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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

Sanctions for Findings Made Pursuant

to Section 179 of the Clean Air Act

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 of the

Clean Air Act (Act), as amended, after

EPA makes a finding of failure 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 of the 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 for one or more 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 3:30 p.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 of Air

Quality Planning.and Standards, U.S.

EPA, Research Triangle Park, North

Carolina 27711, telephone (919) 541-

0823.

SUPPLEMENTARY INFORMATION: The

content of today's preamble is listed in

the following outline:

I. Background

A. Introduction

B. Consequences of State Failure

1. Section 179(a) Scope and Findings

2. Section 179(b) Sanctions

3. Applications and Timing of Section

179(b) Sanctions

C. Notice of Proposed Rulemaking

1. Proposal

2. Rationale for Sanction Order

3. Sanction Effectuation

4. Opportunity for Comment

II. Today's Action

A. Final Action

B. Summary of Comments and Responses

1. Sanction Sequence and Rationale

2. Sanction Effectuation

3. Sanction Clock Policy

4. Other Areas of Comment

C. Summary of Changes 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 of Today's Rulemaking

A. Implementation of the 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 (58 FR 51270) governing the

sequence of mandatory sanctions under,

section 179(a) (42 U.S.C. 7509(a)) of the

amended Act. The document included

extensive background on the Act, some

of which 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 of the

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. Consequences of State Failure

1. Section 179(a) Scope and Findings

The 1990 Amendments revised the

law concerning sanctions I to 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), the FIP

requirement is triggered by an EPA finding that a

State has failed to make a required submittal or that

a received submittal does not satisfy the minimum

completeness criteria established under section

110(k)(1}(A), or an EPA disapproval of a SIP

submittal in whole or in part. However, since FIP's

are not the subject of this notice, these provisions are not addressed here.

requirements of the Act. Under section

179(a) of the Act, for any plan or plan

revision required under part D of title I

or required 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 four findings 3 that

EPA can make, which may lead to the

application of one or both of the

sanctions specified under section 179(b)

(42 U.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 failure to meet one or more

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 of an approved plan

is not being implemented.

The EPA makes section 179(a)

findings of failure to submit and

findings of incompleteness 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 of incompleteness

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)

2

A finding of substantial inadequacy under

section 110(k)(5)-known as a "SIP call"-is made

whenever EPA finds that a plan for any area is

substantially inadequate to attain or maintain the

relevant national ambient air quality standard

(NAAQSI. 3Section 179(a) refers to findings, disapprovals,

and determinations. These will all be referred to by

the one term "findings."

47-62, Finding of Failure to Submit a Required

State Implementation Plan or Any Other Required

Submission of the Act, Clean Air Act, Delegations

Manual, 12/13/91. 5Notice and comment considerations vis-a-vis

findings of failure to submit and incompleteness are

discussed in the proposal at page 51272, footnote

7. and in section IV.G. of this document.

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Federal Register 1* Vol.. 59;. No. 49; ' Thursday, August 4, 1994, f Rules and Regulations 39833

findings- of noniimplementation, 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

Register actions are effective.

2. Setion 179(b) Sanctions,

Under-section l79(bXtwo.sanctions,

am available forselectin by EPA

following atsecdon: 179(a) finding;.One.

available'sanctibn is.a resfrictinu.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

AlthougL application. of'section

179(bysanc ions may become

mandatory when, EPA makes a finding,

under section, 179(e f'( fthe-Statedoes

not correct the deficiencyt it is not

immediate,. Instead- section 179(a)

provides for a-sanction "clock," whicr

is.described in. theproposal'at page.

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. Not ce of Proposed Bulemakihg,

1,..Proposallh'tfie'proposaF, EPA proposed-that

the sectibn- 179(b)(2): offset, sanction.

would appl ,ih an 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 of sanctions

under section 179(h)lintlliimanner'ih,

all cases'unless EPA determines,

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,

respect tb,afindihg'madb'undbr'

6

lmadditom soction.1,79(aprovides.fbr an'air

polllitiogranmsmctian that applies to grantsttle

ERN mayjawardtundersection 105. However,.since

it is nora sanction provided'undbr section 1.7,9(b);.

it is not one of'the'sanctions dt'arautormaticall ,

apply under sectb'mi7.9(a),

subsections (.1-(4)-specific toany

implementatibn plbn or-plan revisibn

requiied' under part D or any'

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 EPA can, makeunder section, 179(b)' regarding SIP' ca.lMe

for non-partD plans-or plant revisions or

the sanction provisions-in section

110(m) of the 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 of the

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 until the 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 that conceptually 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

7While parrWDgenerally 'applies to.nonattainment. areas, some requirementsaxtend.to other areas; For

example,.sect ion 184(a).specifically, created at

enactmenran ozone transpnr'region, called'the

Northeast Okone:TransporrRegion.(NOTR:.whih,

is comprised af:several mid-Atlkntic and New.

England;States;and' tie.Consolldated Metropolitan. Statistical Area containing-the District of Columbia

(see "General Preamble for'the'Implementation of

Titb roE the Clean AikAot'Amendments:of 1990"

at pagp 13527'(67 FR 13498)). Though areas within some of these States may not be designated

nonattainment, the States must submit revisions to

their SIP's byertain.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), 8 Sectlon'ii,(m),ofthe Act grants-EPA.broad.

discretionaryauthority, to apply 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-by EPAunder'seation

1104n)..Note thatsanction selection for section

1 r0(in)'f'fihdiigs w tille made through notice-andcomment'mlbmaking indbpendent from this'action.

categories of stationary sources and,

depending on' the pollutant(s) addi-essed

in the deficibncy prompting-the finding.

may affect all criteria pollutants (i.e..

pollutants forwhich EPA has'

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-a nominal 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 nature and-because.ofthe,

manner in which. EPA intends to,

effectuate it, as discussed in: the

-proposal at 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

as rapidly, as.possible;.Thus, by

applying, the offsetsanction. at 18.

months,,if the State corrects the:

deficiency, promptingthet finding, prior

to. 6 months. thereafter;. then. the highway

sanctiomwou'ld not apply and EPA and

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 lead EPA-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 of the

proposal', EPA describes how-the offset

sanction applies- and notes-that,,undbr -

the highway sanction,.EPA imposes a

prohibition- on approval by die Secretary

of DOT'of certain'highway.'projects-and

grants. Thus, the lighway sanction i's.

notdirectly implemented by EPA.

,However, EPA noted- that itis in the

HeinOnline -- 59 Fed. Reg. 39833 1994
39834 Federal Register / Vol. 59, No. 149 / Thursday, August 4, 1994 / Rules and Regulations

process of developing procedures with

DOT to provide for the coordinated

implementation of the highway

sanction. (Sanction effectuation is

further discussed in section ll.B.2 of this

document.)

4. Opportunity for Comment

As discussed above, under section

179(a), the Act requires that sanctions

apply if the deficiency that prompted

EPA*s finding is not corrected within

the timeframes prescribed. The only

discretion afforded EPA is which of the

two section 179(b) sanctions applies at

18 months and which 6 months

thereafter. The proposal noted that if in

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 that the highway sanction

apply first. The APA, 5 U.S.C. 553(e),

provides that "Each agency (including

EPA) shall give an interested person the

right to petition for the issuance,

amendment, or repeal of a rule." 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 in this 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 D but 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 of SIP's; a

discussion of why the latter type of

SP's--commonly known as part D "SIP

calls"--are not covered by the final rule

is in section U.C.3. This rule also has the

immediate effect of applying the offset

sanction on September 6, 1994 in

affected areas for which 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, in the notice section of

today's Federal Register, EPA is

providing a list of areas that will be

potentially subject to sanctions on

September 6, 1994.

Note that the proposed rule did

include tables in 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 areas that will be

potentially subject to sanctions in the

separate notice mentioned above.

(Sections II.C.5. and III.B. below include

a discussion of why the tables were

removed from the proposed rule and

why such removal does not carry any

substantive significance.)

B. Summary of Comments and

Responses

With one exception, this section

consists of a brief summary of the

comments received on the proposal and

EPA's responses. A more detailed

summary of comments and EPA's

responses can be found in the docket in

a document entitled" Selection of

Sequence of Mandatory Sanctions for

Findings Made Pursuant to Section 179

of the Crean Air Act: DetailedSummary

of Comments and EPA's Responses"

(herein referred to as "Detailed

Summary of Comments"). The one

exception is for the sanction clock

policy; a detailed summary is provided

here, as well as in the companion

document, in order to fully explain in

the Federal Register the changes EPA

has made to the final rule in this area

and because of the complexity of this

issue.

1. Sanction Sequence and Rationale

a. Summary of Comments. The EPA's

proposal for the sequence of mandatory

sanctions and the rationale are provided

in sections I.C.1. and I.C.2. of this

document, as well as in the proposal at

pages 51274-5. The EPA received 14

comments on this part of the proposed

rule. Comments on the sanction

sequence and rationale can generally be

considered in four groups: (1)

Commenters who believe the sequence

should be reversed with the highway

sanction applying first, (2) commenters

who believe that EPA should determink

sanction order on a case-by-case basis,

(3) commenters who believe that the

nature of the deficiency should be

considered in determining sanction

sequence, and (4) commenters who

support the sequence as proposed.

Four commenters stated that the

sequence in which sanctions apply

should be reversed with the highway

sanction generally applying first.

Several of the commenters contend that

the highway sanction will be more

effective at compelling State correction

of SIP 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 will be 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 of the length of the EPA

rulemaking process stationary sources

will bear the brunt of the 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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Fitderal! Register' /'Vol. 59, No. 49. f Thursday, August 4, 1'994% /' Rules and Regurationrs 39835

rulemaking tb determinie whether the

highway sanction applies-fistt asto

specifiC'types.of SIPdeficiencies. The

commenter-is.concernedi that stationary

sources wif. bear the brunt-ofthe;

sanctions'burden'; and:thatthisresult_

could stifleieconomic development:,

Thre'commenters support thei

proposed sequence of sanctions. One

commenter supports the position-that

the link between, the-highway sanction.

and air qpslitbeiiefits-is uncertain and.

another commenter agrees.tht the offset

sanction:provides.a quantifiable and

more likely-air quality benefit.Another

commenter supported. EPA,'sconcerns

regarding the adninistrative.and

implementatio burdens-of the h.ghway

sanction as a basis for the offset sanction.

applying first.

b. Response to Comments: Ih. thisfinal

rule, EPA liasmaintained' th proposed

sanction sequence'wfth theoffset

sanctiongenerally,applyiig- first and the,

high-way'sanctibn second. The-EPA.

contibues-tbbelieve tliis~sequencei&

supportedby, tlleproposed;rat.ionales.

that. theogfset sanction (compared to the

highway sancti'on)will:

(K), Provi&a, more. certain. and. direct

air qualiy benefit,,

(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

offset sanction~will more likely produce,

a net. air qpalitybenefit.. In some cases,.

the-offset sanation. may, be. more.

effectiveatresoLving SIP deficiencies.

For example,,inLan area that is.

undergoing significant economic.

growth,.the~offset sanction.could help.

bring pressure through stationary

sources:wishing.to expand, or locate in.

the areaand w1ich are faced with the

need for an additional, emission offset

increment..Furthermore, offsets.

achieved'by such asanction wnul

benefit air quality in the affected area.

However in particular instances, theEPA dbes-not deny that-theoffset

sanction may not be-as effective

because; fbr example; the-areimaybe.

economibmllr depressediandinot

experieneing grwtht. In, such a case,

there may be less aii-'quality'beneflt, and

perhaps less pressure to correct the,

deficiency in applying the offsetsanctiow first

Nbnetheless, overall EPt

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}) offset ratio necessarily

reduces air'pollutant emissions as

sourcest modifW or locate, in, an areaunder the offset sanction. By contrast-,

the highway sanctibn may not directly

reduce- overall'motor vehicle emissions

in the near tbrm and-any air quality

benefits resulting from the highway'

sanction would beindirect, 'as

appli ation. of the highway sanction

would not necessarily prevent motorists

from driving, noreven necessarily result

in overall emissions reductions, at least

in the short term. The EPA recognizes

that in some instances-it may be more

appropriate for the highway sanction to

apply, to addiess' a political faillire and,

believes there are adequate mechanismsprovided under the rulbto address these

instances.9

The EPA did not intendto 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), for which the area is

subject' thothe section 173'(42 U:S.C.

7503).offsetreqjuirement when the SIP'

deficileacy s.gneral' in nature.. When,

the finding is dpecific.to. one or more

pollutants.(andi its/thefr precursor(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 finding is.pollutant-specific.

or. general,.the offset sanction. wili

generally applyp at least to the pollutants

of direct concern and, sometimes.to)

others-as-wellh On the: other hond,,the.

highway sanction will,potentially affect

only those piolhitants mobile sourcesemit signifibantly'and not. for-instance,,

lead or 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 not address.themore. sigpificant sources, contributingto

CO nonattainment~probems,

Nonetheless,.the- offset sanction still

applies: to, CO' for. nonattainment NSR

purposes;and- thus, will:affect sources,.

subject to 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 is more likely

to produce a. greater air quality benefit

than the highway sanction. because,. as

sources: locae in an' area, direct

emission reductions will be achieved

through the 2-to-1 offset.for potentially

any of the criteria pollutants.

With, respect to imposing, sanctions on

a case-by-case-basis, EPA believes there

aretwo, main disadvantages to this

approach which. hare-led EPA to-reject

it. First, theindividhal, notice-and--

comment rulemakings'that wouldbe,

needed for implementing the sanctions

on a case-by-case basis would impose,

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-of sanction

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 links the

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' a more imlortant-considbration- than

selecting-the sanction sequence based'

priinarily-on the nature of the

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 couldi notbase,

the general sanction sequence proposal

on that factor: Ftndamentally, EPA has

based its, sanction, sequencingrationale,

primarily on the basis of whih sanction,

EPA believesis likelytoyield thegreater air quality benefit. It is

impossibleo-gpuge the impact since4he

uni ,erse-of areas which-willbe,

sanctionedand- for what duration are

not known

The-EPA dbes. not disagree 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 of the timing and

location of their projects, would be

impacted.

2. Sanction Effectuation

A discussion of EPA'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 of major comments and EPA's

responses.

a. Major Comments. (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 of the applicability of the

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 of the 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, of the 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

of the pollutants. In support, the

commenter notes the broad 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 of the SIP deficiency the

offset sanction should apply to all

criteria pollutants and precursors. In

support, the commenter argues that

section 179 references section 173,

which applies to all offset requirements

in title I of the 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 yet received 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) Highway Sanction. One

commenter requests that the rule

include a requirement that EPA notify

several government entities of highway

sanctions to focus multi-agency

resources on resolving SIP deficiencies.

Another commenter believes that the

flow of flexible 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 of the 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 of the offset

sanction by defining source

applicability on a permit issuance basis.

Moreover, EPA believes that once the

offset sanction applies, it would be a

violation of the 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 of the sanction on a

pollutant or pollutants (and its/their

precursor(s)). Moreover, pollutantspecific application of the offset

sanction is consistent with the

requirements of section 179. Section

179(b)(2)'s language providing that "the

ratio of emission reductions to increased

emissions shall be 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 the broader 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 of the offset

sanction will encourage the State to

correct its SIP deficiencies and will

provide reductions in emissions of the

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 if the 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 of the

specific language of the 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 of this rulemaking. The

DOT has primary responsibility for

implementing the highway sanction and

EPA is coordinating with DOT on the

development of procedures for that

purpose.

0Where the SIP deficiency is general, the offset

sanction applies to the criteria pollutant(s) (and its/

their precursor(s)) for which the area is required 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 Clock Policy

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 of one or both

sanctions.

For a finding that a State has failed to

submit a SIP or an 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

that EPA will stop the sanctions clock

or remove 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 if the 18-month

sanction clock elapses during a

completeness review, sanctions would

not be imposed unless and until EPA

determined the plan to be incomplete.12

In such a case, the 18-month clock

would continue to run so that if EPA

determined the plan to be incomplete

after 18-months had elapsed, sanctions

would immediately apply.

The proposal provided that if EPA

disapproves a SIP submission based on

its failure to meet one or more 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 of an approved plan is not

being implemented, the proposal

provided that the sanctions clock would

stop or sanctions would be removed

through notice-and-comment

rulemaking determining that the State is

II For general guidance on EPA's interpretation, at

the time of proposal, of how the sanctions clock

functions and what is necessary to stop it, see the

memorandum entitled "Processing of State

Implementation Plan (SIP) Submittals" from John

Calcagni to Air Division Directors, Regions I-X, July

9, 1992. A copy of this memorandum has been

placed in the docket for this rulemaking. 12 The policy also provided that, following

findings of nonsubmittal 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 or part

of a plan.

b. Summary of Comments. 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 a disapproval,

because of the length of the 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 if a 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 of the Act. The commenter

argues that the Act elsewhere 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 of SIP

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 the additional

phrase of section 110(c)(1)(B).

To support its legal argument, the

commenter states that principles of

statutory construction provide that

effect must be given to each word in a

statutory provision, and that every effort

must be made to avoid an interpretation

which renders other provisions of the

same statute inconsistent, meaningless,

or superfluous (Boise Cascade Corp. v.

United States Environmental Protection

Agency, 942 F.2d 1427, 1432 (9th Cir.

1991)). The commenter also notes that

* an agency cannot ignore or "read out"

part of a statute (Natural Resources

Defense Council v. United States

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 of nonsubmittal and

incompleteness. The commenter states

that under that alternative policy the

clock would be stopped if a new

submittal is received, pending EPA's

determination of whether 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 has been corrected, then the

clock would remain stopped and EPA

would proceed to approve the plan

through rulemaking. If the 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 of a 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. Response to Comments. In response

to the comments received, EPA

reevaluated its proposed sanction clock

policy and made two changes. 13

(1) Overview of Change One. For the

reasons stated in subsection (4) of this

section lI.B.3.c., EPA does not adopt the

exact approach set forth by the

commenters, which would actually stop

a sanctions clock started by a

disapproval upon State submittal of a

SIP. However, EPA has determined that

it is reasonable to temporarily defer

and/or stay the application of sanctions,

as appropriate,' 4 following SIP

disapprovals, where EPA proposes to

fully approve a SIP revision or proposes

to conditionally approve a SIP. 1

-

5 In

13The EPA is also making a clarification to the

sanction clock policy which is discussed in section

11.C.4. '

4

As discussed below under change two, the

proposed sanction clock policy specifically

provided for the deferral of sanctions during

completeness reviews of SIP's submitted following

nonsubmittal and incompleteness findings, but not

staying the sanctions The concept set forth here for

initial disapprovals and findings of failure to

implement is carried forth from this process

developed in the proposal for initial findings of

failure to submit or of incompleteness. In carrying

this concept over. EPA believes that it is logical and

necessary that if the effect of sanction application

is to be deferred that sanctions actually applied

should be stayed.

I Note that a proposed partial or limited approval

would not result in the deferral and/or staying of

Continued

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39838 Federal Register / Vol. 59, No. 149 / Thursday, August 4, 1994 / Rules and Regulations

addition, EPA has determined that such

deferral and/or staying of sanction

application is reasonable following

findings of nonimplementation t6 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 of EPA'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 a proposed disapproval or

final disapproval of the revised SIP in

whole or in part. At .that point, the

interim final determination that the

deficiency had been corrected would be

rescinded or reversed. 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 of the revised SIP in

whole or in part. For initial SIP

disapprovals where EPA subsequently

conditionally approves the revised SIP

in final, sanctions would be deferred

and/or stayed unless and until the

conditional approval converts to a

disapproval, or EPA proposes to

disapprove in whole or in part the

revised SIP the State submits to fulfill

the commitment in its conditionallyapproved SIP. '7 When any of these

events occur with respect to a proposed

or final conditional approval, the

the applicatiok of sanctions because such actions are associated with proposed partial or limited

.disapprovals, (For a discussion of partial and

limited approvals/disapprovals, see the

memorandum entitled "Processing of State

Implementation Plan (SIP) Submittals" from John

Calcagni to Air Division Directors, Regions I-X, July 9, 1992.)

16AIthough the comments focused on a clock

started by a disapproval, EPA has extended its

changes to a clock started by a finding of failure to

implement, finding no reason to treat findings of

failure to implement differently.

17On July, 9, 1992, EPA issued a policy that

included a discussion of how conditional approvals

convert to disapprovals (see memorandum 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 of the

July 1992 guidance that addresses how conditional

approvals convert to disapprovals. In the near future, EPA intends to issue additional guidance to

address this aspect of the conditional approval

policy.

interim final determination that the

deficiency had been corrected would be

rescinded or reversed.

,For initial findings of

nonimplementation, sanctions would be

deferred and/or stayed unless and until

EPA reversed its proposed finding that

the State was implementing 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 the point of that subsequent action,

the interim final determination that the

State had corrected the deficiency

would be rescinded or reversed.

(Exactly how the application of

sanctions would 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 of sanctions in these cases is

that the proposed full or conditional

approval or proposed finding that the

State is implementing its SIP would be

the basis for EPA's interim final

determination that the State has

corrected the deficiency. t When EPA

issues this proposal, the Agency

indicates that it believes it is more likely

than not that the State is complying

with the relevant requirements of the

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 would be unfair to apply

sanctions merely because the clock had

expired before EPA is able to take final

action on the submittal in these

situations given the length of the

rulemaking process. (2) Overview of Change 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

.of failure to submit or incompleteness

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

not temporarily stop, but instead would

continue to run. During that time, EPA

would simply defer the application of

the sanction while it reviewed the SIP

submittal to determine whether or not

" 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, if and

when EPA found the SIP incomplete

after expiration of the 18-month clock,

the sanction would apply on the date

EPA found the plan incomplete. 9

After further analysis of this 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 during review for

completeness of plans submitted by

States following findings of

nonsubmittal and incompleteness.

Therefore, EPA's rule provides that the

temporary deferral and staying of the

application of sanctions occurs only

when EPA takes an affirmative action in

which it indicates the Agency's belief

that the State has corrected the

deficiency prompting the finding (e.g.,

that the State has corrected the finding

of nonsubmittal or incompleieness). The

EPA believes this change is necessary

since, upon further reflection, EPA

realizes that in such a situation there

has been no prior affirmative action by

EPA preliminarily or finally

determining that the State has, in fact,

corrected the deficiency. A proposed

approval of a revised SIP following a

disapproval constitutes such an action

as does a proposed finding that a State,

is implementing its SIP following a

finding of nonimplementation.

However, mere EPA receipt of a 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 that the State has

corrected the deficiency. Under this change, sanctions will

apply if a sanction clock expires during

a completeness review of a SIP

submitted following a nonsubmittal or

incompleteness finding. An example

illustrates the implications of this

change. Suppose EPA finds that a State

-failed to submit a SIP and then at month

17 the 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 in the proposal,

application of the offset sanction at

month 18 would be deferred unless and

until EPA found the plan incomplete.

Under the final rule, the sanction will

apply at month 18 and only be lifted

'9 Note that this specific aspect of the proposed

sanction clock policy was not actually reflected in

the regulatory language of the 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 of deferring sanctions

following nonsubmittal and

incompleteness findings, EPA would

have to view mere receipt of a submittal

from the State as a preliminary

correction of the deficiency. However,

EPA's view is that receipt of a State plan

does not constitute an affirmative EPA

determination that' the revised SIP is

complete. 20 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 of sanctions

more consistent with the requirements

of the Act.

2

OArguably, 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 of the completeness review does

not lend itself to EPA making preliminary and final

determinations. The completeness review is

intended as a straightforward exercise to determine

if the 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 to make such a preliminary determination would be sufficient for

EPA's final completeness determination.

21 A 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 become complete by operation of law

pursuant to section 110(k)(1)(B) of the 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. 22 They are

provided to clarify change one

discussed above. (Section III.A.

discusses how the States and the public

will be kept informed of the 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 or more 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 For both 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,

22 Note that in the five cases discussed below in

the "scenarios illustrating first change," sanctions

would apply or reapply when a conditional

approval converts to a disapproval just as they do

when a proposed full approval is reversed to a disapproval. Note also that, unlike full approvals, the mandatory sanctions process would not cease upon final conditional approval. Following a disapproval, as indicated above, if EPA proposes full approval of the State's revised plan, resulting in the deferral and/or staying of sanction

application, and then takes final, full approval action, the mandatory sanctions process ceases. However, if the scenario were one where EPA was conditionally approving the plan, the final

conditional approval does not stop the mandatory sanction process because it does not represent EPA's final determination that the SIP is adequate. The EPA will make that determination when it

reviews the revised plan the State commits to

submitting as part of the conditional approval. Ultimately, of course, if the State fulfills its

commitment and EPA approves the State's plan revision, then any sanction clocks are permanently stopped and no sanctions are applied or reapplied. 23 This scenario assumes that EPA proposes

approval prior to 18 months and that EPA's positive finding is reversed after 24 months. In that 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. below discusses

how the section 179 sanction clocks function.)

Therefore, in this scenario, the 6-month clock does

not start until EPA reverses its positive finding after

24 months. The next paragraph and Figure 1 give an example of how this functions.

the reversal would be either a proposed

or final 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 of this section

II.B.3.c. Following findings of

nonimplementation, the reversal would

be either a proposed or final 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

1 provide an example of how 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 of failure to

implement. Suppose EPA issues a SIP

disapproval, initiating the section 179

sanction process. Suppose that the 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 of the 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 or in part

or a final disapproval of the SIP in

whole or in 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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Second, if EPA proposes (before

expiration of the 18-month sanctions

clock) to fully or conditionally approve

a plan or proposes to find that a State

is implementing its SIP and that

proposal action is reversed before the 6-

month clock expires that would have

followed upon application of the offset

sanction, application of the offset

sanction is deferred until such reversal

of EPA'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 that the State has

corrected the deficiency. (This scenario

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 of how this

process functions for a finding of

nonimplementation. 24 The process

would be the same for an initial

disapproval. Suppose EPA makes a

finding of nonimplementation, 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 of the

positive finding, EPA would

24This example is given for a finding of failure

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 of the

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 that the State

has corrected the deficiency.

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