P-0442-A 
(``Prop 1B Monitoring Reports G07GMCT3_01246''). Consistent with the 
requirements of the 2008 Prop 1B Guidelines at sections III.D.10, 
III.D.14, IV.D and Appendix A, Section F, these project records contain 
all of the information necessary to verify whether Project 
G07GMCT3_01246 was implemented as required and achieved the emission 
reductions calculated for this project.
---------------------------------------------------------------------------

    \3\ These project documents are labeled with the District-only 
identification number ``P-0442.'' According to CARB, the Goods 
Movement Online Database (GMOD) includes both the District 
identifier (P-0442) and the CARB Equipment Project ID 
(G07GMCT3_01246). See email dated May 9, 2016, from Austin Hicks 
(CARB) to Idalia P[eacute]rez (USEPA Region 9), RE: ``Prop 1B 
Application I Numbers'' and Memorandum dated May 2, 2016, from 
Idalia P[eacute]rez (USEPA Region 9) to File, RE: ``Call with ARB 
regarding questions on Prop 1B documentation.''
    \4\ Personal information has been redacted from each document 
for privacy reasons.
---------------------------------------------------------------------------

    Any member of the public can obtain project-related documents 
maintained by the State and/or District by submitting a request for 
such documents under the California Public Records Act. See Ca. Gov't 
Code Sec. Sec.  6250-6276.48. Accordingly, the EPA and citizens can 
obtain the information necessary to quantify and verify the emission 
reductions identified in the Emission Reduction Report.
    We also disagree with Earthjustice's assertion that there is no way 
to verify whether the emission reductions attributed to the projects 
identified in the Emission Reduction Report are ``surplus'' to existing 
requirements. As an initial matter, we note that both the Carl Moyer 
Program guidelines and the Prop 1B guidelines generally require that 
funded projects achieve emission reductions not required by any 
federal, state or local regulation or other legal mandate. See 2005 
Carl Moyer Guidelines, Part I, Section VIII.D; 2008 Carl Moyer 
Guidelines, Part III, Section (27)(i); 2011 Carl Moyer Guidelines, Part 
1, Chapter 2; 2008 Prop 1B Guidelines, Section III.B.1 at 47; and 2010 
Prop 1B Guidelines, Section III.B.1 at 57.
    Earthjustice highlights ``stationary and portable farm engines'' as 
a source category for which the project life varies from two to ten 
years and claims that there is no way to know whether or not these 
projects were counted for only the years in which their emission 
reductions were surplus. We assume the commenter intended to refer to 
the ``Stationary and Portable Agricultural Engines'' source category 
under the Carl Moyer Program. Two of the Carl Moyer projects that we 
randomly selected for evaluation (identified in Table 1) are within 
this source category (project numbers C-2570 and C-14205). According to 
CARB, these two projects were of the equipment type ``Stationary 
Agricultural Irrigation Pump.'' See email dated November 12, 2015, from 
Sylvia Vanderspek (CARB) to Andrew Steckel (USEPA Region 9). These 
engines are subject to CARB's Airborne Toxic Control Measure (ATCM) for 
Stationary Compression Ignition (CI) Engines in title 17, sections 
93115--93115.15 of the California Code of Regulations (17 CCR 
Sec. Sec.  93115--93115.15) (hereafter ``Stationary Engine ATCM''). 
Table 7 of the Stationary Engine ATCM provides a summary of 
requirements for in-use noncertified stationary diesel-fueled engines 
used in agricultural operations and Table 8 of the Stationary Engine 
ATCM provides a summary of requirements for certified in-use Tier 1 and 
Tier 2 engines used in agricultural operations. See 17 CCR Sec.  
93115.8, Table 7 and Table 8.
    The emission reductions attributed to project C-14205 and project 
C-2570 engine #1 during the January 1-December 31, 2014 timeframe were 
surplus to the requirements of the Stationary Engine ATCM because they 
occurred before the earliest ATCM compliance deadline applicable to 
these engines, which was December 31, 2014. The emission reductions 
attributed to project C-2570 engine #2 during the January 1-December 
31, 2014 timeframe, however, were not entirely surplus because that 
engine was required to comply with the Stationary Engine ATCM's 
NOX and PM2.5 emission limits for in-use 
noncertified stationary diesel-fueled engines used in agricultural 
operations by December 31, 2010.\5\ See Table 3.
---------------------------------------------------------------------------

    \5\ Because the existing uncertified engine for project C-2570 
engine #2 was replaced with an electric unit, this project did 
achieve some surplus emission reductions beyond those required by 
the Stationary Engine ATCM.

                    Table 3--Stationary Engine ATCM Compliance Deadlines Applicable to Carl Moyer Program Projects C-2570 and C-14205
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                            Deadline for
                      Equipment                                      Existing engine      compliance with                           Project      Post
    Project No.      identifier       Fuel type        Horsepower     certification      stationary engine        New engine         life     inspection
                                                                                              ATCM \6\                                           date
--------------------------------------------------------------------------------------------------------------------------------------------------------
C-2570.............           1  Diesel.............          385  Tier 1 Standard....  Later of 12/31/14    Electric...........          10    01/12/10
                                                                                         or 12 years after
                                                                                         the date of
                                                                                         initial
                                                                                         installation.
C-2570.............           2  Diesel.............          420  Uncontrolled         12/31/10...........  Electric...........           5    01/12/10
                                                                    (uncertified).
C-14205............           1  Diesel.............          335  Tier 3 Standard....  N/A................  Electric...........          10    04/25/14
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Email dated December 3, 2015 from Austin Hicks (CARB) to Andrew Steckel (USEPA Region 9), RE: ``Additional information request to support final
  action on ARB Incentive Report,'' including attachments.

     
---------------------------------------------------------------------------

    \6\ See 17 CCR Sec.  93115.8, Table 7 and Table 8.
---------------------------------------------------------------------------

    Given this information, we have assumed conservatively that all 
emission reductions attributed to Carl Moyer Program projects in the 
``Stationary and Portable Agricultural Engines'' source category in the 
Emission Reduction Report are not surplus and, therefore, are not 
creditable for SIP purposes at this time. Stationary and portable 
agricultural engine projects account for 2.829 tpd of the 
NOX emission reductions and 0.066 tpd of the direct 
PM2.5 emission reductions identified in the Emission 
Reduction Report as shown in Table 4. See Emission Reduction Report, 
Appendix H1 at pp. 8-29.

[[Page 53306]]

  Table 4--Emission Reductions From Carl Moyer Stationary and Portable
                  Agricultural Engine Repower Projects
------------------------------------------------------------------------
                                                           2014 PM2.5
      Carl Moyer guideline year        2014 NOX  (tpd)        (tpd)
------------------------------------------------------------------------
2005................................             2.675             0.063
2008................................             0.132             0.002
2011................................             0.022             0.001
                                     -----------------------------------
    Total Reductions................             2.829             0.066
------------------------------------------------------------------------
Source: Emission Reduction Report, Appendix H1 at pp. 27-29.

    We are therefore subtracting these amounts from the total amounts 
of NOX and direct PM2.5 emission reductions 
identified in the Emission Reduction Report (7.8 tpd of NOX 
emission reductions and 0.2 tpd direct PM2.5 emission 
reductions), and crediting the Emission Reduction Report with only 
4.971 tpd of NOX emission reductions and 0.134 tpd of direct 
PM2.5 emission reductions toward the State's 2014 emission 
reduction commitment in the 2008 PM2.5 Plan.
    Earthjustice argues that in order to determine whether these 
projects were counted only for the years during which they could be 
considered surplus, one would need to know the type of engine that was 
used as a replacement; the horsepower of the engine used as a 
replacement; the tier of the original agricultural engine; and 
fleetwide particulate matter (``PM'') levels. We agree that information 
about the type of engine that was used as a replacement, the horsepower 
of the new engine, and the tier of the original agricultural engine is 
necessary to determine whether the emission reductions attributed to a 
particular Carl Moyer project are surplus. As explained above, project 
documents that the District is required to maintain under the Carl 
Moyer and Prop 1B program guidelines, which CARB submitted to the EPA 
at our request, identify all of this information. With respect to 
fleetwide PM levels, we note that this information is not necessary to 
determine the ATCM compliance date applicable to a stationary 
agricultural engine, because the requirements of the Stationary Engine 
ATCM do not vary based on fleetwide PM levels. See generally 17 CCR 
Sec. Sec.  93115-93115.15. Carl Moyer projects C-2570 and C-14205 are 
stationary agricultural engines subject to the Stationary Engine ATCM. 
See email dated November 12, 2015, from Sylvia Vanderspek (CARB) to 
Andrew Steckel (USEPA Region 9). Thus, information about fleetwide PM 
levels is not necessary to determine whether these projects achieved 
surplus emission reductions. We agree with Earthjustice that 
information concerning fleetwide PM levels is necessary to determine 
certain compliance dates under the ATCM for diesel particulate matter 
from portable engines. See 17 CCR Sec.  93116.3. To the extent the 
commenter intended to argue that this information is necessary to 
determine whether a Carl Moyer project for a portable engine will 
achieve emission reductions that are surplus to existing requirements, 
we understand that CARB would provide such information upon request 
under the California Public Records Act and that the public can, 
therefore, verify whether the emission reductions attributed to any 
such project are surplus.
    Based on these reviews, we find that the Emission Reduction Report 
contains information adequate to enable the EPA and citizens to obtain 
emissions-related information necessary to quantify and verify the 
emission reductions attributed to the identified Carl Moyer Program and 
Prop 1B projects.
    Comment 3: Earthjustice states that incentive programs should not 
``be approved into the SIP as a replacement for emission reductions 
from regulations without fulfilling the four fundamental integrity 
elements'' and urges the EPA to require that emission reductions be 
enforceable and quantifiable before approving them into the SIP.
    Response 3: This action does not incorporate any portion of the 
Prop 1B program or Carl Moyer Program, or any related guidelines, into 
the SIP. To the extent Earthjustice intended to state that the EPA 
should not approve emission reductions from the projects identified in 
the Emission Reduction Report for credit toward a SIP commitment unless 
the applicable incentive programs satisfy the EPA's integrity elements, 
we agree. As explained in our proposed rule and further in Responses 1 
and 2 above, the portions of the Prop 1B program and Carl Moyer Program 
guidelines that apply to the projects identified in the Emission 
Reduction Report adequately address the EPA's recommended integrity 
elements for discretionary EIPs. Based on our review of project-
specific documentation submitted by CARB at our request, however, we 
have found that the emission reductions attributed to one Carl Moyer 
Program project within the ``Stationary and Portable Agricultural 
Engines'' category were not entirely surplus to existing requirements 
and, therefore, are not creditable for SIP purposes at this time, or 
until properly adjusted to account for existing regulations. As a 
result, we have conservatively assumed that all of the Stationary and 
Portable Agricultural Engine Carl Moyer projects identified in the 
Emission Reduction Report are not SIP-creditable and subtracted the 
emission reductions attributed to these projects from the total amounts 
of NOX and direct PM2.5 emission reductions 
identified in the Emission Reduction Report. See Response 2. We find 
that, with this one exception, the Carl Moyer Program and Prop 1B 
projects identified in the Emission Reduction Report have achieved the 
NOX and PM2.5 emission reductions attributed to 
them in the Emission Reduction Report. We are therefore approving 4.971 
tpd of NOX emission reductions and 0.134 tpd of 
PM2.5 emission reductions for credit toward the State's 2014 
emission reduction commitment in the 2008 PM2.5 Plan.

III. EPA Action

    Under sections 110(k)(3) and 301(a) of the Act, the EPA is 
finalizing a limited approval and limited disapproval of the Emission 
Reduction Report and crediting the incentive projects identified 
therein with 4.971 tpd of NOX reductions and 0.134 tpd of 
PM2.5 reductions toward the State's 2014 emission reduction 
commitments in the 2008 PM2.5 Plan. We are finalizing a 
limited approval of the Emission Reduction Report because it largely 
satisfies the applicable CAA requirements. We are simultaneously 
finalizing a limited disapproval of the Emission Reduction Report 
because the demonstration therein concerning the Carl Moyer Stationary 
and Portable Agricultural Engines source category

[[Page 53307]]

does not satisfy CAA requirements for SIP credit. Our reasons for 
disapproving the submitted demonstration on this basis are explained in 
our responses to comments above.
    This limited disapproval does not trigger any sanctions clocks 
under CAA section 179(a) because the Emission Reduction Report was not 
submitted to address a requirement of part D, title I of the Act or in 
response to a finding of substantial inadequacy as described in CAA 
section 110(k)(5) (i.e., a ``SIP Call''). The limited disapproval also 
does not trigger any obligation on the EPA to promulgate a federal 
implementation plan (FIP) because the disapproval does not create any 
deficiency in the SIP that must be corrected.

IV. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review

    This action is not a significant regulatory action and was 
therefore not submitted to the Office of Management and Budget (OMB) 
for review.

B. Paperwork Reduction Act (PRA)

    This action does not impose an information collection burden under 
the PRA because this action does not impose additional requirements 
beyond those imposed by state law.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. This 
action will not impose any requirements on small entities beyond those 
imposed by state law.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in 
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect 
small governments. This action does not impose additional requirements 
beyond those imposed by state law. Accordingly, no additional costs to 
State, local, or tribal governments, or to the private sector, will 
result from this action.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government.

F. Executive Order 13175: Coordination With Indian Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175, because the SIP is not approved to apply on any 
Indian reservation land or in any other area where the EPA or an Indian 
tribe has demonstrated that a tribe has jurisdiction, and will not 
impose substantial direct costs on tribal governments or preempt tribal 
law. Thus, Executive Order 13175 does not apply to this action.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    The EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that concern environmental health or safety risks 
that the EPA has reason to believe may disproportionately affect 
children, per the definition of ``covered regulatory action'' in 
section 2-202 of the Executive Order. This action is not subject to 
Executive Order 13045 because it does not impose additional 
requirements beyond those imposed by state law.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This action is not subject to Executive Order 13211, because it is 
not a significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTAA)

    Section 12(d) of the NTTAA directs the EPA to use voluntary 
consensus standards in its regulatory activities unless to do so would 
be inconsistent with applicable law or otherwise impractical. The EPA 
believes that this action is not subject to the requirements of section 
12(d) of the NTTAA because application of those requirements would be 
inconsistent with the CAA.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Population

    The EPA lacks the discretionary authority to address environmental 
justice in this rulemaking.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

L. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by October 11, 2016. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Nitrogen dioxide, Particulate 
matter, Reporting and recordkeeping requirements.

    Dated: July 21, 2016.
Alexis Strauss,
Acting Regional Administrator, Region IX.

    Part 52, Chapter I, Title 40 of the Code of Federal Regulations is 
amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for Part 52 continues to read as follows:

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

Subpart F--California

0
2. Section 52.220 is amended by adding paragraph (c)(477) to read as 
follows:

Sec.  52.220   Identification of plan.

* * * * *
    (c) * * *
    (477) The following plan revision was submitted on November 17, 
2014 by the Governor's designee.

[[Page 53308]]

    (i) [Reserved]
    (ii) Additional Material.
    (A) California Air Resources Board.
    (1) ``Report on Reductions Achieved from Incentive-based Emission 
Reduction Measures in the San Joaquin Valley,'' adopted on October 24, 
2014, including appendices F-H.

[FR Doc. 2016-18903 Filed 8-11-16; 8:45 am]
 BILLING CODE 6560-50-P
```