6560-50-P

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2012-0140; FRL-____]

Revision to the South Coast Air Quality Management District 

Portion of the California State Implementation Plan, South Coast 

Rule 1315

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final Rule.

SUMMARY: The Environmental Protection Agency (EPA) is taking 

final action to approve a State Implementation Plan (SIP) 

revision for the South Coast Air Quality Management District 

(District) portion of the California SIP. This SIP revision 

incorporates Rule 1315 – Federal New Source Review Tracking 

System – into the District‘s SIP approved New Source Review 

(NSR) program to establish the procedures for demonstrating 

equivalency with federal offset requirements by specifying how 

the District will track debits and credits in its Offset 

Accounts for Federal NSR Equivalency for specific federal 

nonattainment pollutants and their precursors. EPA is approving 

this SIP revision because Rule 1315 provides an adequate system 

to demonstrate on an on-going basis that the rule requires 

offsets in amounts equivalent to those otherwise required by the 

Clean Air Act (CAA) and that the emission reductions the 

District is crediting and debiting in its Offset Accounts meet 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

2

the CAA‘s NSR offset requirements for federal major sources and 

modifications.

EFFECTIVE DATE: This rule is effective on [Insert date 30 days 

from the date of publication in the Federal Register].

ADDRESSES: EPA has established docket number EPA-R09-OAR-2007-

1073 for this action. Generally, documents in the docket for 

this action are available electronically at www.regulations.gov

and in hard copy at EPA Region IX, 75 Hawthorne Street, San 

Francisco, California. Some docket materials, however, may be 

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

voluminous records, maps, copyrighted material), and some may 

not be publicly available in either location (e.g., CBI). To 

inspect the hard copy materials, please schedule an appointment 

during normal business hours with the contact listed in the FOR 

FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Laura Yannayon, EPA Region IX, 

(415) 972-3534, yannayon.laura@epa.gov. 

SUPPLEMENTARY INFORMATION: Throughout this document, ―we‖, ―us‖, 

and ―our‖ refer to EPA.

Table of Contents

I. Background

II. EPA‘s Evaluation of the SIP Revision

A. What Action is EPA Finalizing?

B. Public Comments and EPA Responses 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

3

III. EPA‘s Final Action

IV. Statutory and Executive Order Reviews

I. Background

EPA allows and encourages local authorities to tailor SIP 

programs, including new source review permitting programs, to 

account for that community‘s particular needs provided that the 

SIP is not less stringent than the Act‘s requirements. See 

generally CAA Section 116, 42 U.S.C. 7416; Train v. Natural Res. 

Defense Council, 421 U.S. 60, 79 (1975); Union Electric Co. v. 

EPA, 427 U.S. 246, 250 (1976). The District‘s SIP-approved 

nonattainment permitting rules are contained in District 

Regulation XIII. See 61 FR 64291 (December 4, 1996) (final rule 

approving SCAQMD‘s NSR program) and 40 CFR 52.220 

(c)(240)(i)(1). 

When EPA approved Regulation XIII in 1996, we noted that 

Rule 1304 exempted certain major sources from the requirement to 

obtain offsets and Rule 1309.1 allowed the District to provide 

offsets for specific ―priority‖ projects. We approved these 

rules because the District committed to demonstrating on an 

annual basis that it was providing an amount of offsets that was 

equivalent to the amount required to offset federal new and 

modified major sources subject to Rules 1304 and 1309.1.1 The 

 

1 Environmental Protection Agency, Region IX Air & Toxics Division Technical 

Support Document for EPA‘s Notice of Final Rulemaking for the California 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

4

District adopted Rule 1315‘s regulatory language codifying how 

it will account for, or ―track‖, the emission reductions that it 

adds into its Offset Accounts as credits and those which it 

subtracts as debits to provide offsets for the construction of 

certain federal major sources or modifications exempted from 

offset requirements pursuant to Rule 1304 or for which the 

District provided offsets pursuant to Rule 1309.1. SCAQMD 

Governing Board Resolution for the Re-adoption of Rule 1315 –

Federal New Source Review Tracking System, dated Feb. 4, 2011. 

EPA is now finalizing approval of Rule 1315 as a SIP revision. 

For a more detailed discussion of the District‘s NSR program and 

Rule 1315, please refer to our proposed approval. 77 FR 10430, 

10430-31 (Feb. 22, 2012).

II. Evaluation of SIP Revision

A. What Action is EPA Finalizing?

EPA is finalizing a SIP revision for the South Coast 

portion of the California SIP. The SIP revision will be 

codified in 40 CFR 52.220 by incorporating by reference South 

Coast Rule 1315, as adopted February 4, 2011 and submitted on 

March 2, 2011. 

The SIP revision provides a federally approved and 

enforceable mechanism for the District to transfer offsetting 

 

State Implementation Plan South Coast Air Quality Management District New 

Source Review by Gerardo C. Rios, October 24, 1996 (TSD).
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

5

emissions reductions from the District‘s Offset Accounts to 

projects that qualify under District Rules 1304 and 1309.1. 

B. Public Comments and EPA Responses

In response to our February 22, 2012 proposed rule, we 

received six comments, one from the South Coast Air Quality 

Management District (District), one from a consortium of 

environmental groups (Coalition for a Safe Environment, 

Communities for a Better Environment, Desert Citizens Again 

Pollution and the Natural Resources Defense Council 

(collectively referred to herein as ―CSE‖)), and one each from 

the County Sanitation Districts of Los Angeles County, 

California Small Business Alliance, California Council for 

Environmental and Economic Balance, and the Southern California 

Gas Company. Copies of each comment letter have been added to 

the docket and are accessible at www.regulations.gov. The 

comment from the District supported EPA‘s analysis and proposal 

to approve Rule 1315 into the SIP. With the exception of CSE, 

all of the commenters generally supported EPA‘s analysis and 

proposed approval. The comment from CSE opposed the SIP 

revision and raised several specific objections. We have 

summarized the comments and provided a response to each comment 

below. 

Comment 1: CSE‘s first comment provides an overview of the 

reasonable further progress (RFP) and base year requirements of 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

6

the Clean Air Act (CAA). CSE asserts that the South Coast is 

prohibited from including pre-base year (i.e. pre-1997) 

emissions credits for particulate matter of 10 microns or less 

(PM10) and sulfur oxides (SOx) in its NSR Account under 40 CFR 

51.165(a)(3)(ii)(C)(1) because the 2003 Air Quality Management 

Plan (2003 AQMP) is not ―valid.‖ Comment Letter at 3 (stating: 

―In the absence of a valid attainment demonstration, the 

shutdown-unit requirement under 40 CFR 51.165(a)(3)(ii)(C)(2) 

applies, not the base-year requirement.‖) [Footnote omitted] 

CSE‘s basis for concluding the 2003 AQMP is not ―valid‖ is that

EPA has not re-designated the area to attainment for PM10. 

Comment Letter at 3, n. 8 (―Whether [the  ̳fully approved SIP 

language‘] is currently in 40 [CFR] 51.165(a)(3)(ii)(C)(1) or 

not is not relevant where, as here, [sic] attainment 

demonstration offered for compliance with this provision did not 

achievement [sic] attainment.‖ [Citation omitted]). CSE also 

includes a discussion of the shutdown credit requirement in 40 

CFR 51.165(a)(3)(ii)(C)(2).

Response 1: We disagree with these assertions. Although 

the text of EPA‘s current regulation in 40 CFR 

51.165(a)(3)(ii)(C)(1) does not require a fully approved 

attainment demonstration in order to allow for the use of prebase year shutdown credits as NSR offsets, in light of recent 

caselaw we have evaluated Rule 1315 for consistency with EPA‘s 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

7

pre-2005 requirement for an approved attainment demonstration 

for these purposes. See NRDC v. EPA, 571 F.3d 1245, 1265 (D.C. 

Cir. 2009) (remanding, inter alia, those portions of EPA‘s 2005 

ozone implementation rule that eliminated the approved 

attainment demonstration requirement in 40 CFR 

51.165(a)(3)(ii)(C)). As the NRDC court explains, until EPA 

amended its regulations in 1989, emissions reductions from 

shutting down a source could only be used to offset a 

replacement for that source‘s production capacity. Id. at 1264 

(citing 54 FR 27286, 27290 (June 28, 1989)). EPA proposed to 

change this limitation in 1989 in response to concerns expressed 

by local air pollution authorities that the restriction would

infringe on their authority to make growth management decisions 

and industry commenters who argued that the policy encouraged 

sources to continue operating to prevent forfeiting emissions 

credits. 54 FR 27286 (June 28, 1989). EPA also received 

negative comments from a consortium of environmental groups 

opposing the proposed change because they were concerned that 

sources with a limited lifetime could get large ―paper‖ credits 

that would result in worsening air quality. 54 FR at 27291-92.

EPA responded to these comments by revising the restriction 

on using emissions credits from shutdown sources, stating: ―The 

essence of the Act‘s offset provision is that a new source may 

be allowed in a nonattainment area only where its presence would 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

8

be consistent with RFP toward attainment of the NAAQS.‖ Id. at 

27292. EPA explained in the preamble to the 1989 final rule: 

―Thus, where a fully approved SIP demonstrates RFP and 

attainment, it is appropriate to grant that State maximum 

flexibility in its nonattainment plan, under section 173, within 

the constraint that the demonstration not be invalidated. By 

definition, any fully approved SIP has independently assured RFP 

and attainment.‖ 54 FR at 27292 (emphasis added).

EPA cited several planning scenarios ―in which EPA 

considers the SIP to be inadequate and will continue to restrict 

offset credits for prior shutdowns.‖ Id. at 27294. These 

scenarios included (1) ―nonattainment areas that have received a 

final notice of disapproval of their current SIP,‖ (2) 

―nonattainment areas that have received either a section 

110(a)(2)(H) notice of deficiency based on failure to attain or 

maintain the primary NAAQS, or a notice of failure to implement 

an approved SIP,‖ and (3) ―nonattainment areas that received 

notice from EPA that they have failed to meet conditions in 

their EPA-approved SIPs, including commitments to adopt 

particular regulations by a certain date.‖ Id. at 27294-95. 

These are the relevant limited situations in which a fully 

approved SIP may be inadequate or inappropriate for allowing 

pre-base year shutdown credits to be added. In summary, EPA‘s 

pre-2005 regulations required an area to have a fully approved 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

9

SIP, which has not been followed by a notice of deficiency, a 

notice of failure to implement the SIP or a notice that the area 

failed to meet conditions in the SIP. Id. at 27294-95.

CSE provides no support for its conclusory position that an 

approved attainment plan is only ―valid‖ if EPA has redesignated 

the area to attainment for the pollutant at issue prior to or 

upon the attainment date. EPA fully approved the plan submitted 

by California to provide for attainment of the particulate 

matter (PM10) NAAQS in the Los Angeles-South Coast Air Basin 

(2003 AQMP) in 2005. 70 FR 69081 (November 14, 2005). EPA has 

not notified the South Coast of any deficiency, failure to 

implement or unsatisfied condition in the 2003 AQMP. Moreover, 

although EPA has not yet re-designated the South Coast to 

attainment for PM10 (for which SOx is a precursor), the District 

has submitted a re-designation request to EPA along with data 

showing it has not had a violation of the PM10 NAAQS since 2008. 

See Final PM-10 Redesignation Request and Maintenance Plan for 

the South Coast Air Basin, December 2009. Because EPA has 

fully approved the 2003 AQMP, (which contains control strategies 

for both PM10 and SOx emissions in the South Coast area), the 

District may use pre-base year PM10 and SOx shutdown emission 

credits pursuant to 40 CFR 51.165(a)(3)(ii)(C)(1).

Accordingly, the requirements in 40 CFR 

51.165(a)(3)(ii)(C)(2) related to emission reductions that do 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

10

not meet the requirements in section 51.165(a)(3)(ii)(C)(1) do 

not apply to our action.

Comment 2: CSE states ―In its Proposed Rule and associated 

TSD, EPA applies the base-year requirement to all pollutants 

deposited in SCAQMD‘s Community Bank. For PM10 and its precursor 

SOX, EPA looks to the 2003 AQMP with a 1997 base year. For ozone 

precursors VOC and NOx, EPA looks to the 2007 AQMP with a 2003 

base year. In both instances, EPA concludes that  ̳even if the 

District Offset Accounts rely on pre-base year emission 

reductions as offsets, the District‘s Plans have adequately 

added pre-base year emissions explicitly into the appropriate 

projected planning investments [sic].‘‖ Comment Letter at 4, 

quoting EPA‘s TSD at 13.2 CSE‘s comment continues, stating: ―As 

shown below, this conclusion violates 40 C.F.R. 

52.165(a)(3)(i)(C) in two ways. First, for the PM10 and SOX

credits, EPA should have applied the shutdown-credit 

requirement, not the base-year requirement, because no 

attainment demonstration is in place for PM10. Even if it could 

apply the 2003 AQMP, it commits additional errors. Second, for 

VOC an [sic] NOX, EPA erroneously concludes that the 2007 AQMP 

explicitly includes pre-base year credits that it explicitly 

excluded.‖ Comment Letter at 4.

 

2 We note that our TSD referred to ―projected planning inventories‖ rather 

than investments.
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

11

Response 2: This comment appears to repeat arguments CSE 

made above in Comment 1 regarding whether the District can rely 

on the 2003 AQMP and below in Comment 8 regarding whether the 

District added pre-base year credits in its plan to provide for 

attainment of the 1997 8-hour ozone NAAQS (2007 AQMP). EPA‘s 

responses to this comment are above in response to Comment 1 and 

below in response to Comment 8.

Comment 3: CSE asserts that the 2003 AQMP is not a valid 

attainment demonstration because it did not demonstrate 

attainment with the federal PM10 NAAQS by 2006. Based on this, 

the South Coast may only allow emissions credits from shutdown 

sources pursuant to 40 CFR 51.165(a)(3)(ii)(C)(2). Comment 

Letter at 4-5.

Response 3: As discussed above, the CAA and 40 CFR 

51.165(a)(3)(ii)(C)(1) require the South Coast to have a fully 

approved attainment demonstration for PM10 (and SOx as a 

precursor) in order to allow the use of pre-baseline shutdown 

emission reduction credits for PM10 and its precursors. The 2003 

AQMP was fully approved in 2005. 70 FR 69081 (November 14, 

2005). EPA has not issued a notice of deficiency, notice of 

failure to implement or notice that the District is not meeting 

conditions in the 2003 AQMP. See 54 FR at 27294-95. The 

District has requested re-designation and submitted 3 years of 

data showing there has not been a violation of the federal PM10
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

12

NAAQS. EPA therefore disagrees with CSE‘s assertion that the 

District is limited to allowing emissions reductions for 

shutdown sources pursuant to 40 CFR 51.165(a)(3)(ii)(C)(2) (i.e. 

shutdowns occurring after the 1997 AQMP base year).

Comment 4: The next several pages of the CSE‘s comment 

letter assert that the South Coast did not ―explicitly include[] 

adequate pre-base-year PM10 and SOx credits in its [2003 AQMP] 

emissions inventories.‖ It discusses ―expected growth from the 

NSR program and the need for pre-base year credits.‖ Comment 

Letter at 5. In reviewing Table 2-14 in the 2003 AQMP, CSE 

states: ―Where no pre-base-year credits are needed, the 

emissions inventories exclude them.‖ Id.

Response 4: Although CSE‘s references are to the 2007 

AQMP, it appears from the body of the discussion that CSE 

intended to refer to the 2003 AQMP and Appendix III of the 2003 

AQMP. Comment Letter at 5, n. 14 & 15. Given the context of 

these comments, we assume that the references to the 2007 AQMP 

are an inadvertent typographical error and that CSE meant to 

refer to similar tables in the 2003 AQMP and Appendix III of 

this plan.

CSE‘s comment uses the phrase ―expected growth,‖ which is 

not a term used in the 2003 AQMP, and then refers only to 

portions of the AQMP pertaining to expected demand. The 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

13

District handles growth and demand separately and they are 

distinct in the 2003 AQMP.

The District includes pre-base year emissions in the growth

portion of its 2003 AQMP. See 2003 AQMP Figure 3-6 and Appendix 

III Table 2-8 (Growth Impact to 2010 Annual Average Emissions in 

Tons Per Day). Appendix III, Table 2-8 shows a sum of the 

inventory for all emissions sources for each criteria pollutant 

with and without growth. The 2003 AQMP forecasts the 2010 (i.e. 

future year) emissions inventories ―with growth‖ through a 

detailed consultation process with the Southern California 

Association of Governments (SCAG). SCAG provides extensive data 

on demographics and all emissions sources in the South Coast. 

It performs an exhaustive analysis of the growth in the 

inventory of sources that is likely to occur through the 

planning periods of 2010. The District‘s AQMP summarizes this 

data in the 2003 AQMP Figure 3-6 and provides additional details 

in Appendix III Table 2-8 and Attachments A – C. 

The District‘s growth projections include the pre-base year 

emissions, consistent with the requirements of 40 CFR 

51.165(a)(3)(i)(C)(1). For PM10, the District added PM10

emissions into its future year 2010 inventory for growth of both 

point and area sources. For point sources of PM10, the District 

added 3 tpd (from 11 tpd to 14 tpd); for area sources 23 tpd 

were added (from 77 tpd to 100 tpd) in its future year 2010 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

14

inventory. Appendix III, Table 2-8. This means that the 

District added a total of 26 tpd of PM10 emissions to its future 

year 2010 inventory for all point and area sources. The 

detailed inventories in the Attachments to Appendix III (2003 

AQMP) separate the point and area sources into specific source 

categories (e.g. refineries, spray booths, charbroilers) so that 

the emissions with and without growth for each category is 

included in the base year and future year inventories for 2010 

and 2020. Appendix III, Attachments A – C.

However, not all point and area sources are subject to NSR 

permit requirements. Therefore, the District provided data3 to 

EPA indicating what portion of the baseline and growth 

projections are attributed to the point and area sources subject 

to NSR offset requirements. Docket Item III-Z and III-AA. This 

data shows that the District explicitly included 5.9 tpd of PM10

in its future year 2020 inventory for point and area sources 

subject to the District‘s NSR program. (Docket Item III-AA

showing Total Emissions of 14.5 tpd for 1997 and Docket Item

III-Z showing Total Emissions of 20.4 tpd for 2020). The 

District also provided data showing that it included 3.1 tpd of 

 

3 The District submitted several spreadsheets containing emissions data 

related to its base year and future year emission inventories, which we 

identify herein as lettered ―Docket Items,‖ all of which are available in the 

docket for today‘s final rule.
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

15

PM10 (the difference between 14.5 tpd for 1997 and 17.6 tpd for 

2010) to the future year 2010 growth projection.4

In our proposed rule, after describing the 2007 AQMP‘s 

treatment of VOC and NOx for ensuring a sufficient amount of prebase year credits had been added as growth, we stated that

―[t]he District used a similar approach for the 2003 Plan as it 

pertains to PM10 and SOx.‖ 77 FR at 10433. EPA‘s proposal 

explains that the District added a certain amount of emissions 

as growth for various source categories in Table 2-8 of Appendix 

III. EPA further explained that ―[f]or Table 2.8, the District 

provided EPA with the point and area source data used to 

generate the summary data. EPA used this data to determine the 

amount of emissions due to growth at facilities subject to NSR 

offset requirements.‖ 77 FR 10433, n.3.

Our TSD provides a detailed discussion of these data as it 

relates to the 2003 AQMP. We state: ―For PM10, the District 

added 3.1 tpd as growth. [footnote omitted].‖ TSD at 12. EPA

is clarifying in this final approval that the TSD should have 

said the District added 5.9 tpd as growth because Docket Item 

III-Z is the District‘s future year 2020 inventory for NSR 

sources. To clarify, for those point and area sources subject 

to NSR, the 1997 ―no growth‖ inventory was 14.5 tpd. Docket 

 

4 This table was inadvertently left out of the docket, and has now been added 

as Docket Item III-BB. 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

16

Item III-AA. The District then included ―growth‖ of 5.9 tpd for 

the 2020 inventory in Docket Item III-Z and ―growth‖ of 3.1 tpd 

to the 2010 inventory in Docket Item III-BB, for NSR sources. 

EPA inadvertently did not post the information for the 2010 

inventory with our proposal and is adding it to the Docket as 

Docket Item III-BB. EPA‘s TSD inadvertently recited the sum 

from the 2010 inventory (3.1 tpd growth) rather than 5.9 tpd 

from the 2020 inventory. This mistake arising from referring to 

the wrong future year inventory total does not have any 

substantive consequence because the District‘s inclusion of 

either tonnage (3.1 tpd or 5.9 tpd) of pre-base year growth to 

the future year inventories far exceeds the amount that the 

District expects will be used. 

In summary, CSE confuses growth (3.1 tpd for future year 

2010 NSR sources or 5.9 tpd for future year 2020 NSR sources), 

which is where the District adds expected emission increases due 

to growth into the inventories – with demand for credits. CSE 

looks only at demand (0.23 tpd) for pre-base year offsets, which 

the District provides as a check to ensure its growth estimate 

is sufficient to account for this demand. This confusion leads 

CSE to contend that ―[t]he 2003 AQMP includes no pre-base year 

PM10 credits and 0.7 pre-base year SOx credits.‖ Comment Letter 

at 5-6, referring to Table 2-14 in 2003 Appendix III. 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

17

CSE is incorrect. This portion of the 2003 AQMP is

evaluating historic PM10 demand and in addition, is limited to 

the historic demand from the District NSR Accounts. See 

Appendix III Table 2-14 ―2010 Net Demand for ERCs in the AQMD‘s 

NSR Accounts‖. EPA‘s TSD more accurately refers to Table 2-15 

that includes the District‘s estimated net demand from the NSR 

Accounts and the open market transactions, which is 0.23 tpd. 

EPA‘s proposal and TSD stated: ―For PM10, the District 

added 3.1 tpd as growth.‖ TSD at 12. The footnote to this 

statement provided ―See 2003 Plan Appendix III, pgs. 25 – 35. 

For Table 2.8, the District provided EPA with the point and area 

source data used to generate the summary data. EPA used this 

data to determine the amount of emission due to growth at 

facilities subject to NSR offset requirements.‖ TSD at 12, n.7. 

As explained above, EPA‘s TSD should have stated that the 

District added 5.9 tpd as growth for 2020 (Docket Item III-Z)

and 3.1 tpd as growth for 2010 (Docket Item III-BB). CSE does 

not acknowledge that the 2003 AQMP added PM10 emissions growth in 

the future year 2010 and 2020 inventories. In fact, the 

District added emissions for growth in the 2010 (3.1 tpd) and 

2020 (5.9 tpd) inventories far in excess of the expected need 

for offsets on the open market and by the NSR Account combined. 

Further, CSE‘s comment that if the District did not estimate 

that it would need credits from historic supply and demand that 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

18

the District has ―excluded‖ emissions from its inventories is 

not supported by any facts. The 2003 AQMP includes pre-base 

year credits in its growth added to its future year inventories. 

Comment 5: Beginning on page 7 of its Comment Letter, CSE 

lists three comments. The first comment actually repeats 

several paragraphs of CSE‘s previous comments (e.g. that the 

only pre-base year emissions added in the 2003 AQMP are from 

Table 2-14 in Appendix III.) To the extent that CSE is 

repeating comments, EPA‘s responses above (and the statements in 

EPA‘s TSD) that the District added PM10 emissions as growth for 

point and stationary sources subject to NSR, address these 

comments. CSE‘s comment then addresses Table 2-8. Comment 

Letter at 8. EPA considers this comment to contain three 

separate points. First, CSE states that Table 2-8 includes 

growth from all point sources without distinguishing between 

pre-base year and post-base year credits. Second, CSE states 

that the growth from point sources in Table 2-8 does not 

distinguish between open market emissions transactions and the 

District‘s NSR Account transactions. Third, with respect to the 

data provided to EPA by the District (Docket Items III-Z and 

III-AA) CSE says: ―A review of those documents reveals that it 

is nothing more than identical information already attached to 

Appendix III of the 2003 AQMP – but simply repackaged into a 

single table.‖ Comment Letter at 8.
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

19

Response 5: CSE‘s comment in this section confuses the 

District‘s and EPA‘s treatment of the Table 2-8 point and area 

sources subject to NSR. CSE says that it reviewed the documents 

prepared by the District and appended to EPA‘s TSD and found it 

was repackaging identical information regarding the future year 

inventories in Appendix III of the 2003 AQMP. CSE‘s review of 

the information is inaccurate. The spreadsheets contained in 

Docket Items III-Z and III-AA extract from the AQMP‘s base year 

and future year inventories (2020) those point and area sources 

subject to NSR. The point and area sources listed in Docket 

Items III-Z and III-AA are far fewer, particularly for the area 

sources, than those included in Appendix III, Attachments A - C. 

Therefore it is incorrect to say that the documents provide 

identical but repackaged information as that which is included 

in the 2003 AQMP.

EPA requested the District to extract those point and area 

sources subject to NSR because those are the only sources in 

Appendix III, Attachments A – C, for which EPA‘s regulations 

require sufficient emissions to be added back to the future year 

inventory to account for the use of pre-base year emissions 

reductions from shutdowns. EPA calculated that the District had 

added 3.1 tpd for the subset of point and area sources subject 

to NSR for the future year 2010 inventory by comparing the sum 

in Docket Item III-AA to the sum in Docket Item III-BB and 5.9 
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rule, it is not the official version of the rule for purposes of compliance.

20

tpd when compared to the future year 2020 inventory (Docket Item 

III-Z). In the docket for our proposed rule, we included the 

spreadsheet for future year inventory for 2020 (Docket Item IIIAA), and in response to comments we are adding Docket Item IIIBB for the future year 2010 inventory to the docket for this 

final rule. 

CSE‘s same comment contends that the District‘s Table 2-8 

does not separate emissions into pre- and post-base year 

emissions. The spreadsheets the District provided and EPA 

attached to its TSD show the actual 1997 emission inventory for 

point and area sources subject to NSR – assuming no growth 

(Docket Item III-AA), the 2010 projected emission inventory 

(added to the docket as Docket Item III-BB), and the 2020 

projected inventory that was attached to the TSD (Docket Item

III-Z). Each of the future year NSR inventories (2010 and 2020) 

are based on emissions growth expected from the 1997 baseline. 

This means that the inventory for ―no growth‖ is the inventory 

NSR subject point and area sources of 1997 emissions. Docket 

Item III-AA. The inventory ―with growth‖ is the amount of 

emissions added into the 1997 inventory for purposes of showing 

attainment in 2010 and projecting out to 2020. Docket Items

III-Z and III-AA. The distinctions between the inventories for 

the base year and after the base year, therefore, are inherent 

in the data itself and are summarized for NSR sources in the 
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

21

Docket Items III-Z, III-AA and III-BB. Based on the District‘s 

projected demand, 3.1 tpd of PM10 emissions added to the future 

year 2010 inventory and 5.9 tpd added to the future year 2020 

inventory, far exceed the amount of pre-base year PM10 offsets 

that the District expected would ever be used. The District 

projected that it would not need to use any pre-base year PM10

emissions and 0.7 tpd of SOx emissions from its NSR Accounts, and 

that the entire projected demand including the open market 

demand would not exceed 0.23 tpd for PM10. We have concluded

that the District has satisfied the requirements of 

51.165(a)(3)(C)(ii)(1) by adding PM10 emissions to the 1997 base 

year emissions inventory and projecting these emissions as 

―growth‖ for the 2010 and 2020 future year inventories for point 

and area sources subject to NSR. 77 FR 10433 n.3.

CSE is correct that the 2003 AQMP inventories with no 

growth and with growth do not distinguish between the open 

market and the NSR Account transactions. Comment Letter at 7. 

However, there is no need for such a distinction and CSE has not 

provided any reason that such a distinction is needed. The only 

issue is whether the District has added sufficient pre-base year 

emissions from shutdown sources to allow for expected use of 

those emissions after the base year. As discussed above, the 

District has adequately accounted for these pre-base year PM10
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22

emission reduction credits in the 2003 AQMP‘s future year (2010 

and 2020) inventories.

CSE‘s comment concludes: ―This leads EPA to conclude that 

the District added 3.1 tpd of PM10 credits as growth while 

admitting that that figure includes only 0.23 tpd of pre-base 

year PM10 credits for open-market transactions.‖ As noted above, 

CSE has mischaracterized the District‘s 2003 AQMP and EPA‘s 

position. The 2003 AQMP provides its analysis of ―the potential 

2010 emissions from new and modified sources.‖ 2003 AQMP at 

III-2-29. The District further clarifies: ―The net demand 

simply represents the emission increases in the future years to 

be offset by reductions previously banked (i.e. prior to the 

AQMP base year).‖ Id. The estimated 2010 demand, however, does 

not equal the amount of pre-base year emission reductions that

the District added back into the inventory. The pre-base year 

PM10 emissions are included in the growth inventory. The 

District‘s evaluation of demand is a check to ensure that 

adequate emissions (3.1 tpd and 5.9 tpd calculated from the NSR 

subject point and area source growth in 2010 and 2020) are 

included. EPA‘s proposed rule and TSD specifically state: ―For 

PM10, the District added 3.1 tpd as growth.‖ [footnote omitted]. 

TSD at 12.

Comment 6: The section of the Comment Letter that CSE 

identifies as its second separate comment says that it was 
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23

improper for EPA to allow the District‘s NSR Account to carry a 

larger balance (3.94 tpd) of PM10 credits than the total amount 

of emissions that were added as growth (3.1 tpd). Comment 

Letter at 8.

Response 6: EPA‘s proposal and TSD acknowledged that the 

amount of PM10 emissions that the District added to its 

inventories (3.1 tpd) falls somewhat short of the starting 

balance in its NSR Account (3.94 tpd) for PM10. TSD at 12-13 

(stating: ―While this [3.1 tpd] is not the total amount of the 

pre-1997 base year emissions reductions available as debits 

pursuant to Rule 1315 (3.94 tpd) the District has demonstrated 

that this amount represents the highest amount of pre-1997 

credits that are expected to be used as offsets prior to 

attainment of the ozone [sic] standard.‖ We note that the 

reference to the ozone standard here was a typographical error 

and that we intended to refer to Appendix III of the 2003 AQMP 

for PM10. TSD at 13.

As we explained in the TSD, the District‘s adjustment to 

the future year PM10 inventory in the 2003 AQMP is adequate, even 

though the total tonnage is somewhat lower than its NSR Account 

balance, because the District‘s analysis showed that it 

anticipated using significantly less than the pre-base year 

credits being added as growth. EPA‘s TSD stated: ―This 

approach is consistent with EPA guidance that States must 
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24

include pre-base year credits to the  ̳extent that the State 

expects that such credits will be used as offsets . . ..‖ TSD 

at 13 quoting 57 FR 13498. We conclude that the District‘s 

addition of 3.1 pre-base year PM10 credits to cover an expected 

use of emissions offsets (0.23 from both the NSR Accounts and 

the open market) in the 2010 emissions inventory and 5.9 tpd for 

2020, is acceptable. 

CSE‘s argument on this point appears to be that EPA‘s 

regulations require the District to include in its future year 

inventories all of the emissions offsets that could ever be 

available for use in the Air Basin (i.e. 3.94 tpd of PM10 from 

the NSR Account). But EPA‘s NSR regulations, as interpreted in 

the General Preamble, do not require this. See 57 FR 13498 at 

13509 (stating that ―[a]ll pre-enactment banked credits must be 

included in the nonattainment areas attainment demonstration for 

ozone to the extent that the State expects that such credits 

will be used for offsets or netting prior to attainment of the 

ambient standards‖) (emphasis added). As CSE‘s summary sentence 

itself says: ―the guidance was intended to direct the District 

to include all pre-base year credits it expected to use in the 

emissions inventories because otherwise the CAA would not allow 

their usage.‖ Comment Letter at 9.

EPA proposed to approve Rule 1315 upon finding that the 

District included in its 2003 AQMP 3.1 tpd of PM10 emissions for 
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

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25

2010 and 5.9 tpd for 2020, an amount that would amply cover the 

District‘s projected historic supply and demand of 0.23 tpd. 

CSE has failed to demonstrate that the District has projected 

any circumstance in which it would use 3.94 tpd of pre-base year 

PM10 emissions by 2010. CSE‘s Comment Letter fails to provide 

any reasoning, much less regulatory citation, showing why the 

District‘s AQMD should be required to add 3.94 tpd of pre-base 

year PM10 credits when the projected demand is only 0.23 tpd (and 

that demand is expected to occur on the open market rather than 

in the District‘s NSR Accounts.)

Comment 7: The following comment appears to be ancillary 

to CSE‘s prior comment. In the portion of its comment letter 

that purports to discuss CSE‘s ―third‖ comment, CSE contends 

that Section 173 and 40 CFR 51.165(a)(3)(ii)(C)(1)(ii) requires 

the District to place a ―cap‖ on the amount of pre-base year 

emissions offsets it may use in applying Rule 1315. CSE states: 

―In other words approving pre-base year PM10 and SOx credits for 

withdrawal that were not included in the emission inventories 

with no limitations on their use based on an  ̳expectation‘ they 

will not be used is not in accordance with the law.‖ [footnote

omitted] Comment Letter at 9.

Response 7: This comment seems to repeat the same issue as 

CSE‘s Comment 6. The problem is that CSE has misconstrued EPA‘s 

regulation at 40 CFR 51.165(a)(3)(ii)(C)(1).
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

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26

As EPA noted in Response 1 above, in 1989, EPA 

significantly revised its previous restrictions on use of offset 

credit for source shutdowns and curtailments (formerly 40 CFR 

51.18(j)) to allow the planning agency to have more control over 

emissions growth in the area and to allow sources to shutdown 

without forfeiting emissions credit if it could not be used 

immediately to replace productive capacity. See 54 FR at 27295-

95. Congress substantially amended the Clean Air Act in 1990, 

including the attainment planning process in Part D of Title I 

of the Act. In 1992, EPA issued guidance entitled ―State 

Implementation Plans: the General Preamble for the

Implementation of Title I of the Clean Air Act Amendments of 

1990.‖ 57 FR 13498 (April 16, 1992). In that document, EPA 

stated: ―For purposes of equity, EPA encourages States to allow 

sources to use pre-enactment banked emissions reductions credits 

for offsetting purposes. States may do so as long as the 

restored credits meet all other offset creditability criteria 

and such credits are considered by States as part of the 

attainment emissions inventory when developing their postenactment attainment demonstration . . . . Existing EPA 

regulations [40 CFR 51.165(a)(3)(ii)(C)(1)] prohibits certain 

pre-enactment banked emissions reduction credits, i.e., 

reductions achieved by shutting down existing sources or 

curtailing production or operating hours, from being used in the 
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

27

absence of an EPA-approved attainment plan.‖ 57 FR 13498 at 

13508. Nothing in these discussions suggests that the entire 

amount, or balance, of pre-base year banked credits must be 

included in the future year inventory of the approved attainment 

demonstration. 

In 1996, EPA further considered this issue as part of our 

proposed rule to revise the Prevention of Significant 

Deterioration (PSD) and NSR regulations in 40 CFR part 51, 

subpart I (61 FR 38250, July 23, 1996). In that proposed rule, 

EPA stated: ―Passage of the 1990 Amendments has significantly 

altered the landscape that confronted EPA at the time of the 

1989 rulemaking. Congress significantly reworked the attainment 

planning requirements of part D of title I of the Act such that 

EPA now believes it is appropriate to delete the restrictions on 

crediting of emissions reductions from source shutdowns and 

curtailments that occurred after 1990. In particular, Congress 

enhanced the importance of the requirement in section 172(c)(3) 

that States prepare a  ̳comprehensive, accurate, current 

inventory of actual emissions from all sources‘ in a 

nonattainment area as the fundamental tool for air quality 

planning.‖ 61 FR 38250, 38311.

The proposed rule in 1996 notes that the 1990 Amendments 

added specific milestones towards achieving attainment and also 

mandated sanctions that would apply to States that fail to 
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

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28

submit an attainment demonstration. 61 FR at 38311-12. EPA 

proposed two alternatives to allow increased use of shutdown 

credits. Id. In 2005, EPA‘s Phase 2 8-hour ozone 

implementation rule finalized the 1996 proposed alternative that 

did not require a State to have an approved attainment plan to 

use prior shutdown credits. 70 FR 71612, 71676 (November 29, 

2005). On reconsideration of this rule in 2007, EPA disagreed 

with a comment that suggested retiring a certain quantity of 

pre-base year emissions each year, stating: ―The requirements 

of the NSR program provide growth management tools and are an 

integral part of the overall air quality attainment program.‖5 72 

FR 31727, 31741 (June 8, 2007).

NRDC challenged this portion (among others) of EPA‘s 2005 

final rulemaking, arguing in part that EPA‘s allowance of prebase year shutdown credits and elimination of the requirement 

for an approved attainment demonstration were arbitrary and 

capricious. In 2009, the Court of Appeals for the D.C. Circuit 

rejected NRDC‘s challenge to EPA‘s longstanding policy allowing 

―pre-application reductions‖ as NSR offsets, as codified in 40 

CFR 51.165(a)(3)(ii)(C)(1)(ii). NRDC, 571 F.3d 1245 (D.C. Cir. 

 

5 EPA notes that for purposes of the California Environmental Quality Act 

(CEQA), the District capped its account balances. See Chapter 4.1 –

Environmental Impacts And Mitigation Measures - Air Quality. CSE submitted 

this Chapter with its Comment Letter but does not provide any comments that 

address it. Although the CEQA caps are not part of Rule 1315 that will be 

included in the SIP, the District‘s commitment to limit usage of the Offset 

Accounts below these levels unless it performs additional CEQA analysis is 

significant.
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

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29

2009). The court held that NRDC‘s challenge to this 

longstanding policy was time-barred because EPA‘s 2005 ozone 

implementation rule did not reopen the general issue of allowing 

pre-application offsets addressed in the 1989 rulemaking. 

However, the D.C. Circuit agreed with NRDC on the narrow issue 

that EPA‘s elimination of the requirement to have an approved 

attainment demonstration was not adequately justified. The 

court remanded this portion of EPA‘s 2005 rule to the Agency but 

did not vacate it.

6 Id. 

Thus, we agree with CSE‘s general point that approval of an 

attainment demonstration for the relevant NAAQS is a 

prerequisite to the use of prior shutdown credits in accordance 

with 40 CFR 51.165(a)(3)(ii)(C)(1). We disagree, however, with 

CSE‘s assertion that the District is required to either add the 

entire pre-base year balance of credits to the approved future 

year attainment inventory or somehow cap the Rule 1315 NSR 

Account balance at the amount of projected demand, as this 

assertion is not supported by the text of 40 CFR 

51.165(a)(3)(ii)(C) or the NRDC decision. 

 

6 As a result, although the text of current 40 CFR 51.165(a)(3)(ii)(C)(1) does 

not require a fully approved attainment demonstration in order to allow 

offset credit for prior shutdowns or curtailments, in light of the NRDC 

decision we have evaluated Rule 1315 for consistency with EPA‘s pre-2005 

requirement for an approved attainment demonstration for these purposes. The 

NRDC decision did not affect section 51.165(a)(3)(ii)(C)(1) in any other 

respect.
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

30

Comment 8: CSE titled this section of their comments ―The 

2007 AQMP Explicitly Excludes VOC and NOX Credits From Projected 

Emissions Inventories.‖ CSE does not contest the ―validity‖ of 

the 2007 AQMP. CSE‘s comments about the 2007 AQMP‘s treatment 

of pre-base year credits largely mirrors the comments about the 

2003 AQMP. The Comment Letter begins by characterizing Tables 

2-10 and 2-11 in Appendix III of the 2007 AQMP, and then states: 

―This is where growth for the Community Bank portion of the NSR 

program is accounted for, and this is where the pre-base-year 

credits would need to be included for ozone precursors. The 

2007 AQMP includes no pre-base-year credits for VOC and NOx.‖

[Citation omitted] Comment Letter at 11. CSE‘s comment on the 

2007 AQMP also recites three specific objections: (1) that EPA 

―conflates total growth from all point sources in Table 2-8 —

where no distinctions are made between pre-base-year credits and 

post-base-year credits nor open-market transactions and NSRAccount transactions — for growth based on pre-base year credits 

from the NSR Account‖; (2) EPA approves starting balances in 

the NSR Account that are larger than the growth; and (3) EPA‘s 

approval does not require a cap on the bank that is the same as 

the amount of growth that is added. Comment Letter at 12-14. 

Last, CSE states that EPA was required to analyze whether the 1-

hour ozone attainment plan included adequate pre-base year 

credits. EPA responds to this comment at Response 27 below.
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31

CSE is continuing to confuse growth and demand. Tables 2-

10 and 2-11 in Appendix 3 are evaluating historic demand for VOC 

and NOx credits. The District adds the pre-base year credits to 

its 2007 future year inventories in the growth portion of the 

2007 AQMP which is graphically shown in Table 2-8 of the AQMP. 

Then, the District evaluates historic supply and demand as a 

check to ensure that adequate growth is added back into the 

future year inventories. 

Table 2-8 in the 2007 AQMP Appendix III shows the VOC and 

NOx emissions from area and point sources as ―no growth‖ and 

―with growth‖. The growth that is added for the point and area 

sources in the ―with growth‖ portion of Table 2-8 includes the 

pre-base year credits the District is adding to its future year 

inventories. For total point sources of VOC, Table 2-8 shows 

that the District added 12 tpd as growth (35 tpd to 47 tpd) and 

for area sources of VOC, the District added 36 tpd (195 tpd to 

231 tpd). For NOx, the District added 1 tpd for point sources 

(36 tpd to 37 tpd) and 2 tpd for area sources (29 tpd to 31 

tpd).

EPA requested the District to provide data on the amount of 

growth that was included for point and area sources subject to 

NSR. EPA provided that information in Docket Items III-P 

(showing point and area NSR subject sources with growth) and 

III-Q (showing point and area NSR subject sources for no 
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

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32

growth). These tables show that for NSR subject sources the 

District added 12 tpd for VOC (35 tpd to 47 tpd) and 2 tpd for 

NOx (36 tpd to 38 tpd). EPA‘s TSD says that the District added 

27 tpd for VOC and 2 tpd for NOx. The TSD notes that the amount 

of pre-base year credits included in the growth far exceeded the 

District‘s projection of possible demand (3.1 tpd for VOC from 

the NSR Account and the open market) and 0 for NOx. EPA 

determined that the credits the District was including in its 

growth for its future year inventories was ―conservative and an 

appropriate way to meet the requirements of 40 CFR 51.165.‖ TSD 

at 12.

CSE‘s comment that EPA ―conflates total growth from all 

point sources in Table 2-8 . . . for growth based on pre-baseyear credits from the NSR Account‖ is not clear. CSE appears to 

consider only point sources as being subject to NSR. However, 

the District includes both point and area sources in its NSR 

program. Therefore, the District put together data on the point 

and area sources that are subject to NSR and prepared the tables 

in Docket Item III-P and III-Q. CSE apparently did not 

understand this information because it says that ―it is 

identical information already attached to Appendix III of the 

2007 AQMP – simply repackaged into a single table.‖ Comment 

Letter at 13. This is incorrect. EPA stated in its TSD: ―For 

Table 2.8 [sic], the District provided EPA with point and area 
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33

source data used to generate the summary data. EPA used this 

data to determine the amount of emission due to growth at 

facilities subject to NSR requirements.‖ TSD at 12, n 6. 

Therefore, EPA correctly determined that the District added 

sufficient pre-base year credits for point and area sources 

subject to NSR. The amount added as growth far exceeded the 

historic demand that the District used as a check.

For the two next points in CSE‘s comment on the 2007 AQMP, 

EPA incorporates its response from Responses 6 and 7, as 

applicable to the 2007 AQMP for VOC and NOx emissions. 

Comment 9: CSE comments that EPA lacks evidence to support the 

conclusions in the proposed rule concerning retroactive rule 

operation: Internal bank balances lack documentation.‖ As an 

introduction to this section, CSE makes the following statement: 

―Approving Rule 1315 would incorporate in federal law two 

changes to the District‘s internal banking system: one 

retroactive, in an effort to expunge from the District‘s legers 

[sic] the fact that it permitted more emission increases than 

the CAA‘s offsetting requirements allow; and one prospective, so 

that going forward the District would operate a new banking or 

―tracking‖ scheme. The rule‘s attempt to change history is rife 

with flaws, including a pervasive lack of documentation.‖

Response 9: These statements are unsupported and lack 

sufficient specificity for EPA to respond. We assume the 
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34

lettered subsections that follow this introduction contain 

specific comments which provide the factual support for these 

conclusions. Our response to the additional comments found in 

this subsection are provided below in response to each section 

(group of comments) provided by CSE.

Comment 10: CSE titled this section of their comments ―Pre-1990 

Credits Lack Documentation.‖ In this comment, CSE makes several 

assertions about the emission reductions that occurred prior to 

1990 and how they are tracked in Rule 1315. The first is that 

―the 1990  ̳starting balance‘ established in the Rule includes 

offsets for which the District claims to have  ̳some or all‘ 

documentation. (Emphasis added by commenter.) (See Response 

10A) ―Second, the EPAs approval of the decision to retire the 

pre-1990 offsets that remained in the Internal Bank in 2005 does 

not remove all invalid offsets from the system, since the Rule 

proposes to allow the facilities permitted prior to 2005 in 

reliance upon those pre-1990 offsets to ―return‖ those offsets 

as ―payback of offset debt‖ under Rule 1315(c)(3)(A)(v).

‖ 

(See 

Response 10B) Third, CSE states ―it is unclear why the EPA 

did[] not include the documentation that establishes the 

validity of the offsets in the ―Initial District Offset Account 

Balances‖ set out at Table A in the Proposed Rule in the record 

for this rulemaking‖ and that ―...EPA‘s failure to do so not 
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35

only deprives the public the opportunity to review and comment 

upon that documentation, the failure is also a violation of the 

Administrative Procedures Act.‖ (See Response 10C) And fourth 

that ―Proposed Rule 1315 has no mechanism to track how the pre1990 credits are returned to the bank, either as payback of 

offset debt or through orphan shutdowns...‖. (Citations omitted)

(See Response 10D) 

Response 10: EPA disagrees with each of these assertions for 

the reasons provided below. 

Response 10A: First, CSE states that ―the 1990  ̳starting 

balance‘ established in the Rule includes offsets for which the 

District claims to have  ̳some or all‘ documentation,‖ (emphasis 

added by commenter) and continue by stating that ―having  ̳some‘ 

documentation to support the claim that an offset is valid is 

not sufficient.‖ The District provided a full discussion of 

their evaluation of pre-1990 credits on page 12 of their Staff 

Report (as well as the prior 2005 and 2006 evaluations), all of 

which are included in the Docket. The District explains that 

where ―all‖ documentation was not available (e.g., the original 

permit file that generated the emission reductions) there was 

still sufficient historical records to verify the specific 

information listed in the 1994 Seitz memo and determine that the 

emission reductions meet the federal integrity criteria for 

offsets. The Staff Report also explains that all pre-1990 
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submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

36

credits were evaluated when they were originally transferred 

into the District‘s initial Internal Bank. As discussed below, 

the District‘s 2003 - 2005 re-evaluation of all of its banked 

pre-1990 emissions reductions eliminated (with a starting date 

of 1990) all credits for which the District no longer possessed 

sufficient documentation to determine the emission reductions 

meet the federal integrity criteria for offsets. Therefore, we 

disagree with CSE and CSE has not pointed to any specific 

information showing that the District retained a pre-1990 credit 

without adequate documentation. 

As discussed both in the District‘s Staff Report and EPA‘s 

TSD, EPA raised the issue of availability of sufficient records 

for the pre-1990 credits in the District‘s Offset Accounts in 

2002, in light of the District‘s adoption of Rule 1309.2 –

Offset Budget, which would allow more sources access to the 

Offset Accounts. TSD at 4. EPA pointed to a 1994 EPA memo 

regarding the use of pre-1990 offsets as guidance. See 

Memorandum dated August 26, 1994 from John S. Seitz, Director, 

EPA Office of Air Quality Planning and Standards, to David

Howekamp, Director, EPA Region IX Air and Toxics Division, 

―Response to Request for Guidance on Use of Pre-1990 ERC‘s and 

Adjusting for RACT at Time of Use‖ (1994 Seitz Memo). The 1994 

Seitz Memo states that pre-1990 credits may be utilized, 

provided the State ―collect[s] and maintain[s] information on 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

37

these ERC's, including, at a minimum, the name of the source 

that generated the ERC's, the source category that applies to 

this source, the quantity of ERC's generated by this source, the 

specific action that created the ERC's (e.g., a shutdown of a 

unit, process change, add-on control), the date that the ERC's 

were generated and enough other information to determine the 

creditability of all ERC's.‖ 1994 Seitz Memo at 2. At EPA‘s 

request, the District reviewed all available records and 

determined that sufficient records were no longer available for 

some of pre-1990 credits, or that the effort to provide those 

records was too burdensome. See Proposed SCAQMD NSR Offset 

Tracking System, Background, February 23, 2006. Nevertheless, 

the District undertook a complete and thorough review of its 

offset records. Id. at 2. The result was the District‘s 

elimination of pre-1990 credits for which it did not have 

adequate documentation. Id. (stating: ―In order to resolve 

EPA‘s comments, SCAQMD staff is proposing several modifications 

to the procedures used in the tracking system. In the revised 

procedures SCAQMD has proposed elimination of all credits for 

which SCAQMD no longer retains documentation.‖) 

From this review, the District calculated new beginning 

balances for each of the pollutants. The District removed pre1990 credits with inadequate records from the 1990 starting 

balance, leading to much lower balances for all pollutants 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

38

except NOx. Id. (stating: ―Several elements of the proposed 

revisions to the SCAQMD‘s tracking system contribute to these 

reductions, as discussed below, but the single element of the 

proposal with the greatest contribution is the reevaluation of 

pre-1990 credits and proposed elimination of all credits for 

which SCAQMD no longer retains documentation.‖) Accordingly, 

the District removed this quantity of credits from the 1990 

starting balances for the Internal Bank, as shown on page I-1 of 

Appendix I of the District‘s staff report. Thus the District‘s 

1990 starting balances only contain credits for which the 

District possessed sufficient documentation, consistent with the 

1994 Seitz Memo. Therefore, we disagree with CSE that there are 

pre-1990 credits in the District‘s bank that lack documentation. 

In approving the District‘s newly calculated starting balances 

(i.e those from which pre-1990 credits without documentation 

were eliminated), EPA is not required to independently review 

all documentation. As noted in our TSD, EPA is approving a 

system for tracking credits. EPA acknowledges the system 

depends on the starting balances. EPA determined that the 

District‘s Staff Report and the preceding documents setting 

forth the District‘s procedures ensured accurate and 

conservative starting balances for each pollutant. CSE has not 

identified any information to show otherwise.
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

39

Response 10B: Regarding CSE‘s second assertion that while Rule 

1315 requires ―removal of some of those offsets, [the Rule] does 

not actually require removal of all invalid offsets‖; EPA 

disagrees. As stated on page 14 of the District‘s Staff Report, 

all pre-1990 credits for CO and PM10 were used by 1997, and the 

remaining balance of VOC, NOx and SOx credits were retired at the 

end of 2005. CSE claims that this retirement ―does not remove 

all invalid offsets from the system, since the Rule proposes to 

allow the facilities permitted prior to 2005 in reliance upon 

those pre-1990 offsets to  ̳return‘ those offsets as  ̳payback of 

offset debt‘ under Rule 1315(c)(3)(A)(v).‖ [Footnote omitted] 

Comment Letter at 16. According to CSE, as the pre-1990 

internal bank offsets are returned to the internal bank, they 

are laundered, or  ̳tracked‘ as if they were never touched by the 

improper crediting of those offsets in the first place.‖ 

Comment Letter at 16. These statements are incorrect and appear 

to be based on a misunderstanding of the fact that once a credit 

is used to offset new emission increases, the ―credit‖ is gone. 

When credits are debited from the bank to allow the construction 

and increased emissions from a new or modified source, these new 

emissions are no longer ―pre-1990‖ emissions, as they are being 

emitted in the present timeframe. When such a source shuts down 

or has controls applied to reduce emissions, the reductions 

reduce the current emission inventory. In other words, 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

40

pollution that is being emitted into the air stops being emitted 

into the air. These current day emission reductions no longer 

have any relationship to any pre-1990 credits. For example, 

assume a new piece of equipment was permitted in 2000 entirely 

with the use of pre-1990 credits and operated until the entire 

facility shutdown in 2011. If the facility submits an 

application to claim the emission reductions from the entire 

facility (where some pieces of equipment obtained credits from 

the District Offset Account and some did not), the District 

would evaluate the application under the provisions of Rule 1309 

– Emission Reduction Credits and Short Term Credits, which is 

SIP approved. Rule 1309 requires the quantity of emission 

reductions verified as meeting the federal integrity criteria to 

undergo an additional adjustment to reflect current day BACT 

levels7, and only then is the quantity of any ―payback of offset 

debt‖ credited to the District Offset Accounts. The remaining 

balance of emission reductions is issued to the source as an ERC 

certificate. If the source did not claim any emission 

reductions from the shutdown of their facility, the District 

would then evaluate the emission reductions pursuant to Rule 

 

7 The District imposes this more stringent current day BACT adjustment at the 

time of credit creation in lieu of current and future surplus adjustments to 

the quantity of emission reductions. See 61 FR 64292, Dec. 4, 1996 and 

Environmental Protection Agency, Region IX Air & Toxics Division Technical 

Support Document for EPA‘s Notice of Final Rulemaking for the California 

State Implementation Plan South Coast Air Quality Management District New 

Source Review by Gerardo C. Rios, October 24, 1996 (TSD).
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

41

1315, which imposes different requirements than Rule 1309, but 

also ensures that all credits meet the federal integrity 

criteria. It is important to note that all crediting of 

emission reductions in either example are based on real 

reductions of emissions that were recently emitted into the air 

but are no longer being emitted. The association with the pre1990 credits no longer exists. Thus CSE is incorrect to claim 

that the pre-1990 credits are ―laundered‖ in the tracking 

system, since the tracking system only collects as credits the 

quantity of actual emission reductions calculated pursuant to 

Rule 1309 that were originally lent to the source from the 

District‘s Offset Accounts. In addition, orphan shutdown 

credits are collected in accordance with Rule 1315, which 

requires that permitted emission limits be adjusted by an 80% 

factor to estimate actual emissions. See Rule 1315(c)(3)(B)(i).

Response 10C: CSE‘s third comment claims that EPA must review 

documentation for each of the thousands of individual 

transactions that contributed to the 1990 starting balance, 

otherwise our approval of Rule 1315, including our determination 

that the 1990 starting balance meets the federal integrity 

criteria for offsets is improper. EPA does not believe it was 

Congress‘s intent that we review each individual action carried 

out by a local air District to ensure compliance with the CAA. 

As the Court‘s have recognized, the Clean Air Act establishes a 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

42

system of cooperative federalism. The federal EPA establishes 

the National Ambient Air Quality Standards, but the States have 

primary authority for ensuring that their air quality meets the 

NAAQS. 42 U.S.C. §§ 7407(a), 7401(a)(3). The CAA requires 

States to develop SIPs to implement, maintain and enforce the 

NAAQS and to submit these SIPs to EPA, and EPA must approve a

submitted SIP that meets the CAA‘s requirements. 42 U.S.C. §§

7410, 7410(k)(3). In this case, the District adopted and 

submitted a rule that provides detailed methodologies for 

reviewing and quantifying specific types of emission reductions 

prior to crediting such reductions to their Offset Accounts. It 

is the overall program that EPA must review to ensure it 

contains the necessary provisions to ensure 1) that the District 

is providing an adequate quantity of emission reductions to make 

up for all required federal emission reductions not required by 

the District‘s NSR program (CAA Section 173), and 2) to ensure 

the federal offset criteria for offsets debited to be permanent,

surplus, quantifiable, and enforceable are met (40 CFR 

51.165((a)(3)(ii)(C)(1)(i)). For the reasons explained in EPA‘s 

proposed rule and TSD, we have determined that Rule 1315 

satisfies these statutory and regulatory criteria for approval. 

CSE‘s broad assertion that EPA should have reviewed the 

extensive documentation for each pound of emissions credits in 

the District‘s Offset Accounts is without merit. 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

43

CSE claims that since ―EPA failed to review the 

documentation that the SCAQMD relied upon to establish its 

Offset Account balance, then EPA[] is in no position to find...‖ 

that the credits in the Offset Accounts meet the requirements of 

the CAA. As discussed on page 10 of the TSD, EPA made a 

determination as to the whether the credits contained in the 

District‘s Offset Accounts meet the federal integrity criteria 

of being permanent, surplus, quantifiable, and enforceable and 

therefore meet the requirements of the CAA. It is not necessary 

for EPA to review documentation for every single credit and 

debit in the District‘s Offset Account to make this 

determination. Instead EPA has reviewed and evaluated the 

mechanisms contained within Rule 1315 to ensure that at the time 

of use, all credits used to offset new emission increases meet 

the federal integrity criteria. Further discussion of how EPA 

evaluated the rule is provided below in response to specific 

comments made by CSE. 

Response 10D: CSE‘s fourth assertion is based on the 

misconception that pre-1990 credits remain classified as pre1990 credits even after they have been used to construct a new 

project. As discussed above in EPA‘s response to CSE‘s second 

assertion, this is incorrect. (See Response 10B) Once a credit 

is used by a source, the credit is retired. Any credits 

generated later from emissions reductions at that source are new 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

44

credits from actual reductions that meet the federal criteria. 

See EPA‘s response to CSE‘s second assertion under this comment 

for a more detailed discussion.

Comment 11: CSE titled this section of their comments ―Annual 

Balances Lack Documentation‖. In this comment, CSE correctly 

points out that Rule 1315 relies on permitted emission limits, 

discounted by 20% to account for actual emissions from a 

shutdown source, rather than relying on actual emissions 

information for major or minor source orphan shutdowns. They 

claim that ―This presents three problems inherent to this 

rulemaking.‖ 

The first problem identified by CSE is that ―the CAA‘s 

plain language requires  ̳actual‘ emissions be used to meet its 

offsetting requirement...‖ They then cite 40 CFR 51.165(a)(1) 

which reads ―All such plans shall use the specific definitions. 

Deviations from the following wording will be approved only if 

the State specifically demonstrates that the submitted 

definition is more stringent, or at least as stringent, in all 

respects as the corresponding definition below.‖ While not 

stated explicitly, it appears that CSE‘s intended comment is 

that the rule must use the term and meaning of ―actual‖ as 

defined in 51.165 and not an alternative determination of 

―actual‖ emissions. 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

45

Response 11: As CSE points out in their comment, the CAA does 

allow deviations from defined terms if the definition is ―at 

least as stringent, in all respects as the corresponding 

definition...‖ Except for orphan shutdowns, all credits are first 

evaluated pursuant to the requirements of Rule 1309, which in 

turns specifies that the Rule 1306 emission calculation methods 

be used to calculate emission reductions. Rule 1306(c)(1) 

states that emission decreases are ―The sum of actual 

emissions,...which have occurred each year during the two-year 

period immediately preceding the date of permit application, or 

other appropriate period, determined by the Executive Officer or 

designee to be representative of the source's cyclical 

operation, and consistent with federal requirements;...‖ In turn, 

Rule 1302 defines Actual emissions as ―the emissions of a 

pollutant from an affected source determined by taking into 

account actual emission rates and actual or representative 

production rates (i.e., capacity utilization and hours of 

operation).‖ Thus, except for reductions from Orphan Shutdowns, 

the quantity of emission reductions credited to the District 

Offset Accounts is based on the same definition of ―Actual 

Emissions‖ as in 40 CFR 51.165. 

The only remaining question is whether the District‘s use 

of 80% of permitted emission limits for orphan shutdowns 

provides a result that is ―at least as stringent as‖ the result 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

46

of using the 40 CFR 51.165 definition of the term Actual 

Emissions when quantifying the amount of emission reductions to 

be credited to the District Offset Accounts. The TSD and 

proposal for the proposed approval of Rule 1315 both provide a 

discussion on this topic and explain why the provisions of Rule 

1315 provide an acceptable method (i.e. at least as stringent as 

the federal requirement) to calculate actual emissions from 

orphan shutdowns as required by Rule 1315. (See TSD pgs 9-10) 

CSE‘s comments do not question the reasoning behind EPA‘s 

determination, but simply state in their next comment that 

actual emission data is available, therefore it should be used. 

EPA‘s responds to this assertion in our response to Comment 13,

that also makes this point. 

Comment 12: CSE also states in this comment that Rule 1315 

contains a definition for ―Net Emission Increase‖ that differs 

from the language in the regulation. 

Response 12: This definition is not included in the version of 

Rule 1315 that we are approving, as the District has 

specifically excluded this definition from the SIP submittal. 

See Rule 1315(h). Therefore, we do not need to evaluate this

definition as part of our action on Rule 1315. 

Comment 13: CSE states that ―While some very small sources do 

not report emissions, major sources and sources that emit over 4 

tons per year of certain pollutants all report annually. Yet 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

47

under Rule 1315(c)(3)(B), all orphan shutdowns and reductions 

are treated as if they were very small sources, with no 

emissions information. Actual emissions information cannot be 

ignored in favor of assuming 80% of permitted emissions.‖ 

Response 13: While District Rule 301 – Permitting and 

Associated Fees, requires all sources with a potential to emit 

greater than 4 tpy to submit an annual emission report, these 

reports do not always include emission data for individual 

pieces of equipment. Instead, since the annual report covers 

the entire facility, many sources, such as combustion sources 

and coating operations are often grouped together for the 

report. Annual emissions from these units are based on the 

equipment group‘s total material usage multiplied by an 

appropriate default emission factor. The default emission 

factors are designed to be conservative and may not be as 

accurate as the emission factors used for permitting of 

equipment or the calculation of ERCs. For these reasons, EPA 

disagrees with CSE that the use of annual emission reports would 

provide a better (more accurate?) way to calculate actual 

emission reductions from orphan shutdowns. As stated in the TSD 

and proposal, we have determined that the method provided in 

Rule 1315 is at least as stringent as using actual emissions 

records for determining the actual emission reductions from 

orphan shutdowns. See TSD at 9, 10.
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

48

Comment 14: CSE states that there is no evidence that any of 

the Orphan Reduction/Orphan Shutdown credits meet the 

definitions for these terms because the District does not 

evaluate whether these reductions are ―not otherwise required by 

rule, regulation, law, approved Air Quality Management Plan 

Control Measure, or the State Implementation Plan.‖ 

Response 14: This statement is incorrect. As part of the 

process for collecting orphan shutdowns the District reviews 

existing rules and laws to ensure the reduction or shutdown (or 

equivalent such as electrification) is not required as of the 

date of the reduction. The requirement to perform this check 

and make any necessary adjustments is inherent in the definition 

of orphan shutdown, which is defined as follows: ―any reduction 

in actual emissions from a permitted source within the District 

resulting from removal of the source from service and 

inactivation of the permit without subsequent reinstatement of 

such permit provided such reduction is not otherwise required by 

rule, regulation, law, approved Air Quality Management Plan 

Control Measure, or the State Implementation Plan and does not 

result in issuance of an ERC.‖ Rule 1315(b)(5). To the extent 

CSE intended to comment on the District‘s implementation of the 

rule, such comments are outside of the scope of our action on 

this rule under CAA 110(k).
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

49

Comment 15: This comment states that ―[CSE] knows[] that the 

SCAQMD has made mistakes in determining what can lawfully be 

credited to its Internal Bank,‖ and offers two examples. First 

they cite the District‘s action of removing pre-1990 credit 

balances for which sufficient records were no longer available. 

Second they claim that the documentation the District provided 

for the CPV Sentinel Energy Project source-specific SIP revision 

proves that the District has claimed some offsets for their 

Internal Bank that were not valid. Last, CSE claims that the 

rulemaking lacks the record required for EPA to make a finding 

―...that the emission reductions the District is crediting and 

debiting in its Offset Accounts meet the requirements of the CAA 

and can be used to provide the offsets otherwise required for 

Federal major sources and modification.‖ CSE bases this claim 

primarily on that fact that the same type of documentation 

provided for the CPV Sentinel Energy Project source-specific SIP 

revision was not made available for Rule 1315. 

Response 15: As EPA stated earlier in Response 10C, there is no 

requirement for EPA to review and approve every transaction that 

was or will be undertaken pursuant to Rule 1315. Instead EPA 

has carefully reviewed each of the provisions of Rule 1315 and 

determined that it provides an adequate method for tracking and 

quantifying emission reductions which meet all of the federal 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

50

integrity criteria for offsets. The TSD provided a full 

discussion on each aspect of these criteria. (See TSD pgs 7-10) 

As stated in the District‘s Staff Report, the District has 

implemented an NSR tracking system to demonstrate programmatic 

equivalence between its NSR program and the offset requirements 

of the federal program since EPA‘s 1996 approval of the 

Districts NSR program. District staff have prepared and 

presented to the AQMD Governing Board at public meetings a 

series of reports that track credits and debits from August 1990 

through July 2002. While the rulemaking process for Rule 1315 

was in flux (adopted, challenged in court, repealed, readopted...) the District submitted additional reports in 2007 that

also tracked the credits and debits from the District‘s Offset 

Accounts. Each of these reports demonstrated that in the 

aggregate, the District provided an equivalent number of offsets 

as would have otherwise been required by the federal CAA. Each 

of these reports is included in the docket for this rulemaking. 

Comment 16: CSE titled this section of their comments ―The Rule 

1315 Approach To Surplus Adjustment Does Not Capture Reductions 

As Required By Federal Law‖ CSE claims that ―the provisions of 

Proposed[] Rule 1315(c)(4) are inadequate to capture all the 

reductions needed to ensure banked reductions remain surplus at 

time of use‖ because when offsets are deposited from any source 

listed in 1315(c)(3)(A) there is no provision that requires 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

51

those emission reductions to be surplus adjusted prior to 

deposit; and ―once the emissions reductions are deposited, there 

is no mechanism for ensuring that the proper annual reduction is 

calculated and applied.‖ Comment Letter at 19.

Response 16: EPA disagrees. Rule 1306 requires all actual 

emission reductions to be BACT adjusted at the time of creation.

South Coast Rule 1306(c). This means that only reductions that 

exceed the level of control required by BACT are allowed to be 

credited under the Districts NSR program. As EPA discussed in 

our 1996 approval of the District‘s NSR program (61 FR 64292), 

we approved this requirement in lieu of the requirement to 

surplus adjust credits at the time of use based on our 

conclusion that the District‘s BACT adjustment at time of 

creation was at least as stringent as a requirement to adjust at 

the time of use. For the same reasons, we believe that all 

credits deposited under paragraph (c)(3)(A), except clauses 

(c)(3)(A)(i), (c)(3)(A)(ii), and (c)(3)(A)(vi) are adequately 

surplus adjusted both at the time of creation and use. 

Paragraph (c)(4) entitled ―Surplus at the Time of Use‖ only 

applies to these three clauses because they are the only ones 

not automatically adjusted to account for a surplus adjustment 

at the time of use. Instead, paragraph (c)(4) requires credits 

deposited into the District Offset Accounts, pursuant to clauses 

(c)(3)(A)(i), (c)(3)(A)(ii), and (c)(3)(A)(vi), to be annually 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

52

discounted in the aggregate to ensure they remain surplus at the 

time of use. 

Typically credits are adjusted at the time of use by 

reviewing the source category and type of reduction that created 

the emission reduction and determining if any new requirements 

requiring additional reductions have become applicable. This 

method would be extremely difficult and administratively 

burdensome if applied to the District‘s tracking system. 

Therefore the District proposed an alternative which we believe 

is equivalent to the case by case application of surplus 

adjustment at the time of use. Rule 1315 paragraph (c)(4) 

requires the District to determine the quantity of emission 

reductions expected from the adoption of new regulations for 

each non-attainment pollutant. The District then determines 

what percentage of permitted emissions these reductions 

represent. The same percentage of emission reductions is then 

applied to the Offset Account balance for that pollutant. For 

example, if the District adopts two rules that will achieve 200 

tpy of PM10 emission reductions, these 200 tpy represents a 

specific percentage of the total PM10 stationary source 

inventory. This percentage is applied to (multiplied by) the 

Offset Account balance and the resulting figure is subtracted 

from the Offset Account Balance, which in effect reduces the 

total Offset Account balance by a percentage equal to the total 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

53

amount of emission reductions achieved by new or revised control 

measures, as a percentage of the total PM10 stationary source 

inventory. This means that the degree of emission reduction 

achieved by any rules implemented in a year are applied to the 

entire Offset Account balance, not just to sources that would 

otherwise be subject to the new rules, which will result in a 

greater downward adjustment in the total Offset Account balance 

compared to source category-specific adjustments. We conclude

that this surplus adjustment requirement in Rule 1315 is at 

least as stringent as other, more traditional methods for 

surplus adjustments at time of use. 

Comment 17: CSE‘s comment states that while Rule 403, a 

fugitive dust rule, was adopted to control PM10 emissions, no 

surplus reductions appear in the District Offset Account balance 

sheet for that year. Comment Letter at 19.

Response 17: CSE is correct that no surplus reductions were 

made for Rule 403. This rule regulates fugitive dust from any 

active operation – such as earth-moving activities, 

construction/demolition activities, disturbed surface areas, or 

heavy- and light-duty vehicular movement and open storage piles. 

It does not apply to permitted emission units. If a source 

subject to this rule was to shut down, no emission reductions 

would be collected for the reduced fugitive emissions subject to 

Rule 403. Since there are no emission reductions in the 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

54

District‘s Offset Accounts that are subject to Rule 403, the 

Offset Account balance does not need to be surplus adjusted for 

Rule 403.

Comment 18: CSE‘s comment continues by stating that this system 

is not equivalent because the credits in the District‘s internal 

bank do not reflect the District‘s rules as a whole and offers 

as an example that spray coating operations are more likely to 

occur at minor, rather than federal major facilities. And 

finally that ―Spray coating operations became subject to a new 

PM regulation in 2002, when the District adopted Rule 481. The 

District made no discount to the internal bank PM10 account in 

2002-2003.‖ Comment Letter at 19.

Response 18: This statement is not correct. Since the balance 

of both minor and major orphan shutdowns undergo annual surplus

adjustments, it does not matter at which type of facility the 

emission reductions occur. In addition, since Rule 1315 

requires the amount of emission reductions achieved from the 

entire permitted stationary source inventory to be applied to 

the total Offset Account balances, it does not matter at which 

source categories the emission reductions from new rules occur, 

nor does it matter what source categories generated the credits 

in the District‘s Offset Accounts. The Offset Account balances 

are surplus adjusted annually, in the aggregate, so that all 

credits meet the surplus at time of use requirement prior to 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

55

being debited from these accounts. The revisions to Rule 481, 

which were adopted in 2002, were all administrative in nature 

and did not achieve any PM10 emission reductions, therefore no 

surplus adjustment was made to the District‘s Offset Accounts 

for PM10 in 2002-03.

Comment 19: Finally CSE offers an example of an instance where 

the District failed to surplus adjust at time of use some of the 

emission reductions listed in the AB 1318 Tracking System. 

Comment Letter at 19. EPA notes that credits transferred from 

the Rule 1315 Offset Accounts into the AB 1318 Tracking System 

had already been surplus adjusted to account for the emission 

reductions of Rule 1157 – in the aggregate, as represented by 

the 0.31 tpd surplus adjustment the District made to their PM10

Offset Account balance at the end of 2006. While CSE is correct 

that Rule 1157 reduced emissions from the 389 affected 

facilities by 60%, the effect on the entire permitted stationary 

source emission inventory was only 2.8%. 

Response 19: It appears, based on CSEs comments, that CSE did 

not fully understand the requirements of Rule 1315 (c)(4).

Section (c)(4) of the rule requires an ―in the aggregate‖ 

adjustment of the Offset Account balances, which reduces 

emissions by the same overall percentage achieved by any new 

rules, whether or not credits in the District‘s accounts came 

from source categories affected by the new rules. For the 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

56

reasons provided in our TSD in Section IV.A.2. and in Response 

16 above, we conclude that Rule 1315 contains adequate 

provisions to ensure all Offset Account balances are surplus 

adjusted annually to satisfy the surplus adjustment at the time

of use requirement. 

Comment 20: CSE asserts that ―Proposed Rule 1315 Does not 

Incorporate the Federal Validity Requirements.‖ Specifically, 

CSE states that ―To meet the requirements of federal law, the 

Proposed Rule must incorporate the definitions for validity 

found in federal law...‖ and that ―While Proposed Rule 1315 (6) 

is titled ―Federal Offset Criteria,‖ it does nothing more than 

reference other parts of the Proposed Rule and those parts 

neither contain nor reference the requirements of federal law. 

Proposed Rule 1315(6) instead is circular and self-referential.‖ 

Comment Letter at 20.

Response 20: CSE does not provide any citations to support this 

alleged requirement. While EPA agrees that all emission 

reductions used to offset the emissions from new and modified 

sources must meet the federal integrity criteria of being 

permanent, surplus, quantifiable, and enforceable, it is not 

necessary for the rule to specifically define these terms. See 

40 CFR 51.165((a)(3)(ii)(C)(1)(i). Instead the rule must

include provisions that ensure that the credits being used as 

offsets meet these criteria. Paragraph (c)(6) of Rule 1315 is 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

57

not intended to be a requirement that the criteria be met, but 

instead points to the rule section(s) that ensure each of these 

criteria are met. Section IV.A. of our TSD discusses EPA‘s 

evaluation of how the rule ensures each of these criteria are 

being met, consistent with the requirements of 40 CFR 

51.165((a)(3)(ii)(C)(1)(i). CSE‘s comment is conclusory and 

unsupported.

Comment 21: CSE‘s comments that the SCAQMD‘s existing SIP 

approved NSR program establishes certain requirements on 

emissions that this Rule attempts to set aside. CSE cites 

sections of Rule 1315 which allow some of the offsets provided 

from the open market, pursuant to the requirements of Rule 1303, 

to be collected as credits for the District‘s Offset Accounts. 

They claim that since Rule 1303 requires these offsets to be 

provided to obtain a permit, they are not surplus to the 

requirements of the SIP, and may not be credited into the 

District‘s Offset Accounts. Comment Letter at 21.

Response 21: The purpose of Rule 1315 is to provide a tracking 

system to demonstrate that in the aggregate, the District is 

providing at least as many offsets under their approved NSR 

program as would otherwise be required by a program that 

contained no exemptions from federal offset requirements. The 

requirement in Rule 1303 for minor sources (>4 tpy but less than 

major source emission thresholds) to provide offsets for 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

58

emission increases is more stringent than federal requirements 

which only apply to major sources. South Coast Rule 1303(b)(2).

Likewise, the general requirement to provide offsets at a ratio 

of 1.2:1 is more stringent than the CAA‘s general requirement in 

subpart 1 of part D, title I to provide offsets at a ratio of 

1:1 for all non-attainment pollutants except ozone precursors 

(VOC and NOx), which are subject to more stringent offset ratios

under subpart 2 of part D. When the District collects offsets 

(or portions thereof) that were already determined to be 

surplus, they are collecting a greater quantity of offsets than 

required by the federal NSR program. Rule 1315 collects some of 

the offsets surrendered to the District that are in excess of 

federal requirements to balance against the offsets not 

collected by the District, which would have been required under 

federal requirements. Before any emission reductions can be 

credited to the District‘s Offset Accounts, the emission 

reductions must first meet the federal integrity criteria, which 

these credits – offsets collected for minor sources and the 

additional 0.2 offset ratio, have already met. They are 

―credits‖ i.e., pluses to the tracking system because they are 

in excess of federal offset requirements. 

Comment 22: CSE states that the provisions of Section 

(c)(3)(A)(v) are problematic for two reasons: 1) ―once a 

facility uses an ERC (or ERC equivalent) to meet its NSR 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

59

offsetting requirement, that ERC no longer exists.‖; 2) ―...there 

is no provision in Proposed Rule 1315 that requires a surplus 

adjustment for those emissions...‖. Comment Letter at 21. CSE 

then provides the following example of how they believe this 

process would work:

As the Rule is currently proposed, a manufacturing facility 

operating now could have received a Community Bank or 

Priority Reserve allocation for emissions in 1994 [check], 

based upon the shutdown of a boiler that operated between 

1987 and 1993. Then, the manufacturing facility shuts down 

in 2010 and submits a 1306 banking application. This 

proposed rule would allow the SCAQMD to bank the entire 

Community Bank or Priority Reserve allocation even though 

the intervening facility has already used that allocation 

to meet its 1303 obligation and there have been rules 

adopted between 1987 and 2010 that would have required 

emission reductions for boilers. 

Response 22: There are several errors in this example. If 

an existing facility shutdown in 2010 and submits a banking 

application pursuant to Rule 1306, then the District will first 

determine how much of the emission reduction meets the federal 

offset integrity criteria, including the required BACT surplus 

adjustment. After this determination has been made, the 

District will then review its records to determine if the source 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

60

ever obtained any offsets from the District (e.g., Priority 

Reserve, Community Bank, NSR Balance). If so, then the District 

will subtract this amount from the total creditable amount of 

emission reductions calculated pursuant to Rule 1306, and credit 

only the amount originating from the District accounts back to 

the Rule 1315 tracking system. To the extent the District 

provided these credits to the source in the first place, the 

District is simply returning the same amount of credits to the 

District NSR Account. These credits are still surplus adjusted. 

Comment 23: Based on the example provided in the earlier 

comment, CSE also claims these emission reductions are not 

surplus when they are credited back to the District offset 

accounts because they were already relied upon by the shutdown 

source. Comment Letter at 22.

Response 23: EPA agrees that such a facility would have 

relied on these credits at the time their permit was issued, but 

since that time, the facility has been emitting its own

emissions into the air. When the facility shuts down, it is 

creating new emission reductions when compared to the baseline 

inventory. These new emission reductions are evaluated pursuant 

to Rule 1306 to verify that they meet all of the federal 

integrity criteria, including the requirement that the reduction 

be surplus. 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

61

Comment 24: CSE claims that ―Similarly, for Proposed Rule 

1315(3)(A)(vi)[] Rule 1306 does not allow ERCs to be generated 

for the activities described therein.‖ 

Response 24: CSE‘s comment does not provide an explanation 

or basis for this claim. The provision contained in section 

(c)(3)(A)(vi) of Rule 1315 allows, upon EPA concurrence, the 

amount of the BACT adjustment required by Rule 1306(c) to be 

credited to the District‘s Offset Accounts if this amount ―is 

not otherwise required by rule, regulation, law, approved Air 

Quality Management Plan Control Measure, or the State 

Implementation Plan.‖ This provision has only been used once 

since the District created its Internal Bank in 1990.8 EPA 

intends to approve such use only in cases where the credits are

to be used immediately for a specifically identified project 

(and therefore the credits would not be subject to an additional 

at time of use surplus adjustment) and where EPA determines that 

the construction of the identified project would not interfere 

with any applicable requirement concerning attainment and RFP or 

any other applicable requirement of the Act. 

Comment 25: CSE states in this comment ―As a broader, more 

universal matter the SCAB and the Coachella Valley‘s failure to 

attain the PM10 NAAQS and the 1 hour ozone NAAQS coupled with the 

 

8 See Appendix A of Rule 1315 Staff Report, entry entitled ―1990-97 BACT 

Discount ERCs [(c)(3)(A)(vi)]‖.
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

62

massive black box in the 8 hour ozone plan show that no emission 

reductions that have occurred or will occur as part of the NSR 

program are actually surplus. In fact, the Air Basins need all 

the reductions of the NSR program and more for attainment. The 

currently approved SIP Rules set out a rigorous process for 

banking emission reductions that was developed at the direction 

of the Clean Air Act because the Air Basins are nonattainment 

areas. The EPA cannot now approve a Rule that, in effect, sets 

aside parts the SIP approved NSR program.‖ Comment Letter at 

22.

Response 25: It appears that CSE is using the term 

―surplus‖ in this comment to mean something different from the 

requirement in 40 CFR 51.165((a)(3)(ii)(C)(1)(i) that emission 

reductions be ―surplus‖ to any other requirement of the CAA. In 

the context of evaluating the integrity of an NSR offset, EPA 

uses the term ―surplus‖ to refer to any emission reduction that 

is not otherwise required by the CAA. See CAA 173(c); see also 

TSD at 7-9. Whether the District has attained any particular 

NAAQS or needs additional emission reductions as part of its 

plan for attaining a particular NAAQS is not relevant to the 

question whether a particular emission reduction is ―surplus‖ to 

other CAA requirements consistent with 40 CFR 

51.165(a)(3)(ii)(C)(1). Contrary to CSE‘s contention that Rule 

1315, ―sets aside parts the SIP approved NSR program,‖ we are 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

63

approving Rule 1315 based on our conclusion that it strengthens 

the SIP-approved NSR program by providing a detailed methodology 

for tracking credits within the District‘s Offset Accounts. 

Comment 26: CSE titled this section of their comments 

―Allowing the District to Shift from a 1.5 to 1.0 Offset Ratio 

to a 1.2 to 1.0 Offset Ratio Violates the Act‖. CSE claims that 

―EPA has not determined that California BARCT and federal BACT 

are equivalent‖ and that ―federal BACT is a facility by facility 

approach and BARCT uses classes of categories‖ and therefore, 

they cannot be equivalent. Approval of a 1.2:1, rather than 

1.5:1 offset ratio is an illegal shift and is therefore 

arbitrary and capricious. 

Response 26: We disagree as we are not approving any 

change in the offset ratios established in the District‘s SIPapproved NSR program. Rule 1303 – Requirements, currently 

requires all sources of VOC and NOx to provide offsets at a 1.2:1 

ratio. EPA approved this ratio as part of our 1996 approval of 

the Districts NSR program based on our conclusion that the 

District‘s program met the criteria for exemption from the 

requirement in CAA section 182(e)(1) for a 1.5:1 offset ratio in 

extreme ozone nonattainment areas (61 FR 64291, December 4, 

1996). Nothing in our action today affects our prior action with 

respect to Rule 1303. To the extent CSE intended to challenge 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

64

our approval of the 1.2:1 ratio in Rule 1303 into the SIP in 

1996, such a challenge is late.

As CSE notes, Section 182(e)(1) of the CAA provides an 

exception to the requirement of a 1.5:1 offset ratio for ozone 

precursors in extreme non-attainment areas. This Section reads 

as follows:

―...shall be at least 1.5 to 1, except that if the State 

plan requires all existing major sources in the NA areas to 

use BACT as defined in section 7479(3) for the control of 

VOC, the ratio shall be at least 1.2:1.‖

We note that California state law requires all 

nonattainment areas to implement Best Available Retrofit Control 

Technology (BARCT)9. The District has adopted rules which 

require BARCT for all source categories that include major 

sources and many that apply to minor sources as well. These 

rules have been submitted and approved (or in the process of 

being approved) into the South Coast portion of the California 

SIP. Therefore the District does have requirements in their 

plan that require all existing major sources to use BARCT as 

defined in Rule 1302 – Definitions. CSE provides the 

definitions of both terms – Federal BACT and California BARCT in 

their Comment Letter. A review of both terms shows that the 

definition of BARCT contains the same key elements of the 

 

9 Health & Safety Code §40440(a)(1). 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

65

Federal BACT definition, as noted below by the underlined text 

of the definition of BARCT:

An air emission limitation that applies to existing sources 

and is based on the maximum degree of reduction achievable, 

taking into account environmental, energy, and economic 

impacts by each class or category of source.

The application of both BACT and BARCT each result in ―an air

emission limitation,‖ ―based on the maximum degree of 

reduction,‖ ―taking into account environmental, energy, and 

economic impact,‖ ―for such facility‖ (BACT) or ―each class or 

category of source‖ (BARCT). 

The definition of BACT referenced in Section 182(e)(1) is 

from the new source review regulations, which only apply when a 

facility is new or makes a modification that increases 

emissions. The language in Section 182(e)(1) therefore 

specifically states that the requirement–to apply the Best 

Available Control Technology–also applies to existing major 

sources. This inherently means that any additional control must 

be applied on a retrofit basis, which is exactly what the 

California requirement to apply Best Available Retrofit Control 

Technology does. Since the District requires the implementation 

of BARCT on all major ozone pre-cursor sources, we continue to 

find that the provisions of Section 182(e)(1) allow for approval 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

66

of a NSR program that requires a 1.2:1, rather than 1.5:1 offset 

ratio of ozone precursors in the South Coast. 

Comment 27: CSE titled this section of their comments ―EPA 

Failed to Show That This SIP Amendment Does Not Interfere With 

Attainment of the 1-hour Ozone Standard. CSE comments that 

EPA‘s proposed approval of Rule 1315 ―fails to make the 

assessment that this SIP revision will not interfere with 

attainment of the 1-hour ozone standard,‖ citing CAA section 

110(l) and Hall v. EPA, 273 F.3d 1146, 1158 (9th Cir. 2001). 

The comment states that the absence of such a ―finding‖ violates 

―bedrock statutory provisions and longstanding NSR case law . . 

.‖ CSE believes that EPA‘s failure to assess this SIP revision 

for potential interference with the 1-hour ozone standard is 

particularly troubling in light of a recent Ninth Circuit 

decision that the current 1-hour ozone plan is deficient to 

actually attain the 1-hour ozone standard, citing Association of 

Irritated Residents v. EPA. Comment Letter at 24.

Response 27: EPA acknowledges that, for the proposed rule, 

the Agency did not evaluate whether the SIP revision would 

interfere with attainment of the 1-hour ozone standard under CAA 

section 110(l). Given that the 1-hour ozone standard was 

revoked in 2005 [see 40 CFR 50.9(b)], the potential issue to 

address under section 110(l) is not whether the SIP revision 

would interfere with attainment or RFP of the 1-hour ozone NAAQS 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

67

because the 1-hour ozone standard is no longer one of the NAAQS. 

Instead the issue to be addressed is whether the SIP revision 

would interfere with any other applicable requirement of the 

CAA, which in this case refers to the ―anti-backsliding‖ 

requirements [found in 40 CFR 51.905(a)(1)(i)], which continue 

to apply in 8-hour ozone nonattainment areas (such as the South 

Coast) that had been a nonattainment area for the 1-hour ozone 

standard. Among the anti-backsliding requirements is the 

requirement to have an approved 1-hour ozone attainment 

demonstration plan. 

The South Coast Air Basin has a 1-hour ozone attainment 

plan (referred to as the ―1997/1999 South Coast Ozone SIP‖) that 

EPA approved in 2000 (65 FR 18903, April 10, 2000) and this SIP 

revision would not interfere with that plan. However, the 

commenter is correct that a recent Ninth Circuit decision raises 

the possibility that, in light of deficiencies in the 1997/1999 

South Coast Ozone SIP brought to EPA‘s attention in 2003 (i.e., 

prior to revocation of the 1-hour ozone standard) and having 

nothing to do with NSR, EPA may find it necessary to develop and 

adopt a new 1-hour ozone attainment plan or require the State of 

California to do so, in response to the remand of that case. 

See, generally, Association of Irritated Residents v. EPA , No. 

09-71383 and 09-71404, rehearing denied and amended opinion 

filed Jan. 27, 2012. EPA has not yet decided how the Agency 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

68

intends to respond to the decision in Association of Irritated 

Residents, and although this SIP revision would not interfere 

with such a future plan, it would need to be taken into account 

in developing the emissions inventories and control strategies 

for such a 1-hour ozone attainment plan in much the same manner 

as has been done for the now-approved South Coast 8-hour ozone 

and PM2.5 plans. 

Comment 28: CSE titled this section of their comments ―It 

is Arbitrary and Capricious for This SIP Amendment to Allow for 

Vast Increases in Pollution Credits Given the Reliance on a 

Large ‘Black Box‘.‖ CSE‘s final comment is that EPA cannot 

approve Rule 1315 because the District has emissions reductions 

in its AQMPs ―black box‖. Comment Letter at 24. CSE comments 

that the 2007 AQMP has 55% of the emission reductions needed to 

attain the 8-hour ozone NAAQS in the ―black box‖. CSE then 

states: ―Given that there really is not a true framework for 

attaining the 8-hour ozone standard (e.g. reliance on 

speculative, undefined measures) on time combined with the 

recent failure of the region to attain the 1-hour ozone 

standard, [footnote omitted] it is arbitrary and capricious for 

EPA to allow 1315 to move forward with the myriad of newly 

minted offsets that will be allowed to impeded the already 

formidable task of actually closing the ―black box‖ gap that 

currently exists. Even if the rosy assumptions in the TSD are 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

69

accurate, adding 29 tpd (27 tpd VOC and 2 tpd NOx) of pre-2002 

credits is approximately 10% of the emissions reductions needed 

to be met through black box reductions. This represents a

significant amount of pollution that could be prevented, which 

would actually help push the region to attain the standard on 

time.‖ Comment Letter at 24-25.

Response 28: We disagree with these assertions. First, 

with respect to the commenter‘s contentions that the ―black box‖ 

(which we refer to herein as the ―long-term strategy‖) in the 

2007 AQMP accounts for 55% of the reductions needed to attain 

the 1997 8-hour ozone standard and that pre-2002 credits account 

for approximately 10% of these ―black box‖ reductions, these 

statements are factually incorrect. As we explained in our 

responses to similar comments on our proposal to approve the 

2007 AQMP (referred to in that action as the ―South Coast 2007 

Ozone SIP‖), the correct amounts of the needed emission 

reductions attributed to the long-term strategy in the 2007 AQMP 

are 26% for NOx (241 of 910 tons per day (tpd) needed to attain) 

and 9% for VOC (40 of 461 tpd needed to attain). See 77 FR 

12674, 12686 (March 1, 2012). Thus, the pre-2002 base year 

emission reduction credits (2 tpd of NOx and 27 tpd of VOC) that 

the District added as growth into its projected inventories for 

the 2007 AQMP constitute roughly 0.83% of the NOx reductions and 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

70

68% of the VOC reductions attributed to the long-term strategy

in the 2007 AQMP.10

Second, we disagree with the commenter‘s suggestion that 

the South Coast‘s inclusion of a long-term strategy in the 2007 

AQMP precludes our approval of Rule 1315 into the SIP or somehow 

renders our approval arbitrary and capricious. CAA section 

182(e)(5) authorizes EPA to ―approve provisions of an 

implementation plan for an Extreme Area which anticipate 

development of new control techniques or improvement of existing 

control technologies . . .‖ provided certain conditions have 

been met. 42 USC 7511a(e)(5). EPA fully approved the 2007 AQMP 

based, in part, on our conclusion that California had met the 

criteria for approval of a long-term strategy under CAA section 

182(e)(5) for purposes of attaining the 1997 8-hour ozone 

standard (77 FR 12674 at 12686-12689) and our conclusion that 

the SCAQMD had accounted for existing pre-base year ERCs in the 

reasonable further progress (RFP) and attainment year 

inventories in the plan, consistent with the applicable 

requirements of part D, title I of the CAA and EPA‘s 

implementing regulations in 40 CFR part 51 (77 FR 12674 at 

12682). CSE provides no support for its contention that these 

 

10 It appears that CSE simply summed the NOx and VOC emissions estimates to 

arrive at its 55% and 10% figures, but this approach entirely overlooks the 

significant differences in the NOx reductions and VOC reductions attributed 

to the long-term strategy in the 2007 AQMP, as well as the respective 

contributions of reductions in each pollutant to attainment of the ozone 

standards in the South Coast. 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

71

elements of the 2007 AQMP preclude or undermine our approval of 

Rule 1315 into the SIP, nor any information indicating that 

approval of Rule 1315 would interfere with any applicable 

requirement concerning attainment and RFP or any other 

applicable requirement of the Act (see CAA 110(l)). 

Finally, to the extent the commenter intended to argue that 

the South Coast area‘s failure to attain the 1-hour ozone NAAQS 

by the applicable attainment date precludes our approval of Rule 

1315 or somehow renders our approval arbitrary and capricious, 

we disagree. EPA‘s recent determination that the South Coast 

area failed to attain the 1-hour ozone standards by its 

applicable attainment date of November 15, 2010 (76 FR 82133, 

December 30, 2011) has no bearing on our action on Rule 1315, 

and the commenter provides no support for any argument 

otherwise.

Comment 29: In CSE‘s last portion of this comment, CSE 

reproduces Table 4.1-4 from Subchapter 4.1 of the Districts 

Final Program Environmental Assessment (CEQA analysis) prepared

for adoption of Rule 1315. Comment Letter at 25. Using data 

from this table, CSE states that the amount of potential ozone 

emissions increases from Rule 1315 (16.99 tpd VOC in 2014 and 

34.52 tpd in 2023 and 1.29 tpd in NOx in 2014 and 2.38 tpd in 

2023) is ―important because they represent a significant

increase in the total projected emissions‖. (emphasis added) 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

72

CSE then provides the total projected emission inventory for 

years 2014, 2020 and 2023 from the 2007 AQMP, apparently to show 

that the values in Table 4.1.4 are a large percentage of the 

total projected emission inventory. CSE then states that EPA 

must ―demonstrate what measures will replace this backsliding in 

emission reductions that will lead to attainment of all relevant 

standards,‖ and finally that ―it is arbitrary and capricious for 

EPA to ignore the significant analysis prepared by the SCAQMD 

for the California Environmental Quality Act document for Rule 

1315 that details the emissions and impacts associated with 

adopting this Rule.‖ 

Response 29: EPA disagrees with CSE‘s characterization of 

the information provided in Subchapter 4.1 of the District‘s 

CEQA analysis. See ―Final Program Environmental Assessment for 

Re-Adoption of Proposed Rule 1315 – Federal New Source Review 

Tracking System, Volume I, Subchapter 4.1, ―Environmental 

Impacts and Mitigation Measures – Air Quality‖ (January 7, 2011) 

(Rule 1315 CEQA Analysis). The emissions data in Table 4.1-4 of 

this CEQA analysis, which CSE reproduced in Table 4.1-4 of its 

comment letter, provide conservative (high) estimates of total

NOx and VOC stationary source emissions expected from 

implementation of Rule 1315. See Rule 1315 CEQA Analysis at 4.1-

9. The 2007 AQMP includes all of these projected NOx and VOC 

emissions in the future projected inventories ―with growth‖ for 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

73

2014, 2020 and 2023. See 2007 AQMP, Table 2-8 of Appendix III. 

To the extent CSE intended to argue that implementation of Rule 

1315 will increase the projected NOx and VOC emission inventories 

in the 2007 AQMP by the amounts specified in Table 4.1-4, this 

assertion is factually incorrect, as the emissions impacts 

identified in Table 4.1-4 of the Rule 1315 CEQA Analysis are 

already accounted for in the 2007 AQMP projected emission 

inventories. Alternatively, to the extent CSE intended to 

challenge the District‘s inclusion of these additional NOx and 

VOC emissions in the projected emissions inventories underlying 

the 2007 AQMP, such a challenge to the 2007 AQMP is outside the 

scope of our action on Rule 1315. 

Comment 30: The South Coast Air Quality Management 

District submitted a comment letter in which the District stated 

that the legislative history of the 1990 Amendments to the CAA 

specifically addressed the ability of a district to promulgate a 

rule that, in the aggregate produces equivalent or greater 

emissions reductions. Comment Letter at 1-2. The District also 

included a discussion of the importance of Rule 1315 to the 

economic issues in the area and that many of the projects in the 

area that will use credits from the District‘s Offset Accounts 

are environmentally beneficial. Comment Letter at 2-3. The 

District‘s comment also referenced the Ninth Circuit‘s decision 

in Natural Resources Defense Council v. South Coast Air Quality 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

74

Management District, 651 F.2d 1066 (9th Cir. 2011) which 

evaluated the District‘s treatment of pre-1990 credits in its 

Offset Accounts and ―concluded that the challenge to the pre1990 offsets was moot‖. [citation omitted] The District 

stated: ―Therefore, we conclude that EPA need not be concerned 

with any issues relating to pre-1990 offsets.‖ Comment Letter 

at 5. Finally, the District pointed to some specific language 

in EPA‘s TSD that the District considered inaccurate. TSD at p. 

11. 

The District requested EPA to include in its final approval 

the following clarification: ―The AQMP growth projections do 

not distinguish between new or modified sources and increased 

operations at existing sources. Therefore, the growth 

projections represent a maximum projected amount of demand for 

pre-base-year offsets. All growth from new and modified sources 

must necessarily be offset by pre-base-year emission reductions. 

This is because post-base-year reductions could at most be used 

to replace themselves, and would not be available to support 

growth. Therefore, the AQMP growth projections represent 

maximum projected use of pre-base-year offsets.‖ Comment Letter 

at 5. The District‘s comment also attached copies of hundreds 

of letters from local municipalities, organizations and 

businesses that supported State legislation that would allow the 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

75

District to continue to issue credits from its Offset Accounts 

during preparation of CEQA documents.

Response 30: EPA agrees with the District that Congress 

intended to allow the District to adopt a rule that in the 

aggregate that demonstrates an equivalent amount or greater 

emission reductions than would be required by the 1990 

Amendments to the CAA. EPA appreciates the District‘s 

statements about the importance of Rule 1315. These 

considerations may inform the policy choices that the District 

makes in choosing how to implement the requirements of the CAA. 

EPA makes note of the Ninth Circuit‘s decision in NRDC v. 

SCAQMD. As discussed in a prior Response, EPA has also 

determined that the District‘s treatment of pre-1990 credits in 

Rule 1315 is approvable. Finally, EPA agrees that the 

District‘s language clarifies EPA‘s intent with respect to 

approving the District‘s inclusion of pre-base year credits in 

its inventories. Accordingly, we agree that ―[t]he AQMP growth 

projections do not distinguish between new or modified sources 

and increased operations at existing sources. Therefore, the 

growth projections represent a maximum projected amount of 

demand for pre-base-year offsets. All growth from new and 

modified sources must necessarily be offset by pre-base-year 

emission reductions. This is because post-base-year reductions 

could at most be used to replace themselves, and would not be 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

76

available to support growth. Therefore, the AQMP growth 

projections represent maximum projected use of pre-base-year 

offsets.‖ EPA agrees that in both the 2003 and 2007 AQMPs, the 

growth that the District adds represents the maximum projected 

use of pre-base year credits. EPA also takes note of the 

hundreds of pages attached to the District‘s comment letter.

Comment 31: California Council for Environmental and 

Economic Balance, the County Sanitation Districts of Los Angeles 

County and the Southern California Gas Company submitted 

comments on our proposed approval of Rule 1315. These comment 

letters express support for EPA‘s proposed approval of Rule 

1315. The comment letters also state that Rule 1315 is 

important for the area to continue to operate essential public 

services, such as installation of emergency generators at 

wastewater pumping plants. Finally, these comment letters ask 

EPA to finalize approval of Rule 1315 with an effective date 

that is shorter than 30 days based on the good cause exception 

in section 553(d) of the Administrative Procedures Act.

Response 31: EPA takes note of the support for final 

approval of Rule 1315. EPA also understands that as a result of 

State legislation the District may be precluding from issuing 

permits pursuant to Rule 1315 for a short period of time until 

the effective date of EPA‘s final approval of Rule 1315. 

Although EPA understands that waiting for a 30 day effective 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

77

date to expire may place a burden on the District and local 

municipalities, utilities and business, EPA is declining at this 

time to provide a shorter effective date based on 5 U.S. C. 

553(d)(3).

III. EPA Action

Under section 110(k)(3) of the Act, EPA is fully approving 

Rule 1315, as adopted February 4, 2011 and submitted on March 2, 

2011, into the South Coast portion of the California SIP based 

on our conclusion that this SIP revision satisfies all 

applicable CAA requirements. 

IV. Statutory and Executive Order Reviews

Under the Clean Air Act, the Administrator is required to 

approve a SIP submission that complies with the provisions of 

the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 

40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA‘s role 

is to approve State choices, provided that they meet the 

criteria of the Clean Air Act. Accordingly, this action merely 

approves State law as meeting Federal requirements and does not 

impose additional requirements beyond those imposed by State 

law. For that reason, this action:

• is not a "significant regulatory action" subject to 

review by the Office of Management and Budget under 

Executive Order 12866 (58 FR 51735, October 4, 1993);
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

78

• does not impose an information collection burden under 

the provisions of the Paperwork Reduction Act (44 U.S.C. 

3501 et seq.);

• is certified as not having a significant economic impact 

on a substantial number of small entities under the 

Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• does not contain any unfunded mandate or significantly or 

uniquely affect small governments, as described in the 

Unfunded Mandates Reform Act of 1995 (Public Law 104-4);

• does not have Federalism implications as specified in 

Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action 

based on health or safety risks subject to Executive 

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

• is not a significant regulatory action subject to 

Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the 

National Technology Transfer and Advancement Act of 1995 

(15 U.S.C. 272 note) because application of those 

requirements would be inconsistent with the Clean Air 

Act; and

• does not provide EPA with the discretionary authority to 

address, as appropriate, disproportionate human health or 

environmental effects, using practicable and legally 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

79

permissible methods, under Executive Order 12898 (59 FR 

7629, February 16, 1994).

In addition, this proposed rule does not have tribal 

implications as specified by Executive Order 13175 (65 FR 67249, 

November 9, 2000), because the SIP is not approved to apply in 

Indian country located in the State and EPA notes that it will 

not impose substantial direct costs on tribal governments or 

preempt tribal law. 

The Congressional Review Act, 5 U.S.C. 801 et seq., as 

added by the Small Business Regulatory Enforcement Fairness Act 

of 1996, generally provides that before a rule may take effect, 

the agency promulgating the rule must submit a rule report, 

which includes a copy of the rule, to each House of the Congress 

and to the Comptroller General of the United States. EPA will 

submit a report containing this action and other required 

information to the U.S. Senate, the U.S. House of 

Representatives, and the Comptroller General of the United 

States prior to publication of the rule in the Federal Register. 

A major rule cannot take effect until 60 days after it is 

published in the Federal Register. This action is not a ―major 

rule‖ as defined by 5 U.S.C. 804(2). 

Under section 307(b)(1) of the Clean Air Act, petitions for 

judicial review of this action must be filed in the United 
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

80

States Court of Appeals for the appropriate circuit by [FEDERAL 

REGISTER OFFICE: insert date 60 days from date of publication of 

this document in the Federal Register]. Filing a petition for 

reconsideration by the Administrator of this final rule does not 

affect the finality of this action 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 CAA section 307(b)(2).)

List of Subjects in 40 CFR Part 52

Air pollution control, Environmental protection, 

Intergovernmental relations, Nitrogen dioxide, Ozone, 

Particulate matter, Reporting and recordkeeping requirements, 

Volatile organic compounds.

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

_____4/26/12__________ _____/signed/__________

Dated: Jared Blumenfeld,

Regional Administrator,

Region IX
Jared Blumenfeld, the Regional Administrator in Region 9, signed the following Final rule on April 26, 2012 and EPA is 

submitting it for publication in the Federal Register (FR). While we have taken steps to ensure the accuracy of this version of the 

rule, it is not the official version of the rule for purposes of compliance.

81

Part 52, chapter I, title 40 of the Code of Federal 

Regulations is amended as follows:

PART 52 [AMENDED]

1. The authority citation for part 52 continues to read as 

follows:

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

Subpart F - California

2. Section 52.220 is amended by adding paragraph (c)(403) to 

read as follows: 

§52.220 Identification of plan.

* * * * *

(c) * * *

(403) A new rule for the following APCD was submitted on March 

2, 2011 by the Governor‘s designee.

(i) Incorporation by reference.

(A) South Coast Air Quality Management District.

(1) Rule 1315, ―Federal New Source Review Tracking System,‖ 

adopted on February 4, 2011. 

* * * * *