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[Federal Register Volume 79, Number 52 (Tuesday, March 18, 2014)]
[Proposed Rules]
[Pages 15090-15092]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-05906]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 35

[EPA-R09-0AR-2014-0120; FRL-9908-06-Region 9]

Clean Air Act Grant: South Coast Air Quality Management District; 
Opportunity for Public Hearing

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed Action; determination with request for comments and 
notice of opportunity for public hearing.

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SUMMARY: The Environmental Protection Agency (EPA) has made a proposed 
determination that the reduction in expenditures of non-Federal funds 
for the South Coast Air Quality Management District (SCAQMD) in support 
of its continuing air program under section 105 of the Clean Air Act 
(CAA), for the calendar year 2013 is a result of non-selective 
reductions in expenditures. This determination, when final, will permit 
the SCAQMD to receive grant funding for FY2014 from the EPA under 
section 105 of the Clean Air Act.

DATES: Comments and/or requests for a public hearing must be received 
by EPA at the address stated below by April 17, 2014.

ADDRESSES: Submit comments, identified by docket ID No. EPA-R09-OAR-
2014-0120, by one of the following methods:
    1. Federal Portal: www.regulations.gov. Follow the online 
instructions.
    2. Email to: lance.gary@epa.gov or
    3. Mail to: Gary Lance (Air-8), U.S. Environmental Protection 
Agency Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901.

FOR FURTHER INFORMATION CONTACT: Gary Lance, EPA Region IX, Grants & 
Program Integration Office, Air Division, 75 Hawthorne Street, San 
Francisco, CA 94105; phone: (415) 972-3992, fax: (415) 947-3579 or 
email address at lance.gary@epa.gov.

SUPPLEMENTARY INFORMATION: Section 105 of the Clean Air Act (CAA) 
provides grant support for the continuing air programs of eligible 
state, local, and tribal agencies. In accordance with CAA section 
105(a)(1)(A) and 40 CFR 35.145(a), the Regional Administrator may 
provide air pollution control agencies up to three-fifths of the 
approved costs of implementing programs for the prevention and control 
of air pollution. Section 105 contains two cost-sharing provisions 
which

[[Page 15091]]

recipients must meet to qualify for a CAA section 105 grant. An 
eligible entity must meet a minimum 40% match. In addition, to remain 
eligible for section 105 funds, an eligible entity must continue to 
meet the minimum match requirement as well as meet a maintenance of 
effort (MOE) requirement under section 105(c)(1) of the CAA and 40 CFR 
35.146. Program activities relevant to the match consist of both 
recurring and non-recurring expenses. The MOE provision requires that a 
state or local agency spend at least the same dollar level of funds as 
it did in the previous grant year, but only for the costs of recurring 
activities. Specifically, section 105(c)(1) provides that ``no agency 
shall receive any grant under this section during any fiscal year when 
its expenditures of non-Federal funds for recurrent expenditures for 
air pollution control programs will be less than its expenditures were 
for such programs during the preceding fiscal year.'' Pursuant to CAA 
section 105(c)(2), however, EPA may still award a grant to an agency 
not meeting the requirements of section 105(c)(1), ``if the 
Administrator, after notice and opportunity for public hearing, 
determines that a reduction in expenditures is attributable to a non-
selective reduction in the expenditures in the programs of all 
Executive branch agencies of the applicable unit of Government.'' These 
statutory requirements are repeated in EPA's implementing regulations 
at 40 CFR 35.140 through 35.148. EPA issued additional guidance to 
recipients on what constitutes a nonselective reduction on September 
30, 2011. In consideration of legislative history, the guidance 
clarified that a non-selective reduction does not necessarily mean that 
each Executive branch agency need be reduced in equal proportion. 
However, it must be clear to EPA, from the weight of evidence, that a 
recipient's CAA-related air program is not being disproportionately 
impacted or singled out for a reduction.
    A section 105 recipient must submit a final financial status report 
no later than 90 days from the close of its grant period that documents 
all of its federal and non-federal expenditures for the completed 
period. The recipient seeking an adjustment to its MOE for that period 
must provide the rationale and the documentation necessary to enable 
EPA to make a determination that a nonselective reduction has occurred. 
In order to expedite that determination, the recipient must provide 
details of the budget action and the comparative fiscal impacts on all 
the jurisdiction's executive branch agencies, the recipient agency 
itself, and the agency's air program. The recipient should identify any 
executive branch agencies or programs that should be excepted from 
comparison and explain why. The recipient must provide evidence that 
the air program is not being singled out for a reduction or being 
disproportionately reduced. Documentation in two key areas will be 
needed: Budget data specific to the recipient's air program, and 
comparative budget data between the recipient's air program, the agency 
containing the air program, and the other executive branch agencies. 
EPA may also request information from the recipient about how impacts 
on its program operations will affect its ability to meet its CAA 
obligations and requirements; and documentation which explains the 
cause of the reduction, such as legislative changes or the issuance of 
a new executive order.
    In FY2013, EPA awarded the SCAQMD $5,135,895, which represented 
approximately 5% of the SCAQMD budget. In FY-2014, EPA intends to award 
the SCAQMD an estimate of $5,039,863, which represents approximately 5% 
of the SCAQMD budget.
    SCAQMD's final Federal Financial Report for FY-2012 indicated that 
SCAQMD's maintenance of effort (MOE) level was 108,291,832. SCAQMD's 
final Federal Financial Report for FY-2013 indicates that SCAQMD's 
maintenance of effort (MOE) level is at $105,096,053.
    The projected MOE is not sufficient to meet the MOE requirements 
under the CAA section 105 because it is not equal to or greater than 
the MOE for the previous fiscal year. In order for the SCAQMD to be 
eligible to receive its FY2014 CAA section 105 grant, EPA must make a 
determination, after notice and an opportunity for a public hearing, 
that the reduction in expenditures is attributable to a non-selective 
reduction in the expenditures in the programs of the South Coast Air 
Quality Management District. The shortfall stems from a decline of 8.9% 
in stationary sources revenue from FY2008-09 to FY2012-13, as reflected 
in the table below:

                                    Comparison of Stationary Source Revenues
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                Description                    Actual FY 2008-09      Actual FY 2012-13          Difference
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Stationary Source Revenues.................           $91,472,243            $83,307,359           ($8,164,884)
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    The SCAQMD is a single-purpose agency whose primary source of 
funding is emission fee revenue. It is the ``unit of government for 
section 105 (c)(2) purposes.''
    The decline in stationary source revenues would have been even more 
pronounced had it not been for the SCAQMD Governing Board-adopted fee 
increases totaling 7.9% over the last four years. The net loss of 
stationary revenues has given SCAQMD no choice but to reduce its budget 
and find less costly ways to meet its mandates. Over the past several 
years, actions were undertaken by SCAQMD to balance its budget by 
reducing overall expenditures, including deleting or not funding vacant 
positions, implementing a hiring freeze, enacting pension reform, 
reducing services and supplies expenditures, and utilizing reserves.
    Since FY2009-10, SCAQMD has supplemented revenues with $27.4 
million in reserves to balance the budget and meet program 
requirements.
    In addition to the conditions described above, an increase in non-
recurrent capital expenditures has also contributed to the decrease in 
the FY13 MOE level.
    Based on: (1) SCAQMD's inability to levy taxes, (2) regulated and 
voluntary emissions reductions, (3) the general economic downturn, (4) 
voter approval of Proposition 26, (5) an overall decline in stationary 
source revenue, (6) expenditure cuts, (7) use of financial reserves to 
balance the budget, and (8) an increase in non-recurrent capital 
expenditures, the request for a reset of SCAQMD's MOE meets the 
criteria for a non-selective reduction determination.
    Although SCAQMD receives less than 5 percent of its support from 
the section 105 grant, the loss of that funding would seriously impact 
SCAQMD's ability to carry out its clean air program. The revenue 
generated from Stationary Sources over the last 10 years is detailed 
below.

------------------------------------------------------------------------
                                                            Stationary
                          Year                                sources
------------------------------------------------------------------------
2003....................................................      62,835,710
2004....................................................      61,461,482

[[Page 15092]]

 
2005....................................................      64,613,635
2006....................................................      68,483,189
2007....................................................      75,200,253
2008....................................................      82,800,004
2009....................................................      91,472,243
2010....................................................      81,097,647
2011....................................................      78,787,371
2012....................................................      79,815,562
2013....................................................      83,307,359
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    The SCAQMD's MOE reduction resulted from a loss of revenues due to 
circumstances beyond its control. EPA proposes to determine that the 
SCAQMD lowering the FY2013 MOE level to $105,096,053 meets the CAA 
section 105(c) (2) criteria as resulting from a non-selective reduction 
of expenditures.
    This notice constitutes a request for public comment and an 
opportunity for public hearing as required by the Clean Air Act. All 
written comments received by April 17, 2014 on this proposal will be 
considered. EPA will conduct a public hearing on this proposal only if 
a written request for such is received by EPA at the address above by 
April 17, 2014. If no written request for a hearing is received, EPA 
will proceed to the final determination. While notice of the final 
determination will not be published in the Federal Register, copies of 
the determination can be obtained by sending a written request to Gary 
Lance at the above address.

    Dated: March 5, 2014.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2014-05906 Filed 3-17-14; 8:45 am]
BILLING CODE 6560-50-P
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