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[Federal Register Volume 76, Number 89 (Monday, May 9, 2011)]
[Rules and Regulations]
[Pages 26609-26615]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-11133]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2010-0430; FRL-9292-7]

Revisions to the California State Implementation Plan, San 
Joaquin Valley Unified Air Pollution Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is finalizing approval of revisions to the San Joaquin 
Valley Unified Air Pollution Control District (SJVUAPCD) portion of the 
California State Implementation Plan (SIP). These revisions were 
proposed in the Federal Register on May 21, 2010 and concern oxides of 
nitrogen (NOx) and particulate matter (PM) emissions primarily from 
indirect sources associated with new development projects as well as 
NOx and PM emissions from certain transportation and transit projects. 
We are approving local rules that regulate these emission sources under 
the Clean Air Act as amended in 1990 (CAA or the Act).

DATES: Effective Date: This rule is effective on June 8, 2011.

ADDRESSES: EPA has established docket number EPA-R09-OAR-2010-0430 for 
this action. The index to the docket is available electronically at 
http://www.regulations.gov and in hard copy at EPA Region IX, 75 
Hawthorne Street, San Francisco, California. While all documents in the 
docket are listed in the index, some information may be publicly 
available only at the hard copy location (e.g., copyrighted material), 
and some may not be publicly available in either location (e.g., 
Confidential Business Information). To inspect the hard copy materials, 
please schedule an appointment during normal business hours with the 
contact listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Lily Wong, EPA Region IX, (415) 947-
4114, wong.lily@epa.gov.

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

Table of Contents

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

I. Proposed Action

    On May 21, 2010 (75 FR 28509), EPA proposed to approve the 
following rule into the California SIP.

----------------------------------------------------------------------------------------------------------------
              Local agency                 Rule No.           Rule title              Adopted        Submitted
----------------------------------------------------------------------------------------------------------------
SJVUAPCD...............................         9510  Indirect Source Review            12/15/05        12/29/06
                                                       (ISR).
----------------------------------------------------------------------------------------------------------------

    We proposed to approve this rule because we determined that it 
complied with the relevant CAA requirements. Our proposed action 
contains more information on the rule and our evaluation.

II. Public Comments and EPA Responses

    EPA's proposed action provided a 30-day public comment period. 
During this period, we received comments from the following parties.
    1. Susan Asmus, National Association of Home Builders (NAHB); 
letter dated July 6, 2010.
    2. Lawrence J. Joseph, representing the American Road & 
Transportation Builders Association (ARTBA); letter dated July 6, 2010.
    3. Paul Cort, EarthJustice; letter dated July 6, 2010.
    4. Mat Ciremele, email dated May 25, 2010.
    The comments and our responses are summarized below.
    Comment #1: NAHB asserts that EPA must disapprove Rule 9510 because 
a state must provide adequate assurances of the legal authority to 
carry out all SIP revisions and, in light of NAHB's legal challenge to 
Rule 9510 in the U.S. Court of Appeals and the possibility of the 
court's finding section 6.1.1 of Rule 9510 preempted and unenforceable, 
the SJVUAPCD cannot enforce the emission limitations in section 6.1.1 
because the limitations are preempted standards or other requirements.
    Response #1: The commenter is correct in asserting that a state 
must provide assurances of legal authority to carry out SIPs and SIP 
revisions. See CAA section 110(a)(2)(E)(SIPs must ``provide (i) 
necessary assurances that the State * * * will have adequate * * * 
authority under State (and, as appropriate, local) law to carry out 
such implementation plan * * * ''). In our Technical Support Document 
(TSD) for

[[Page 26610]]

the proposed rule, we recognized the legal challenge brought by NAHB 
against the SJVUAPCD in connection with enforcement of Rule 9510. At 
the time we proposed action on Rule 9510, NAHB had appealed to the 
Ninth Circuit Court of Appeals [in National Association of Home 
Builders v. San Joaquin Valley Unified Air Pollution Control District 
(No. 08-17309)] to overturn a District Court ruling that held that Rule 
9510 was not preempted under the CAA, but the Ninth Circuit had not yet 
reached a decision on the appeal. Based on the information available to 
us at the time, we concluded that the SJVUAPCD had the authority to 
adopt and implement Rule 9510 because we believed that the limits in 
the rule were not preempted under CAA section 209(e), consistent with 
the District Court ruling.
    Since publication of the proposed rule, the Ninth Circuit has 
published its opinion in National Association of Home Builders v. San 
Joaquin Valley Unified Air Pollution Control District, 627 F.3d 730 
(9th Cir. 2010) (``NAHB''). In an opinion filed December 7, 2010, the 
Ninth Circuit affirmed the District Court's ruling that Rule 9510 was 
not preempted. With respect to the express preemption of CAA section 
209(e)(1), which preempts states and subdivisions thereof from adopting 
or attempting to enforce any standard or other requirement relating to 
the control of emissions from either of two categories of new nonroad 
vehicles or engines, the court held that Rule 9510 was not preempted 
because none of the construction equipment that Rule 9510 regulates 
would be considered ``new'' under EPA's pre-existing (and permissible, 
in the court's view) definition of ``new.''
    Before turning to the implied preemption of CAA section 209(e)(2), 
which preempts states and subdivisions thereof from adopting or 
attempting to enforce any standard or other requirement relating to the 
control of emissions from all other types of nonroad vehicles and 
engines not covered in CAA section 209(e)(1), the court first 
determined that Rule 9510 was authorized under CAA section 110(a)(5), 
the CAA section that allows states and subdivisions thereof to include 
indirect source review (ISR) programs in a SIP. CAA section 
110(a)(5)(C) defines ``indirect sources'' as meaning ``a facility, 
building, structure, installation, real property, road, or highway 
which attracts, or may attract, mobile sources of pollution,'' but also 
provides that ``[d]irect emissions sources or facilities at, within, or 
associated with, any indirect source shall not be deemed indirect 
sources for the purposes of this paragraph.''
    Noting that Rule 9510 is ultimately directed at emissions that come 
from construction equipment (i.e., direct sources), the court, 
nonetheless, concluded that Rule 9510 was authorized under section 
110(a)(5) because in the court's view, the limitation only makes sense 
if it is read to prohibit an indirect source review program from 
targeting direct sources at, within, or associated with, any indirect 
source apart from the program's regulation of an indirect source, and 
Rule 9510 does not target construction equipment apart from its 
regulation of development sites. The court also notes that the scope of 
Rule 9510 indicates that the rule targets sites rather than equipment. 
The reach of the rule depends on the character of the site, not on the 
character of the equipment. The court then concluded that the feature 
that allows Rule 9510 to qualify as an indirect source for the purposes 
of CAA section 110(a)(5), i.e., its site-based regulation of emissions, 
was the same feature that allows the rule to avoid preemption under CAA 
section 209(e)(2).
    Given the appellate court's decision, we believe that any 
significant doubt about the SJVUAPCD's authority to enforce the 
emissions requirements in section 6.1.1 has been removed, and that our 
approval of Rule 9510 is consistent with CAA section 110(a)(2)(E) as 
explained in the proposal.
    Comment #2: NAHB asserts that the emission limits of section 6.1.1 
of Rule 9510 are preempted under CAA section 209(e)(1) because they 
represent ``standards or other requirements'' relating to the control 
of emissions from new nonroad construction vehicles or engines less 
than 175 horsepower.
    Response #2: CAA section 209(e)(1) states: ``No State or any 
political subdivision thereof shall adopt or attempt to enforce any 
standard or other requirement relating to the control of emissions from 
* * * (A) New engines which are used in construction equipment or 
vehicles or used in farm equipment or vehicles and which are smaller 
than 175 horsepower. (B) New locomotives or new engines used in 
locomotives. Subsection (b) of this section shall not apply for 
purposes of this paragraph.'' The construction equipment to which 
section 6.1.1 of Rule 9510 applies is not new equipment. Under EPA's 
nonroad emissions standard regulations, ``new'' means ``a nonroad 
engine, nonroad vehicle, or nonroad equipment the equitable or legal 
title to which has never been transferred to an ultimate purchaser. 
Where the equitable or legal title to the engine, vehicle, or equipment 
is not transferred to an ultimate purchaser until after the engine, 
vehicle, or equipment is placed into service, then the engine, vehicle, 
or equipment will no longer be new after it is placed into service.'' 
See 40 CFR 89.2. This definition was upheld by the Court of Appeals for 
the District of Columbia in Engine Manufacturers Association v. EPA, 88 
F.3d 1075 (DC Cir. 1996) (EMA v. EPA), and the 9th Circuit, in NAHB, 
also indicated its view that this definition was permissible.
    Rule 9510 applies to applicants that seek final discretionary 
approval for certain development projects, and thus the emission limits 
in section 6.1.1 of Rule 9510 apply to construction equipment that has 
already been purchased or placed into service, and brought to a 
development site to meet the particular construction needs of a given 
development project. Therefore, the limits do not apply to new 
construction equipment within the meaning of CAA section 209(e)(1).
    Even if the emission limits in the rule could have the consequence 
of influencing an applicant early in the planning process in connection 
with the purchase of construction equipment, for the reasons provided 
in the TSD to EPA's proposed rule on Rule 9510 and in the responses, 
EPA believes that the emission limits in section 6.1.1 of Rule 9510 do 
not represent a standard or other requirement relating to the control 
of emissions from new nonroad engines or nonroad vehicles, and thus are 
not preempted under CAA section 209(e)(1).
    NAHB references the Supreme Court's decision in Engine 
Manufacturers Assocation v. South Coast Air Quality Management 
District, 541 U.S. 246 (2004) (EMA v. South Coast). However, that case 
involved a regulation of vehicles that clearly were ``new,'' as defined 
in the statute, as the regulations applied to vehicles at the time of 
purchase. Rule 9510 applies after the time of purchase of the engine 
and in any case is directed to the site of the project, not the engine, 
and can be met in ways that do not implicate the purchase of new 
engines. The Court of Appeals has ruled that Rule 9510 is not preempted 
under section 209(e)(1) and we follow and agree with that decision.
    Comment #3: NAHB asserts that the emission limits of section 6.1.1 
of Rule 9510 are preempted under CAA section 209(e)(2) because they 
apply to used nonroad construction equipment greater than 50 
horsepower.
    Response #3: CAA section 209(e)(2) applies to, among other 
categories of nonroad vehicles and engines, used

[[Page 26611]]

nonroad vehicles or engines, and it allows EPA to authorize, after 
notice and opportunity for public hearing, the State of California to 
adopt and enforce standards and other requirements relating to the 
control of emissions from such vehicles or engines if certain criteria 
are met. As asserted by the commenter, no authorization has been sought 
from EPA by California for the emission limitations in section 6.1.1 of 
Rule 9510. However, EPA does not believe such authorization is required 
because, while section 6.1.1 sets standards relating to the control of 
emissions from used construction equipment, EPA notes that the 
standards at issue in this SIP revision relate directly only to 
emissions associated with development sites. As the Court of Appeals 
stated, this regulation is authorized as an indirect source review 
program under section 110(a)(5) of the Act. Rule 9510 does not regulate 
nonroad engines directly and would not affect nonroad engines apart 
from the possible effects from the regulation of the indirect source as 
a whole. The court noted that given the language in section 110 
authorizing indirect source programs, they would cautiously examine the 
Act before concluding that section 209(e)(2) preempted such a program. 
The court also distinguished the cases cited by NAHB, EMA v. South 
Coast and Pacific Merchant Shipping Ass'n v. Goldstene, 517 F.3d 1108 
(9th Cir. 2008), by noting that the regulations in those cases were 
directed at vehicles, not sites. EPA also notes that Rule 9510 allows 
compliance with the site-based requirement using actions that would not 
affect the engines at the site or would only affect the use of the 
engine, which EPA has already determined is not preempted by section 
209(e)(2). See also, EMA v. EPA and Pacific Merchant Shipping Ass'n v. 
Goldstene, 2009 U.S. Dist Lexis 55516, 70 ERC 1337 (E.D. Cal. 2009). 
Thus any argument that the requirements are de facto standards on 
nonroad engines is not persuasive. The Court of Appeals has ruled that 
Rule 9510 is not preempted under section 209(e)(2) and we follow and 
agree with that decision.
    Comment #4: Citing Engine Manufacturers Association v. South Coast 
Air Quality Management District [541 U.S. 246 (2004)], NAHB asserts 
that EPA erred in finding that the emissions limits in Rule 9510 are 
not preempted under CAA section 209(e) because the standards can be met 
in numerous ways including options that do not involve any changes to 
nonroad equipment and that the emission limits in Rule 9510 would be 
preempted only if they impose burdens so onerous that manufacturers 
would be forced to alter the design or emission control equipment on 
new nonroad engines or vehicles.
    Response #4: EPA agrees that, if the emission limits in Rule 9510 
were standards or other requirements relating to the emissions from 
nonroad vehicles or engines, then the limits would be preempted under 
section 209(e) regardless of whether the rule provides for compliance 
options other than direct reduction of emissions from nonroad vehicles 
or engines and regardless of whether the limits would in practical 
effect force manufacturers to alter the design or emission control 
equipment on new nonroad engines or vehicles. In this case, though, as 
noted above and as found by the Court of Appeals, the emission limits 
in Rule 9510 are not such standards.
    In the TSD, EPA describes the flexibility provided in Rule 9510 to 
developers in meeting the emissions limitations not to show that the 
standards are therefore not preempted, but as further evidence that the 
rule truly is an indirect source rule that only indirectly regulates 
emissions from direct sources (such as construction equipment). 
Furthermore, in the TSD, EPA evaluates the potential for Rule 9510, as 
an ISR rule otherwise authorized under CAA section 110(a)(5), to 
nevertheless run afoul of CAA section 209(e), and in so doing, EPA 
identified two ways that an ISR rule that on its face is authorized 
under CAA section 110(a)(5) could nonetheless be preempted. First, the 
ISR rule could be preempted if the rule in practice as applied acts to 
compel the manufacturer or user of a nonroad engine or vehicle to 
change the emission control design of the engine or vehicle, or second, 
an ISR rule could be preempted if it creates incentives so onerous as 
to be in effect a purchase mandate. EPA concluded, however, that Rule 
9510 would not have either type of effect and would not operate in such 
a way as to amount to a standard controlling the emissions of nonroad 
vehicles or engines, and thus would not be preempted.
    Comment #5: NAHB contrasts EPA's stated position on preemption of 
state attempts to enforce fleet-based nonroad emissions standards with 
EPA's proposed approval of section 6.1.1 of Rule 9510 which, in NAHB's 
view, establishes emissions standards for fleets of construction 
equipment when used at construction sites subject to Rule 9510.
    Response #5: EPA agrees that, if the emission limits in Rule 9510 
were standards or other requirements relating to the control of 
emissions from nonroad vehicles or engines, then the fact that they 
apply to fleets of construction equipment, rather than to individual 
nonroad vehicles or engines, would not make any difference as to 
preemption. Such fleet-based nonroad emission limits would be preempted 
just as would emission limits that apply to individual nonroad engines 
or vehicles.
    However, as the Court of Appeals found, the emission limits in 
section 6.1.1. of Rule 9510 are not standards or other requirements 
relating to the control of emissions from nonroad vehicles or engines, 
but rather, are emission reduction obligations that relate to the 
construction-phase at development sites, and as such are not preempted. 
EPA notes that the rule by its terms (see section 2.0 of the rule) 
applies to applicants seeking discretionary approval for development 
projects that meet certain size criteria and to certain transportation 
or transit projects, not to fleets of nonroad vehicles or engines. EPA 
also notes that a developer has numerous options to meet the emission 
reduction obligation in section 6.1.1, including options that do not 
involve any changes to construction equipment (see section 6.3 of the 
rule). The flexibility provided in the rule in meeting the emission 
reduction obligation in section 6.1.1 provides further evidence that 
the rule is intended to reduce emissions from construction sites as an 
indirect source of emissions, rather than to regulate the construction 
equipment directly, either as a fleet or as individual pieces of 
equipment.
    Comment #6: ARTBA petitions EPA to amend EPA's rules implementing 
CAA section 209(e) to clarify that: (1) Section 209(e) preempts rules 
based on nonroad fleets to the same extent that it preempts rules based 
on individual nonroad vehicles and engines; (2) section 209(e)'s 
preemption lasts throughout nonroad vehicles and engines' useful life; 
(3) section 209(e)(1)(A) preempts California standards and other 
requirements related to emissions from farm and construction equipment 
under 175 horsepower to the same extent that section 209(e)(1)(B) 
preempts California standards and other requirements related to 
emissions from locomotives; and (4) section 209(e) preempts emission-
based regulation of the use and operation of nonroad vehicles and 
engines, such as regulations on hours of usage, daily mass emission 
limits, and fuel restrictions.
    Response #6: ARTBA's petition seems to be little more than a 
renewal of its earlier request for an amendment to

[[Page 26612]]

EPA's rule implementing CAA section 209(e). EPA denied ARTBA's 
petition. See 73 FR 59034 (October 8, 2008). ARTBA's challenge to EPA's 
denial of ARTBA's petition was dismissed for lack of subject matter 
jurisdiction by the U.S. Court of Appeals for the DC Circuit. See Am. 
Rd. & Transp. Builders Ass'n v. EPA, 588 F.3d 1109 (DC Cir. 2009), 
petition for cert. denied, No. 09-1485 (U.S. Oct. 4, 2010). ARTBA's 
petition, except as discussed below, is related to the general 
preemption issues that ARTBA has raised previously and not specifically 
to the proposal to add Rule 9510 to the California SIP. EPA has already 
reviewed these issues several times and is not revisiting these broader 
issues in this limited proceeding. To the extent ARTBA intends EPA to 
do so, the request is denied. Further, because EPA did not propose any 
changes to its rules implementing section 209(e) in this rulemaking on 
the California SIP, it could not make any such revisions in this final 
rule in any event.
    Comment #7: ARTBA contends that, in EPA's final rule on 
California's submittal of Rule 9510, EPA should find that EPA's action 
has ``nationwide scope or effect'' pursuant to CAA section 307(b)(1) 
leading to exclusive jurisdiction in the U.S. Court of Appeals for the 
District of Columbia to ensure nationwide uniformity in the 
interpretation and enforcement of these important CAA issues.
    Response #7: CAA section 307(b)(1) generally provides that judicial 
review of EPA action in approving a SIP or SIP revisions may be filed 
only in the U.S. Court of Appeals for the appropriate circuit. Thus, 
final EPA actions on revisions to the California SIP, such as Rule 
9510, are generally subject to timely challenges filed in the U.S. 
Court of Appeals for the Ninth Circuit. However, judicial review of an 
EPA SIP action may be filed only in the U.S. Court of Appeals for the 
District of Columbia if such action is based on a determination of 
nationwide scope or effect and if in taking such action the EPA finds 
and publishes that such action is based on such a determination.
    We do not believe that our action approving Rule 9510 as a revision 
to the California SIP is based on a determination of ``nationwide scope 
or effect.'' While we recognize Rule 9510 as a novel approach for 
advancing air quality goals, the innovative or unusual nature of the 
rule alone does not give our approval of it under CAA section 110 
``nationwide scope or effect.'' Once approved, Rule 9510 will become 
enforceable under the CAA by its terms only to certain development 
projects within the geographic jurisdiction covered by the SJVUAPCD. 
Thus, EPA's approval of Rule 9510 is clearly regional in scope and 
effect.
    Of course, EPA's rationale for approval of Rule 9510 sets a 
precedent for future rulemaking actions on similar ISR rules submitted 
to EPA as SIP revisions by California or any other state, but the 
precedential effect in this instance is no different than for EPA 
actions approving or disapproving any other SIP or SIP revision 
anywhere in the country. Thus, EPA's action on Rule 9510 is based on a 
determination of no greater scope or effect than any other EPA action 
on SIPs, which are reviewable only in the U.S. Courts of Appeal of the 
appropriate circuit, not necessarily the U.S. Court of Appeals for the 
District of Columbia.
    Comment #8: ARTBA contends that EPA cannot approve Rule 9510 as a 
SIP revision because: (1) Section 209(e) preempts Rule 9510 as an 
impermissible standard and ``other requirement'' related to emissions 
for construction equipment both above and below 175 horsepower; (2) 
California and the SJVUAPCD therefore lack authority to enforce Rule 
9510, and (3) SIP approval does not meet the criteria or procedures for 
waiving federal preemption such as California's protectiveness 
determination, consistency with sections 209 and 202(a), and the 
opportunity for an EPA hearing.
    Response #8: As to preemption issues, please see our responses to 
comments 2 through 5 above. As to the legal authority 
to enforce Rule 9510, please see our response to comment 1. 
Lastly, as to the failure by Rule 9510 to meet the criteria or 
procedures for waiving preemption, we do not believe that Rule 9510 
requires a waiver because, as discussed above and as determined by the 
Court of Appeals, it is not preempted as it does not establish 
standards or other requirements relating to the control of emissions of 
nonroad engines or vehicles for the purposes of CAA section 209(e) but 
rather establishes standards relating to the control of emissions from 
an indirect source, the construction phase of development projects.
    Comment #9: Citing EPA's TSD for Rule 9510, NAHB notes EPA has 
concluded that some provisions of Rule 9510 concerning on-site and off-
site emissions reductions are not federally enforceable. NAHB asserts 
that section 172(c)(6) the CAA (42 U.S.C. 7502(c)(6)) prohibits EPA 
from incorporating into a SIP ``any portion of Rule 9510 that it has 
determined to be federally unenforceable.''
    Response #9: NAHB misinterprets section 172(c)(6) the Act. As cited 
by NAHB, section 172(c)(6) does state that SIPs ``shall include 
enforceable emissions limitations.'' However, NAHB reads this language 
to mean that SIPs shall only include enforceable emissions limitations. 
This reading is far from correct. SIPs contain many aspects which are 
not federally enforceable emissions limitations. For example, approved 
SIPs contain such items as current emissions inventories, future 
emissions inventory projections based upon economic and technological 
trends, and air quality modeling. In addition, section 172(c)(6) 
expressly provides for ``other control measures, means or techniques'' 
which may not include enforceable emissions limitations. One example 
given in section 172(c)(6) is ``economic incentives such as fees.'' The 
imposition of a fee on a polluting activity may create an incentive to 
minimize the resulting pollution from that activity, and the incentive 
might be successful in accomplishing that goal. However, imposition of 
the fee, in itself, in no way creates an enforceable emissions 
limitation.
    In addition, as noted in EPA's TSD, through policies such as 
``Guidance for Incorporating Voluntary Mobile Source Emission Reduction 
Programs in State Implementation Plans (VMEP)'' and ``Incorporating 
Emerging and Voluntary Measures into a State Implementation Plan 
(SIP),'' EPA has recognized that measures and rules which are not 
federally enforceable can be incorporated into a SIP pursuant to the 
Act in appropriate circumstances.
    Finally, in evaluating rules or measures which contain novel and/or 
voluntary aspects, some issues regarding federal enforceability really 
concern the amount of emissions reductions which can be legally 
compelled pursuant to such a rule or measure, and, therefore, what 
amount of emissions reductions, if any, should be credited toward 
satisfying the planning requirements of section 110 of the Act. This is 
the case with Rule 9510. As noted by NAHB, many of the issues described 
in EPA's TSD concern the mechanisms created by Rule 9510 to accomplish 
emissions reductions. For example, a project developer subject to Rule 
9510 might choose to pay fees instead of reducing emissions associated 
with the project site. In turn, the SJVUAPCD would use these collected 
fees to generate off-site emissions reductions. The SJVUAPCD's ability 
to require these reductions would rely on a contract between the 
SJVUAPCD and an off-site project applicant.
    If Rule 9510 was incorporated into the SIP, EPA could use the Act's

[[Page 26613]]

enforcement authority to require that the appropriate fees be collected 
from a project developer, and that the collected fees be used by the 
SJVUAPCD to seek off-site emissions reductions. However, the issue of 
federal enforceability arises because EPA may not be able to enforce 
the terms of a contract between the SJVUAPCD and an off-site project 
applicant, and thus the emissions reductions required by that contract, 
pursuant to its enforcement authority under the Act. Thus the issue is 
not EPA's ability to enforce the provisions of Rule 9510 as they are 
written, but whether those provisions create adequate legal authority 
for EPA to require emissions reductions which are sought or claimed by 
the rule. In view of these enforceability concerns, among other issues, 
the TSD recommends approving Rule 9510 into the SIP, but also 
recommends that ``reductions from the Rule should not be credited in 
any attainment and rate of progress/reasonable further progress 
demonstrations or used to meet contingency measure requirements until 
the District corrects the identified problems, which we believe the 
District should easily be able to do.'' In today's final rule we 
therefore approve Rule 9510 but we do not assign any emissions 
reduction credit to the rule for purposes of any attainment or progress 
demonstration in any area.
    Comment #10: NAHB states that Rule 9510 is not an ``incentive'' 
program that ``encourages'' reductions, but rather Rule 9510 requires 
developers to achieve emission reductions. NAHB therefore asserts that 
Rule 9510 is not an economic incentive program and EPA's guidance, 
``Improving Air Quality with Economic Incentive Programs'' (EIP 
Guidance) does not apply.
    Response #10: Economic incentive programs (EIPs), as defined by 
EPA's EIP Guidance,\1\ are programs which may include State established 
measures directed toward stationary, area, and/or mobile sources, to 
achieve emission reductions milestones to attain and maintain ambient 
air quality standards, and/or to provide more flexible, lower-cost 
approaches to meeting environmental goals. EIPs use market-based 
strategies to encourage reducing emissions in the most efficient manner 
(see EIP Guidance sections 1.1 and 15.1). While Rule 9510 requires 
developers subject to the rule to reduce emissions, it also provides 
developers the flexibility of paying a fee as an alternative means to 
comply. The developer may choose to pay a fee when it is a lower cost 
approach to meeting the rule requirements. Rule 9510 also requires 
SJVUAPCD to administer a program that uses these funds to achieve 
surplus emission reductions. Because the program as a whole includes 
this separate program where SJVUAPCD will use the funds to obtain 
emission reductions, it allows for a more flexible and potentially 
lower cost approach to getting emission reductions from the program. 
For these two reasons, Rule 9510 is an economic incentive program and 
EPA's EIP Guidance applies.
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    \1\ EPA's EIP Guidance, ``Improving Air Quality with Economic 
Incentive Programs'' published on January 2001 (EPA-452/R-01-001) is 
available at http://www.epa.gov/ttn/oarpg/t1/memoranda/eipfin.pdf.
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    Comment #11: NAHB states that Rule 9510 is not a voluntary program, 
that it is a mandatory program. NAHB asserts that EPA's ``Guidance on 
Incorporating Voluntary Mobile Source Emission Reduction Programs in 
State Implementation Plans (VMEP)'' does not apply.
    Response #11: First, we wish to clarify that EPA proposed to 
approve Rule 9510 because it strengthens the SIP. EPA did not propose 
to approve Rule 9510 as a measure under VMEP.\2\ Our discussion of VMEP 
and the Emerging and Voluntary Measures Policy \3\ was intended to 
provide the SJVUAPCD and the public with information concerning certain 
deficiencies in Rule 9510 and how these deficiencies might be addressed 
under the policies so that SIP emission reduction credit could be 
granted for the emission reductions achieved by Rule 9510. In addition, 
we acknowledge that we may not have made fully clear in the TSD the 
difference between enforceability in the context of reviewing the 
provisions of an individual emissions control rule as distinct from 
being able to assure that a state's commitment to achieve emissions 
reductions is fully accomplished.
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    \2\ A copy of VMEP (October 23, 1997) is available at http://www.epa.gov/otaq/stateresources/policy/general/vmep-gud.pdf.
    \3\ This guidance is entitled, ``Incorporating Emerging and 
Voluntary Measures into a State Implementation Plan (SIP),'' 
September 2004, and is available at http://www.epa.gov/ttn/oarpg/t1/memoranda/evm_ievm_g.pdf.
---------------------------------------------------------------------------

    The commenter is correct that entities subject to Rule 9510 are 
required to comply with the rule, and in that sense the provisions are 
mandatory. However, the commenter misunderstands the scope and 
potential applicability of VMEP.
    VMEP defines voluntary measures as emission reduction programs that 
rely on voluntary actions of individuals or other parties for achieving 
emission reductions. However, a State's obligations with respect to 
VMEPs must be enforceable at the State and Federal levels. That is, 
under the VMEP policy guidance, the State is not responsible, 
necessarily, for implementing a program dependent on voluntary actions. 
However, the State is obligated to monitor, assess and report on the 
implementation of voluntary actions and the emission reductions 
achieved from the voluntary actions and to remedy in a timely manner 
emission reduction shortfalls should the voluntary measure not achieve 
projected emission reductions.
    While the developer must comply with the rule, several of the 
developer's compliance options rely upon voluntary emission reductions. 
For instance, the developer could include on-site mitigation measures 
designed to reduce vehicle miles travelled by the residents. Emission 
reductions would occur when residents voluntarily choose to drive less. 
Alternatively, the developer could also pay a fee in lieu of 
implementing on-site mitigation measures. While the SJVUAPCD would use 
the funds to achieve emission reductions, the entities actually 
providing the emission reductions are voluntarily participating in the 
program and are not subject to a rule. Because some of the activities 
generating the actual emission reductions are voluntary, VMEP could be 
used to help evaluate whether SIP credit is appropriate if the 
deficiencies discussed in section (5)(f) of our TSD are addressed.
    Comment #12: NAHB notes that EPA's guidance ``Incorporating 
Emerging and Voluntary Measures into a State Implementation Plan 
(SIP)'' (Emerging and Voluntary Measures Policy) does not apply to 
emissions from mobile sources. NAHB states that while EPA asserts that 
developers are the entities subject to the rule, developers are not the 
``sources'' of NOX and PM10 mobile source 
emissions. NAHB states that nonroad engines and vehicles are the 
``source'' of emissions regulated by Section 6.1.1. NAHB therefore 
concludes that this policy does not apply.
    Response #12: In section (5)(b)(iv) of our TSD (page 13), we 
discuss enforceability and how prohibitory rules typically hold 
``sources'' of emissions legally responsible for the required emission 
reductions. Rule 9510 in contrast applies to developers. As the entity 
subject to the rule and legally responsible for the emission 
reductions, our reference to the developer as the ``source'' in Rule 
9510 was shorthand to reflect their legal responsibility under Rule 
9510. The commenter is correct that sources of emissions are normally

[[Page 26614]]

categorized as mobile, stationary, or area sources. However, as we 
described in Response 1, the CAA recognizes that development 
projects are ``indirect sources'' and can be subject to regulation in a 
SIP.
    Development projects indirectly result in new emissions from 
mobile, stationary, and area sources, including those from new or 
longer vehicle trips, fuel combustion from stationary and area sources, 
use of consumer products, landscaping maintenance, and construction 
activities.
    While the calculation of emission reductions required by Rule 9510 
takes into account construction equipment emissions (Section 6.1) and 
operational emissions (Section 6.2), the emission reduction obligation 
is expressed in tons of NOX and tons of PM10 
without regard to whether the reductions must come from mobile, 
stationary, or area sources. Indeed, Section 6.3 allows the emission 
reduction requirement to be met through any combination of on-site 
measures or off-site fees.
    Because the sources of emissions are mobile, stationary, and area 
sources and the emission reductions could come from all three types of 
sources, EPA has appropriately considered the guidances ``Incorporating 
Emerging and Voluntary Measures into a State Implementation Plan 
(SIP)'' which applies to stationary and area sources, and ``Guidance on 
Incorporating Voluntary Mobile Source Emission Reduction Programs in 
State Implementation Plans (VMEP)'' which applies to mobile sources. As 
we clarified in Response 11, the discussion in the TSD on the 
consideration of these policies was largely to provide the SJVUAPCD and 
the public with information on how rule deficiencies might be addressed 
in the future.
    Comment #13: NAHB states that even if the Emerging and Voluntary 
Measures Policy applied to non-road mobile sources under Rule 9510, EPA 
cannot approve Rule 9510 because the non-road mobile source reductions 
are not permanent. The reductions are not permanent because they are 
not federally enforceable.
    Response #13: As we stated in Responses 11 and 
12, EPA did not propose to approve Rule 9510 as a measure 
under the Emerging and Voluntary Measures Policy, and the discussion in 
the TSD was largely to provide information on how rule deficiencies 
might be addressed in the future to obtain SIP credit for emission 
reductions. While thus not relevant to our action in approving Rule 
9510, we will elaborate on the concept of permanent.
    Whether a reduction is considered ``permanent'' is dependent on the 
duration of the obligation which the particular measure and resulting 
emission reductions are meant to address. The commenter has noted that 
EPA identified enforceability concerns with the provisions requiring 
implementation of the mitigation measure, and Response 9 
addresses the enforceability issue. Enforceability is a separate 
question from whether the non-road mobile source mitigation measure, if 
implemented, results in permanent reductions. If a developer's 
mitigation measure is the use of lower emitting construction equipment, 
the very use of that equipment results in a stream of emission 
reductions during the construction phase. Although these reductions may 
not be federally enforceable, they can still be permanent during the 
relevant time period.

III. EPA Action

    No comments were submitted that change our assessment that the 
submitted rules comply with the relevant CAA requirements. Therefore, 
as authorized in section 110(k)(3) of the Act, EPA is fully approving 
this rule into the California SIP.

IV. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the Act and 
applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). 
Thus, in reviewing SIP submissions, EPA's role is to approve State 
choices, provided that they meet the criteria of the Clean Air Act. 
Accordingly, this action merely approves State law as meeting Federal 
requirements and does not impose additional requirements beyond those 
imposed by State law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     Does not interfere with Executive Order 12898 (59 FR 7629 
(Feb. 16, 1994)) because EPA lacks the discretionary authority to 
address environmental justice in this rulemaking.
    In addition, this rule does not have tribal implications as 
specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 
because the SIP is not approved to apply in Indian country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on tribal governments or preempt tribal law.
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this action and 
other required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2).
    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by July 8, 2011. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this action for the purposes of 
judicial review nor does it extend the time within which a petition for 
judicial review may be filed, and shall not postpone the effectiveness 
of such rule or action. This action may not be challenged later in 
proceedings to enforce its requirements (see section 307(b)(2)).

[[Page 26615]]

List of Subjects in 40 CFR Part 52

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

    Dated: March 31, 2011.
Jared Blumenfeld,
Regional Administrator, Region IX.

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

PART 52--[AMENDED]

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

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

Subpart F--California

0
2. Section 52.220, is amended by adding paragraph (c)(348) (i)(A)(3) to 
read as follows:

Sec.  52.220  Identification of plan.

* * * * *
    (c) * * *
    (348) * * *
    (i) * * *
    (A) * * *
    (3) Rule 9510, ``Indirect Source Review (ISR),'' adopted on 
December 15, 2005.
* * * * *
[FR Doc. 2011-11133 Filed 5-6-11; 8:45 am]
BILLING CODE 6560-50-P
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