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Citation: 59 Fed. Reg. 39832 1994

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-- The search text of this PDF is generated from uncorrected OCR text.3.9832 Federal Register / Vol. 59, No. 149 / Thursday, August 4. 1994 / Rules and Regulations

ENVIRONMENTAL PROTECTION
AGENCY

40 CFR Part 52 [AD-FRL-6023-3]

Selection of Sequence of Mandatory Sanctionsfor Findings Made Pursuant to Section 179 of the Clean AirAct

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

SUMMARY: The EPA is promulgating a rule governing the order in which the sanctions shall apply under the mandatory sanctions provision ofthe Clean Air Act (Act), as amended, after EPA makes a finding offailure specific

to any State implementation plan (SIP)

or plan revision required under the Act's nonattainment area provisions. This final rule provides that the offset sanction shall apply in an area 18 months after the date on which EPA makes such a finding with regard to that

area and that the highway sanctions shall apply in that area 6 months following application ofthe offset sanction. Once this rule is effective, sanctions will apply automatically in the sequence prescribed in all instances in which sanctions are required following applicable findings that EPA has already made or that EPA will make in the future, except when EPA determines through a separate rulemaking to change the sanction
sequence forone ormore specific circumstances. The public will have an opportunity to comment on any such separate rulemaking. EFFECTIVE DATES: This action wil become effective on September 6, 1994. ADDRESS(ES): The public docket for this action, A-93-28, is available for public inspection and copying between 8:30

a.m. and 3:30p.m., Monday through Friday, at the Air and Radiation Docket and Information Center, Room M-1500, Waterside Mall, U.S. EPA, 401 M Street, SW, Washington, DC 20460. A reasonable fee may be charged for copying. FOR FURTHER INFORMATION CONTACT: Mr. Christopher Stoneman, Sulfur Dioxide/Particulate Matter Programs Branch, Mail Drop 15, Office ofAir Quality Planning.and Standards, U.S. EPA, Research Triangle Park, North Carolina 27711, telephone (919) 541- 0823. SUPPLEMENTARY INFORMATION: The

content oftoday's preamble is listed in the following outline:
I.Background

A. Introduction B.Consequences ofState Failure 1.Section 179(a) Scope and Findings 2. Section 179(b) Sanctions 3. Applications and Timing ofSection

179(b) Sanctions C.Notice ofProposed Rulemaking 1.

Proposal 2. Rationale for Sanction Order 3. Sanction Effectuation 4. Opportunity for Comment II. Today's Action

A. Final Action B. Summary ofComments and Responses 1. Sanction Sequence and Rationale 2. Sanction Effectuation 3. Sanction Clock Policy 4. Other Areas ofComment C. Summary ofChanges in Rule 1. Section 52.31(a)-Purpose 2. Section 52.31(b)-Definitions 3. Section 52.31(c)-Applicability 4. Section 52.31(d)-Sanction Application

Sequencing 5. Section 52.31(e--Available Sanctions

and Methods for Implementation Ill. Implications ofToday's Rulemaking

A. Implementation ofthe Sanctions B. Areas Potentially Subject to Sanctions IV.Miscellaneous

A. Executive Order 12866 B. Regulatory Flexibility Act 1. Proposal 2. Comments 3. Response C. Paperwork Reduction Act

I. Background

A. Introduction

On October 1, 1993, EPA proposed a rule (58FR 51270) governing the
sequence ofmandatory sanctions under, section 179(a) (42 U.S.C. 7509(a)) ofthe amended Act. The document included extensive background on the Act, some ofwhich is briefly resummarized in this background section because it relates directly to the Act's sanction provisions. The information not repeated concerns the overview at pages 51270-2 ofthe proposal provided on the Clean Air Act Amendments of 1990 (1990 Amendments), title I requirements of the Act, and EPA action on SIP's.This background section also summarizes the proposal and the rationale.

B. ConsequencesofStateFailure

1. Section 179(a) Scope and Findings

The 1990 Amendments revised the law concerning sanctions Ito address State failures to comply with the

IThe 1990 Amendments also revised the Act's provisions concerning Federal implementation plans (FIP's). Under section 110(c)(1), theFIP requirement is triggered byan EPA finding thata State has failed to make a required submittal orthat

a received submittal does not satisfy the minimum completeness criteria established under section 110(k)(1}(A),or an EPA disapproval ofa SIP submittal in whole or in part. However, since FIP's

are not the subject ofthis notice, these provisions

are not addressed here. requirements ofthe Act. Under section 179(a) ofthe Act, for any plan or plan revision required under part D oftitle I

orrequired in response to a finding of substantial SIP inadequacy under section 110(k)(5) (42 U.S.C. 7410(k)(5)),2 the Act sets forth fourfindings 3that EPA can make, which may lead to the application of one orboth ofthe sanctions specified under section 179(b) (42U.S.C. 7509(b)). The four findings

are: (1)A finding under section 179(a)(1) that a State has failed, for a nonattainment area, to submit a SIP or

an element of a SIP, or that a submitted SIP or.SIP element fails to meet the completenesg criteria established pursuant to section 110(k) (42 U.S.C. 7410(k)); (2) a finding under section 179(a)(2) where EPA disapproves a SIP submission for a nonattainment' area based on its failureto meet one ormore plan elements required by the Act; (3)

a finding under section 179(a)(3) that the State has not made any other submission required by the Act (including an adequate maintenance plan) or has made any other submission that fails to meet the completeness criteria or has made a required submission that is disapproved by EPA for not meeting the Act's requirements;

or (4) a finding under section 179(a)(4) that a requirement ofan approved plan is not being implemented.

The EPA makes section 179(a) findings offailure to submit and findings ofincompleteness via letters from EPA Regional Administrators to State governors or other State officers to whom authority has been delegated. 4

The letter itself triggers the sanctions clock. To make findings of failure to submit and findings ofincompleteness under section 179(a)(1) and section 179(a)(3)(A), EPA is not required to go through notice-and-comment rulemaking.5 For section 179(a)(2) and section 179(a)(3)(B) findings of disapproval, the Federal Register document in which EPA takes final action disapproving the submittal (after notice and comment) initiates the sanctions clock. For section 179(a)(4)

2A finding ofsubstantial inadequacy under section 110(k)(5)-known asa "SIP call"-is made wheneverEPA finds that a plan for any area is substantially inadequate to attain or maintain the relevant national ambient airquality standard (NAAQSI.

3Section 179(a) refers to findings, disapprovals, and determinations. These will all be referred toby the one term "findings."

47-62, Finding ofFailureto Submita Required StateImplementation Planor Any OtherRequired SubmissionoftheAct, Clean Air Act, Delegations Manual, 12/13/91.

5Notice and comment considerations vis-a-vis findings offailure to submit and incompleteness are discussed in the proposal at page 51272, footnote 7.and in section IV.G. ofthis document.

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### f Rules and Regulations 39833

findings-ofnoniimplementation, the, sanctionsclockstirts.when EPA makes.

a finding oknonimplementationin the, Fedartgist tiroughtnotce-and commentrulemaking. For both disappromals and findings of nonimplementatien, the cleck.actually starts.on the date the final:Federal Registeractions are effective.
2. Setion 179(b) Sanctions,

Under-section l79(bXtwo.sanctions,

amavailable forselectin by EPA following atsecdon: 179(a) finding;.One. available'sanctibn is.aresfrictinu.on highwayfunding,.as.provided:i. section 179(b}){j ( 42 U S.E. 7509(b)(1.)), which is discussed ir the proposaLat pages.51273;-5129'41.Theothernavailablesanction is tfie offset sanction, as. providbdditsectibn 179(b)2) ('42.U:.S.C: 7509(b)(2)).which is also.discussedi in. the proposal ,atpage;512 4',-
3. Applicatibn and'Timing,of Sectibn 179(b),Sanctions

AlthougLapplication.of'section 179(bysanc ions may become mandatory when, EPA makes a finding, under section,179(e f'( fthe-Statedoes
notcorrect the deficiencyt it is not immediate,.Instead- section 179(a) provides fora-sanction "clock," whicr is.described in.theproposal'atpage. 51274..Genemlly under section-179(a)'s sanction dock,,tha.sanction selected-by; EPA applies,ifthe deficiency that' prompted the~findingisnot corrected before the sanction clock expires. (The' sanction clock is further discussedin section L 3& ofthis,document)
C. Notce of Proposed Bulemakihg,1,..Proposallh'tfie'proposaF,EPA proposed-that the sectibn-179(b)(2): offset,sanction. would appl ,ihan area,18months.fromthe dhfwhten EPA makes a.finding under'sectibn 179(u). Fiirthermorej EPA proposed!that'the-section 179(b)(I)' highway,santion wouWiapplyrin an
area 6-months-folowing application of the ofiet sanction Tie,EPA-proposed to sequencethe application ofsanctions under section 179(h)lintlliimanner'ih, all cases'unless EPAdetermines, througt-iididvidualnr~tfie-and-comment rulemalihg, that tie highway sanction will apply.first:

The.proposal addtressedithe sequence in whichsanctions shallapply asrequired under section 179(a) with, respecttb,afindihg'madb'undbr'

6lmadditom soction.1,79(aprovides.fbran'air polllitiogranmsmctian that appliesto grantsttle ERN mayjawardtundersection 105. However,.since it is norasanction provided'undbr section 1.7,9(b);. it is not one of'the'sanctionsdt'arautormaticall

, apply under sectb'mi7.9(a), subsections (.1-(4)-specific toany implementatibn plbn or-plan revisibn requiied'under part D orany' implementation plhn or revision required:underpart Dfound substantially inadequate.pursuant to section 110(k)(.5). In general, part D. plans and plantrevisions are requii'ed for

areas designated: nonattainment under section 107.7'The prop'osaldid;not encompass'findings EPAcan,makeunder section,179(b)' regarding SIP'ca.lMe fornon-partDplans-or plantrevisions or the sanction provisions-in section 110(m) ofthe Actl.:Ital'so-dbes not encompass anyfindihgs EPA.may make under other titlbsof'the-Act: (';g

, section 502(d) for operating.permitt-ing programs)'
2. Rationale. for Sanction-Order

At.pages 512T4;-51275 ofthe proposal, EPA.,described!the purpose sanctions can serve. Quefunction,i'sto encourage:compliance with;the Act'h requirements..A second.function. of sanctionsds.thprotct and preserve-air quality in.areas untilthe dbfi.iency prompting the sanctions.initiating findincam be;corrected

.

In the proposalat'page51275' for three reasons,.EPA proposed.that,.asa. general matter, the offset sanction.appy at 18 months followed by the highway sanctibn,6.months thereafter. First, EPA stated thatconceptually the-offset sanction'will, in generali,provide-a more certain air quality benefit in theshorter and longer termthan the-highway sanctinm

Secand; the.proposar stated:the offset sanction.provides.greater'potential for more-significant air'quality pro ction becausetit potentiall.. affects-alF

7WhileparrWDgenerally 'appliesto.nonattainment.
areas,some requirementsaxtend.to otherareas; For example,.section 184(a).specifically, created at enactmenran ozone transpnr'region, called'the NortheastOkone:TransporrRegion.(NOTR:.whih, iscomprisedaf:several mid-Atlkntic and New. England;States;and' tie.Consolldated Metropolitan. StatisticalArea containing-the DistrictofColumbia (see "General Preamble for'the'Implementation of Titb roE theClean AikAot'Amendments:of 1990" at pagp 13527'(67 FR 13498)). Though areas within
someofthese Statesmay not be designated nonattainment, the States must submit revisions to their SIP'sbyertain.statutory deadlines to inclhdb specific part D measures for these areas (e.g,, anHanced;vahlefiiihspection and maintenance
progrm.,reasonablyavailable control.technology firvolale. organic.compounds (VOC) sources),

8Sectlon'ii,(m),ofthe Act grants-EPA.broad. discretionaryauthority,toapply either sanction listedihsection79(b)"atany timeonr'at.any time aftehtheAdminttrator makes" a finding under section 1.7.9(a) withlrespect,to any portion.of the State. subjoct'to certain limitations (57 FR 44534, Sept. 28, 1993): Theselbctionof'sancttbns being mad.bBy thiitaatin,,however, does not apply to-tie imposition of'sanctions-byEPAunder'seation 1104n)..Note thatsanctionselection for section 1 r0(in)'f'fihdiigs wtille made through notice-andcomment'mlbmaking indbpendent from this'action. categories ofstationary sources and, depending on'thepollutant(s) addi-essed in the deficibncy prompting-the finding.
may affect all criteria pollutants (i.e.. pollutants forwhich EPAhas' promulgated national ambient air quality standards.(NAAQS) such as carbon monoxide (CO). PM-10 (partii:les with an aerodynamic diameter less than or equal-to-anominal 10' micrometers), etc.). By contrast, the, highway'sanction would affect onify mobilb-sources and polhitants'emitted bymobilesources. (Mobilesources'are' not, for instance; regorded as significant emitters'of'leed and sulfur-dioxide (SO2)J "

Third in additionto air-quality consideratibns the,2-to-1 offset sanctibn is less complicated'to'implement and, administer than-the highway sanction' by its very natureand-because.ofthe,

manner in which.EPA intends to, effectuate it, as discussed in: the -proposalat pages.5T275-5.1277

In addition, EPAnoted-inthe proposal!that it dbes'not regard sanctionsas a. long-term solution to ai:r quality problems:but rather intends.to work with. States.to resolVe.deficiencies

asrapidly,as.possible;.Thus, by applying,the offsetsanction.at 18. months,,if the State corrects the: deficiency,promptingthet finding,prior
to.6months.thereafter;.then.the highway sanctiomwou'ld not apply and EPAand other affected agentibs.(mostnotably theDepartmentof'Transportatibn. (MOT)):would:not bb:faced'with-ts comparatively greater'implementation. and administration burden.

The EPA, therefore, proposed, as a general matter, that the offset sanction. apply before the.highway,funding, sanction following,a section 179(h), finding.,The EPA recognized, however., that ih specific.cases the particulhr circumstances may leadEPA-to' conclude that ilis more.appropriate-for the highway sanction.to apply first. Therefore.,EPA has:specifically.noted that it may gp through notice-andcomment rulbmaking.fbr the highway, sanction,to apply after 1:8 months.and' the offset sanction 6 months thereafter. (The sanction sequence rationale.isfurther discussed in sectibn I.B.1. of this document'.),

3..Sanction Effictuation.

At pages 51275-51277 ofthe proposal', EPA describes how-the offset sanction applies-and notes-that,,undbr - the highway sanction,.EPA imposes a prohibition-on approval by die Secretary ofDOT'ofcertain'highway.'projects-and grants. Thus, the lighway sanction i's. notdirectly implemented by EPA. ,However,EPA noted-that itis in the

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process ofdeveloping procedures with DOT to provide for the coordinated implementation ofthe highway sanction. (Sanction effectuation is further discussed in section ll.B.2 ofthis document.)
4. Opportunity for Comment

As discussed above, under section 179(a), the Act requires that sanctions apply ifthe deficiency that prompted EPA*s finding is not corrected within the timeframes prescribed. The only discretion afforded EPA is which ofthe two section 179(b) sanctions applies at 18 months and which 6 months thereafter. The proposal noted that ifin the future EPA makes exceptions to this rule, then in individual notice-andcomment rulemakings EPA will seek
comment on whether the highway sanction shall apply after 18 months and the offset sanction shall apply 6 months thereafter given the circumstances at hand.

The proposal also noted that the Administrative Procedure Act (APA) provides citizens with a means that could be used to petition EPA to propose thatthe highway sanction apply first. The APA, 5U.S.C. 553(e), provides that "Each agency (including EPA) shall give an interested person the right to petition for the issuance, amendment, orrepeal ofarule." This provision could conceivably be invoked by a citizen to petition EPA to propose that the highway sanction apply first with respect to a section 179(a) finding covered by this action.

II. Today's Action

A. Final Action By this document, EPA is promulgating a rule which provides that the section 179(b)(2) offset sanction shall apply in an area 18 months from the date when EPA makes a finding under section 179(a) with regard to that

area if the deficiency prompting the finding is not corrected within such period. The final rule also provides that the section 179(b)(1) highway sanction " shall apply in an area 6 months following application of the offset sanction in cases where the deficiency has still not been corrected within that period. The section 179(b) sanctions shall be sequenced inthis manner in all

cases unless EPA proposes the highway sanction to apply first through separate notice-and-comment rulemaking. This final rule applies to plan or plan revisions required under part Dbut does
not apply to plans or.plan revisions required under part D found substantially inadequate pursuant to section 110(k)(5). The proposed rule applied to both types ofSIP's; a discussion ofwhy the latter type of SP's--commonly known aspart D "SIP calls"--are not covered by the final rule is in section U.C.3. This rule also has the immediate effect ofapplying theoffset sanction on September 6, 1994 in affected areas forwhich the Administrator has not determined that the 18-month sanction clock has expired by that date and for which the deficiency prompting the finding has not been corrected by that date. Specifically, inthe notice section of today's Federal Register, EPA is providing a list ofareas that will be potentially subject to sanctions on September 6, 1994.

Note that the proposed rule did include tablesin which EPA intended to list areas subject to sanctions. In the final rule,EPA has removed the tables from the rule and decided to provide information on areasthat will be potentially subject to sanctions in the separate notice mentioned above. (Sections II.C.5. and III.B. below include

a discussion ofwhy the tables were removed from the proposed rule and why such removal does notcarry any substantive significance.)

B. Summary ofCommentsand Responses

With one exception, this section consists ofa briefsummary ofthe
comments received on the proposal and EPA's responses. A more detailed summary ofcomments and EPA's responses can be found in the docket in

a document entitled" Selection of Sequence ofMandatory Sanctions for Findings Made Pursuant to Section 179 ofthe Crean Air Act: DetailedSummary ofComments and EPA's Responses" (herein referred to as "Detailed Summary ofComments"). The one exception is for the sanction clock policy; a detailed summary is provided here, as well asin the companion document, in orderto fully explain in the Federal Register the changes EPA has made to the final rule inthis area and because ofthe complexity ofthis issue.
1. Sanction Sequence and Rationale

a. SummaryofComments.The EPA's proposal for the sequence ofmandatory sanctions and the rationale are provided in sections I.C.1. and I.C.2. ofthis document, as well as in the proposal at pages 51274-5. The EPA received 14
comments on this part ofthe proposed rule. Comments on the sanction sequence and rationale can generally be considered in four groups: (1) Commenters whobelieve the sequence should be reversed with the highway sanction applying first, (2) commenters whobelieve that EPA should determink sanction order on a case-by-case basis, (3) commenters whobelieve that the
nature ofthe deficiency should be considered in determining sanction
sequence, and (4) commenters who support the sequence asproposed.

Four commenters stated that the
sequence in which sanctions apply should be reversed with the highway sanction generally applying first. Several ofthe commenters contend that the highway sanction will be more effective at compelling State correction ofSIP deficiencies because it would have greater economic impact, and it will be more effective at addressing political and statewide failures. One
commenter disagrees with EPA's rationale that the offset sanction is more likely to produce a greater air quality benefit, arguing instead that the highway sanction better encourages early State compliance. Several
commenters challenge EPA's rationale that the offset sanction potentially applies to all criteria pollutants; the
commenters argue that the fact that stationary sources emit more types of pollutants is irrelevant since, in the proposed rule, the offset sanction applies only to the pollutant(s) in the deficiency. The commenters also raise

an argument that EPA's proposed
sequence unfairly burdens industry when the SIP deficiency is State-caused and that sources willbe unfairly penalized due to project location and timing.

Four commenters believe that EPA. should determine sanction order on a case-by-case basis. These commenters
express concern that EPA's streamlined approach provides insufficient notice of sanctions and leaves many sanction application details unclear. One
commenter argues that EPA should streamline its own rulemaking processes rather than deny notice to affected parties. These commenters were also concerned that general application of the offset sanction would negatively impact stationary sources. One
commenter argues economic competitiveness and air quality will deteriorate under he offset sanction. Two commenters were concerned that because ofthe length ofthe EPA rulemaking process stationary sources will bear the brunt ofthe sanction
burden.

Two commenters believe that the
nature of the SIP deficiency should be considered in determining sanction
sequence. One commenter believes that the sanction chosen should be linked to the SIP deficiency and-that EPA must conduct notice-and-comment

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rulemaking tb determinie whether the highwaysanction applies-fistt asto specifiC'types.of SIPdeficiencies. The commenter-is.concernedi that stationary

sources wif.bearthe brunt-ofthe; sanctions'burden'; and:thatthisresult_ could stifleieconomic development:,

Thre'commenters support thei proposed sequence ofsanctions. One
commenter supports the position-that the linkbetween,the-highway sanction. and air qpslitbeiiefits-is uncertain and. another commenter agrees.tht the offset sanction:provides.a quantifiable and

more likely-air qualitybenefit.Another commenter supported.EPA,'sconcerns regarding the adninistrative.and implementatio burdens-ofthe h.ghway sanction as abasis for the offset sanction. applying first.

b. Responseto Comments:Ih.thisfinal rule, EPA liasmaintained' th proposed sanction sequence'wfth theoffset sanctiongenerally,applyiig-first andthe, high-way'sanctibn second. The-EPA. contibues-tbbelieve tliis~sequencei& supportedby,tlleproposed;rat.ionales. that. theogfset sanction (comparedto the highway sancti'on)will:

(K)

,Provi&a,more.certain.and.direct air qualiybenefit,,

(2) Potentially affect more criteriapollutants;,and.

(3) Be easier'to-implement,and adminisaer. The EPA disagrees-with the comments.that highway sanctions,will always:more effectivelyladdress.SIPrelated. deficiencies,and should, therefore, be.generally applied first Inaddifion,.EPA does be]levetthat the offsetsanction~will more likely produce,

a net. air qpalitybenefit..In some cases,. the-offset sanation.may,be.more. effectiveatresoLving SIP deficiencies. Forexample,,inLan area thatis. undergoing significant economic. growth,.the~offset sanction.could help. bring pressure through stationary sources:wishing.to expand,orlocate in. theareaand w1ich are faced with the need foran additional,emission offset increment..Furthermore, offsets. achieved'by such asanction wnul benefit air quality in the affected area. However inparticular instances, theEPA dbes-not deny that-theoffset sanction may not be-as effective because; fbr example; the-areimaybe. economibmllr depressediandinot experieneinggrwtht.In,such a case, there maybe less aii-'quality'beneflt,and perhaps lesspressure to correct the, deficiency in applying the offsetsanctiow first

Nbnetheless, overall EP t A continues'to believe:that conceptually'the offset sanctioni(domparedfto the.higlway. sanction) pmvides.a-more-certain;, direct air quality benefit in the near and Ibng term-and potentiall'y'covers more pollutants. An increased new source review (NSR})offsetratio necessarily reduces air'pollutant emissions as sourcestmodifW or locate,in, an areaunder the offset sanction. By contrast-, the highway sanctibn may not directly reduce-overall'motor vehicle emissions in the near tbrmand-any air quality benefits resulting from the highway' sanction wouldbeindirect, 'as appli ation.ofthe highway sanction would not necessarily preventmotorists from driving, noreven necessarily result in overall emissions reductions, at least in the short term. The EPA recognizes thatin some instances-it maybe more appropriate forthe highway sanction to apply,to addiess'a political faillire and, believes there areadequate mechanismsprovided under the rulbto address these instances.9

The EPA did notintendto suggpst.in the proposarthat the offset.sanction.will applyjih every case, to all criteria pollutants. The.offset sanction will. apply,only to,all'criterih pollutants (and their precursors),forwhich the area is subject' thothe section 173'(42 U:S.C. 7503).offsetreqjuirement when the SIP' deficileacy s.gneral'innature.. When, the finding is dpecific.to. one ormore pollutants.(andi its/thefrprecursor(s)),. the.sanctibn.applies only to. those pollutants (hndlbr.precursorfs)). Thiestatement inthe proposar intndad that the:offset can potentially.affict.all criteria.polhtants,,either because.of pollutant-specific findingp.or general findings. Thismeans.that, regardless of whether the findingis.pollutant-specific.

or.general,.the offset sanction.wili generally applyp at least to the pollutants ofdirect concern and,sometimes.to) others-as-wellh Onthe:otherhond,,the. highway sanction will,potentially affect only those piolhitants mobile sourcesemit signifibantly'and not. for-instance,, leador SO,. However,,EPA also realizes that since.C0 nonattainment area problems'are due primarily to.mobil'e
sources, arguably applicationi.of-the' offset sanction may notaddress.themore.sigpificant sources,contributingto CO nonattainment~probems, Nonetheless,.the-offset sanction still applies:to,CO' for.nonattainment NSR purposes;and-thus,will:affect sources,. subjectto nonattainmenrNSR that wish
to locate.or,expand,in.a CO nonattainment area; which,would provide'some.airquality benefit in thearea under theoffset sanction. Therefore;,EPA. continues tobeiev.e-that

9 As noted in section:.LC.-of this notice, under the.APA.citdzens can petition.the EPA-for. rulenakihg,to,propose the highway,sanction to apply,,first. ov~rall the 

### qffset sanction ismore likely
to produce a.greater air qualitybenefit than thehighway sanction.because,.as
sources: locae in an'area, direct emission reductions will be achieved through the 2-to-1 offset.for potentially any ofthe criteria pollutants.

With,respect to imposing,sanctions on
a case-by-case-basis, EPAbelieves there aretwo,main disadvantages to this approach which.hare-led EPA to-reject it.

First, theindividhal,notice-and--
comment rulemakings'that wouldbe, needed forimplementing the sanctions

on a case-by-case basis wouldimpose, significant demands on EPA's resources. These resources could,otherwise be spent on activities'that more directly

serve the-gpa'ofthe Act-, namely, clean air; Second',the'approach taken in the final rulb will provide certainty and sufficient notification to-the~parties affectedabout the details-ofsanction applibation and'consistency in the implbmentation"of'section,

# y179.These details'are further-discussed'in section III.A.and in-the'dbatal'ed.summary of comments document.

Asto'establishing a rule-that linksthe first sanction to'the-deficiency onwhich the sanction is'based, EPAbelieves that approach fails-to'consider'other important considerations'with,respect to. sanctions such- as which-sanctibn is more-likely to'yield the greater air quality benefit. The EPA believes, as a general' matter, thatthe sanctibir that results'fn the'greaterair-quality benefit is'amore imlortant-considbration-than selecting-thesanction sequence based' priinarily-on the nature ofthe deficiency.

.

At- the same, time; EPA recognizes that' in some cases it'may be moreapproprihte-to apply-the,highway sanetfon'first ifthe'circumstances of'the, dbficiency warrant and the-offset sanction is! unlikely,to'yield significant air quality,benefits: The.EPA believes therul4-provides the flexibility to, db so. Additionally, EPA cannotpredi'ct,
across,all sanction findings, which sanctibr-will more effbctitvely address State inaction and thus couldinotbase, the general sanction sequence proposal

on thatfactor: Ftndamentally, EPA has based its,sanction,sequencingrationale, primarily on the basis ofwhih sanction, EPAbelievesis likelytoyield thegreaterair quality benefit. It is impossibleo-gpuge the impactsince4he uni ,erse-ofareas which-willbe, sanctionedand-forwhat duration are notknown

The-EPA dbes.notdisagree that the offset sanction has the,potenti'al to impact industry-and that this.burden maybe greater'oni'ndustry than on the transportation sector..However, by

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including the offset sanction in the Act, Congress clearly intended thal certain
sources, by virtue ofthe timing and location oftheir projects, would be impacted.

2. Sanction Effectuation

A discussion ofEPA's approach for effectuating the offset and highway sanctions is provided in section I.C.3. of this document and at pages 51275-7 of the proposal. The following is a brief
summary ofmajor comments and EPA's
responses.

a.MajorComments.(1) Offset Sanction. Comments on offset sanction effectuation addressed both the source and pollutant applicability aspects of EPA's proposal. One commenter objects
to the timing ofthe applicability ofthe offset sanction and believes EPA's proposed approach is contrary to past EPA practice. The commenter argues that applying the increased offset ratio
to all sources that have not received a permit as ofthe date the sanction begins would stop many sources during the permitting process for reasons beyond their control. The commenter believes that in the past EPA has avoided these problems by applying tighter NSR requirements Only where permit applications were not complete when the requirements became effective. The
commenter recommends EPA continue with this approach.

Two comments concern the pollutant applicability,ofthe offset sanction. One
commenter objects to the application of the offset requirement to both ozone precursors (nitrogen oxides (NOx) and volatile organic compounds (VOC}) even when the deficiency relates only to one ofthe pollutants. In support, the
commenter notes thebroad nature of section 179 and the manner in which
NOx emissions are treated under the Act vis-a-vis VOC emissions. Regarding PM10 precursors, the commenter argues that the offset sanction should apply to precursors only in those areas where EPA has approved a PM-10 SIP control strategy imposing the offset requirement

on PM-10 precursors.

Another commenter believes that regardless ofthe SIP deficiency the offset sanction should apply to all criteria pollutants and precursors. In support, the commenter argues that section 179references section 173, which applies to all offset requirements in title I ofthe Act, and that this reflects

a clear Congressional intent to apply the offset sanction to these pollutants. The
commenter also believes that areas that have not yetreceived a section 182(f) (42 U.S.C. 7511a(f) NOx exemption from the section 173 offset requirements should remain subject to the increased offset ratio for NOx until EPA grants an exemption.

(2) HighwaySanction.One
commenter requests that the rule include a requirement thatEPA notify several government entities ofhighway sanctions to focus multi-agency

resources on resolving SIP deficiencies. Another commenter believes thatthe flow offlexible funds for certain
programs (e.g., congestion mitigation air quality improvement program) should continue to flow if sanctions apply because the funds are important for achieving the Act's goals by improving transit.

b. Response to Comments.'(1) Offset Sanction Applicability. Regarding offset sanction source and pollutant applicability, in the final rule, EPA has maintained the approaches in the proposal.

On source applicability, EPA believes it is important to maximize the air quality benefit ofthe offset sanction by requiring that sources whose permits are issued after the date the offset sanction applies comply with a 2-to-1 emission offset requirement. Contrary to the comment, the source applicability definition is not a departure from all past EPA practices because historically EPA has not always used the "complete application" definition. (The different

source applicability definitions EPA has used in the past are discussed in the detailed response to comments document.) Therefore, EPA believes that past practice does not constrain it from determining today that it is important to enhance the effectiveness ofthe offset sanction by defining source applicability on apermit issuance basis.

Moreover, EPAbelieves that once the offset sanction applies, it wouldbe a violation ofthe sanction for a permit to be issued with an emission offset of less than 2-to-1. The plain language of section 179(a) and section 179(b)(2) does not provide for nor contemplate any grace period based on whether a

source has submitted a complete application.

Regarding pollutant applicability of the offset sanction, EPA believes the proposed applicability is reasonably supported and will have the potential to effectively protect air quality. Section 179(b)(2) generally references the offset requirements of section 173 and does
not restrict EPA's ability to base the applicability ofthe sanction on a pollutant or pollutants (and its/their precursor(s)). Moreover, pollutantspecific application ofthe offset sanction is consistent with the requirements of section 179. Section 179(b)(2)'s language providing that "the ratio ofemission reductions to increased emissions shallbe at least 2 to,1" is general enough such that EPA can determine the most reasonable method
to apply the sanction. While section 179(b)(2) references thebroader section 173 requirement, EPA believes it is

more reasonable, with one caveat,10 to apply the offset sanction to the criteria pollutants specifically related to the SIP deficiency in question. Pollutantspecific application ofthe offset sanction will encourage the State to
correct its SIP deficiencies and will provide reductions in emissions ofthe relevant pollutant in the interim, without unnecessarily punishing stationary sources in cases where the State's program for other pollutants is adequate.

Regarding ozone and PM-10
precursors, EPA is maintaining the approach in the proposal that the sanction applies to ozone and PM-10
precursors. The caveat to that general rule has expanded in one minor respect with respect to the ozone precursor NOx. As provided in the proposed rule,

sources will need to achieve the increased offset ratio for VOC and NOx when the finding concerns an ozone requirement unless EPA approves a section 182(f) demonstration that the Act's NOx nonattainment NSR requirements should not apply. In addition, EPA has added the exception that ifthe area otherwise is not subject
to the section 173 offset requirement for NOx (e.g., submarginal ozone nonattainment areas), then sources in that area would not be subject to that requirement under the offset sanction (see sections 182(1)and 182(b)(2)). This exception is necessary in light ofthe specific language ofthe offset provision, which ties the offset sanction specifically to offsets required under section 173. For PM-10 precursors, EPA has retained the caveat for cases in which EPA has made a section 189(e) (42 U.S.C. 7513a(e)) determination for

an area that PM-10 precursors are not significant.

(2) Highway Sanction Effectuation, The issues raised by the commenters are not a subject ofthis rulemaking. The DOT has primary responsibility for implementing the highway sanction and EPA is coordinating with DOT on the development ofprocedures for that
purpose.

0Where the SIPdeficiency is general, the offset sanction applies to thecriteria pollutant(s) (and its/ their precursor(s)) forwhich the area isrequired to meet the section 173 NSR requirements. (This pollutant applicability definition for general SIP deficiencies is also discussed in section I1.C.5. below.)

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3. Sanction ClockPolicy

a. Summary of Proposal. In the proposal, EPA described its proposed policy with respect to the sanctions clock at pages 51272-51273." Under that interpretation, once the sanctions clock has started upon EPA making a finding under section 179(a), in order to stop the clock, EPA must determine that the State has corrected the deficiency that prompted the finding. Similarly, to

remove section 179(b) sanctions applied under section 179(a), EPA must determine that the State has come into compliance by correcting the deficiency that prompted the finding that resulted in the application ofone or both sanctions.

For a finding that a State has failed to submit a SIP oran element of a SIP, or that the SIP or SIP element submitted fails to meet the completeness criteria of section 110(k), the proposal provided thatEPA will stop the sanctions clock

orremove any sanctions applied upon EPA's determination that the State has submitted the missing plan or plan element and that the submittal meets the completeness criteria established pursuant to section 110(k)(1). Note that EPA's July 9, 1992 SIP processing guidance indicated that ifthe 18-month sanction clock elapses during a completeness review, sanctions would
not be imposed unless and until EPA determined the plan tobe incomplete.12 In such a case, the 18-month clock would continue to run so that ifEPA determined the plan to beincomplete after 18-months had elapsed, sanctions would immediately apply.

The proposal provided that ifEPA disapproves a SIP submission based on its failure to meet one ormore plan elements required by the Act, to correct the deficiency for purposes of stopping the sanctions clock or removing the sanction, the State must submit a revised SIP to EPA and EPA must approve that submittal pursuant to section 110(k). For a finding that a requirement ofan approved plan is not being implemented, the proposal provided that the sanctions clock would stop or sanctions wouldbe removed through notice-and-comment rulemaking determining that the State is

IIFor general guidance on EPA's interpretation, at the time ofproposal, ofhow the sanctions clock functions andwhat is necessary to stop it, see the memorandum entitled "Processing ofState Implementation Plan (SIP) Submittals" from John Calcagni to Air Division Directors, Regions I-X, July 9, 1992. A copy ofthis memorandum has been placed in the docket forthisrulemaking.

12The policy alsoprovided that, following findings ofnonsubmittal and incompleteness, sanctions which had applied would continue to apply upon State submittal until the submittal was determined to be complete. implementing the approved plan orpart ofa plan.

b. SummaryofComments.Two commenters raise both practical and legal issues with respect to the proposal's sanction clock policy where it indicates that EPA must fully approve SIP submittals beforesanctions clocks that are started by disapprovals can be stopped.

The first commenter's practical

concern is time. With respect to a sanctions clock started by adisapproval, because ofthe length ofthe State's regulatory development, approval and adoption processes and EPA's review period, the interpretation in the proposed rule could result in sanctions being imposed even ifa State had fully adopted and submitted the corrective rule. Sanctions would remain in effect until EPA finished its rulemaking approving the corrected rule. The commenter is concerned that the rule could have an adverse impact solely because EPA had not had time to act on SIP revisions that are fully approvable.

The commenter further believes that EPA's policy is not supported by the language ofthe Act. The commenter argues that the Actelsewhere explicitly distinguishes between correcting the deficiency and EPA's process of approving a SIP. Section 110(c)(1)(B) states that the Administrator must 'promulgate a Federal implementation plan (FIP) within two years ofSIP disapproval "* * * unless the state corrects the deficiency, and the' Administrator approves the plan or plan revision * * *." Section 179(a), though, merely provides that sanctions shall apply "unless such deficiency has been corrected * * * and does not include the phrase regarding EPA plan approval. The commenter believes that EPA cannot ignore the difference between sections 110 and 179 because to don would constitute "reading out" or rendering meaningless theadditional phrase ofsection 110(c)(1)(B).

To support its legal argument, the
commenter states that principles of statutory construction provide that effect must begiven to each word in a statutory provision, and that every effort mustbe made to avoid an interpretation which renders other provisions ofthe

same statute inconsistent, meaningless,

or superfluous (BoiseCascadeCorp.v. UnitedStatesEnvironmental Protection Agency, 942 F.2d 1427, 1432 (9th Cir. 1991)). The commenter also notesthat * an agency cannot ignore or "read out" part ofa statute (Natural Resources Defense Councilv. UnitedStates Environmental Protection Agency, 822 F.2d 104, 113 (D.C. Cir. 1987)). As an alternative to EPA's proposal, the commenter recommends that the sanctions clock policy for disapprovals follow the process in the proposal for findings ofnonsubmittal and incompleteness. The commenter states that under that alternative policy the clock would be stopped ifa new submittal is received, pending EPA's determination ofwhether the deficiency has been corrected. The commenter urges EPA to adopt a consistent policy to stop sanction clocks in all cases upon receiving a revised SIP submittal. If EPA's preliminary review indicates the deficiency hasbeen corrected, then the clock would remain stopped and EPA would proceed to approve the plan through rulemaking. Ifthe deficiency

was not corrected initially, the clock would restart via a letter to the State.

A second commenter raised similar

concerns with EPA's proposal that actual approval was needed to stop a sanctions clock started by a disapproval. According to the commenter, the clock should be suspended with the submittal to EPA ofa completed rulemaking and remain suspended unless EPA disapproves the SIP. The commenter notes that EPA has the opportunity to participate in the State's rulemaking process to ensure'the deficiency is corrected.

c. Responseto Comments.In response to the comments received, EPA reevaluated its proposed sanction clock policy and made two changes. 13

(1)Overview ofChange One.For the

reasons stated in subsection (4) ofthis section lI.B.3.c., EPA doesnot adopt the exact approach set forth by the commenters, which would actually stop

a sanctions clock started by a disapproval upon State submittal ofa SIP. However, EPA has determined that it is reasonable to temporarily defer and/or stay the application ofsanctions,

as appropriate,' 4 following SIP disapprovals, where EPA proposes to fully approve a SIP revision or proposes to conditionally approve a SIP. 1 - 5In

13The EPA is also making a clarification to the sanction clock policy which is discussed in section 11.C.4.

' 4As discussed below under change two, the proposed sanction clock policy specifically provided forthe deferral ofsanctions during completeness reviews ofSIP's submitted following nonsubmittal and incompleteness findings, but not staying the sanctions The concept set forth here for initial disapprovals and findings offailure to implement is carried forth from this process developed in the proposal for initial findings of failure to submit or ofincompleteness. Incarrying this concept over. EPA believes that it is logical and necessary that ifthe effect ofsanction application is to be deferred that sanctions actually applied should be stayed.

I Note that a proposed partial or limited approval would notresult in the deferral and/or staying of Continued

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addition, EPA has determined that such deferral and/or staying ofsanction application is reasonable following findings ofnonimplementationt6 where EPA proposes to find that a State is implementing its SIP. Simultaneous with such proposed approval or finding of SIP implementation. EPA will issue

a separate, interim final determination that the State has corrected the deficiency that prompted the finding that started the sanctions dock. In all these cases, whether sanctions are deferred and/or stayed depends on the timing ofEPA's proposed action vis-avis the sanction clocks.

For initial SIP disapprovals where EPA subsequently fully approves the revised SIP, sanctions would be deferred andfor stayed unless and until EPA's proposed full approval was reversed by aproposed disapproval or final disapproval ofthe revised SIP in whole orin part. At .thatpoint, the interim final determination that the deficiency hadbeen corrected wouldbe rescinded orreversed. For initial SIP disapprovals where EPA subsequently proposes to conditionally approve the revised SIP, sanctions would be deferred and/or stayed unless and until EPA reverses its proposed conditional approval by a proposed disapproval or final disapproval ofthe revised SIPin whole orin part. Forinitial SIP disapprovals where EPA subsequently conditionally approves therevised SIP in final, sanctions would be deferred and/or stayed unless and until the conditional approval converts to a disapproval, orEPA proposes to disapprove in whole or in part the revised SIP the State submits to fulfill the commitment inits conditionallyapproved SIP. '7When any ofthese events occur with respect to a proposed

or final conditional approval, the

the applicatiok ofsanctions because such actions

are associated with proposed partial or limited .disapprovals, (For a discussion ofpartial and limited approvals/disapprovals, see the memorandum entitled "Processing ofState Implementation Plan (SIP) Submittals" from John Calcagni to Air DivisionDirectors, Regions I-X, July 9, 1992.)

16AIthough the comments focused ona clock started by adisapproval, EPAhas extended its changes to aclock startedby a finding offailure to implement, finding no reason totreat findings of failure to implement differently.

17On July, 9, 1992,EPA issued apolicy that included a discussion ofhow conditional approvals convert to disapprovals (seememorandum entitled "Processing of State Implementation Plan [SIP) Submittals" from John Calcagni to Air Division Directors. Regions I-X,July 9, 1992).But note that, by this action, EPA is withdrawing the part ofthe July 1992 guidance that addresses how conditional approvals convert to disapprovals. Inthe near future, EPA intends to issue additional guidance to address this aspect ofthe conditional approval policy. interim final determination that the deficiency had been corrected would be rescinded orreversed.

,For initial findings of nonimplementation, sanctions wouldbe deferred and/or stayed unless and until EPA reversed its proposed finding that the State wasimplementing its SIP by proposing to find or finally finding that the State was not implementing its SIP

or by withdrawing its proposed finding that the State was implementing its SIP. At thepoint ofthat subsequent action, the interim final determination that the State had corrected the deficiency would be rescinded orreversed. (Exactlyhow the application of sanctionswould be deferred and/or stayed following SIP disapprovals and nonimplementation findings is discussed in greater detail below in this section. Change one is reflected in the nile in §52.31 (d)(2), (d)(3), and (d)(4].)

The rationale for the deferring and staying ofsanctions inthese cases is that the proposed full orconditional approval or proposed findingthat the State is implementing its SIP wouldbe thebasis for EPA's interim final determination thatthe State has corrected the deficiency.t When EPA issues this proposal, theAgency indicates that it believes itis more likely than notthat the State is complying with the relevant requirements ofthe Act.The EPA believes it would be inequitable for sanctions to apply in situations where EPA has made such an affirmative finding,even though it is only preliminary. Moreover, EPA believes it wouldbe unfair to apply sanctions merely because the clock had expired before EPA is able totake final action on the submittal in these situations given the length ofthe rulemaking process.

(2) Overview ofChange Two. The second change to the rule concerns the guidance discussed in the preamble to the proposed rule at page 51273, footnote 9, where EPA indicated that if the sanction clock started by a finding .offailure to submit orincompleteness expires during a completeness review for a subsequent SIP submittal, the sanction would not apply unless and until EPA found the submittal incomplete. In this instance, EPA intended that the sanction clock would nottemporarily stop, but instead would continue to run. Duringthat time,EPA would simply defer the application of the sanction while it reviewed the SIP submittal to determine whether ornot

"The EPA's final conditional approval would merely continue any stay or deferral initiated by EPA's proposed conditional approval and EPA's simultaneous interim final determination the deficiency hasbeen corrected. the State had corrected the deficiency prompting the finding. Thus,ifand when EPA found the SIP incomplete after expiration ofthe 18-month clock, the sanction would apply on the date EPA found the plan incomplete. 9

After further analysis ofthis aspect of the sanction clock policy in the context of addressing comments, EPA has determined that it is inappropriate to defer and/or stay sanctions when sanction clocks elapse duringreview for completeness ofplans submitted by States following findings of nonsubmittal and incompleteness. Therefore, EPA's rule provides that the temporary deferral and staying ofthe application ofsanctions occurs only whenEPA takes an affirmative action in which it indicates theAgency's belief that the State has corrected the deficiency prompting the finding (e.g., that the State has corrected the finding ofnonsubmittal orincompleieness). The EPA believes thischange is necessary since, uponfurther reflection, EPA realizes that in such a situation there hasbeen no prior affirmative action by EPA preliminarily or finally determining that the State has, in fact, corrected the deficiency. A proposed approval ofa revised SIP following a disapproval constitutes such an action

as does aproposed finding that a State, is implementing its SIP following a finding ofnonimplementation. However, mere EPA receipt ofa SIP submittal from a State following a nonsubmittal or incompleteness finding does not constitute such an action, since EPA takes no affirmative action preliminarily indicating that the State has submitted a complete SIP, and there is nothing to give rise to an interim final determination thatthe State has corrected the deficiency.

Under this change, sanctions will apply ifa sanction clock expires during

a completeness review ofa SIP submitted following a nonsubmittal or incompleteness finding.An example illustrates the implications ofthis change. Suppose EPA finds that a State -failedto submit a SIP and then at month 17the State submits a SIP which the Agency then starts reviewing for completeness. Month 18 arrives and EPA is still reviewing the submittal. Under the approach inthe proposal, application ofthe offset sanction at month 18 would be deferred unless and until EPA found the plan incomplete. Under the final rule, the sanction will apply atmonth 18 and only be lifted

'9 Notethat this specific aspect ofthe proposed sanction clockpolicy was not actually reflected in the regulatory language ofthe proposed rule but

was discussed in the preamble only.

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once EPA takes affirmative action finding the plan complete.

For EPA to continue with the proposed policy ofdeferring sanctions following nonsubmittal and incompleteness findings, EPA would have to view mere receipt ofa submittal from the State as a preliminary correction of the deficiency. However, EPA's view is that receipt ofa State plan does not constitute an affirmative EPA determination that'the revised SIP is complete. 2 0 Therefore, it is inappropriate to defer and/or stay sanctions following nonsubmittal and incompleteness findings. Furthermore,

once EPA has affirmatively determined the plan is complete, any sanctions clock or any applied sanctions would be permanently stopped. Therefore, it is inappropriate to defer or stay sanctions following nonsubmittal and incompleteness findings until EPA has affirmatively determined the plan is complete. 2' The EPA believes this change, as well as change one, makes the Agency's approach in deferring and staying the application ofsanctions

more consistent with the requirements ofthe Act.

2OArguably, EPA could make an interim final determination that the State's submittal is complete. However, such an interim determination is impractical and inappropriate for at least two

reasons. One, the short time period provided under the Act for EPA to make completeness determinations (i.e., 60 days) indicate that Congress did not intend for EPA (nor contemplate for EPA)
to make preliminary completeness determinations. Two, the nature ofthe completeness review does not lend itself to EPAmaking preliminary and final determinations. The completeness review is intended asa straightforward exercise to determine ifthe SIP revision includes the basic elements to warrant further review for overall adequacy. Therefore, there is no room for a preliminary determination; any review sufficient tomake such

a preliminary determination would be sufficient for EPA's final completeness determination.

21A clarification is being made in the final rule which was not specifically addressed in the proposed rule. Following nonsubmittal and incompleteness findings, the final rule effectively provides that sanction clocks can be stopped (and sanctions lifted) only when EPA makes an affirmative completeness finding, and not when SIP's becomecomplete by operation oflaw pursuant to section 110(k)(1)(B) ofthe Act. This change is further discussed in section IlC.4. below. (3) Scenarios Illustrating First Change. The following five scenarios illustrate how sanctions can be deferred and/or stayed following SIP disapprovals and nonimplementation findings. 2 2 They are provided to clarify change one discussed above. (Section III.A. discusses how the States and the public will be kept informed ofthe status of ,sanction application.)

First, if,before month 18, EPA
proposes to fully or conditionally
approve a plan or proposes to find that

a State is implementing its SIP and that action is reversed 24 ormore months after the finding, at which time the 18- month clock has expired, application of the offset sanction is deferred until EPA's proposed approval or-proposed finding that the State is implementing its SIP is reversed.23 Forboth types of findings, the offset sanction applies on the date EPA reverses its preliminary finding. Following disapprovals, where EPA proposed to fully approve the SIP,

2 2Notethat in the fivecases discussed below in the "scenarios illustrating first change," sanctions would apply orreapply when aconditional approval converts to a disapproval just as they do when aproposed full approval isreversed to a disapproval. Note also that, unlike full approvals, themandatory sanctions process would not cease upon final conditional approval. Following a disapproval, as indicated above, ifEPA proposes fullapproval ofthe State's revisedplan,resulting in the deferral and/or staying ofsanction application, and then takes final, full approval action, themandatory sanctions process ceases. However, ifthe scenario were one where EPA was conditionally approving the plan,the final conditional approval does not stop the mandatory sanction process because itdoes not represent EPA'sfinal determination that the SIPisadequate. The EPAwill makethat determination when it reviews the revisedplan theState commits to submitting as part of theconditional approval. Ultimately, ofcourse, ifthe State fulfills its commitment and EPA approves the State's plan revision, then any sanction clocks are permanently stopped and nosanctions are applied orreapplied.

23This scenario assumes that EPA proposes approval priorto 18months and thatEPA's positive finding isreversed after 24 months. Inthat instance, after 24 months, only the 18-month clock has expired (and not the 6-month clock) because the 6- month clock is not triggered until the offset sanction applies. (Section In.A. belowdiscusses howthe section 179 sanctionclocks function.) Therefore, in this scenario, the 6-month clock does not start untilEPA reverses itspositive finding after 24 months. Thenext paragraph and Figure 1give

an example ofhow this functions. the reversal would be either a proposed

orfinal disapproval in whole or in part, whichever occurs. Following disapprovals, where EPA proposes to or finally conditionally approves the SIP, the reversal would occur as described in subsection (1)above ofthis section II.B.3.c. Following findings of nonimplementation, the reversal would be either aproposed orfinal finding, whichever occurs, that the State was not implementing its SIP. For both disapprovals and nonimplementation findings, the highway sanction applies 6 months from the date the offset sanction applies, unless EPA determines within that period that the State corrected the deficiency prompting the finding. (This scenario is provided for in the rule in 

### §52.31 (d)(2)(i), (d)(3)(i), and (d)(4)(i).)

The following discussion and Figure 1provide an example ofhow this process functions with respect to a sanctions clock started by an initial disapproval. The process would function in the same manner where the initial finding was a finding offailure to implement. Suppose EPA issues a SIP disapproval, initiating the section 179 sanction process. Suppose thatthe State submits a revised SIP to EPA which EPA proposes to fully or conditionally approve, prior to 18 months from the date the sanctions clock started. The EPA would simultaneously issue an interim final rule, making a finding that the State has corrected the deficiency. In that case, the application ofthe offset sanction would be deferred. Now suppose that, at month 25, EPA reverses its preliminary determination. The reversal would be a proposal to disapprove the SIP in whole orin part

or a final disapproval ofthe SIP in whole orin part. At month 25 (or, for final actions, on the action's effective date), the offset sanction applies. The highway sanction then applies 6 months later at month 31 (or,for final actions, shortly thereafter, as appropriate), if within that period EPA has notdetermined that the State has corrected the deficiency.

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# Figure 1: Case 1 for SIP Disapprovals

Per disapproval,

State submits revised SIP to EPA

prior to month 18

Prior to month 18,

EPA proposes to fully or conditionally approve SIP and makes interim final determination

deficiency

corrected

18-month sanction clock expires and

application of offset sanction deferred

At month 25, full

or conditional approval becomes disapproval and EPA determines deficiency not corrected At month 25, (or shortly thereafter following final actionsi, offset sanction applies

At month 31. highway sanction applies (or shortly thereafter following final actions), unless EPA determines State corrected

deficiency

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### / Thursday,, August 4, J994 / Rules and Regulations 39841

Second, ifEPA proposes (before expiration ofthe 18-month sanctions clock)to fully or conditionally approve

a plan or proposes to find that a State is implementing its SIPand that proposal action isreversed before the 6- month clock expires that would have followed upon application ofthe offset sanction, application ofthe offset sanction is deferred until such reversal ofEPA's proposed finding. The offset sanction applies on the date EPA's proposal finding is reversed (or, for final actions, on the action's effective date). The highway sanction then applies 6 months later if EPA has not determined during that period thatthe State has corrected the deficiency. (Thisscenario is provided for in.the rule at §§ 52.31 (d)(2)(i), (d)(3)(i) and (d)(4)(i).)

The following discussion and Figure 2 provide an example ofhow this process functions for a finding of nonimplementation. 2 4The process would be the same for an initial disapproval. Suppose EPA makes a finding ofnonimplementation, initiating the section 179 sanction process. Suppose that EPA, prior to the end of the 18 month sanctions clock, proposes to find that the State is implementing its approved SIP. At the time ofthe positive finding, EPA would

24This example is given for a finding offailure

to implement, whilethe other four examples are given.for SIP disapprovals, for illustrative purposes OTrly. simultaneously issue an interim final rule, finding that the State has corrected the deficiency.

In this case, the application ofthe offset sanction would be deferred unless and until EPA reverses its proposed positive finding. Now suppose that EPA, at month 22, reverses its proposed positive finding by withdrawing its proposed finding that the State is implementing its SIP. At month 22 (or, for final actions, on the action's effective date), the offset sanction applies. The highway sanction then applies 6 months later at month 28 (or,for final actions, shortly thereafter, as appropriate), if EPA has not determined thatthe State has corrected the deficiency.

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