```

[Federal Register Volume 89, Number 249 (Monday, December 30, 2024)]
[Rules and Regulations]
[Pages 106332-106357]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-30513]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2024-0228; EPA-R09-OAR-2022-0338; FRL-11830-02-R9]

Federal Implementation Plan for Nonattainment New Source Review 
Program; Mojave Desert Air Quality Management District, California

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is finalizing a 
Federal Implementation Plan (FIP) under the Clean Air Act (CAA) that 
consists of Nonattainment New Source Review (NNSR) rules for areas 
within the jurisdiction of the Mojave Desert Air Quality Management 
District (MDAQMD or ``District'') in which air pollutant concentrations 
are above specific National Ambient Air Quality Standards (NAAQS). The 
NNSR rules will apply to construction of new major stationary sources 
and major modifications at existing major stationary sources of air 
pollution. The FIP will be implemented by the EPA, unless and until it 
is replaced by an EPA-approved state implementation plan (SIP). In this 
action, the EPA is also responding to a September 5, 2024 decision of 
the United States Ninth Circuit Court of Appeals for the Ninth Circuit, 
which remanded the EPA's disapproval of a MDAQMD rule provision related 
to the calculation and generation of emissions offsets. This response 
again disapproves MDAQMD Rule 1304(C)(2)(d) and provides additional 
information to support that decision.

DATES: This final rule is effective on February 28, 2025.

ADDRESSES: The EPA has established a docket for the FIP rulemaking 
under Docket ID No. EPA-R09-OAR-2024-0228. The EPA established a 
different docket (EPA-R09-OAR-2022-0338), for its 2023 limited 
approval/limited disapproval of a MDAQMD state implementation plan 
submission, which contained provisions addressing the calculation and 
generation of emissions offsets for the nonattainment area permitting 
program. This notification will be placed in both dockets, which are 
each accessible via the Federal eRulemaking Portal at https://www.regulations.gov/. Although listed in the indices for these rules, 
some information is not publicly available, e.g., Confidential Business 
Information or other information whose disclosure is restricted by 
statute. Certain other material, such as copyrighted material, will be 
publicly available only in hard copy. Publicly available docket 
materials are available either electronically at https://www.regulations.gov or in hard copy at the U.S. Environmental 
Protection Agency, EPA Docket Center, William Jefferson Clinton West 
Building, Room 3334, 1301 Constitution Ave. NW,

[[Page 106333]]

Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 
p.m., Monday through Friday, excluding legal holidays. The telephone 
number for the Public Reading Room is (202) 566-1744, and the telephone 
number for the Office of Air and Radiation Docket is (202) 566-1742.

FOR FURTHER INFORMATION CONTACT: Tanya Abrahamian, Air and Radiation 
Division, Rules Office (AIR-3-2), Environmental Protection Agency, 
Region IX, telephone number: (213) 244-1849; email address: 
[email protected].

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us,'' 
and ``our'' refer to the EPA.
    The information presented in this preamble is organized as follows:

Table of Contents

I. Summary of the Proposed Action
II. EPA Response to the Ninth Circuit's Remand
III. Public Comments on FIP and EPA Responses to Comments and Court 
Remand
IV. Final Action
V. Supporting Information
VI. Statutory and Executive Order Reviews

Preamble Glossary of Terms and Abbreviations

    The following are abbreviations of terms used in the preamble.

APA Administrative Procedure Act
Appendix S 40 CFR part 51, appendix S
BACT Best Available Control Technology
CAA or Act Clean Air Act
CARB California Air Resources Board
CFR Code of Federal Regulations
EPA we, us, or our The United States Environmental Protection Agency
ERC Emission Reduction Credit
FIP Federal Implementation Plan
FR Federal Register
LAER Lowest Achievable Emission Rate
LA/LD Limited Approval-Limited Disapproval
MDAQMD The Mojave Desert Air Quality Management District
NAAQS National Ambient Air Quality Standards
NOX Nitrogen Oxides
NSR New Source Review
NNSR Nonattainment New Source Review
PSD Prevention of Significant Deterioration
PAL Plantwide Applicability Limit
PM10 Particulate Matter with a diameter of 10 micrometers 
or less
PTE Potential To Emit
RACT Reasonably Available Control Technology
RFP Reasonable Further Progress
SER Simultaneous Emission Reduction
SIP State Implementation Plan
TSD Technical Support Document
VOC Volatile Organic Compound
2023 LA/LD The EPA's rulemaking action at 88 FR 42258, which was 
published on June 30, 2023, in the Federal Register.

I. Final Action To Establish Federal Implementation Plan

    On July 9, 2024 (89 FR 56237), the EPA proposed to establish a 
Federal Implementation Plan (FIP), pursuant to (Clean Air Act) section 
110(c), for a nonattainment New Source Review (NNSR) program within the 
Mojave Desert Air Quality Management District (MDAQMD).\1\ This FIP 
relates to a finding of failure to submit issued by the EPA on February 
3, 2017, and EPA's action to disapprove a part of the MDAQMD's 
Nonattainment New Source Review (NNSR) permitting program regulations 
on June 30, 2023 (88 FR 42258) (``2023 LA/LD''). The latter action was 
a limited approval/limited disapproval action in which EPA disapproved 
MDAQMD's Rule 1304(C)(2)(d) because this rule failed to meet 
requirements for determining the quantity of offsets needed to issue a 
permit for a major modification.
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    \1\ The EPA's finding of failure to submit triggered an 
obligation under CAA section 110(c) for the EPA to promulgate a FIP 
within two years (i.e., by March 6, 2019). 82 FR 9158, 9161 
(February 3, 2017).
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    This FIP implements NNSR program requirements and will apply to the 
construction of new major sources and major modifications at existing 
major sources that are located within areas that are designated as 
nonattainment with specific National Ambient Air Quality Standards 
(NAAQS). This FIP will apply to pollutants for which the area is 
designated nonattainment. Therefore, this action applies only in the 
areas within the MDAQMD's jurisdiction that are designated 
nonattainment, specifically, the San Bernardino County portion of the 
West Mojave Desert ozone nonattainment area and the San Bernardino 
County and Trona Planning Area Particulate Matter with a diameter of 10 
micrometers or less (PM10) nonattainment areas.\2\ The EPA 
will implement the FIP in these areas until such time as the EPA 
approves a SIP submission from the MDAQMD that fully resolves the 
deficiencies identified in the EPA's June 30, 2023 limited approval/
limited disapproval (``2023 LA/LD'') action on the MDAQMD's NNSR 
program and identifies no new deficiencies.\3\ This FIP satisfies the 
statutory requirements for SIPs and NNSR programs in CAA sections 
110(c)(1), 172(c)(5), 173, 182(c) and (d), 189(a)(1)(A) and (e), 
301(a), and 302. The provisions of the FIP are also designed to meet 
the requirements for state plans in the EPA regulations at 40 CFR 
51.165, 40 CFR 51.1114, and 40 CFR 51.1314.
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    \2\ See 40 CFR 81.305. The ozone nonattainment area is located 
within San Bernardino County. The PM10 nonattainment 
areas consist of all of the MDAQMD portion of San Bernardino County: 
the Trona Planning Area and the portion of San Bernardino County 
that excludes both the Trona Planning Area and the portion of San 
Bernardino County that is located in the South Coast Air Basin. A 
map of this area is available in the docket for this action.
    \3\ 89 FR 56237, 56241.
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    The FIP that is finalized in this action addresses the deficiencies 
the EPA identified in the MDAQMD's NNSR program by incorporating 
requirements from 40 CFR part 51, appendix S (``Appendix S''), as well 
as additional requirements to make the program administrable. Upon the 
effective date of this action, permit applicants will need to obtain 
two permits--one permit from the EPA under this FIP and one permit from 
the MDAQMD under the rules in the SIP. Where permit approval criteria 
between the MDAQMD's SIP and this FIP conflict--for example, the 
procedures to determine the quantity of offsets at a major 
modification, a deficiency in the MDAQMD's NNSR program--permit 
applicants need to demonstrate compliance with the requirements of this 
FIP, since this FIP fills the gaps in the MDAQMD's NNSR program. To the 
extent that there are any differences in the required permit 
application materials under the FIP versus the SIP, the applicant will 
need to comply with both requirements when submitting its permit 
application. The EPA will enforce the FIP as provided under CAA section 
113(a). Our notification proposing this action includes further 
information on the implementation, purpose, components, and 
severability of this FIP.\4\
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    \4\ 89 FR 56237.
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II. EPA Response to the Ninth Circuit's Remand

    In this rulemaking, the EPA is also taking final action in response 
to a remand to the Agency by the U.S. Court of Appeals for the Ninth 
Circuit in Mojave Desert Air Quality Management District v. U.S. 
Environmental Protection Agency (``MDAQMD v. EPA'').\5\ As background, 
on July 10, 2023, the MDAQMD filed a petition for review in the Ninth 
Circuit Court of Appeals of the EPA's 2023 LA/LD of the MDAQMD's NNSR 
program. The focus of the litigation was the EPA's disapproval of the 
MDAQMD's Rule 1304(C)(2)(d). The MDAQMD argued that the EPA had failed 
to adequately explain the disapproval in light of the Agency's 1996 
approval of a

[[Page 106334]]

substantially similar, earlier version of the rule. On September 5, 
2024, the Ninth Circuit found that the EPA's disapproval of Rule 
1304(C)(2)(d) was arbitrary and capricious because the Agency had 
failed to adequately explain ``the reversal of its prior approval of a 
similar Mojave rule.'' \6\ The court granted the District's petition 
and remanded the matter ``for further proceedings before the agency on 
an open record consistent with this decision.'' \7\
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    \5\ Mojave Desert Air Quality Mgmt. Dist. v. U.S. Env't. Prot. 
Agency, No. 23-1411 (9th Cir. September 5, 2024), Docket No. EPA-
R09-OAR-2022-0338, available in the docket for this action and at 
https://cdn.ca9.uscourts.gov/datastore/memoranda/2024/09/05/23-1411.pdf.
    \6\ Id. at 2. The court wrote that its disposition of the case 
``is not appropriate for publication and is not precedent. . . .'' 
Id. at 1.
    \7\ Id. at 5.
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    In response to a remand from a court and agency can choose one of 
two paths. The agency may offer a fuller explanation of its reasoning 
at the time of the remanded agency action, or EPA may take a new agency 
action that need not be limited to its prior reasons but must comply 
with the procedural requirements for a new agency action.\8\ The EPA is 
choosing to follow the second of these paths to respond to the Ninth 
Circuit's remand, reexamining the remanded action and providing a fresh 
justification for the disapproval of Rule 1304(C)(2)(d), including an 
explanation for the reversal of EPA's 1996 approval.
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    \8\ See, Biden v. Texas, 597 U.S. 785, 807-809 (2022); Fischer 
v. Pension Benefit Guarantee Corporation, 994 F.3d 664, 669-70 (D.C. 
Cir. 2021).
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    The EPA also received comments referencing our 1996 rulemaking 
action on the proposal for the FIP. In light of the overlapping subject 
matter, we have elected to include the following two final actions in 
one rulemaking: (1) a new EPA final action to disapprove Rule 
1304(C)(2)(d), as authorized under CAA sections 110(k)(3) and 301(a), 
that responds to the Ninth Circuit's remand of a portion of our 2023 
LA/LD; and (2) EPA's final action on the FIP, as authorized under CAA 
section 110(c), described above. Our responses to comments in Section 
III of this action both respond to the comments received on the 
proposed FIP and provide additional explanation that supports EPA new 
final action to disapprove Rule 1304(C)(2)(d), consistent with the 2023 
LA/LD rule.
    For the former action, the EPA must comply with the procedural 
requirement for a new agency action. Considering the grounds for the 
court's remand, there is no need for the EPA to provide an additional 
opportunity for public comment before taking final action to disapprove 
Rule 1304(C)(2)(d). The EPA provided notice and opportunity to comment 
on the disapproval of Rule 1304(C)(2)(d) in the 2023 LA/LD action. In 
reviewing that action, the Ninth Circuit held that EPA's response to 
one of the public comments on that action was not adequate. The court 
found that the MDAQMD had sufficiently raised in its comment the 
contention that EPA's 2023 action was inconsistent with the Agency's 
prior approval of comparable rule in 1996. Then, the court held that 
the EPA did not sufficiently articulate a basis for our change of 
position to support the 1993 disapproval of MDAQMD Rule 1304(C)(2)(d). 
In this action, the EPA is responding to the MDAQMD's comment in the 
manner that the Ninth Circuit directed. We have opened the record to 
the 2023 LA/LD action and provided additional information to support a 
new disapproval of Rule 1304(C)(2)(d). Considering that the court 
remanded for the EPA to provide a response to a comment, there is no 
need to provide an opportunity to submit comments.\9\
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    \9\ See, Fischer, 994 F.3d. at 670 (additional administrative 
appeal not needed on remand where the factual record was fully 
developed).
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III. Public Comments on FIP and EPA Responses to Comments and Court 
Remand

    The public comment period on the proposed FIP rule opened on July 
9, 2024, the date of the proposal's publication in the Federal 
Register, and closed on August 23, 2024. The EPA held a virtual public 
hearing on July 24, 2024, for members of the public to provide oral 
comments. This section summarizes the written and oral public comments 
the EPA received on the proposed FIP rule and provides responses to 
those comments. The written comments as well as a transcript of the 
public hearing are available in the docket for this action. The 
responses below also provide additional analysis and explanation that 
supports the EPA's disapproval of Rule 1304(C)(2)(d) in the 2003 LA/LD 
rule.
    Twelve written comments were submitted to https://regulations.gov. 
The commenters are listed in Table 1.

                             Table 1--List of Commenters Providing Written Comments
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                                                   Commenter
    Commenter ID          Commenter name          organization        Type of commenter            Notes
----------------------------------------------------------------------------------------------------------------
01..................  Brad Poiriez,          MDAQMD...............  State or Local         This is the first
                       Executive Director.                           Government             comment letter
                                                                     Representative/        submitted by the
                                                                     Agency.                MDAQMD.
02..................  Brad Poiriez,          MDAQMD...............  State or Local         This is the second
                       Executive Director.                           Government             comment letter
                                                                     Representative/        submitted by the
                                                                     Agency.                MDAQMD regarding the
                                                                                            MDAQMD's August 7,
                                                                                            2024 SIP submittal.
03..................  Garden Hills Org. &    .....................  .....................  This comment is not
                       Co. Ltd.                                                             relevant to the
                                                                                            proposed action and
                                                                                            the EPA will
                                                                                            therefore not be
                                                                                            providing a response
                                                                                            to this comment.
04..................  Clean Future.........  .....................  .....................  This commenter
                                                                                            submitted four
                                                                                            separate comments,
                                                                                            two that supported
                                                                                            the proposed FIP as
                                                                                            drafted and two that
                                                                                            made additional
                                                                                            recommendations.
05..................  Karnig Ohannessian,    U.S. Department of     Government             .....................
                       Deputy Assistant       Defense.               Representative/
                       Secretary of the                              Agency.
                       Navy (Environment
                       and Mission
                       Readiness).
06..................  L. Dugan.............  Marine Air Ground      Government             .....................
                                              Task Force Training    Representative/
                                              Command, Marine        Agency.
                                              Corps Air Ground
                                              Combat Center
                                              (MAGTFTC-MCAGCC).
07..................  Nicole Valentine.....  Pacific Gas and        Industry.............
                                              Electric Company.
08..................  Catalina Elias,        CalPortland Company..  Industry.............
                       Environmental
                       Manager.

[[Page 106335]]

 
09..................  Michael Meinen, V.P.   Mitsubishi Cement      Industry.............
                       Environmental and      Corporation.
                       Decarbonization
                       Efforts.
----------------------------------------------------------------------------------------------------------------

    The EPA also received a total of three comments on the proposed 
rule during the public hearing. The commenters are listed in Table 2.

       Table 2--List of Commenters in July 24, 2024 Public Hearing
------------------------------------------------------------------------
                                         Commenter           Type of
  Commenter ID      Commenter name      organization        commenter
------------------------------------------------------------------------
AA..............  Brad Poiriez,      Mojave Desert      State or Local
                   Executive          Valley Air         Government
                   Director.          Quality            Representative/
                                      Management         Agency.
                                      District
                                      (MDAQMD).
BB..............  Pedro Dumaua.....  Ducommun, Inc....  Industry.
CC..............  Daniel McGivney..  Southern           Industry.
                                      California Gas
                                      Company
                                      (SoCalGas).
------------------------------------------------------------------------

    As we stated in the July 24, 2024 public hearing, the EPA considers 
written comments and oral comments equally in reaching its final 
decision on the proposed FIP. For clarity, we have divided our 
responses to the comments we received into two sections: the written 
comments we received during the public comment period and the oral 
comments we received during the public hearing.

A. Summaries of Written Comments and the EPA's Responses

1. Basis and Timing for the FIP
    Comment A.1.1: Commenter 01 asserts that the EPA proposed the FIP 
in ``haste,'' that the proposed FIP relates to a single issue, and that 
it is unnecessary because it rests on an erroneous assumption.
    Response to Comment A.1.1: The EPA disagrees with the 
characterization that the EPA proposed the FIP in haste. As explained 
in our proposed rulemaking,\10\ the EPA's FIP authority and obligation 
arises from our February 3, 2017 finding of failure to submit, in which 
we found that the State of California had failed to submit a SIP 
revision for NNSR rules that apply to a ``Severe'' classification for 
the 2008 ozone NAAQS, as required under subpart 2 of part D of title 1 
of the CAA and the 2008 Ozone SIP Requirements Rule.\11\ The EPA's 
finding of failure to submit triggered an obligation under CAA section 
110(c) for the EPA to promulgate a FIP no later than two years from the 
finding of failure to submit a complete SIP (i.e., by March 6, 
2019).\12\ Specifically, the finding stated that if the State did not 
make the required SIP submission and the EPA did not take final action 
to approve the submission within two years of the effective date of the 
finding, the EPA would be required to promulgate a FIP for the affected 
nonattainment area.\13\ On June 7, 2022, the Center for Biological 
Diversity (CBD) filed a lawsuit against the EPA alleging that the EPA 
had failed to promulgate a FIP or approve a SIP by the statutory 
deadline of March 6, 2019 (``2023 CBD Consent Decree'').\14\ On June 
15, 2023, the U.S. District Court of the Northern District of 
California entered a consent decree resolving this claim and requiring 
the EPA to sign a final rulemaking action to either promulgate a FIP or 
approve a SIP no later than November 29, 2024, although on November 8, 
2024, the EPA and CBD agreed to extend the deadline to January 10, 
2025.\15\ The EPA proposed and is finalizing this FIP for the NNSR 
program in the MDAQMD to fulfill the EPA's statutory duty by the 
deadline established under the consent decree.\16\
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    \10\ 89 FR 52637, 52639.
    \11\ 82 FR 9158 (February 3, 2017).
    \12\ Id. at 9161.
    \13\ Id. at 9158.
    \14\ Center for Biological Diversity et al., v. Regan, No. 3:22-
cv-03309-RS (N.D. Cal.) (``2023 CBD Consent Decree''). The consent 
decree, as entered by the court on June 15, 2023, is available in 
the docket for this action.
    \15\ Id. Prior to court's entry of the 2023 CBD Consent Decree, 
the EPA published a notice in the Federal Register announcing the 
proposed settlement and providing an opportunity for interested 
persons to submit comments. 88 FR 20166 (April 5, 2023). The EPA 
received no comments on the proposed settlement. The parties' joint 
stipulation to extend the consent decree deadline is available in 
the docket for this action.
    \16\ 2023 CBD Consent Decree, supra n. 13.
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    Relatedly, the 2015 Ozone NAAQS Implementation Rule required the 
MDAQMD to submit an updated NNSR rule to the EPA by August 1, 2021, no 
later than three years from the effective date of its nonattainment 
designation.\17\ On July 23, 2021, CARB submitted to the EPA the 
MDAQMD's revised NNSR rules for the 2015 ozone NAAQS, which the MDAQMD 
adopted in March 2021.\18\ On June 30, 2023, the EPA finalized an LA/LD 
of the District's NNSR rules.\19\ In this rulemaking, the EPA evaluated 
the SIP submission to determine its compliance with NNSR requirements 
for the 2008 and 2015 ozone NAAQS and for the 1987 PM10 
NAAQS. The EPA's rulemaking for the submitted rules explained that the 
EPA had identified six deficiencies in the submitted rules that did not 
fully satisfy the relevant requirements for preconstruction review and 
permitting in nonattainment areas under section 110 and part D of title 
I of the Act. These deficiencies prevented full approval.\20\ As noted 
in that final action, this disapproval imposed an obligation on the EPA 
to promulgate a FIP pursuant to CAA section 110(c) within 24 months of 
the effective date of the action (i.e., July 31, 2023, setting a 
deadline of July 31, 2025, for the EPA to promulgate a FIP), unless the 
EPA approved a SIP revision correcting the deficiencies. The June 2023 
final action also noted the EPA's existing obligation under the 2023 
CBD Consent Decree to promulgate a FIP for new source review (NSR) SIP 
elements that the Agency had not approved.\21\ The EPA is therefore 
finalizing this FIP for the NNSR program in the MDAQMD to fulfill the 
EPA's statutory duty by the deadline

[[Page 106336]]

established under the 2023 CBD Consent Decree.
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    \17\ 83 FR 62998 (December 6, 2018).
    \18\ 88 FR 42258 (June 30, 2023). CARB's submittal stopped the 
sanctions clocks that started as a result of the 2017 Finding of 
Failure to Submit, but not the FIP clock, since the latter requires 
approval of the SIP submission.
    \19\ Id.
    \20\ Id.
    \21\ Id. at 42268.
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    Comment A.1.2: Commenter 08 states that it understands that the EPA 
is proposing the FIP under both a statutory deadline established by a 
consent decree resulting from its failure to act in a timely manner on 
various SIP submissions and under a regulatory deadline required by CAA 
section 110(c). Commenter 08 states that the EPA acted to propose the 
FIP nearly five months sooner than required by the consent decree. 
Commenter 08 believes that the proposed FIP presumes the outcome of the 
ongoing litigation, and the hasty action on the EPA's part does not 
demonstrate a good faith effort to allow the MDAQMD to continue to 
implement its own NNSR program.
    Response to Comment A.1.2: The EPA proposed this FIP for the MDAQMD 
NNSR program to fulfill the EPA's statutory duty by the deadline 
established under the 2023 CBD Consent Decree.\22\ The terms of the 
consent decree require the EPA to sign a notice of final rulemaking to 
approve a revised SIP submission, to promulgate a FIP, or to approve in 
part a revised SIP submission and promulgate a partial FIP for the 
Severe NNSR SIP element in the MDAQMD no later than January 10, 
2025.\23\ Because the FIP can only be promulgated through a notice and 
comment rulemaking, it was necessary for the EPA to propose the FIP 
several months before the final signature deadline to give time for the 
public to review the draft rulemaking, provide comments, and allow for 
the EPA to consider and respond to those comments in a final agency 
action.
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    \22\ Id.
    \23\ Center for Biological Diversity et al., v. Regan, No. 3:22-
cv-03309-RS (N.D. Cal.). The consent decree, as entered by the court 
on June 15, 2023, is available in the docket for this action. On 
November 8, 2024, the parties stipulated to an extension of the 
consent decree deadline to January 10, 2025. The joint stipulation 
is available in the docket for this action.
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    Commenter 08's assessment of the basis for the EPA's promulgation 
of the FIP and the timing of the FIP is not correct. The EPA's 
obligation to promulgate a FIP stems from our 2017 Finding of Failure 
to Submit the NNSR SIP element for a Severe-15 ozone nonattainment 
area.\24\ Our 2017 action started the clock for when the EPA would need 
to promulgate a FIP, consistent with CAA section 110(c). Thus, since 
March 6, 2019 (two years after the effective date of the action, under 
CAA section 110(c)), the EPA has had an obligation to promulgate a FIP 
unless it approved the MDAQMD's NNSR program. Because the EPA has not 
fully approved the MDAQMD's NNSR program, the EPA remains obligated to 
promulgate a FIP unless the MDAQMD addresses the deficiencies 
identified in the 2023 LA/LD.
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    \24\ 82 FR 9158 (February 3, 2017).
---------------------------------------------------------------------------

    After extensive coordination between the EPA and MDAQMD, the MDAQMD 
adopted revised NSR rules on March 22, 2021, which CARB, as the 
governor's designee, submitted to the EPA on July 23, 2021, for 
approval into the SIP. In the transmittal letter from the MDAQMD to 
CARB accompanying the amended NNSR rules, the MDAQMD wrote that the 
issue regarding MDAQMD Rule 1304(C)(2)(d) may need to be resolved in 
court.\25\ The EPA's 2023 LA/LD was the final action on the 2021 
submittal. The FIP clock that commenced with the 2023 LA/LD is separate 
from the FIP clock that began with the 2017 finding of failure to 
submit, in contrast to the statements Commenter 08 made in its comment 
number 1 on the proposed FIP; again, that deadline passed in 2019.
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    \25\ Cover Letter, MDAQMD March 22, 2021 Amendments to MDAQMD 
Regulation XIII--New Source Review and Rule 1600--Prevention of 
Significant Deterioration, sent from the MDAQMD to CARB. May 17, 
2021, p. 2.
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    Following the EPA's finalization of the 2023 LA/LD on June 30, 
2023, the MDAQMD filed a petition for review of that action in the U.S. 
Court of Appeals for the Ninth Circuit Court on July 10, 2023. On 
September 5, 2024, the Ninth Circuit Court of Appeals in the case 
Mojave Desert Air Quality Management District v. EPA remanded to the 
EPA the Agency's determination that the MDAQMD Rule 1304(C)(2)(d) is 
unlawful under the CAA. The Ninth Circuit did not render a substantive 
ruling on the legality of the MDAQMD Rule 1304(C)(2)(d); rather, it 
remanded to the EPA to explain the EPA's finding that the MDAQMD rule 
was deficient, specifically in the context of the EPA's 1996 approval 
of the MDAQMD's NNSR program containing similar provisions to today's 
Rule 1304(C)(2)(d). The EPA therefore finds the MDAQMD SIP remains 
deficient with respect to Rule 1304(C)(2)(d) and inconsistent with CAA 
requirements. Regardless of the Ninth Circuit's remand, the EPA is 
required to promulgate the FIP, and it must do so by the consent decree 
deadline of January 10, 2025.\26\
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    \26\ On November 8, 2024, CBD and the EPA filed a joint 
stipulation to extend the original November 29, 2024 deadline to 
January 10, 2025. Center for Biological Diversity et al., v. Regan, 
No. 3:22-cv-03309-RS (N.D. Cal.). This consent decree is also 
available in the docket for this action.
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    Comment A.1.3: Commenter 02 states that since the MDAQMD made 
changes to address all but one of the six deficiencies the EPA 
identified in the 2023 LA/LD, there is no longer a need to address 
those particular issues in the FIP other than to note that resolution 
has been reached and approval of those five issues is forthcoming.
    Commenter 08 states that because CARB submitted the MDAQMD's 
revised rules to the EPA on August 7, 2024, it is the commenter's 
understanding that the FIP will only pertain to Simultaneous Emission 
Reduction (``SER'') calculations under MDAQMD Rule 1304(C)(2)(d). The 
commenter states that with CARB's submission of the MDAQMD's revised 
rules, the deficiencies in the MDAQMD's rules are no longer broad in 
scope, nor do they affect multiple aspects of the program. The 
commenter urges the EPA to work cooperatively with the MDAQMD and not 
put the onus of the FIP on facilities.
    Commenter 07 states that the MDAQMD has made many changes to its 
NSR rules to meet the requirements of the 1990 Clean Air Act and 
requests that the EPA reevaluate its decision to promulgate the FIP. 
Similarly, Commenter 05 states that the EPA should reconsider or 
postpone implementing the FIP until it can resolve its disagreement 
with the MDAQMD regarding Rule 1304(C)(2)(d). Commenter 09 urges the 
EPA to defer the FIP until the ongoing litigation between the EPA and 
the MDAQMD is resolved.
    Response to Comment A.1.3: Section III.H of our FIP proposal 
described how SIP replacement of all or any part of the proposed FIP 
would work, noting that changes to the MDAQMD's rules, if approved into 
the SIP, could replace the corresponding requirements of the FIP.\27\ 
The EPA received CARB's submission of the MDAQMD's revised rules 
(adopted by the MDAQMD on March 25, 2024) on August 7, 2024, which was 
after our July 9, 2024 proposed action. For the EPA to narrow the scope 
of the FIP to just the remaining issue--the quantification and 
generation of offsets under MDAQMD Rule 1304(C)(2)(d)--the EPA would 
first need to approve the August 7, 2024 CARB submittal containing the 
MDAQMD's revised NNSR rules, which requires a 30-day notice and comment 
period. We are currently reviewing the submission for completeness and 
substance, as required under section 110(k) of the CAA. Therefore, 
there is not enough time before the January 10, 2025 consent decree 
deadline to accommodate the required notice and comment rulemaking on 
any action the

[[Page 106337]]

EPA takes on the August SIP submittal.\28\
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    \27\ 89 FR 56237, 56243.
    \28\ The CBD Consent Decree deadline was November 29, 2024, 
until CBD and the EPA agreed to extend the deadline, following the 
EPA's showing of need for an extension. Despite this extension, the 
EPA maintains that the extension of the CBD Consent Decree deadline 
to January 10, 2025, is still an insufficient amount of time to act 
on the MDAQMD's submittal and narrow the scope of the FIP before the 
deadline to finalize it.
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    Case law also supports the conclusion that the EPA is not required 
to act on the MDAQMD's August 7, 2024 submittal prior to finalizing the 
FIP. As the court held in Keystone-Conemaugh Projects LLC v. EPA, a 
case in which the EPA promulgated a FIP before acting on a revised SIP 
submittal, CAA section 110(c) ``contains no language requiring the EPA 
to act on the SIP revision before promulgating the FIP.'' \29\ 
(Emphasis in original.) Likewise, as Commenter 02 indicates in its 
comment letter, the MDAQMD's revised NNSR rules submitted by CARB on 
August 7, 2024, does not include any revisions of MDAQMD Rule 
1304(C)(2)(d).
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    \29\ Keystone-Conemaugh Projects LLC v. EPA, 100 F.4th 434, 447 
(3d Cir. 2024). The court further stated that ``. . . if the EPA 
were required to act on each and every SIP revision submitted before 
it could issue a FIP, an untenable scenario could ensue. For 
instance, if a state were to submit multiple inadequate SIP 
revisions, it could effectively nullify the EPA's ability to issue a 
FIP and thus delay the implementation of any emission limits.'' 
(FN7)
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    Similar to the situation at issue in Arizona ex rel. Darwin v. 
United States, there is no reason to think that, after nearly five 
years of discussions of the MDAQMD's NNSR program between EPA and the 
MDAQMD, additional time to correct Rule 1304(C)(2)(d) would lead to 
MDAQMD's revising its NNSR program to resolve the deficiency.\30\
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    \30\ See, Ariz. ex rel. Darwin v. United States, 815 F.3d 519, 
543-544 (9th Cir. 2016), in which the Ninth Circuit Court of Appeals 
upheld the EPA's combined partial SIP disapproval and FIP, which the 
agency promulgated to meet a consent decree deadline stemming from a 
previous finding of failure to submit. The court stated that ``it is 
unlikely that a different outcome would have resulted if EPA had 
provided [the State] with additional time to correct its . . . SIP . 
. . [the State] made no effort to correct its SIP in light of these 
comments. There is no reason to think it would have done so after 
the Final Rule disapproving the SIP issued either.''
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    Comment A.1.4: Commenter 09 states that the proposed FIP is not 
necessary because the EPA already has authority under the existing 
MDAQMD rules to review applications for major facilities and enforce 
applicable federal NNSR requirements. This commenter states that MDAQMD 
Rule 1203(B)(1) requires that the EPA be given an opportunity to review 
and comment on applications for Federal Operating Permits (FOP), 
Significant Modifications to FOPs, and Renewals to FOPs. The commenter 
states that the EPA already has the discretion and authority to deny 
applications for a Major Facility that it believes has not complied 
with applicable federal NNSR requirements.
    Response to Comment A.1.4: The EPA disagrees with the comment. 
While the EPA can comment on, and enforce, Title V permits issued under 
the MDAQMD's approved CAA Title V program,\31\ the Title V operating 
permit program is not the same permitting program as a NNSR pre-
construction permitting program. Title I of the CAA has a separate 
requirement that the MDAQMD SIP contain a fully approved NNSR 
permitting program for the 2008 and 2015 ozone NAAQS.\32\ Federal 
Operating Permits issued under Title V of the CAA (and under Regulation 
XII of MDAQMD's approved Title V program) are not the same as pre-
construction NNSR permits issued under a SIP-approved program under 
Title I of the CAA, and the EPA's authority to review, comment on, and 
object to Title V permits does not remedy the deficiencies in the 
MDAQMD's NSR program, nor does the EPA's authority under Title V 
fulfill the EPA's FIP obligation under CAA section 110(c). MDAQMD 
Regulation XIII, which contains the MDAQMD's NNSR program, still needs 
to be approved into the SIP for the 2008 and 2015 ozone NAAQS. The EPA 
therefore has a statutory duty to promulgate a FIP as the result of its 
finding of failure to submit published in the Federal Register on 
February 6, 2017, and the EPA is now subject to a court order to either 
promulgate a FIP or approve a SIP submission that corrects all the 
deficiencies identified in the finding of failure to submit no later 
than January 10, 2025.\33\
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    \31\ See 40 CFR part 70, appendix A.
    \32\ 42 U.S.C. 7410(a).
    \33\ Center for Biological Diversity et al., v. Regan, No. 3:22-
cv-03309-RS (N.D. Cal.). This consent decree is also available in 
the docket for this action.
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2. Comments on MDAQMD Rule 1304(C)(2)(d)
    Comment A.2.1: Commenter 01 asserts that the EPA erroneously 
assumed that SERs (Simultaneous Emissions Reductions) created under 
MDAQMD Rule 1304(C)(2)(d) (referred to by Commenter 01 as 
``1304(C)(2)(d) Offsets'') are unlawful under the CAA. The commenter 
states that 1304(C)(2)(d) Offsets are created by a reduction in a 
source's allowable emissions that were fully offset in a previous 
action. Commenter 01 states that 1304(C)(2)(d) Offsets are adjusted to 
reflect otherwise required reductions, may only be used to offset 
contemporaneous emission increases at the facility, and cannot be 
banked for future use. Commenter 01 further asserts that 40 CFR 
51.165(a)(3)(ii)(J) does not relate to creditable emission reductions 
and that even that provision, through a cross-reference to the 
definition of ``actual emissions'' at 40 CFR 51.165(a)(1)(xii), allows 
permitting agencies to ``presume that source-specific allowable 
emissions for the unit are equivalent to the actual emissions of the 
unit.''
    Commenter 06 similarly asserts that while 40 CFR 
51.165(a)(3)(ii)(J) requires offsets to be determined by summing the 
difference between the allowable emissions after the modification and 
the actual emissions before the modification (as defined in paragraph 
(a)(1)(xii)), paragraph (a)(1)(xii)(C) allows the MDAQMD to presume 
that source-specific allowable emissions for the unit are equivalent to 
the actual emissions of the unit.
    Therefore, Commenters assert, 1304(C)(2)(d) Offsets and the 
potential-to-emit to potential-to-emit or potential-to-potential (PTE-
to-PTE) test are valid and consistent with sections 173(c)(1), 
173(c)(2), and 182 of the CAA and the implementing regulations at 40 
CFR 51.160-165.
    Response to Comment A.2.1: The EPA disagrees with the assertion 
that the EPA made an erroneous finding that 1304(C)(2)(d) Offsets are 
inconsistent with statutory and regulatory requirements. As the EPA 
previously explained in the 2023 LA/LD and reiterated in our proposed 
action for the FIP, 1304(C)(2)(d) Offsets are inconsistent with the CAA 
and the EPA's regulations because they allow facilities to satisfy 
major NSR offset obligations using a baseline of allowable emissions 
before construction rather than a baseline of actual emissions before 
construction. We provide a more detailed explanation below.
    CAA sections 173(a)(1)(A) and 173(c)(1) require that NNSR permits 
issued by states (or local air districts) pursuant to EPA-approved SIPs 
must require all proposed new or modified major sources that trigger 
NNSR to obtain sufficient offsetting emissions reductions. For example, 
section 173(c)(1) requires owners or operators of new or modified major 
stationary sources to obtain emission reductions that ``assure that the 
total tonnage of increased emissions of the air pollutant from the new 
or modified source shall be offset by an equal or greater reduction, as 
applicable, in the actual emissions of such air pollutant from the same 
or other sources in the area.''

[[Page 106338]]

(Emphasis added.) \34\ Rule 1304(C)(2)(d) is inconsistent with section 
173(c)(1) because it allows sources that have offset their allowable 
emissions at any point in time to avoid the CAA obligation to offset 
future increases in actual emissions from future major modifications. 
The EPA also disagrees with Commenter 01's assertion that Rule 
1304(C)(2)(d) is consistent with CAA section 173(c)(2). In addition to 
the phrase referenced by the commenter, CAA section 173(c)(2) also 
states that ``[i]ncidental emission reductions which are not otherwise 
required by this chapter shall be creditable as emission reductions for 
such purposes if such emission reductions meet the requirements of [CAA 
section 173(c)(1)].''
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    \34\ In New York v. EPA, a case regarding the applicability of 
NSR requirements, the U.S. Court of Appeals for the District of 
Columbia held that ``the plain language of the CAA indicates that 
Congress intended to apply NSR to changes that increase actual 
emissions instead of potential or allowable emissions,'' when 
describing the definition of the term ``modification'' in CAA 
section 111(a)(4). 413 F.3d 3, 40 (D.C. Cir. 2005). CAA section 
173(c)(1) is at least as clear as CAA section 111(a)(4) regarding 
the import of using actual emissions for baseline purposes--it 
specifically uses the term ``actual emissions,'' and it omits terms 
like ``potential to emit,'' ``emission limitations,'' or similar 
references when addressing the baseline. Although the D.C. Circuit 
did not construe the Act's offset requirement at section 173(c)(1), 
its interpretation of a similar statutory provision bearing on when 
a proposed source's emissions increases trigger the need for an NSR 
permit, CAA section 111(a)(4), is instructive.
---------------------------------------------------------------------------

    The regulations at 40 CFR 51.165 require the District to use actual 
emissions as the baseline for determining the total tonnage of offsets 
that must be obtained by an owner or operator of a stationary source 
undergoing NNSR permitting. 40 CFR 51.165(a)(3)(i) requires:
    [T]hat the offset baseline shall be the actual emissions of the 
source from which offset credit is obtained where . . . [t]he 
demonstration of reasonable further progress and attainment of ambient 
air quality standards is based upon the actual emissions of sources 
located within a designated nonattainment area for which the 
preconstruction review program was adopted. (Emphasis added.)
    Moreover, under 40 CFR 51.165(a)(3)(ii)(J), which the EPA codified 
in 2002, SIPs ``shall . . . provide that'' ``[t]he total tonnage of 
increased emissions . . . that must be offset . . . shall be determined 
by summing the difference between the allowable emissions after the 
modification (as defined by paragraph (a)(1)(xi) of this section) and 
the actual emissions before the modification (as defined in paragraph 
(a)(1)(xii) of this section)[.]'' (Emphasis added.)
    Although Commenters 01 and 06 cite 40 CFR 51.165(a)(1)(xii) as 
authority to assert that MDAQMD is allowed to presume that the source-
specific allowable emissions for a unit are equivalent to the actual 
emissions of the unit, any flexibility allowed under that provision is 
limited by section 40 CFR 51.165(a)(3)(i), which requires states or air 
districts that base reasonable further progress (RFP) and attainment 
planning on actual emissions \35\ to use actual emissions as the 
baseline for all offset purposes.\36\ The MDAQMD's RFP and attainment 
demonstrations are based on actual emissions, not allowable 
emissions.\37\
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    \35\ See 86 FR 24809, 24813 (May 10, 2021), ``The 2018 SIP 
Update explains that 2012 `stationary source emissions reflect 
actual emissions reported from industrial point sources' and include 
stationary aggregate sources, such as gasoline dispensing facilities 
. . . MDAQMD Rule 107, `Certification of Submissions and Emission 
Statements,' require[s] all stationary sources within the 
nonattainment area that emit more than 25 tons per year (tpy) or 
more of VOC or NOX to report and certify annual 
emissions.'' The MDAQMD does not assert or document use of 
allowables for RFP or attainment.
    \36\ Furthermore, Commenter 01 states the presumption 
incorrectly--40 CFR 51.165(a)(1)(xii)(C) allows the permitting 
authority to presume that allowable emissions are equivalent to the 
actual emissions, it does not say that the permitting authority may 
presume that the actual emissions are equivalent to the allowable 
emissions. This is important because a source's actual emissions 
will almost always be lower than its allowable emissions since an 
exceedance of the allowable emissions could constitute a violation 
of the permit.
    \37\ MDAQMD's 2008 and 2015 ozone NAAQS attainment plans are 
based on actual emissions. The 2008 ozone NAAQS plan is available 
at: https://ww2.arb.ca.gov/sites/default/files/classic/planning/sip/planarea/wmdaqmp/2016sip_mdplan.pdf, pp. 7, 34 (EPA approved this 
plan, see 86 FR 53223 (September 27, 2021).) The 2015 ozone NAAQS is 
available at: https://www.mdaqmd.ca.gov/home/showpublisheddocument/9693/638131029372000000, pp. 4-5, 24, 80.
---------------------------------------------------------------------------

    The EPA also disagrees with Commenter 01's suggestion that the EPA 
erroneously relied on 40 CFR 51.165(a)(3)(ii)(J) in its disapproval of 
Rule 1304(C)(2)(d) because that paragraph ``addresses calculating 
emission increases[,] not creditable emission reductions.'' \38\ Both 
provisions require the use of actual emissions as a baseline to 
calculate either the offset obligation (emission increase) or the 
satisfaction of that obligation (credit for emissions reductions), and 
the commenter does not dispute that 40 CFR 51.165(a)(3)(i) requires 
that emissions reductions for offset credits must use actual emissions 
as a baseline if actual emissions are used to demonstrate reasonable 
further progress and attainment. The MDAQMD's RFP and attainment 
demonstrations are based on actual emissions--not allowable 
emissions.\39\
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    \38\ Commenter 01 letter, p. 4, footnote 30.
    \39\ MDAQMD's 2008 and 2015 ozone NAAQS attainment plans are 
based on actual emissions. The 2008 ozone NAAQS plan is available 
at: https://ww2.arb.ca.gov/sites/default/files/classic/planning/sip/planarea/wmdaqmp/2016sip_mdplan.pdf, pp. 7, 34 (EPA approved this 
plan, see 86 FR 53223 (September 27, 2021).) The 2015 ozone NAAQS is 
available at: https://www.mdaqmd.ca.gov/home/showpublisheddocument/9693/638131029372000000, pp. 4-5, 24, 80.
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    Based on the requirements of the CAA and its implementing 
regulations regarding offsets,\40\ Rule 1304(C)(2)(d) does not ensure 
that the required quantity of emissions associated with a major 
modification in the MDAQMD will be offset and the provision is 
therefore not approvable in the SIP. Accordingly, the EPA must 
promulgate a FIP that contains the requirements stated in the CAA and 
its implementing regulations. The MDAQMD regulates an area that is 
classified as a Severe ozone nonattainment area and a ``Moderate'' 
PM10 nonattainment area. It is important that sources in the 
nonattainment area make real reductions in emissions to offset 
emissions increases consistent with the goal of bringing the area into 
attainment for these air pollutants.
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    \40\ See e.g., CAA sections 173(a)(1)(A), 173(c)(1) and 40 CFR 
51.165(a)(3)(i), 40 CFR 51.165(a)(3)(ii)(G), and 40 CFR 
51.165(a)(3)(ii)(J).
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    Comment A.2.2: Commenter 01 states that although 1304(C)(2)(d) 
Offsets result from reductions in allowable emissions, ``they produce 
real reductions in actual emissions.'' The commenter states that to 
``originally secure the allowable emissions, the facility had to 
previously effect permanent actual emission reductions'' either by 
curtailing its own emissions or by purchasing emission reduction 
credits. The commenter states that if the facility agrees to 
permanently reduce those offset allowable emissions, the permanent 
emission reductions continue to exist. Commenter 01 then states that 
where those emission reductions ``exceed the volume of reductions 
required to sufficiently offset historical actual emissions (i.e., the 
facility was able to curtail the source's emissions below the now 
eliminated allowable emission levels), those reductions exceed the 
obligation to assure that the total tonnage of increased emissions of 
an air pollutant from the new or modified source is offset by a 
reduction of actual emissions of that air pollutant in accordance with 
42 U.S.C. 7503(c)(1) and in the quantities required by 42 U.S.C. 
7511a.'' Commenter 01 further states that Rule 1304(C)(2)(d) complies 
with 42 U.S.C.

[[Page 106339]]

7503(c)(2) by identifying excess emission reductions and credits that 
exceeds the law's requirements as an available offset.
    Moreover, Commenter 05 believes that emissions that were previously 
offset under the MDAQMD's rules represent actual emission reductions as 
required by CAA section 173(c)(1) and can be used for calculating 
emission reductions pursuant to Rule 1304(C)(2)(d). Commenter 05 
asserts that fully offset emissions are not ``paper reductions'' 
because they represent actual emission reductions that are banked and 
used following approved regulatory procedures.
    Response to Comment A.2.2: The EPA does not agree with the comment 
that 1304(C)(2)(d) Offsets result in real reductions in actual 
emissions, as required by the Act. Rule 1302(C)(2)(d) requires that (i) 
a federally enforceable emission limitation specify the PTE for the 
specific Emissions Unit; (ii) the resulting emissions change result in 
a decrease in emissions from the emissions unit; and (iii) any excess 
Simultaneous Emissions Reductions (SERs) generated from a calculation 
using the Rule are not eligible for banking. For emissions units that 
have allowable emissions limits that were fully offset at some point in 
the past, Rule 1304(C)(2)(d) allows any reduction in a facility's 
allowable emissions to be used to avoid CAA requirements to offset 
actual emissions increases.\41\ As a hypothetical example, under MDAQMD 
Rule 1304(C)(2)(d), a facility might at the time of its original 
construction, ``secure the allowable emissions,'' (using the 
commenter's phrasing) in the amount of 200 tons per year (tpy) through 
``permanent actual emission reductions'' in that amount. If the 
facility subsequently submits a permit application to construct a 
project that would increase its actual emissions by 40 tpy, Rule 
1304(C)(2)(d) allows the facility to decrease its allowable emissions 
limit of 200 tpy by a nominal amount, even just 1 tpy or less, to 
establish that the project would result in an ``emissions decrease,'' 
rather than the actual emissions increase of 40 tpy that would actually 
occur and that would be subject to a requirement to offset the increase 
in actual emissions.\42\ Rule 1304(C)(2)(d) is contrary to the CAA 
because it allows increases in actual emissions without any offsetting 
reductions in actual emissions. In other words, Rule 1304(C)(2)(d) 
allows real increases in emissions to be added to the air without 
requiring any offsetting decrease in real emissions.
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    \41\ Rule 1304(C)(2)(d)(ii) requires that ``the resulting 
Emissions Change from a calculation using this provision is a 
decrease in emissions from the Emissions Unit(s),'' hence why a 
source must demonstrate a reduction in allowable emissions from the 
subsequent modification.
    \42\ The example presented here is similar to a recent MDAQMD 
permitting action that the EPA described in the 2023 LA/LD. 88 FR 
42258, 42263 (MDAQMD, ``Preliminary Determination/Decision--
Statement of Basis for Minor Modification to and Renewal of FOP 
Number: 104701849 For: High Desert Power Project, LLC.'' December 
21, 2022, p. 7.)
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    It should also be noted that, in the hypothetical example presented 
in the previous paragraph, although the facility would have offset 200 
tpy of emissions at the time of its initial construction by obtaining 
or surrendering 200 tpy of emissions reduction credits (``ERCs''), it 
used those ERCs to obtain a 200 tpy allowable emissions limit in that 
project.\43\ Therefore, those ERCs are no longer available to offset 
subsequent increases in actual emissions resulting from future 
construction and modification projects. According to Commenter 01, Rule 
1304(C)(2)(d) allows NNSR permit applicants to obtain permits by 
relying on previously relied upon emission reductions or previously 
surrendered emission reduction credits; however, because those emission 
reductions were used in a prior permitting action, they are not 
``surplus'' under 40 CFR 51.165(a)(3)(ii)(G). 40 CFR 
51.165(a)(3)(ii)(G) states: [The SIP] ``shall further provide that . . 
. [c]redit for an emissions reduction can be claimed to the extent that 
the reviewing authority has not relied on it in issuing any [NNSR] 
permit . . . or the State has not relied on it in demonstrat[ing] 
attainment or reasonable further progress.'' Thus, 40 CFR 
51.165(a)(3)(ii)(G) prevents facilities from re-using credits to obtain 
a permit for a major modification.
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    \43\ These required offset quantities do not reflect the 
adjustment based on the area's nonattainment, which would require an 
even greater quantity of offsets for higher levels of nonattainment. 
CAA 182(d)(2), 40 CFR 51.165(a)(9).
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3. Comments Regarding EPA's 1996 Approval of 1304(C)(2)(d) Offsets
    Comment A.3.1: Commenter 01 states that in 1996, EPA approved 
1304(C)(2)(d) Offsets and that the associated 1995 technical support 
document explained that 1304(C)(2)(d) Offsets constitute real 
reductions in actual emissions, are not otherwise required by the CAA 
(once adjusted) and comply with CAA section 173. The commenter also 
states that since 1996 neither the relevant law nor the 1304(C)(2)(d) 
Offsets have materially changed.
    Commenter 01 further states that the proposed FIP is arbitrary and 
capricious because the EPA fails to explain the reversal of its 1996 
position in approving the District's Rule 1304(C)(2)(d) Offsets. The 
commenter states that EPA's contention that 1304(C)(2)(d) Offsets allow 
reductions on paper that do not represent real emissions reductions and 
that sources must reduce actual emissions to below historic actual 
emission levels to generate offset credit are complete reversals of the 
positions the EPA took in 1996 when it determined that SERs, including 
1304(C)(2)(d) Offsets, constitute real reductions in actual emissions 
that are not otherwise required by the CAA and offset credit could be 
lawfully generated from reductions of surplus, fully-offset allowable 
emissions. The commenter states that, while the Administrative 
Procedure Act (APA) allows the EPA to reverse its policy on the 
1304(C)(2)(d) Offsets, the EPA must ``display awareness that it is 
changing position and show that there are good reasons for the new 
policy.'' \44\
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    \44\ Citing Ass'n of Irritated Residents v. U.S. Env't Prot. 
Agency, 10 F.4th 937, 945 (9th Cir. 2021).
---------------------------------------------------------------------------

    Response to Comment A.3.1: The EPA's response to this comment 
serves as both our response to this comment in the context of the 
proposed FIP, the rulemaking for which the comment was submitted, and 
as the Agency's new final action to disapprove Rule 1304(C)(2)(d) in 
response to the Court of Appeals' ruling in the case Mojave Desert Air 
Quality Management District v. EPA, in which the Ninth Circuit granted 
petitioner MDAQMD's petition for review and remanded to the EPA ``for 
further proceedings before the agency on an open record consistent with 
this decision.'' \45\ The MDAQMD, in its comments on the EPA's proposal 
of the 2023 LA/LD, criticized the EPA's proposed rulemaking for failing 
to explain why the EPA approved similar provisions into the SIP in 1996 
that it now finds deficient. The MDAQMD sought review of EPA's 2023 LA/
LD action in the Ninth Circuit. The court agreed that the EPA failed to 
provide sufficient explanation in that action for the change in 
direction after 1996 and therefore directed the EPA to address the 
issue through further proceedings. Commenter 01--the MDAQMD--makes the 
comment again in the context of the FIP. Since both matters address the 
same subject, the EPA has determined that it is appropriate to use one 
notice

[[Page 106340]]

to both respond to the MDAQMD's comments in the context of the FIP and 
to respond to the court's remand regarding the 2023 LA/LD disapproval 
of Rule 1304(C)(2)(d).
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    \45\ Memorandum, Mojave Desert Air Quality Management District 
v. United States Environmental Protection Agency, 9th Circuit Court 
of Appeals No. 23-1411, September 5, 2024, p. 5.
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    First, we note that significant regulatory changes occurred or were 
proposed in the 1990s, federally and in California, where the State and 
local air districts were implementing State legislation that was passed 
in 1988 to address air quality issues.\46\ Later in this action, we 
discuss the CAA and regulatory requirements at the time of the EPA's 
October 1995 proposed approval and November 1996 final approval of the 
MDAQMD's NNSR rules. We then describe the Agency's contemporaneous 
consideration of options for regulatory flexibility during the 1990's. 
These documents, taken together, provide context for the regulatory 
landscape that existed during the EPA's review and approval of the 
MDAQMD's rules in 1995-1996. We also analyze our 1996 approval of 
MDAQMD's offset rules in light of the EPA's 2002 final rulemaking 
revising significant aspects of the NSR program (``2002 NSR Reform 
Rule).\47\ In sum, this analysis is sufficient for the EPA, now, to 
conclude that the EPA's 1996 approval of the MDAQMD's offset rules was 
inconsistent with the CAA and its implementing regulations. Based on 
the documents discussed in this response, the EPA apparently believed 
in 1996 that the District's rules, which required the application of 
Best Available Control Technology (BACT) and offsets for a modification 
on the PTE of the entire facility rather than the modification alone, 
were sufficiently stringent to satisfy federal requirements.\48\ As we 
explain in this response and in our responses to comments A.2.1 and 
A.2.2, however, our justification in 1996 for approving MDAQMD rule 
provisions that were similar to Rule 1304(C)(2)(d) is deficient, the 
EPA's 2002 NSR Reform Rule did not include revisions that would ratify 
or authorize MDAQMD's approach, and therefore our 2023 disapproval of 
Rule 1304(C)(2)(d) is correct.
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    \46\ For example, the California Clean Air Act uses different 
offsets thresholds than the federal regulations. See California 
Health and Safety Code sections 40918, 40919, 40920, and 40920.5; 
compare to 40 CFR 51.165. California air districts must implement 
State requirements under California law and satisfy the federal 
requirements under the CAA and its implementing regulations. Any 
provision that conflicts with the CAA and its implementing 
regulations is not approvable.
    \47\ 67 FR 80186, 80205 (December 31, 2002).
    \48\ 1995 TSD accompanying the EPA's proposed rule (60 FR 55355 
(October 31, 1995)) (``1995 TSD''), p. 17.
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Federal Regulatory Scheme Regarding Offsets in Effect in 1996
    On August 7, 1980, the EPA promulgated NSR rules for attainment and 
nonattainment areas.\49\ The 1980 NSR rulemaking codified 40 CFR 
51.18(j)(3)(i), requiring an offset baseline to be based on actual 
emissions of the source from which offset credit is obtained where 
demonstrations of reasonable further progress and attainment are based 
on actual emissions.\50\ As stated in the rule's preamble, the EPA's 
rationale was, ``to be consistent with RFP, sources must reduce their 
actual, rather than their allowable, emissions. Otherwise, sources 
could claim credit for offsets in situations where the offset would 
actually interfere with RFP.'' \51\ On November 7, 1986, the EPA 
promulgated NSR rules specifically for nonattainment areas at 40 CFR 
51.165 and codified the text at 40 CFR 51.18(j)(3)(i) into 40 CFR 
51.165(a)(3)(i), where it was in 1996, in 2023 (at the time of our LA/
LD rulemaking), and today.\52\
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    \49\ 45 FR 52676 (August 7, 1980).
    \50\ Id. at 52745.
    \51\ Id. at 52728.
    \52\ 51 FR 40656, 40672 (November 7, 1986); 40 CFR 
51.165(a)(3)(i) (1996) (a copy of the CFR as of July 1, 1996 is in 
the docket for this rulemaking). See also, 57 FR 13498, 13552 (April 
16, 1992) (``The EPA interprets section 173(a)(1)(A) to ratify 
current EPA regulations requiring that the emissions baseline for 
offset purposes be calculated in a manner consistent with the 
emissions baseline used to demonstrate RFP.'')
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    The EPA's 1980 NSR rulemaking also codified 40 CFR 51.18(j)(3)(g), 
allowing credit for emissions reductions only ``to the extent that the 
reviewing authority has not relied on [the reductions] in issuing any 
permit under regulations approved pursuant to 40 CFR 51.18 or the state 
has not relied on [the reductions] in demonstrating attainment or 
reasonable further progress.'' \53\ The EPA's 1986 NNSR rulemaking 
codified the text at 40 CFR 51.165(a)(3)(ii)(G), where it was in 1996, 
in 2023 (at the time of our LA/LD rulemaking) and today.\54\
---------------------------------------------------------------------------

    \53\ 45 FR 52746.
    \54\ 51 FR 40672; 40 CFR 51.165(a)(3)(ii)(G) (1996).
---------------------------------------------------------------------------

    Likewise, EPA guidance issued during the 1990s addressed the 
quantity of emissions to be offset. Specifically, in the proposed 
rulemaking action titled, ``General Preamble for the Implementation of 
Title I of the Clean Air Act Amendments of 1990,'' the EPA clarified 
that CAA section 173(c)(1) ``provides that emissions increases from the 
new or modified source must be offset by real reductions in actual 
emissions.'' \55\
---------------------------------------------------------------------------

    \55\ 57 FR 13498, 13553 (April 16, 1992). The EPA further stated 
that if RFP and attainment plans ``are based on allowable emissions, 
offset credit for reductions in allowable emissions . . . is 
appropriate, but will be deemed inadequate if there is not a real 
reduction in actual emissions that equals or exceeds, as applicable, 
the increase in emissions resulting from the operation of the major 
new or modified source.'' Id.
---------------------------------------------------------------------------

The EPA's 1995-1996 Rulemaking for the MDAQMD's 1993 and 1996 Adopted 
Versions of Rule 1304(C)(2)(d)
    On October 27, 1993, the MDAQMD adopted a series of NSR rules, 
which CARB submitted to the EPA as a SIP revision on March 29, 
1994.\56\ On October 31, 1995, the EPA published a proposed action in 
the Federal Register to approve the rules contingent upon the MDAQMD's 
adoption and submittal, as a SIP revision, of revised rules that would 
correct a number of deficiencies that EPA had identified.\57\ The EPA 
based its proposed ``approval with a contingency and disapproval in the 
alternative'' on a set of draft rules that the MDAQMD transmitted to 
the EPA on October 11, 1995 (``October 11, 1995 draft rules'') that 
MDAQMD had not yet adopted or submitted to CARB.\58\ The EPA's proposed 
action explained that the 1993 adopted version of the rules contained 
numerous deficiencies that precluded full approval but that the October 
11, 1995 draft rules were intended to address those deficiencies and 
that the EPA's proposed approval was conditioned upon MDAQMD's adoption 
and submission of the revised rules.\59\ Thus, the EPA's proposed rule 
and technical support document (TSD) summarized the rules as adopted on 
March 29, 1993, including bases for findings of rule deficiencies, as 
well as statements regarding the October 11, 1995 draft rules that the 
MDAQMD had

[[Page 106341]]

committed to adopt and submit to EPA before EPA finalized its 
rulemaking.
---------------------------------------------------------------------------

    \56\ Although EPA has not been able to locate a copy of the NSR 
rules as adopted by the MDAQMD in October 1993, we are able to 
determine the adoption date from the MDAQMD's headings on later 
versions of the rules that provide a chronology of adoption dates. 
The 1995 TSD and proposed rulemaking reference the submittal date. 
1995 TSD at 2; 60 FR 55356.
    \57\ 61 FR 58133 (November 13, 1996). In the proposed 
rulemaking, the EPA proposed ``to approve with a contingency, and 
disapprove in the alternative.'' 60 FR 55355 (October 31, 1995).
    \58\ 60 FR 55355.
    \59\ Id. (``The submitted rules contain a number of deficiencies 
that prevent EPA from approving them as revisions to the SIP. 
However, MDAQMD has agreed to correct these deficiencies, and has 
sent draft rules . . . to EPA which contain acceptable language. 
This proposed approval is therefore contingent upon MDAQMD adopting 
and submitting to EPA revised rules which correct the deficiencies 
identified in this document before EPA promulgates a final 
rulemaking on the submitted rules.'')
---------------------------------------------------------------------------

    In the EPA's proposed action on this submission, the EPA concluded 
that MDAQMD's Rule 1306 ``Calculating Emissions Changes'' as adopted in 
March 1993 was deficient because the rule uses a source's pre-
modification PTE rather than pre-modification actual emissions, as the 
baseline to calculate the offset requirement and that the method is not 
acceptable unless the source has already offset its entire pre-
modification PTE.\60\
---------------------------------------------------------------------------

    \60\ Id. at 55356 (``This section uses a source's pre-
modification potential to emit (PTE), rather than its pre-
modification actual emissions, as the baseline for calculating the 
offset requirement for major modifications in nonattainment areas. 
This method is not acceptable unless the source has already offset 
its entire pre-modification PTE. The District must amend the rule to 
calculate the offset requirement in this case as the source's new 
PTE minus the source's pre-modification actual emissions.'')
---------------------------------------------------------------------------

    In the 1995 TSD accompanying the EPA's proposed rule, the EPA 
further explained that Rule 1306 as adopted in March 1993 ``has several 
deficiencies that prevent its full approvability by EPA'' and provided 
a list of deficiencies, ``along with the changes which would make the 
rule approvable.'' As stated in the 1995 TSD:

    The rule uses a source's potential to emit as a baseline for 
calculating emissions changes, rather than its actual emissions. In 
general, use of potential to emit in this calculation is 
unacceptable, however, for most purposes in this rule it is 
acceptable. For example, the submitted rules require the application 
of BACT and offset for a modification if the PTE of the entire 
source (not just the increase caused by the modification) would 
exceed the applicable threshold after the modification. Thus, 
applicability is determined by the total PTE of the source, not the 
size of the calculated emissions change resulting from the 
modification. However, this method is not acceptable for calculating 
the amount of offsets required as the result of an increase, unless 
the source has already offset its entire PTE.\61\
---------------------------------------------------------------------------

    \61\ 1995 TSD, p. 17.
---------------------------------------------------------------------------

    Section 1305(A)(2)(b)(iii) of the proposed revision of the 
District's rules contains the necessary changes to these 
provisions.\62\
---------------------------------------------------------------------------

    \62\ Id. at 17. In March 1996, the MDAQMD adopted Rule 
1305(A)(2)(b)(iii), which the EPA approved into the California SIP 
in November 1996, and is the equivalent of current Rule 
1304(C)(2)(d). Rule 1305(A)(2)(b)(iii) stated: ``For emissions 
increases from a Modification to a Major Facility the base quantity 
of Offsets shall be determined as follows: (a) When the Modification 
is a Major Modification to a Major Facility within a nonattainment 
area, the base quantity of Offsets shall be the amount equal to the 
difference between the Facility's Proposed Emissions and the HAE 
[historic actual emissions] unless the Facility's HPE [Historic 
Potential Emissions] has been completely offset in prior permitting 
actions pursuant to this Regulation; or (b) The amount equal to the 
difference between the Facility's Proposed Emissions, as modified, 
and the HPE.''

(Emphasis in original.)
    The statements in the EPA's proposed rule and TSD are brief. It 
appears, however, that we concluded that the MDAQMD's approach--using 
PTE (i.e., allowable emissions) rather than actual emissions as a 
baseline to evaluate NNSR applicability for modifications--would be 
acceptable because it would require the MDAQMD to impose BACT and 
offsets requirements for any modification at a major source, regardless 
of whether the modification qualified as ``significant,'' whereas the 
EPA's regulations apply BACT and Lowest Achievable Emission Rate (LAER) 
to facility modifications only if the source is already major and the 
emissions increase from the modification itself is ``significant,'' or 
if the modification is itself above the applicable major source 
threshold. Therefore, it appears that applying this rationale, the EPA 
found that the MDAQMD's approach to determining NNSR applicability for 
modifications was at least as stringent as the federal approach and 
therefore was approvable.
    As described in the EPA's final rulemaking, the MDAQMD adopted 
revised NSR rules on March 25, 1996, that CARB submitted as a SIP 
revision to the EPA on July 23, 1996.\63\ The EPA's final rulemaking 
contains no additional analysis, but it simply states: ``The submitted 
rules contain the changes necessary for approval, in a manner that is 
identical to that described in the TSD for the proposed approval.'' 
\64\ As part of this final action, the EPA approved MDAQMD rules, such 
as 1304(C)(1)(b), that allow SERs to be based on reductions in PTE 
(allowable emissions) and that allow such SERs to satisfy federal 
offset obligations.
---------------------------------------------------------------------------

    \63\ 61 FR 58133.
    \64\ Id. at 58134.
---------------------------------------------------------------------------

    Thus, we have been unable to discern in the EPA's 1995-1996 
rulemaking documents any legal rationale or support for the MDAQMD's 
use of a PTE baseline to determine that the amount of offsets is 
acceptable if a ``source has already offset its entire PTE.'' The 
statement is inconsistent with statutory and regulatory requirements 
that existed at the time (and are still in effect), such as CAA section 
173, 40 CFR 51.165(a)(3)(i) and 40 CFR 51.165(a)(3)(ii)(G).\65\ 
Furthermore, the EPA appears to have mistakenly concluded in 1995-1996 
that the MDAQMD's approach for applicability would be sufficient to 
consistently ensure issuance of NNSR permits that would be at least as 
stringent as required by federal law. First, as we have explained in 
our response to comment A.2.2, MDAQMD Rule 1304(C)(2)(d) allows 
facilities that are ``fully offset'' at any time in the past to 
increase actual emissions without having to offset those actual 
emission increases. These increases would be impermissible if MDAQMD 
applied the federal requirements.\66\ Second, we note that the EPA's 
regulations at 40 CFR 51.165(a)(2)(ii) allow states to use different 
calculation methodologies to determine applicability upon the state's 
demonstration that its approach is at least as stringent as the EPA's 
approach. The EPA's regulations do not contain a similar provision that 
would allow states to apply an alternative methodology to calculate the 
quantity of required offsets based on a demonstration that the 
alternative is more stringent.
---------------------------------------------------------------------------

    \65\ As noted elsewhere, the provision is also inconsistent with 
40 CFR 51.165(a)(3)(ii)(J), which the EPA promulgated in 2002.
    \66\ We provide a hypothetical example in our response to 
comment A.2.2 and reference the real-world example that we described 
in our 2023 LA/LD, wherein a facility that should have been required 
to obtain offsets under the federal requirements was exempted from 
doing so under MDAQMD Rule 1304(C)(2)(d).
---------------------------------------------------------------------------

The 80 Percent Compromise for Calculating Emissions Increases
    In a letter dated October 30, 1995, from the EPA to the MDAQMD, 
transmitting the 1995 TSD that provided the EPA's analysis of the 
MDAQMD's October 1993 NSR rules, the EPA referenced an NSR flexibility 
option that the EPA, the MDAQMD, and CARB had discussed since at least 
1993. The flexibility option pertains to how an applicant could 
calculate emissions changes at its facility, and it is therefore 
relevant to the offset generation and quantification issues in 
1304(C)(2)(d). This portion of the EPA's response to comment A.3.1 
focuses on that flexibility option, beginning with the earliest 
document EPA staff were able to locate on the subject.
    A letter dated September 8, 1993, from CARB to MDAQMD documents 
that the EPA had provided a comment regarding the MDAQMD's calculation 
procedures during MDAQMD's process of amending its NSR rules.\67\ 
Specifically, the letter documents that the EPA had identified a 
conflict in determining ``historic emissions'' (i.e., emissions that 
could be used as a baseline in evaluating emissions changes resulting 
from facility modifications) between federal requirements requiring the 
use of actual

[[Page 106342]]

emissions and California guidelines that allowed PTE. In an apparent 
attempt to resolve this conflict, the letter references a 
``compromise'' that ``will allow potential to emit to be used in some 
instances but actual emissions in others.'' \68\ The letter included an 
enclosure with text for the MDAQMD to include in its Rule 1306 stating 
that the EPA had ``tentatively'' agreed to the draft text. Included in 
the draft text are definitions for the terms ``historic emissions'' and 
``normal operations'' as follows:
---------------------------------------------------------------------------

    \67\ CARB Letter to MDAQMD, dated September 8, 1993.
    \68\ Id.

    Historic Emissions: The potential to emit of an existing 
emissions unit prior to modification. In determining the potential 
to emit, daily emission limitations shall be treated as part of an 
emission unit's design only if the limitations are representative of 
normal operations, or, if the facility has provided offsets for 
previous permitting actions . . .
    Normal Operations: Usual or typical daily operating of an 
emissions unit resulting in actual emissions which are at least 80% 
of the specific limits contained in the unit's authority to 
construct or permit to operate.

    Based on this letter, it appears that the EPA agreed to allow 
emissions changes from facility modifications to be calculated using a 
baseline of 80 percent of a facility's allowable emissions, rather than 
actual emissions, which, as the letter acknowledges, was the federal 
requirements for such calculations. The letter does not provide 
sufficient detail to determine whether the calculations in question 
were for the purpose of determining emissions changes for applicability 
or for determining the offset obligation or both. The letter also does 
not provide any legal analysis or support to justify the use of 
allowable emissions as a baseline in situations in which actual 
emissions are at least 80 percent of allowable emissions, in contrast 
to the EPA's statutory and regulatory requirements to use actual 
emissions to calculate emissions changes when the air district uses 
actual emissions for reasonable further progress and attainment 
planning purposes.
    Later, in the 1995 TSD transmittal letter, the EPA wrote:

    The proposed rules contain one provision that should be removed 
prior to adoption and submittal of the rules. This provision, 
located at 1304(C)(3)(a) and 1305(B)(2)(b)(i), allows for reductions 
in a facility's potential to emit to be used as simultaneous 
emission offsets if the facility's actual emissions were equal to or 
greater than 80% of its potential emissions. EPA has discussed this 
provision with the California Air Resources Board and both agencies 
agree that it should not be included in the District's rules.\69\
---------------------------------------------------------------------------

    \69\ 1995 TSD, Transmittal Letter.

    As explained earlier in this response, the EPA's 1995 TSD 
(transmitted with this letter) also discussed the use of PTE as a 
baseline to calculate offset obligations, but it allowed that approach 
if a source had already offset its entire PTE. There is no explanation 
in the October 30, 1995 letter or the 1995 TSD to reconcile the EPA's 
apparent position that PTE could not be used to calculate the offset 
requirement if actual emissions were equal to or greater than 80 
percent of PTE (as expressed in the October 30, 1995 letter) with the 
EPA's stated position that PTE could be used to calculate the offset 
requirement if the source's PTE had been fully offset in a previous 
permitting decision (as stated in the 1995 TSD).
    A subsequent document with the handwritten notation ``Mojave 
Compromise,'' is possibly relevant. This document appears to have been 
sent by CARB to the MDAQMD on November 14, 1995, and reflects 
discussions between EPA and the MDAQMD (``November 14, 1995 
Memo'').\70\ The document states:
---------------------------------------------------------------------------

    \70\ CARB Memo, November 14, 1995. The November 14, 1995, CARB 
Memo appears substantially similar to an October 20, 1995, CARB 
Memo, apparently transmitted by CARB to the EPA, that reflects 
CARB's comments regarding the MDAQMD's draft rules, specifically 
Rule 1304 ``Emissions Calculations'' and Rule 1305 ``Emissions 
Offsets.'' The October 20, 1995, CARB memo also references 
communications between the EPA, CARB, and the MDAQMD regarding 
MDAQMD Rules 1304, ``Emissions Calculations'' and 1305, ``Emissions 
Offsets.''

    General: Rule 1304, Section (C)(3)(a), states that ``actual 
emissions reductions may be calculated using a facility's ``historic 
potential to emit'' if the ``historic actual emissions'' of the 
emissions unit(s) prior to modification is greater than or equal to 
80 percent of the ``historic potential to emit'' for that emission 
unit.
    The ARB and the U.S. Environmental Protection Agency have agreed 
that in one specific case a facility may use an emission unit's 
``historic potential to emit'' in lieu of the emission unit's 
``historic actual emissions.'' Both agencies agreed that districts 
could use this ``compromise'' when determining the applicability of 
federal New Source Review. The intention of this ``compromise'' was 
to give a facility more flexibility when making this determination. 
It was not intended to be used when calculating the quantity of 
offsets required for mitigation by a facility. The use of ``historic 
potential to emit'' in lieu of ``historic actual emissions'' should 
only be used in the ``federal netting process,'' and it only applies 
to quantifying emissions increases.
    As you know, 40 CFR 51.165 (a)(1)(vi), which defines ``net 
emissions increase,'' in general stipulates that all increases/
decreases must be actual emissions. This compromise allowed a 
facility to reduce the increase in emissions by a factor no greater 
than 20 percent. Unfortunately, the District has also applied the 
``compromise'' provision when calculating emission decreases in the 
netting process.
    The District has included the above provision in both Rules 1304 
and 1305. The net effect of using the ``compromise'' when 
calculating emission decreases is that it generates ``paper 
credits.'' Further, Rule 1305, Section (B)(2)(b) proposes to allow 
the use of these credits to offset ``actual'' emission increases.
    We strongly recommend that the District delete Subsection 
(C)(3)(a) from Rule 1304, and Subsection (B)(2)(b)(i) from Rule 
1305. In addition, we recommend that definitions (V) ``Historic 
Potential Emissions'' and (DD) ``Normal Operation'' in your current 
Rule 1302 (Amended 10/27/93) be added to your proposed Rule 1301. 
Once these changes have been made, the District should apply the 
``compromise'' provision as intended by the ARB and U.S. EPA.\71\
---------------------------------------------------------------------------

    \71\ November 14, 1995, CARB staff comments on 1995 MDAQMD draft 
Regulation XIII.

    Based on the November 14, 1995 Memo, it appears that the EPA 
generally objected to the MDAQMD's use of PTE as a baseline when 
calculating emissions decreases, either in the context of determining 
NSR applicability or calculating an offset obligation, but would allow 
the use of PTE as a baseline when calculating emissions increases if 
PTE was within 80 percent of actual emissions. However, these documents 
(CARB's September 8, 1993 letter to the MDAQMD, the EPA's October 30, 
1995 TSD transmittal letter, and the November 14, 1995 Memo) contain no 
explanation to reconcile (i) the objection by CARB and the EPA to use 
of PTE to calculate emissions decreases because such an approach would 
``generate `paper credits,' '' which could then be used to offset 
actual emission increases'' (as stated in the November 14, 1995 Memo) 
with (ii) the acceptance by CARB and the EPA of the MDAQMD's use of PTE 
to calculate simultaneous emission reductions if an emissions unit's 
PTE had been fully offset in a previous permit action (as stated in the 
1995 TSD).\72\
---------------------------------------------------------------------------

    \72\ See 1995 TSD, p. 17 (regarding MDAQMD Rule 1306 (as adopted 
in March 1993).
---------------------------------------------------------------------------

    In a letter dated January 26, 1996 from the MDAQMD to CARB, with a 
courtesy copy to the EPA, the MDAQMD proposes an alternative to the 
compromise that had previously been discussed among the three 
agencies.\73\ The letter references the MDAQMD's new text for Rules 
1303 and 1304 as ``attached,'' but the EPA has not been

[[Page 106343]]

able to locate these attachments. The EPA is also unable to locate 
copies of the October 11, 1995 draft rules; therefore, the EPA is 
unable to track revisions to the rules MDAQMD adopted in October 1993 
to the rules MDAQMD adopted in March 1996, which the EPA approved in 
November 1996. Although it is apparent from the correspondence among 
the EPA, CARB and the MDAQMD that the agencies were involved in multi-
year discussions over the calculation of emissions increases and 
decreases and the application of emissions decreases to new projects, 
it is not clear why the EPA and CARB objected to the use of PTE to 
calculate offsets (as well as emissions decreases related to the 
applicability analysis) but allowed the use of PTE to calculate offsets 
if emissions units had been fully offset as part of previous permitting 
action.
---------------------------------------------------------------------------

    \73\ Letter from the MDAQMD to CARB, dated January 26, 1996.
---------------------------------------------------------------------------

1996 Proposal To Revise the Federal NSR Rules and 2002 NSR Reform Rule
    While EPA Region 9 was reviewing the MDAQMD's proposed revisions to 
its NSR program in 1993-1996, the EPA was also in the process of 
revising its nationally applicable NSR regulations for major stationary 
sources in both attainment and nonattainment areas based on input from 
stakeholders from industry, state and local agencies, and environmental 
organizations. Towards this end, in July 1996, the EPA published in the 
Federal Register a proposed rulemaking to comprehensively overhaul the 
federal NSR program for the first time in 15 years.\74\ The proposal 
provides a roughly contemporaneous insight to concepts that the EPA was 
exploring to provide states greater flexibility to customize their own 
NSR programs.\75\ One such concept was a revision to the NSR 
regulations to allow the use of the PTE-to-PTE test for NSR 
applicability as well as for calculating offsets, netting credits, and 
other emissions reductions credits.\76\ This proposal, referred to as 
the ``Exhibit B approach,'' would provide sources with the alternative 
of using their hourly potential emissions to determine baselines for 
NSR applicability and other NSR purposes.\77\ The EPA acknowledged in 
the proposed rulemaking that the Exhibit B approach would provide 
flexibility requested by industry, but we expressed concern for 
environmental consequences, providing examples of how the proposal 
could lead to increases in actual emissions that would escape NSR 
review.\78\ The EPA's analysis of potential environmental impacts of 
the proposal revealed that, in the two states studied, actual emissions 
comprised 30 to 86 percent of allowable emissions, depending on source 
category and pollutant.\79\ Because the analysis showed actual 
emissions were substantially below allowable emissions levels, the use 
of an emissions baseline based on actual or allowable emissions could 
significantly impact whether a source would need to comply with NSR 
requirements.
---------------------------------------------------------------------------

    \74\ 61 FR 38250, 38251 (July 23, 1996).
    \75\ Id.
    \76\ Id. at 38268.
    \77\ Id. at 38268-69.
    \78\ Id. at 38269. The EPA also acknowledged, however, that the 
``magnitude of the environmental impact of Exhibit B, if 
promulgated, is difficult to predict.'' Id. at 38270.
    \79\ Id. at 38270.
---------------------------------------------------------------------------

    The EPA's 1996 proposed rulemaking included the following analysis 
of a PTE-to-PTE test for calculation of offsets:

    [Exhibit B's] proposal on offsets may conflict with the 1990 
Amendments. That is, section 173(c) of the Act requires that a 
source secure sufficient emissions reductions to assure that ``the 
total tonnage of increased emissions of the air pollutant from the 
new or modified source shall be offset by an equal or greater 
reduction . . . in the actual emissions of such air pollutants.'' 
Thus, offsetting emissions reductions (including emissions reduction 
credits used for offsets) must be calculated in terms of actual 
emissions.\80\
---------------------------------------------------------------------------

    \80\ Id. at 38269, footnote 31.

(Emphasis in original.)
    The EPA sought comment in the 1996 proposed rulemaking as to 
whether the Exhibit B proposal ``is consistent with the air quality 
planning goals of the NSR program. That is, while Exhibit B could allow 
significant increases in actual emissions to be unreviewed, section 173 
of the Act required offsets to be based on actual emissions.'' \81\
---------------------------------------------------------------------------

    \81\ Id. at 38270.
---------------------------------------------------------------------------

    After seeking comment on the Exhibit B proposal in 1996, the EPA 
ultimately decided not to adopt it for reasons explained in the 2002 
NSR Reform Rule (which also added 40 CFR 51.165(a)(3)(ii)(J)). The EPA 
reiterated that the Exhibit B proposal would allow sources to ``use 
this potential-to-potential test for NSR applicability, as well as for 
calculating offsets, netting credits, and other ERCs.'' \82\ While 
acknowledging the ``maximum flexibility'' the PTE-to-PTE test would 
provide to existing sources, the EPA also re-stated concerns associated 
with the calculation methodology for calculating emission reductions to 
be used for netting or ERCs, stating that Exhibit B would allow 
facilities to generate netting credits and ERCs for offsets based on 
potential hourly emissions, even if never actually emitted, which could 
allow greater actual emissions increases without any preconstruction 
review.\83\
---------------------------------------------------------------------------

    \82\ 67 FR 80186, 80205.
    \83\ Id.
---------------------------------------------------------------------------

    In the 2002 NSR Reform Rule, the EPA acknowledged that it was 
unable to determine the specific environmental impact from using a PTE-
to-PTE test, but we observed that its analysis showed that typical 
source operation frequently results in actual emissions that are below 
allowable emission levels.\84\ This observation reinforces concerns 
that a calculation methodology that relies on allowable emissions will 
fail to regulate actual emissions increases. Regarding the offsets 
implications of Exhibit B specifically, the EPA wrote in the response 
to comments that:
---------------------------------------------------------------------------

    \84\ Id.

    [The Exhibit B] methodology would also be problematic for 
generating ERCs, particularly for use as offsets. The use of 
potential emissions for offset credits is in direct conflict with 
the Act. Under section 172(c) of the Clean Air Act, emissions 
offsets must be based on reductions in actual emissions. Allowing 
sources to get credit for reductions in potential emissions would 
result in ``paper'' credits, and could allow sources to receive 
credit for reducing emissions that never actually occurred. Thus, 
our rules have not changed with regard to the calculation of 
reductions in actual emissions for offsetting purposes.\85\
---------------------------------------------------------------------------

    \85\ ``Technical Support Document for the Prevention of 
Significant Deterioration and Nonattainment Area New Source Review 
Regulations,'' November 2002, page I-6-11.

    It is important to note that, along with rejecting Exhibit B, the 
2002 NSR Reform Rule also codified at 40 CFR 51.165(a)(3)(ii)(J) a 
specific requirement that, for each major modification, a source must 
offset the difference between the allowable emissions after the 
modification and the actual emissions before the modification for each 
emissions unit.\86\ The EPA's statement in the response to comments 
that it was not changing regulatory requirements for offset 
calculations establishes that the addition of new section 40 CFR 
51.165(a)(3)(ii)(J) was merely a codification of an existing 
requirement for calculating offsets.\87\
---------------------------------------------------------------------------

    \86\ See 67 FR 80186, 80249.
    \87\ ``Technical Support Document for the Prevention of 
Significant Deterioration and Nonattainment Area New Source Review 
Regulations,'' November 2002, page I-6-11. The need to establish a 
regulatory requirement for calculating offsets was perhaps necessary 
in light of the numerous changes to NSR applicability promulgated 
throughout the 2002 NSR Reform Rule. See, e.g., 67 FR 80186, 80189-
91; see also, 67 FR 80241 (``Our decision is based primarily on our 
belief that the NSR program will work better as a practical matter 
and will produce better environmental results if all five of the new 
applicability provisions are adopted and implemented.'')

---------------------------------------------------------------------------

[[Page 106344]]

Conclusion: The EPA's 1996 SIP Action Was Inconsistent With the Act and 
Regulations
    For the reasons we articulate today, and that we articulated in the 
2023 LA/LD, the MDAQMD's program that we approved in 1996 is not 
consistent with the requirements of the Act and its implementing 
regulations. The EPA acknowledges that its 2023 disapproval of Rule 
1304(C)(2)(d) is at odds with its 1996 approval of the MDAQMD's rules 
that allowed facilities to use emissions reductions that were 
previously relied upon as a basis for using a PTE-to-PTE test to not 
require a project to obtain offsets. The EPA's 1995 TSD and 1995-1996 
rulemaking approving the MDAQMD's NNSR program do not explain how the 
EPA reconciled the MDAQMD's program's departure from the requirements 
that existed at the time (and continue to exist) in CAA section 
173(c)(1), 40 CFR 51.165(a)(3)(i), 40 CFR 51.165(a)(3)(ii)(G), and the 
not-yet-codified 40 CFR 51.165(a)(3)(ii)(J), which the EPA promulgated 
in 2002. The EPA's 2023 LA/LD, however, does explain our disapproval of 
Rule 1304(C)(2)(d) in light of applicable statutory and regulatory 
requirements.
    The preceding paragraphs describe the EPA's interest in exploring 
options for flexibility contemporaneously with our 1995-1996 rulemaking 
to approve MDAQMD's NNSR program. For example, from at least 1993 to 
1996, the EPA, CARB, and the MDAQMD discussed how to calculate 
emissions changes for applicability, netting, and ERC purposes. The 
changes to the MDAQMD program, and the EPA's approval of them, occurred 
during the years following the passage of the California Clean Air Act 
(1988), the Federal Clean Air Act Amendments of 1990, and the numerous 
associated statutory deadlines for the EPA to act on revised NSR 
programs in the 1990s (similar to today, there were nearly three dozen 
air districts in California in the 1990s). In July 1996, between the 
EPA's proposed contingent approval of the MDAQMD's NNSR rules in 
October 1995 and its final approval of those rules in November 1996, 
the EPA proposed changes to the federal NSR program that contemplated a 
PTE-PTE test for NSR applicability and offsets. The timing of the many 
regulatory changes and proposals that occurred around the same time as 
the EPA's approval of the MDAQMD's NNSR program is thus helpful context 
for understanding the EPA's unexplained approval of MDAQMD's provisions 
that conflict with CAA requirements. However, the EPA did not approve 
any regulatory revisions during the 1990s or thereafter that would 
allow the MDAQMD's program, as it existed in 1996 or 2023, to be 
approved. In 2002, the EPA clarified in its rejection of the 1996 
Exhibit B proposal that we were not revising our rules regarding the 
calculation of reductions in actual emissions for offsetting 
purposes.\88\ Furthermore, in 2002, the EPA codified 40 CFR 
51.165(a)(3)(ii)(J) to make explicit in its regulations a requirement 
for major stationary sources to calculate their offset obligation using 
a pre-modification baseline of actual emissions (at least when the air 
district uses actual emissions for reasonable further progress and 
attainment planning purposes).
---------------------------------------------------------------------------

    \88\ ``Technical Support Document for the Prevention of 
Significant Deterioration and Nonattainment Area New Source Review 
Regulations,'' November 2002, page I-6-11.
---------------------------------------------------------------------------

    The MDAQMD's 1994, 2008, and 2015 attainment plans demonstrate RFP 
and attainment based on actual emissions, not allowable emissions.\89\ 
Under 40 CFR 51.165(a)(3)(i), which was promulgated by the EPA in 1980, 
substantially predating the EPA's 1996 approval of the MDAQMD's NNSR 
rules, the offset baseline must be the actual emissions of the source 
from which the credit is obtained. Likewise, 40 CFR 51.165(a)(3)(ii)(G) 
prevents sources in the MDAQMD from relying on emissions reductions 
that were utilized in a prior permitting action. The EPA's 1996 
approval of the MDAQMD's rules does not provide a justification for its 
conclusions that the MDAQMD's rules satisfied the offsetting 
requirements of the CAA or its implementing regulations. The EPA 
recognizes that we are changing our position as stated in our 1995-1996 
rulemaking on the MDAQMD's rules on the specific question of whether 
Rule 1304(C)(2)(d) is consistent with the Act and the NSR regulations. 
This change in position is because the provisions that we approved in 
1996 (which, as noted above, are substantially similar to Rule 
1304(C)(2)(d)) were not consistent with the CAA or our regulations at 
that time. As we wrote in the 1996 and 2002 NSR Reform rules, we are 
concerned about the potential environmental impacts of an NNSR program 
such as MDAQMD's that would use the PTE-PTE test along with or because 
of a unique offset generating scheme. The codification of 
51.165(a)(3)(ii)(J) in 2002 meant that, when the EPA analyzed the 
MDAQMD's NNSR program for approvability in the context of the 2008 
ozone NAAQS implementation rule, the program's inconsistency was 
apparent. MDAQMD Rule 1304(C)(2)(d) is not approvable, even though the 
EPA approved similar text in 1996.
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    \89\ MDAQMD 1994 ROP Plan, October 5, 1994. MDAQMD's 2008 and 
2015 ozone NAAQS attainment plans are based on actual emissions. 
MDAQMD's 2008 and 2015 ozone NAAQS attainment plans are based on 
actual emissions. The 2008 ozone NAAQS plan is available at: https://ww2.arb.ca.gov/sites/default/files/classic/planning/sip/planarea/wmdaqmp/2016sip_mdplan.pdf, pp. 7, 34 (EPA approved this plan, see 
86 FR 53223 (September 27, 2021).) The 2015 ozone NAAQS is available 
at: https://www.mdaqmd.ca.gov/home/showpublisheddocument/9693/638131029372000000, pp. 4-5, 24, 80.
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4. Comments Regarding Reliance
    Comment A.4.1: Commenter 01 states that while the EPA may reverse 
its policy on 1304(C)(2)(d) Offsets, the APA requires the EPA `` `to 
assess whether there were reliance interests, determine whether they 
were significant, and weigh any such interests against competing policy 
concerns,' considering alternatives to accommodate such interests.'' 
\90\ The commenter states that the EPA is effectively nullifying 
valuable 1304(C)(2)(d) Offsets that were purchased with costly 
reductions in actual emissions on the EPA's promise that they could 
later be used to offset certain emission increases. The commenter also 
states that the proposed FIP does not consider these reliance interests 
or alternatives to the immediate invalidation of the 1304(C)(2)(d) 
Offsets that have existed with EPA's blessing for over 25 years.
---------------------------------------------------------------------------

    \90\ Citing Dep't of Homeland Sec. v. Regents of the Univ. of 
California, 591 U.S. 1, 30, 33 (2020).
---------------------------------------------------------------------------

    Response to Comment A.4.1: The EPA has provided a comprehensive 
explanation in our response to comment A.3.1 regarding our changed 
position on the approvability of MDAQMD Rule 1304(C)(2)(d). Moreover, 
the EPA disagrees with the comment to the extent it is asserting that 
this action invalidates significant reliance interests. Commenter 01 
cites Dep't of Homeland Sec. v. Regents of the Univ. of California as 
support for its assertion that there are reliance interests stemming 
from Rule 1304(C)(2)(d) and that the EPA failed to consider them in 
disapproving the provision.\91\ In Regents, the Supreme Court ruled 
against the government, finding that the government's decision to 
rescind the Deferred Action on Childhood Arrivals (``DACA'') program 
was arbitrary and capricious under the

[[Page 106345]]

APA.\92\ DACA recipients (as well as their parents, under the related 
``DAPA'' program) ``enjoy[ed] . . . forbearance, work eligibility, and 
other benefits'' under the programs.\93\ The Supreme Court held that 
the government failed to provide a ``reasoned explanation for its 
action'' because it ``failed to consider the conspicuous issues of 
whether to retain forbearance and what if anything to do about the 
hardship to DACA recipients.'' \94\
---------------------------------------------------------------------------

    \91\ 591 U.S. 1, 30, 33 (2020).
    \92\ Id. at 33.
    \93\ Id. at 2.
    \94\ Id. at 35.
---------------------------------------------------------------------------

    Regents, however, is materially distinguishable from the EPA's 
disapproval of Rule 1304(C)(2)(d); the case does not support the 
MDAQMD's assertions regarding reliance interests. In Regents, while the 
Attorney General had determined that the work-authorization aspect of 
the DACA program was illegal following an adverse judicial decision 
about the DAPA program, the Attorney General's opinion was not 
comprehensive; i.e., the Attorney General had ``neither addressed the 
[deportation] forbearance policy at the heart of DACA nor compelled 
[the government] to abandon that policy.'' \95\ Further, as the Supreme 
Court found, the government had offered ``no reason for terminating 
forbearance.'' \96\
---------------------------------------------------------------------------

    \95\ Id. at 28.
    \96\ Id.
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    In contrast, the EPA, in disapproving Rule 1304(C)(2)(d), proposed 
and finalized a comprehensive, outcome-controlling legal determination 
that Rule 1304(C)(2)(d) fails to comply with federal law. Regents does 
not stand for the proposition that agencies must consider reliance 
interests when federal law compels the outcome. Also, unlike the 
situation in Regents, the EPA provided an opportunity for public 
comment and has provided reasoned responses to all comments received. 
Thus, EPA fulfilled its obligations under the APA.
    Furthermore, the commenter's characterization of 1304(C)(2)(d) 
Offsets as ``valuable'' and as ``purchased with costly reductions in 
actual emissions'' is fundamentally a claim that sources hold 
compensable property rights in 1304(C)(2)(d) Offsets.\97\ The EPA has 
repeatedly rejected similar assertions in the past and has never 
recognized a property right associated with emission reductions to be 
used as offsets.\98\ Also, it is unclear to what extent 1304(C)(2)(d) 
Offsets were, in fact, ``purchased.'' In the MDAQMD, as in all 
nonattainment areas, construction of a new major stationary source 
requires the facility owner to obtain emission reduction credits to 
offset the emissions from the new construction. Nonattainment NSR 
permits issued by the MDAQMD to such sources are contingent on the 
surrender of credits to offset emissions up to the allowable limits in 
the permits. The EPA acknowledges that facility owners purchase 
emission reduction credits and surrender them to obtain permits with 
allowable emissions limits to allow them to proceed with construction. 
The MDAQMD, however, claims that its rules should additionally allow 
those same emission reduction credits, which facility owners have 
already surrendered to obtain allowable emissions limits that 
authorized the facility to emit up to those levels, to be re-used to 
offset emissions increases associated with future construction 
projects. This system is inconsistent with federal NNSR requirements in 
multiple respects and therefore further delegitimizes any claim that 
1304(C)(2)(d) Offsets are a property right with a compensable value.
---------------------------------------------------------------------------

    \97\ MDAQMD has made similar assertions in the past. See, e.g., 
MDAQMD Regulation XIII Final Staff Report, March 22, 2021, page 44, 
footnote 188: ``If the amount of offsets needed is calculated using 
the HAE of the emissions unit(s) involved many Facilities view this 
as a taking of property (namely the previously allowed PTE that was 
fully offset) without just compensation.''
    \98\ See, e.g., Letter from John S. Seitz, Director, EPA Office 
of Air Quality Planning and Standards to Peter F. Hess, President, 
California Air Pollution Control Officers Association Joint 
Commission of Regulators & Business, July 8, 1996 (``Finally, your 
letter states that it is unfair for owners of banked ERC's not to be 
able to sell or use them. However, please note that although ERCs 
are a limited authorization to emit, they are not and never have 
been an absolute property right.''); EPA, Office of Air and 
Radiation, ``Improving Air Quality with Economic Incentive 
Programs,'' January 2001, p. 80 (``Emission reductions and emission 
allowances generated, traded, and used in emission trading EIPs do 
not have property rights associated with them. They simply represent 
a limited authorization to emit for the entity holding the tradable 
reduction or allowance.''); see also South Coast Air Quality 
Management District (SCAQMD) Rule 2007, ``Trading Requirements,'' 
most recently approved into the California SIP at 73 FR 38122 (July 
3, 2008), which states, in relevant part, at subsection (b)(3) that 
a RECLAIM Trading Credit ``shall not constitute a security or other 
form of property . . .''
---------------------------------------------------------------------------

    First, as explained our response to comment A.2.2, the EPA's 
regulations at 40 CFR 51.165(a)(3)(G) do not allow emission reduction 
credits to be re-used in subsequent permitting actions of, for example, 
facility modifications. The MDAQMD's rules allow emission reduction 
credits that have already been applied to initial construction of a new 
facility to be used to offset emissions increases in the future and are 
therefore inconsistent with NNSR requirements. Second, as also 
explained in our response to comment A.2.1, the EPA's regulations at 40 
CFR 51.165(a)(3)(i) allow the use of allowable emissions to be used as 
a baseline to calculate emission reductions that will be used as 
offsets only if demonstrations of RFP and attainment are also based on 
allowable emissions. MDAQMD's RFP and attainment demonstrations are 
based on actual emissions; therefore, MDAQMD's calculation of 
reductions to be used as offsets must also be based on actual 
emissions. Third, since 2002, the EPA's regulations have clearly 
specified that emissions increases resulting from major modifications 
must be offset through a calculation that uses actual emissions before 
the modification. In fact, as explained above in our response to 
comment A.3.1, as part of the 2002 NSR Reform Rule, the EPA explicitly 
rejected a calculation that would use potential emissions as a baseline 
in this calculation. MDAQMD's provision for 1304(C)(2)(d) Offsets 
clearly allow sources to offset emissions increases through reductions 
in allowable emissions and therefore fail to ensure compliance with the 
requirement that sources offset emissions increases through reductions 
in actual emissions. The fact that 1304(C)(2)(d) Offsets are 
inconsistent with federal law invalidates any claim of property right 
or compensable value.
    Comment A.4.2: Commenter 05 states that the removal of Rule 
1304(C)(2)(d) would ``create a discriminatory situation, where a 
facility that has previously provided offsets for emission sources/
processes is not differentiated from one that has received a permit 
without providing offsets.''
    Response to Comment A.4.2: As explained in the response to comment 
A.4.1, Rule 1304(C)(2)(d) Offsets do not comply with CAA 173 and 
federal NNSR requirements for offsetting emissions increases at major 
stationary sources. The permit application process should be sufficient 
to enable the reviewing authority to determine the quantity and status 
of offset credits and reductions; diligent implementation of the 
federal requirements will avoid confusion and unfair outcomes. Rule 
1304(C)(2)(d) Offsets are not valid under the CAA or the federal NNSR 
regulations. The FIP will bring the MDAQMD's offset regulations into 
compliance with the CAA and federal regulations. The EPA disagrees that 
the removal of Rule 1304(C)(2)(d) would create a discriminatory 
situation.
    Comment A.4.3: Commenter 08 states that MDAQMD Rule 1304(C)(2)(d) 
has developed a provision for major facilities to utilize existing 
allowable emissions as a mechanism to generate simultaneous emissions 
reductions during another permitting action and

[[Page 106346]]

that this provision has been in effect since the 1990s. Commenter 08 
urges the EPA to consider how the sudden change of a provision in 
effect for years will impact regulated facilities.
    Response to Comment A.4.3: As explained above in the responses to 
comments A.2.1 and A.2.2, the MDAQMD's Rule 1304(C)(2)(d) is not 
consistent with the CAA or the EPA's NNSR regulations. The EPA 
disagrees with the commenter's suggestion that the FIP represents a 
``sudden change,'' because the calculation method in Rule 1304(C)(2)(d) 
was specifically prohibited in the EPA's 2002 NSR Reform rule, which 
included 40 CFR 51.165(a)(3)(ii)(J).\99\ Moreover, the MDAQMD and 
regulated entities in its jurisdiction have been aware of the EPA's 
position regarding Rule 1304(C)(2)(d) and the MDAQMD's practices 
regarding its emissions offset calculations since at least March 2021, 
when the MDAQMD responded to the EPA's concerns about Rule 
1304(C)(2)(d) in the ``Appendix G to Staff Report'' document (an 
appendix to its 2021 final staff report and rules that the MDAQMD 
adopted), which is a public document. In December 2019, prior to the 
release of that document, the EPA wrote to the MDAQMD to inform the 
MDAQMD of its concern regarding the offset calculation method allowed 
under what is currently Rule 1304(C)(2)(d).\100\ The EPA, the District, 
and CARB then committed significant resources to meeting, on a bi-
weekly basis from approximately March 2020 to June 2021, for detailed 
discussions to address the deficiencies in the MDAQMD's NSR program. 
The EPA's obligation to promulgate a FIP is a consequence of a finding 
of failure to submit published in the Federal Register in February 
2017; the subject of a lawsuit filed in the U.S. District Court for the 
Northern District of California in June 2022; and a court-ordered 
obligation as the result of a consent decree that was subject to a 30-
day comment period as announced in the Federal Register on April 5, 
2023.
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    \99\ Rule 1304(C)(2)(d) is also inconsistent with the federal 
regulations promulgated in 1980.
    \100\ Memorandum, Lisa Beckham, EPA Region IX, to Brad Poiriez, 
MDAQMD, ``Re: Mojave Desert Air Quality Management District New 
Source Review Program,'' December 19, 2019. A copy of the letter is 
available in the docket for this rulemaking action.
---------------------------------------------------------------------------

    Finally, the EPA notes that the FIP will apply prospectively, that 
is, to new major stationary sources and major modifications at existing 
major sources that commence construction after the effective date of 
the FIP.
5. Comments on Potential Impacts and Implementation of the FIP
    Comment A.5.1: Commenter 01 states that the proposed FIP is 
arbitrary and capricious because the EPA fails to consider important 
aspects of the problem before the Agency, including the impacts of the 
proposed FIP on air quality. The commenter states that the EPA fails to 
substantiate its claim that the proposed FIP will result in greater 
emission reductions. The commenter states that this claim is false 
because Rule 1304(C)(2)(d) Offsets incentivize operators to voluntarily 
lower actual emissions to ensure the greatest volume of creditable 
emissions reductions for future projects. The commenter states that the 
EPA's disapproval of offset calculations allowed under Rule 
1304(C)(2)(d) encourages source operators to retain older, dirty units 
and to replace those old and dirty units with comparably dirty units 
when the units fail. The commenter states that, under the proposed FIP, 
operators are particularly incentivized to run equipment to produce the 
maximum amount of emissions for the two years prior to applying for a 
modification to secure creditable emissions reductions.
    Similarly, commenters 07, 08, and 09 state that MDAQMD Rule 
1304(C)(2)(d) enables permit holders to plan for equipment upgrades and 
modernizations that will ultimately reduce actual major source 
emissions in the ozone nonattainment area. These commenters state that 
that removal of these offset provisions will hinder emission reduction 
projects and burden facilities with significant increased costs. 
Commenter 05 adds that the loss of previous offsets would create a 
disincentive for facilities to be upgraded to new technology. Commenter 
09 states that regulated facilities may elect to cancel business 
expansions, facility improvements, or other major capital investments 
that would modernize equipment or otherwise benefit air quality.
    Response to Comment A.5.1: The EPA disagrees with the comments. 
Preliminarily, we note that the commenters do not provide any analysis 
or support for their assertions that Rule 1304(C)(2)(d)'s approach to 
calculating offsets results in greater emission reductions than the 
federal requirements for offsets. We also note that in the 2002 NSR 
Reform Rule, we rejected an option similar to Rule 1304(C)(2)(d) that 
would have allowed sources ``to generate netting credits and ERCs for 
offsets based on potential hourly emissions, even if never actually 
emitted,'' because we had determined that such an approach ``could 
sanction greater actual emission increases to the environment, often 
from older facilities, without any preconstruction review.'' \101\ In 
the 1996 NSR proposal, the EPA stated that its analysis of actual and 
allowable emissions in two states showed that ``typical source 
operation frequently does result in actual emissions that are 
substantially below allowable emissions levels.'' \102\ In other words, 
the difference between actual and potential emissions may be up to 70 
percent, depending on source category and pollutant.\103\ Using actual 
emissions as a baseline to calculate emissions will reflect emissions 
increases and require offsets that would not be captured or regulated 
if allowable emissions were used as a baseline. As the EPA also stated 
in response to comments in the rulemaking for the 2002 NSR Reform Rule, 
``The use of potential emissions for offset credits is in direct 
conflict with the Act. Under section 172(c) of the Clean Air Act, 
emissions offsets must be based on reductions in actual emissions. 
Allowing sources to get credit for reductions in potential emissions 
would result in `paper' credits, and could allow sources to receive 
credit for reducing emissions that never actually occurred.'' \104\ 
Similarly, the MDAQMD Rule 1304(C)(2)(d) would allow sources to receive 
credit for ``reductions'' in emissions that do not actually occur and 
use them to offset actual emissions increases.
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    \101\ 67 FR 80186, 80205.
    \102\ 61 FR 38250, 38270.
    \103\ Id.
    \104\ U.S. EPA Office of Air Quality Planning and Standards, 
Technical Support Document for the Prevention of Significant 
Deterioration and Nonattainment Area New Source Review Regulations 
(November 2002) at page I-6-11, available at https://www.epa.gov/sites/default/files/2015-12/documents/nsr-tsd_11-22-02.pdf.
---------------------------------------------------------------------------

    Moreover, we note that the federal regulations, such as 40 CFR 
51.165(a)(3)(ii)(J) and 40 CFR 51.165(a)(3)(ii)(G), are more protective 
than Rule 1304(C)(2)(d). For example, 40 CFR 51.165(a)(3)(ii)(J) 
requires facilities to offset the difference between pre-project actual 
emissions and post-project allowable emissions that are associated with 
each major modification, and 40 CFR 51.165(a)(3)(ii)(G) requires those 
actual emissions reductions to be reductions that the facility has not 
relied upon in a prior permitting action.
    The EPA also disagrees with comments claiming that the EPA's 
disapproval of Rule 1304(C)(2)(d) will encourage retention of older 
greater-emitting units and incentivize sources

[[Page 106347]]

to operate and emit more. Rather, the FIP encourages sources to take 
enforceable limits that reflect the source's actual emissions. We note 
in addition that the CAA does not require sources to offset emissions 
that they do not emit or intend to emit. Regarding commenters' concern 
that the FIP would discourage emissions-reduction projects, we note 
that a project that reduces actual emissions would not be subject to 
NSR requirements to offset and install pollution controls. Installation 
of cleaner equipment is therefore not in jeopardy under the FIP. Only 
projects at major stationary sources that would increase emissions will 
be required to undergo review to determine if emissions increases will 
trigger requirements to install emissions controls and to offset 
emissions increases. It is therefore unclear how sources would be 
incentivized to retain older, dirtier equipment if the installation of 
newer, cleaner equipment would result in emissions decreases.
    Finally, we disagree that Commenter 01's quotations from the 2002 
NSR Reform Rule support its claims that Rule 1304(C)(2)(d) Offsets 
``incentivize operators to voluntarily lower actual emissions to ensure 
the greatest volume of creditable emissions reductions for future 
projects.'' The statements quoted by Commenter 01 are irrelevant to 
this action, because they do not involve offsets.
    Comment A.5.2: Commenter 01 states that the EPA fails to address 
the practical impacts the proposed FIP will have on facilities. More 
specifically, the commenter states that it is unclear what a new minor 
facility, existing minor facility remaining under the applicability 
threshold, or a synthetic minor facility retaining its permitted 
limitation on PTE would need to submit to the EPA to show that it is 
not subject to the FIP requirements. The commenter requests that the 
EPA clarify whether all new or modified facilities would need to submit 
applications to the EPA and that it appears every permit application 
would be required to be duplicated in EPA Region 9's electronic permit 
application system to ensure that a minor facility has not become 
subject to the FIP. The commenter also states that while the MDAQMD has 
the staffing and expertise to properly analyze and process applications 
under the current SIP, it has neither the time nor the resources to 
devote to analyzing each application for FIP applicability purposes.
    Response to Comment A.5.2: As explained in the EPA's proposed 
action, the FIP will apply ``(i) If you propose to construct a new 
major stationary source and your source is a major source of 
nonattainment pollutant(s)'' or ``(ii) If you own or operate a major 
stationary source and propose to construct a major modification, where 
your source is a major source of nonattainment pollutant(s) and the 
proposed modification is a major modification for the nonattainment 
pollutant.'' \105\ The relevant terms in the quoted provisions are 
defined in the definitions section of the FIP, in section 40 CFR 
52.285(b). If the applicant believes that its proposed project would 
constitute a new major source or a major modification under the FIP, it 
is required to submit an application to the EPA or the designated 
reviewing authority (if not the EPA) to obtain a permit under the FIP. 
It is the permit applicant's responsibility to comply with the FIP 
provisions. Failure to obtain a permit in accordance with the FIP prior 
to construction and operation of the new or modified source would be a 
federally enforceable violation of the FIP and the CAA. Under the FIP, 
existing minor facilities remaining under the applicability threshold 
and synthetic minor facilities retaining the permitted limitation on 
PTE would not need to apply for a permit under the FIP unless they make 
a modification that would constitute a major stationary source by 
itself.\106\
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    \105\ 89 FR 56237, 56247; 40 CFR 52.285(c)(1)(i)-(ii) (as 
proposed).
    \106\ Appendix S, section II.A.4(i)(c).
---------------------------------------------------------------------------

    Regarding Commenter 01's concern over the MDAQMD's time and 
resources to devote to analyzing applications, the EPA would be 
responsible for implementation of the FIP unless and until the MDAQMD 
is delegated authority to implement it. The MDAQMD would only be 
delegated authority to implement the proposed FIP if it requested 
delegation. Under the FIP as implemented by the EPA, applicants would 
need to submit their applications to the EPA, not to the MDAQMD.
    Comment A.5.3: Commenter 04 states that this action is crucial for 
ensuring that regions with air pollutant concentrations above the NAAQS 
are protected from further environmental degradation. This commenter 
presents information on the detrimental impact of air pollution to 
health and notes that these effects are felt mainly by minority 
communities, such as low-income families or people of color, who are 
more likely to live in areas with higher pollution levels. The 
commenter supports approval of the FIP and states that the FIP will 
provide a necessary regulatory framework to manage and reduce 
emissions, enhancing efforts to meet and maintain NAAQS in the region.
    Response to Comment A.5.3: The EPA has noted the commenter's 
support of this action.
    Comment A.5.4: Commenters 01, 05, 06, 07, and 08 express concern 
about the permit processing timeline under the proposed FIP. Commenter 
01 states that pursuant to these timelines, approximately 90 percent of 
permit applications submitted to the MDAQMD are processed and issued 
within 90 days but that no similar timelines are proposed in the FIP 
and that this may result in a detrimental impact to sources, especially 
minor facilities, to the extent they cannot proceed with their 
modifications due to the necessity of awaiting an EPA determination. 
Commenter 05 states that the FIP creates the potential for delays in 
permit issuances due to conflicts between California law and the FIP on 
items such as the completeness determination, BACT determinations, and 
offsetting and the use of SERs, and Commenter 06 adds that the 
differences between the requirements under the SIP and the FIP will add 
a level of complexity to the permit application process and in ensuring 
facilities comply with the permits. Commenters 05 and 06 state that 
potential timing issues would have an adverse impact on the national 
security mission at Department of Defense facilities because a facility 
cannot proceed with construction until it receives two permits--one 
from MDAQMD, and one from EPA. Commenters 01, 07, and 08 request that 
the EPA provide timeline estimates for the proposed permit processing.
    Response to Comment A.5.4: Neither the CAA nor the existing NNSR 
FIP that applies in tribal areas, which is very similar to the FIP, 
includes a requirement for the reviewing authority to render a decision 
on a permit application within a certain period of time. Likewise, the 
EPA has not incorporated any temporal requirement to the issuance of 
permits under this FIP. Under the CAA, the EPA is required to make a 
permit decision on a Prevention of Significant Deterioration (PSD) 
permit application within one year after the application is determined 
complete by the EPA.\107\ While no analogous provision exists in Part D 
of Title I of the CAA, which governs Plan Requirements for 
Nonattainment Areas, the EPA will endeavor to follow the PSD permit 
application processing timeline when we review applications submitted 
under the finalized FIP. Also, should the MDAQMD receive delegation as 
a

[[Page 106348]]

reviewing authority of the FIP, it could consolidate its review under 
the FIP with its review under the SIP.
---------------------------------------------------------------------------

    \107\ CAA section 165(c) (42 U.S.C. 7465(c)).
---------------------------------------------------------------------------

    Finally, it is not clear how applicants for minor source permits--
either new or modified sources--would be affected by the timing issue 
because the proposed FIP does not affect minor NSR.\108\
---------------------------------------------------------------------------

    \108\ See 40 CFR 52.285(c)(1)(i)-(ii); 89 FR 56237, 56247.
---------------------------------------------------------------------------

    Comment A.5.5: Commenter 01 states that the proposed FIP includes 
``de minimis'' provisions that allow emissions increases of less than 
25 tons per year aggregated with all other net increases from the 
facility over five consecutive calendar years to not require BACT or 
offsets. Commenter 01 states further that this provision is contrary to 
California law, which requires any emission unit that emits or has the 
potential to emit over 25 lbs per day to be equipped with BACT. The 
commenter also states that the Protect California Air Act of 2003 
prohibits California air districts, including the MDAQMD, from 
``backing off'' their NNSR programs to allow the implementation of 
requirements less stringent than those in place as of December 30, 
2002. The commenter states that because the MDAQMD's current SIP rules 
have been in place since before 1996, they cannot now be avoided, and 
that the FIP creates the potential for massive confusion and 
misunderstanding among regulated facilities that are located in the 
MDAQMD.
    Response to Comment A.5.5: If the MDAQMD believes that the 
provisions in its current SIP, which EPA acted upon in the 2023 LA/
LD,\109\ will result in greater emissions reductions than the 
application of the de minimis provisions proposed in the FIP, there 
should be no conflict between the FIP and the MDAQMD's SIP. The EPA is 
not required to apply state-level requirements even if, in some cases, 
the application of the state-level requirements would result in a 
scenario where emissions reductions would be greater than under federal 
requirements. Likewise, in the situation described in the comment, a 
permit applicant's compliance with a more stringent MDAQMD requirement 
would enable the applicant to satisfy the federal requirement. The de 
minimis requirement that the commenter references, which is in CAA 
section 182(c)(6), states that a source cannot be considered ``de 
minimis'' for NNSR applicability purposes unless its net emissions 
increases over the past five consecutive calendar years are less than 
25 tons per year.\110\ It is not clear how the federal requirement is 
``directly contrary'' to the California law that, according to the 
commenter, ``requir[es] any emissions unit which emits or has the 
potential to emit over 25 LBS per day to be equipped with BACT;'' the 
California requirement sets a threshold for BACT, based on potential 
emissions of 25 pounds per day, whereas the federal requirement says 
that the source must undergo NNSR (e.g., satisfy BACT and offsets 
requirements) if net emissions increases over the last five consecutive 
calendar years exceed 25 tons per year. It would appear that in most, 
if not all, cases a source's compliance with the California requirement 
would also comply with the federal requirement.
---------------------------------------------------------------------------

    \109\ 88 FR 42258 (June 30, 2023).
    \110\ The de minimis requirement at CAA section 182(c)(6) was a 
part of the 1990 CAA Amendments.
---------------------------------------------------------------------------

    Finally, the EPA finds this comment from the MDAQMD confusing given 
that the MDAQMD stated elsewhere in its comments that its August 7 SIP 
submittal addresses all but one of the deficiencies EPA identified in 
the 2023 LA/LD, which the EPA understands to be a reference to Rule 
1304(C)(2)(d).\111\ The EPA's 2023 LA/LD rulemaking also found the 
MDAQMD's rules as adopted in 2021 to be deficient because they did not 
ensure compliance with CAA 182(c)(6). Based on discussions with the 
MDAQMD after we finalized the 2023 LA/LD, we had understood that the 
MDAQMD intended that its revised rules as adopted on March 25, 2024, 
and submitted to the EPA on August 7, 2024, would address the concerns 
identified in our LA/LD, including adding the missing de minimis 
provision. While our full review of those rules will be attentive to 
this issue, it is not clear why the MDAQMD would object to the 
inclusion of the de minimis provision in the FIP.
---------------------------------------------------------------------------

    \111\ MDAQMD August 8, 2024 comment letter: ``USEPA and MDAQMD 
reached resolution of all but one of the purported deficiencies and 
the MDAQMD thereafter modified its NNSR rules on 3/25/2024.'' In the 
comments Brad Poiriez, on behalf of the MDAQMD, provided during the 
July 24, 2024 public hearing, Mr. Poiriez mentioned the ``pending 
SIP submission containing revisions to the NNSR rules that were 
agreed upon by the District and US EPA.'' (Transcript page 16).
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    Comment A.5.6: Commenters 05, 06, 07, 08 and 09 state that permit 
holders may also face increased permit fees, increased permit 
processing times, and possible inconsistencies between the duplicate 
EPA permits and district permits. The commenters state that dual 
permits and their separate requirements will increase the complexity 
and potential for conflicting or unclear requirements and that this may 
lead to unintended compliance issues and conflicts, which could 
compromise a source's ability to comply as well as result in 
significant penalties. Commenters 05, 07, and 08 request that the EPA 
work with the MDAQMD to develop a solution that would remove the 
requirement that sources obtain two permits.
    Commenter 05 requests that the EPA confirm which agency (the MDAQMD 
or the EPA) will be the permitting authority under the proposed FIP 
rule or if the intention is for both the MDAQMD and the EPA to issue 
and enforce separate permits independently, including facility 
inspections and processing fees.
    Response to Comment A.5.6: Unless the MDAQMD requests, and the EPA 
approves, delegation to implement the FIP or the MDAQMD addresses the 
deficiency in MDAQMD Rule 1304(C)(2)(d), major stationary sources and 
sources undergoing major modifications in areas within the jurisdiction 
of MDAQMD will need to obtain two permits--one under the EPA's FIP, and 
one under the MDAQMD's SIP. The MDAQMD, if delegated to implement the 
FIP, could consolidate its review under the FIP and its review under 
its SIP-approved NNSR program. The EPA considered options to avoid 
permit applicants having to obtain two permits, such as delegating the 
FIP to MDAQMD. However, the MDAQMD is not interested in implementing 
the FIP at this time. We also considered regulatory approaches that 
would reduce or eliminate the MDAQMD's role in issuing permits to major 
stationary sources, but those options seemed likely to have 
unnecessarily disruptive outcomes and uncertain impacts on permitting 
for minor sources. We anticipate that applications for projects subject 
to the FIP will require essentially the same information as 
applications to be submitted to the MDAQMD, which should reduce the 
permitting burden on permit applicants. We also anticipate that the 
most significant difference between the two permit programs will be 
evaluation of offset obligations and requirements. We also hope that 
the MDAQMD's newly submitted NNSR rules will narrow the scope of the 
FIP once we have approved these rules into the SIP, reducing EPA's role 
in permitting major stationary sources within MDAQMD's jurisdiction.
    In response to Commenter 05's inquiry regarding which agency will 
be the permitting authority, both the EPA and MDAQMD will be permitting 
authorities for major stationary sources. As explained previously, 
major sources subject to the FIP will need to obtain

[[Page 106349]]

two permits--one under the EPA's FIP and one under the MDAQMD's SIP.
    Comment A.5.7: Commenters 07 and 09 state that the proposed FIP 
will likely cause increased demand and prices for ERCs of nonattainment 
area pollutants. The commenters state that the proposed FIP may have 
significant impacts on local ERC demand and prices for emission offsets 
at a time where there are a few private holders of ERCs with relatively 
low quantities of available credits within the MDAQMD. Commenter 09 
provides examples of the prices of credits for PM10 and 
Nitrogen Oxides (NOX) in the South Coast Air Quality 
Management District to support its assertion that it is unclear how the 
FIP will address such potentially restrictive and unsustainable ERC 
market conditions within the MDAQMD. Commenter 09 states that there has 
been insufficient study of these potential ERC market conditions, 
additional emission offset costs, and related concerns on regulated 
facilities.
    Commenter 04 recommends that the EPA work with the MDAQMD to ensure 
that the proposed FIP complements existing state and local efforts and 
states that coordination will help avoid any errors in the process. 
This commenter states that the NNSR rules should provide flexibility to 
accommodate the needs of businesses and economic development in the 
region.
    Response to Comment A.5.7: The EPA is promulgating this FIP as 
required by a consent decree because the MDAQMD does not have a fully 
approved NNSR SIP, as required by the 2008 ozone NAAQS implementation 
rule.\112\ The requirements that entities would be subject to under the 
FIP, which implements Appendix S, are the same requirements that 
regulated entities in other jurisdictions across the country are 
currently subject to and have been subject to for decades under SIP-
approved programs that meet the minimum requirements of the CAA. The 
EPA recognizes the scarcity of offsets in the nonattainment area that 
would be covered by this FIP. The EPA will continue to work with the 
MDAQMD to assist in identifying offsets from sources in the 
nonattainment area that will be covered by this FIP.
---------------------------------------------------------------------------

    \112\ Center for Biological Diversity et al., v. Regan, No. 
3:22-cv-03309-RS (N.D. Cal.). This consent decree is also available 
in the docket for this action.
---------------------------------------------------------------------------

    Comment A.5.8: Commenter 08 states that the proposed FIP puts the 
time, monetary, and compliance burdens on facilities. Similarly, 
Commenter 09 states that the burdensome conditions that the FIP will 
cause will make it difficult for it and other regulated facilities to 
make capital investments, equipment purchases, facility expansions, new 
employee hires, and other business decisions.
    Response to Comment A.5.8: The EPA disagrees with the commenters' 
characterizations of the impacts of the FIP. Facilities in the MDAQMD 
are required to comply with federal NNSR requirements, including the 
requirements for offset quantification and generation, in the same 
manner as any other facilities in other jurisdictions that are located 
in areas not attaining the NAAQS. The FIP applies only when new or 
existing major stationary sources undertake facility modifications that 
will increase emissions above the applicable thresholds. The FIP is 
necessary to ensure that air quality in the MDAQMD, which is currently 
classified as Severe nonattainment for the 2008 and 2015 ozone NAAQS, 
as well as Moderate nonattainment for the PM10 NAAQS, 
improves toward attainment of the NAAQS over time. At present, the 
MDAQMD's current rules allow for applicants to be excused from certain 
NNSR requirements, as described in the proposed FIP rulemaking and in 
the 2023 LA/LD.\113\
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    \113\ 88 FR 42258, 42260; 89 FR 56237, 56240.
---------------------------------------------------------------------------

B. Summaries of Oral Comments Received During the Public Hearing and 
EPA's Responses

1. Comments on the Timing and Implementation of the FIP
    Comment B.1.1: Commenter AA states that while he understands that 
the EPA is under a consent decree to act on the MDAQMD's NNSR 
provisions, the EPA's promulgation of a FIP seems to be rushed given 
the pending SIP submission that contains revisions to the NNSR rules 
that the MDAQMD, and the EPA agreed to during mediation following the 
MDAQMD's petition for review of the EPA's 2023 LA/LD action.\114\ The 
commenter states that EPA was copied on the submission of the MDAQMD's 
rules to CARB and thus has constructive notice of the MDAQMD's 
submission.
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    \114\ 88 FR 42258.
---------------------------------------------------------------------------

    Commenter AA states that, to the extent that the EPA's rush to 
promulgate the FIP is spurred by the dispute between the MDAQMD the EPA 
over the use of fully offset allowable emissions as SERs at an existing 
major facility, the EPA should reconsider its disapproval of the 
MDAQMD's SER provision. The commenter states that the EPA has 
previously approved the MDAQMD's offset provision and that there is a 
reasonable reliance by industry and the MDAQMD on this approval.
    Response to Comment B.1.1: The EPA disagrees with the commenter's 
characterization that ``the EPA's promulgation of a FIP seems to be 
rushed.'' In fact, the EPA's obligation to promulgate a FIP is more 
than five years overdue. As explained in our proposed rulemaking, on 
February 3, 2017, the EPA found that the State of California failed to 
submit a SIP revision for NNSR rules that apply to a Severe 
classification for the 2008 ozone NAAQS, as required under subpart 2 of 
part D of title 1 of the CAA and the 2008 Ozone SIP Requirements 
Rule.\115\ In addition to establishing deadlines for the imposition of 
sanctions, the EPA's finding of failure to submit triggered an 
obligation under CAA section 110(c) for the EPA to promulgate a FIP no 
later than two years from the finding, i.e., by March 6, 2019.\116\ The 
EPA did not meet this deadline and was subsequently sued over its 
failure to do so.\117\ The lawsuit was resolved by a consent decree 
that underwent a 30-day public comment period before it was entered by 
the court on June 15, 2023. Under the terms of the consent decree, no 
later than November 29, 2024, the EPA must sign a notice of final 
rulemaking to approve a revised SIP submission, promulgate a FIP, or 
approve in part a revised SIP submission and promulgate a partial FIP 
for the Severe NNSR SIP element. On November 8, 2024, the EPA and CBD 
agreed to extend the deadline to January 10, 2025.\118\
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    \115\ 82 FR 9158 (February 3, 2017).
    \116\ Id.
    \117\ Center for Biological Diversity et al., v. Regan, No. 
3:22-cv-03309-RS (N.D. Cal.). The consent decree, as entered by the 
court on June 15, 2023, is available in the docket for this action.
    \118\ Id. Prior to court's entry of the 2023 CBD Consent Decree, 
the EPA published a notice in the Federal Register announcing the 
proposed settlement and providing an opportunity for interested 
persons to submit comments. 88 FR 20166 (April 5, 2023). The EPA 
received no comments on the proposed settlement. The parties' joint 
stipulation to extend the consent decree deadline is available in 
the docket for this action.
---------------------------------------------------------------------------

    As the commenter notes, MDAQMD adopted revised rules on March 25, 
2024, and submitted them to CARB for transmittal to the EPA. On August 
7, 2024, CARB submitted the revised rules to the EPA. The EPA is 
currently reviewing the submission as required under section 110(k) of 
the CAA. The EPA has confirmed that the submission still contains the 
deficiency associated with MDAQMD Rule 1304(C)(2)(d) that EPA has 
previously identified. For the EPA to discharge its obligation to 
promulgate a FIP, it would need to fully approve the MDAQMD's NNSR

[[Page 106350]]

submission, which is not possible due to the deficiency associated with 
MDAQMD Rule 1304(C)(2)(d). The EPA provides additional information that 
is relevant to this comment both specifically in our response to 
Comment A.1.1 in this Response to Comments and generally in our 
responses to the comments summarized in section A.1 of this Response to 
Comments, where we address the written comments we received that 
pertain to the EPA's obligation under the applicable consent decree.
    As stated in Section III.H of the proposed rulemaking action, if 
the EPA approves CARB's recent SIP submittal, the approved MDAQMD rules 
would apply rather than the FIP, except for the portion of the FIP that 
had not been replaced by the approved SIP.\119\
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    \119\ 89 FR 56237, 56243.
---------------------------------------------------------------------------

    Lastly, for the reasons we explain in our responses to comments 
A.4.1 through A.4.3 in this Response to Comments, we disagree with 
Commenter AA's assertion that the EPA should reconsider the FIP because 
of industry's reliance upon MDAQMD's Rule 1304(C)(2)(d).
    Comment B.1.2: Commenter BB states that the EPA should postpone 
promulgating the FIP until after the EPA and the MDAQMD resolve their 
differences. Commenter BB states that there is only one pending issue 
that the two agencies need to resolve. Having to apply to two 
jurisdictions for permits will cause an undue burden to facilities like 
the one at which Commenter BB works.
    Response to Comment B.1.2: It is not possible for the EPA to 
postpone finalizing the FIP while we attempt to resolve our differences 
with the MDAQMD. Section 110(c) of the CAA requires the EPA to 
promulgate a FIP for a deficient NNSR program. As the EPA wrote in the 
proposed action, the purpose of this NNSR FIP, which will regulate 
sources within the MDAQMD's jurisdiction, is to fulfill the EPA's 
statutory duty by the deadline established under a consent decree in a 
lawsuit brought against the EPA.\120\ The consent decree compels the 
EPA to promulgate a FIP by November 29, 2024, unless the EPA can fully 
approve the MDAQMD's NNSR SIP program before that date.\121\ On 
November 8, 2024, the EPA and CBD agreed to extend the deadline to 
January 10, 2025.\122\ We provide additional information on this issue 
in our responses to comments A.1.2 and A.1.3 in this Notice.
---------------------------------------------------------------------------

    \120\ Id. at 56240-56241.
    \121\ Center for Biological Diversity et al., v. Regan, No. 
3:22-cv-03309-RS (N.D. Cal.). This consent decree is also available 
in the docket for this action.
    \122\ Id. Prior to court's entry of the 2023 CBD Consent Decree, 
the EPA published a notice in the Federal Register announcing the 
proposed settlement and providing an opportunity for interested 
persons to submit comments. 88 FR 20166 (April 5, 2023). The EPA 
received no comments on the proposed settlement. The parties' joint 
stipulation to extend the consent decree deadline is available in 
the docket for this action.
---------------------------------------------------------------------------

    Regarding the burdens associated with compliance with the FIP and 
the MDAQMD's NNSR program, we direct the reader to our response to 
written comment A.5.6, where we respond to similar assertions from 
other commenters. Unless the EPA delegates authority to implement the 
FIP to the MDAQMD, permit applicants will need to apply to the EPA for 
an NNSR permit under the FIP and to the MDAQMD for a permit under the 
SIP. If, however, the MDAQMD requests delegation authority to implement 
the FIP, the EPA is willing to work with the MDAQMD for MDAQMD to 
obtain this delegation authority.
2. Comments on the 2023 LA/LD of the MDAQMD's NNSR SIP Submission
    Comment B.2.1: Commenter AA states that the EPA previously approved 
the use of SERs, as offsets, which it subsequently disapproved in the 
2023 LA/LD action. The commenter states that neither the 2023 LA/LD 
action nor the proposed FIP fully explain the EPA's policy reversal of 
MDAQMD Rule 1304(C)(2)(d), which regulates the use of SERs. The 
commenter states that allowable emissions reflected in a permit were 
backed by real reductions when the permit was issued and that the EPA 
has not explained why these reductions are no longer real, especially 
when the SERs are surplus adjusted and adjusted for Reasonably 
Available Control Technology (RACT) upon use. The commenter states that 
any leftover SERs created in the permitting action would never again be 
available for use, since SERs cannot be put into the ERC bank. Finally, 
the commenter states that CAA section 173(c)(2) expressly mandates that 
these SERs are creditable emission reductions (i.e., offsets), that EPA 
recognized this in 1996, and that there has been no relevant change in 
the CAA or the implementing regulations since then.
    Response to Comment B.2.1: Rule 1304(C)(2)(d) is not approvable 
under the CAA or the requirements for NNSR SIPs at 40 CFR 51.160-
51.165. As we explain in our responses to comments A.2.1 and A.2.2, 
MDAQMD Rule 1304(C)(2)(d) is not consistent with section 173(c)(1) of 
the CAA, and it is not consistent with the requirements at 40 CFR 
51.165(a)(3)(i), 40 CFR 51.165(a)(3)(ii)(G), or 40 CFR 
51.165(a)(3)(ii)(J) because it allows facilities in the MDAQMD's 
jurisdiction to use reductions in past potential emissions, even if 
actual emissions associated with a modification would not be reduced at 
all, to offset emissions increases from construction of modified 
emissions units. This arrangement creates a loophole in the actual 
emissions accounting system established by the CAA and in place in the 
MDAQMD, which uses an attainment plan that is based on actual 
emissions.\123\ The currency of the CAA is actual emissions, and that 
is true at each major modification undertaken at a facility.
---------------------------------------------------------------------------

    \123\ MDAQMD's 2008 and 2015 ozone NAAQS attainment plans are 
based on actual emissions. The 2008 ozone NAAQS plan is available 
at: https://ww2.arb.ca.gov/sites/default/files/classic/planning/sip/planarea/wmdaqmp/2016sip_mdplan.pdf, pp. 7, 34 (EPA approved this 
plan, see 86 FR 53223 (September 27, 2021).) The 2015 ozone NAAQS is 
available at: https://www.mdaqmd.ca.gov/home/showpublisheddocument/9589/638084392297570000, pp. 4-5, 24, 80.
---------------------------------------------------------------------------

    As we explained in our response to comment A.2.1 in this 
rulemaking, Rule 1304(C)(2)(d) is inconsistent with CAA section 
173(c)(1), 40 CFR 51.165(a)(3)(i), 40 CFR 51.165(a)(3)(ii)(G), and 40 
CFR 51.165(a)(3)(ii)(J) because it allows a facility to offset 
emissions from a major modification with previously-relied upon offsets 
associated with a prior, distinct, project. Because Rule 1304(C)(2)(d) 
is at odds with these requirements, it is not approvable.
3. Comments on the Impact of the FIP on Reliance Interests
    Comment B.3.1: Commenter AA is concerned that the EPA, in proposing 
the FIP, failed to recognize and assess the impact of the FIP on the 
MDAQMD and regulated industry. The commenter states that the MDAQMD and 
sources subject to the FIP have a reliance interest in the MDAQMD's 
Rule 1304(C)(2)(d) because, for over 25 years, the MDAQMD and its 
constituents have operated under the EPA's previously approved Rule 
1304(C)(2)(d) procedures. The commenter states that SERs allowed under 
Rule 1304(C)(2)(d) may not be allowed under the FIP, and that this will 
impede the permitting process and the timeline for projects that have 
proceeded based on the understanding that MDAQMD's Rule 1304(C)(2)(d) 
was acceptable. Now, the commenter states, the EPA is reversing its 
position to eliminate these SERs without explanation or consideration 
of readily apparent alternative measures that could reduce the severity 
of its impact. The commenter states that the EPA's action does not 
reflect the

[[Page 106351]]

cooperation between agencies that should be strived for, nor is it in 
compliance with the EPA's obligations under the APA.
    Response to Comment B.3.1: As explained in our response to comment 
A.4.1, the EPA disagrees with the commenter's assertion regarding 
reliance interests. The EPA must promulgate a FIP because the MDAQMD 
has not adopted NSR rules that the EPA can fully approve.
    Furthermore, it is not clear what the commenter means by the 
statement that EPA's proposed FIP fails to comply with EPA's 
obligations under the Administrative Procedure Act. To the extent that 
this comment is the same as comment A.3.1, the EPA's response is 
already stated in our response to that comment.
4. Comments on Other Potential Impacts of the FIP
    Comment B.4.1: Commenter AA states that the proposed FIP is 
primarily silent about practical implementation issues, elaborating 
that the only discussion on that topic seems to be that two permits 
will be necessary and that the new permit for modified major facilities 
will need to use the EPA Region IX's electronic format.
    Response to Comment B.4.1: Section 40 CFR 52.285(d)(3) of the FIP 
identifies the information that an applicant must provide to the EPA 
(or other reviewing authority, if delegated by the EPA) when submitting 
an application under the FIP.
    Comment B.4.2: Commenter AA states that the EPA has expressed 
orally to the MDAQMD on a number of different occasions that it is 
concerned about various minor sources that will somehow escape NNSR. 
The commenter states that the EPA has especially expressed this concern 
for synthetic minor sources, where a permit limitation is the only 
thing rendering the facility ``minor.'' The commenter states that, 
given the EPA's concern, it seems to be a bit of an oversight that 
specific provisions regarding review of minor sources are not addressed 
either directly or by reference.
    Response to Comment B.4.2: The FIP and 40 CFR 51.165 generally 
apply to major stationary sources of air pollution, though synthetic 
minor sources must comply with definitions of ``potential to emit'' and 
provisions relating to the relaxation of these limits. At such time 
that a particular source or modification becomes a major stationary 
source or major modification solely by virtue of a relaxation in any 
enforceable limitation that was established after August 7, 1980, on 
the capacity of the source or modification otherwise to emit a 
pollutant, such as a restriction on hours of operation, then the 
requirements of the FIP shall apply to the source or modification as 
though construction had not yet commenced on the source or 
modification.\124\ The FIP also requires sources to identify any 
emission limitations taken by the source.\125\ The FIP incorporates the 
definitions used in Appendix S to Part 51, including the definition of 
``Potential to Emit.'' \126\ Synthetic minor sources that take a limit 
on their PTE are required to comply with this definition and the 
provisions relating to the relaxation of limits.
---------------------------------------------------------------------------

    \124\ 40 CFR 52.285(c)(2) (incorporating Appendix S, section 
IV.F.).
    \125\ 40 CFR 52.285(b)(referencing the definitions in Appendix S 
including the definition of PTE in 40 CFR 52.285(e)(2)(ii)(C)).
    \126\ Appendix S section II.A.3.
---------------------------------------------------------------------------

    Comment B.4.3: Commenter BB states that, in contrast to the 
MDAQMD's requirement for a response or issuance of permits within 90 
days of application, the EPA's permitting process lacks a specific 
timeline. The commenter states that this potential delay could 
significantly impact manufacturing facilities applying for permits, 
which could impact facility operation and planning. The commenter 
states that facilities want to comply, but adding layers to the 
already-approved SIP that is implemented by the MDAQMD will cause an 
added layer of undue burden on the facility.
    Response to Comment B.4.3: We refer the reader to our response to 
comment A.5.4 for this comment.
    Comment B.4.4: Commenter CC states that five out of the six issues 
the EPA identified in the 2023 LA/LD of the MDAQMD's NNSR program have 
apparently been resolved and that after CARB takes its action only one 
issue remains. The commenter states that it appears that issue is more 
based on interpretation, which does not seem resolvable by a FIP as far 
as the implications and impacts it will have on industry for submitting 
dual permits, having different permitting timelines, additional costs, 
and impacts on projects moving forward that maybe benefit clean air. 
The commenter suggests not implementing the FIP and instead encourages 
that it would be more beneficial for the EPA and the MDAQMD to work 
through their issues.
    Response to Comment B.4.4: The EPA directs the reader to our 
responses to comments A.1.3, A.5.6, and A.5.8. The EPA received CARB's 
submission of the MDAQMD's most recent NNSR SIP on August 7, 2024. The 
EPA is currently reviewing the submittal. Because the MDAQMD did not 
address one of the deficiencies that the EPA identified in the 2023 LA/
LD, even if it did address all of the other deficiencies, the EPA would 
still need to promulgate a FIP by January 10, 2025, as required under 
the consent decree, because the EPA would still not be able to fully 
approve the MDAQMD's NNSR program into the SIP.\127\
---------------------------------------------------------------------------

    \127\ On November 8, 2024, CBD and the EPA filed a joint 
stipulation to extend the original November 29, 2024 deadline to 
January 10, 2025. Center for Biological Diversity et al., v. Regan, 
No. 3:22-cv-03309-RS (N.D. Cal.). This consent decree and the 
parties' joint stipulation to extend the consent decree deadline is 
also available in the docket for this action.
---------------------------------------------------------------------------

    To the extent that the disagreement between the EPA and the MDAQMD 
is based upon interpretation of legal requirements, the FIP is a gap-
filling tool that the EPA is required to promulgate when states or air 
districts do not implement CAA requirements into their permitting 
requirements. Because the MDAQMD refuses to implement CAA requirements 
regarding offsets, the EPA must implement a FIP that effectuates those 
requirements.

IV. Final Action

    In this rulemaking, the EPA is taking final action in response to 
the court remand of EPA's June 30, 2023 LA/LD action.\128\ The EPA is 
disapproving MDAQMD's Rule 1304(C)(2)(d) because this rule continues to 
be insufficient to meet requirements for determining the quantity of 
offsets needed to issue a permit for a major modification.\129\ In this 
rulemaking, the EPA has provided additional explanation to support this 
disapproval of Rule 1304(C)(2)(d). This includes an analysis of the 
EPA's prior action in 1996, which shows that the EPA did not fully 
consider applicable requirements at that time and that there have also 
since been intervening changes to EPA regulations. These responses 
supplement the EPA's rationale provided for the 2023 LA/LD action.\130\ 
EPA affirms its disapproval of Rule 1304(C)(2)(d) in the 2023 LA/LD 
action \131\ in this new final action based on the additional reasoning 
provided in this rulemaking and the record the EPA compiled to support 
the 2023 LA/LD action.
---------------------------------------------------------------------------

    \128\ 88 FR 42258.
    \129\ The EPA's disapproval of Rule 1304(C)(2)(d) in this 
action, as in the 2023 LA/LD, is limited; the provision remains a 
part of the SIP, as justified under CAA sections 110(k)(3) and 
301(a).
    \130\ Id.
    \131\ Id.
---------------------------------------------------------------------------

    In addition, in accordance with CAA section 110(c), the EPA is 
finalizing a FIP for the NNSR program for the MDAQMD portion of the 
West Mojave Desert ozone nonattainment area and the San Bernardino 
County and Trona

[[Page 106352]]

Planning Area PM10 nonattainment areas. The EPA is 
finalizing the FIP as proposed except for one change to address an 
oversight error that is in the proposed rule text: in 40 CFR 
52.285(b)(1)(i), the definition of ``actual emissions,'' the EPA is 
inserting the text ``, or for establishing a PAL under paragraph IV.K 
of 40 CFR part 51, appendix S'' to the first sentence of the 
definition. The added text clarifies the terms that are to be used in 
establishing a Plantwide Applicability Limit (PAL), as described in 
Appendix S, which the FIP incorporates by reference.\132\ The EPA is 
not requesting public comment on the fix to this minor typographical 
error since it merely applies the text that is in Appendix S.\133\
---------------------------------------------------------------------------

    \132\ See 40 CFR 52.285(d), ``Permit approval criteria.''
    \133\ Furthermore, the EPA notes that the PAL provisions in the 
FIP are not likely to be utilized by any permit applicants because 
the MDAQMD no longer has a PAL program in its NSR rules.
---------------------------------------------------------------------------

    The FIP applies only to construction of new major stationary 
sources and major modifications at existing major stationary source in 
these nonattainment areas. The FIP implements statutory requirements in 
CAA sections 110(c)(1), 172(c)(5), 173, 179(b), 182(c) and (d), 
189(a)(1)(A) and (e), 301(a), and 302.
    The FIP will be directly implemented and enforced by the EPA. The 
FIP authorizes the EPA to delegate implementation of the FIP to the 
MDAQMD if the District requests such delegation. The FIP will apply 
until the MDAQMD revises its SIP to address deficiencies identified by 
the EPA and the EPA fully approves the MDAQMD's NNSR SIP.
    As we explained in the proposal for this action, should the MDAQMD 
submit a SIP revision that corrects some, but not all, of the 
deficiencies identified in our June 30, 2023 rulemaking, the permit 
approval criteria for this FIP could be limited to the remaining 
deficiencies that the EPA identified.\134\ As described in the proposal 
for this action, permit applicants would still need to comply with any 
portions of the FIP that remain after the EPA approves the MDAQMD's 
revised rules in the SIP. Likewise, if a court invalidates any one of 
these elements of the FIP, the EPA intends the remainder of this action 
to remain effective, as the EPA finds each portion of it to be 
appropriate even if one or more parts of it have been set aside.
---------------------------------------------------------------------------

    \134\ 88 FR 42264-42266; See also 87 FR 72434, 72438 (November 
25, 2022).
---------------------------------------------------------------------------

V. Supporting Information

A. Policy on Children's Health

    In 2021, the EPA updated its Policy on Children's Health to reflect 
that ``children's environmental health refers to the effect of 
environmental exposure during early life: from conception, infancy, 
early childhood and through adolescence until 21 years of age.'' In 
addition, the policy applies to ``effects of early life exposures 
[that] may also arise in adulthood or in later generations.'' In this 
action, the EPA is finalizing a program that would implement our 
federal regulations in the nonattainment areas under the MDAQMD. In so 
far as there is an impact from this action, it will be positive since 
the deficiencies in the District's program it is meant to rectify would 
likely result in increased emissions as compared to this FIP and our 
federal NNSR regulations.

B. Judicial Review

    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 February 28, 2025.
    Filing a petition for reconsideration by the Administrator of this 
final rule does not affect the finality of this rule 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)).

VI. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders 
can be found at https://www.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 14094: Modernizing Regulatory Review

    This action is not a significant regulatory action as defined in 
Executive Order 12866 (58 FR 51735, October 1993), as amended by 
Executive Order 14094 (88 FR 21879, April 11, 2023), and was, 
therefore, not subject to a requirement for Executive Order 12866 
review.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.) 
because this final rule implements existing requirements under the CAA 
and 40 CFR 51.160-165. The Office of Management and Budget (OMB) has 
previously approved the information collection activities in the 
existing PSD and NNSR regulations under OMB control number 2060-0003. 
The burden associated with obtaining an NNSR permit for a major 
stationary source undergoing a major modification is already accounted 
for under the approved information collection requests. Thus, the EPA 
is not conducting an information collection request for this action.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities under the RFA. This 
action is unlikely to impact small entities because the permitting 
requirements implemented through this action are applicable only to 
construction or modification of major stationary sources of air 
pollution. In the MDAQMD, major sources are those that emit, or have 
the potential to emit 25 tons per year or more of NOX, 
Sulfur Oxides, or volatile organic compounds (VOCs); or 15 tons per 
year or more of PM10. To the extent that any small entities 
would own or operate sources capable of emitting this much air 
pollution, the requirements of this action apply only to construction 
of new major sources, or major modifications to existing major sources, 
located in the portions of the MDAQMD that are subject to the 
requirements of this action. The EPA does not have information to 
suggest that there currently are a substantial number of major 
stationary sources located in the MDAQMD that are owned or operated by 
small entities. The Agency also does not have any information on future 
modifications that any such existing major sources may engage in after 
the effective date of this FIP. Further, the Agency does not have 
information that suggests one or more small entities will seek to 
construct a new major stationary source in the MDAQMD.
    Even if the federal permitting requirements established in this FIP 
could be applicable to one or more small entities, these requirements 
would not have significant economic impact on such a small entity. 
Furthermore, any impact would not affect a substantial number of small 
entities. This FIP ensures that such small entities and other sources 
subject to the FIP requirements meet CAA requirements to which these 
sources should have already been subject. Upon finalization of this 
action, sources applying for a

[[Page 106353]]

permit will be required to submit application materials to the EPA in 
compliance with the FIP. These sources are already subject to NNSR 
requirements under the District's SIP, including the requirements to 
submit applications, to obtain offsets, and to install pollution 
control technology that satisfies Federal standards. Consequently, the 
incremental impact associated with application of the specific 
requirements of the NNSR regulations for certain sources emitting 
nonattainment criteria pollutants or its precursors is expected to be 
de minimis, primarily pertaining to the amount of offsets needed.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate of $100 million or 
more, as described in UMRA, 2 U.S.C. 1531-1538, and does not 
significantly or uniquely affect small governments. This action imposes 
no enforceable duty on any state, local or tribal governments or the 
private sector.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government.

F. Executive Order 13175: Consultation and Coordination With Indian 
Tribal Governments

    This action does not have tribal implications, as specified in 
Executive Order 13175, because this proposed rule would not apply on 
any Indian reservation land or in any other area where the EPA or an 
Indian tribe has demonstrated that the tribe has jurisdiction, and it 
will not impose substantial direct costs on tribal governments or 
preempt tribal law. Thus, Executive Order 13175 does not apply to this 
action.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045 directs federal agencies to include an 
evaluation of the health and safety effects of the planned regulation 
on children in Federal health and safety standards and explain why the 
regulation is preferable to potentially effective and reasonably 
feasible alternatives. This action is not subject to Executive Order 
13045 because it is not a significant regulatory action under section 
3(f)(1) of Executive Order 12866. The EPA does not believe the 
environmental health or safety risks addressed by this action present a 
disproportionate risk to children because it implements specific 
standards established by Congress in statutes.
    However, EPA's Policy on Children's Health applies to this action. 
Information on how the Policy was applied is available under 
``Children's Environmental Health'' in the Supporting Information 
section of this preamble.

H. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use

    This action is not subject to Executive Order 13211 (66 FR 28355, 
May 22, 2001), because it is not a significant regulatory action under 
Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations and 
Executive Order 14096: Revitalizing Our Nation's Commitment to 
Environmental Justice for All

    The EPA believes that it is not practicable to assess whether the 
human health or environmental conditions that exist prior to this 
action result in disproportionate and adverse effects on communities 
with environmental justice concerns. The EPA performed an EJ analysis, 
as is described in the proposed action, 89 FR 56237, July 9, 2024, in 
the section titled, ``Environmental Justice Considerations.'' The 
analysis was done for the purpose of providing additional context and 
information about this rulemaking to the public, not as a basis for the 
action. While the EPA can identify the existing major sources in the 
nonattainment areas that would be impacted by this action, the EPA 
cannot quantify the number or types of sources that will undertake 
major modifications in the future. Additionally, the EPA cannot know 
whether new major sources will locate in the nonattainment area and 
what emissions these sources may have. The impacts of the action are 
likely to vary greatly depending on the source category, number and 
location of facilities, and the pollutants and potential controls 
addressed. Therefore, while the EPA cannot quantify the precise 
baseline conditions and impacts, to the extent that this action will 
have impacts, it will not result in disproportionate and adverse 
effects on communities with EJ concerns as compared with baseline human 
health and environmental conditions.
    In finalizing this action, the EPA will replace the MDAQMD in 
implementation of the District's NNSR program through the FIP. 
Therefore, the EPA does not anticipate that this action will result in 
any negative impacts to human health and the environment negative 
impacts. If this action has any impact on human health or the 
environment it will be beneficial in so far as the FIP action will 
address deficiencies associated with the calculation of emission 
offsets in the NNSR program. As explained in section II of the preamble 
of the proposal of this action, this FIP is being promulgated to 
address several deficiencies with the MDAQMD's NNSR program. See 89 FR 
56237, 56239. While the EPA has not analyzed the health impacts nor the 
emissions impacts from these deficiencies, the deficient provisions are 
less stringent than the Federal NNSR requirements that the EPA will be 
applying if this proposed FIP is finalized. Therefore, in so far as the 
EPA can qualitatively identify impacts to human health and the 
environment, the EPA expects this action will ensure the protections 
provided by the CAA and that the EPA's implementing regulations will be 
fully realized.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule 
report to each House of the Congress and to the Comptroller General of 
the United States. This action is not a ``major rule'' as defined by 5 
U.S.C. 804(2).

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Ammonia, 
Incorporation by reference, Intergovernmental relations, Nitrogen 
oxides, Ozone, Particulate matter, Reporting and recordkeeping 
requirements, Volatile organic compounds.

Michael Regan,
Administrator.

    For the reasons stated in the preamble, part 52 of title 40 of the 
Code of Federal Regulations is amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

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

[[Page 106354]]

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

Subpart F--California

0
2. Section 52.285 is added to read as follows:

Sec.  52.285  Review of new sources and modifications--Mojave Desert 
Air Quality Management District.

    (a) Plan overview--(1) What is the purpose of the Federal 
Implementation Plan (FIP or ``plan'')?
    (i) The FIP has the following purposes: It establishes the Federal 
preconstruction permitting requirements for new major sources and major 
modifications located in nonattainment areas within the Mojave Desert 
Air Quality Management District (MDAQMD or ``District'') that are major 
for a nonattainment pollutant.
    (ii) The plan serves as the Federal nonattainment new source review 
(NNSR or ``nonattainment major NSR'') plan for the area described in 
paragraph (a)(1)(i) of this section, which the EPA has determined does 
not meet all of the Clean Air Act (CAA or ``Act'') title I part D 
requirements for NNSR programs. Sources subject to the plan must comply 
with the provisions and requirements of 40 CFR part 51, appendix S. The 
FIP also sets forth the criteria and procedures that the reviewing 
authority (as defined in paragraph (b)(1)(v) of this section) must use 
to issue permits under the plan. For the purposes of the plan, the term 
SIP means any EPA-approved implementation plan for the area 
administered by the MDAQMD.
    (iii) Paragraph (f)(3) of this section sets forth procedures for 
appealing a permit decision issued under the plan.
    (iv) The plan does not apply in Indian country, as defined in 18 
U.S.C. 1151 and 40 CFR 49.167, located within the MDAQMD.
    (2) Where does the plan apply? (i) The provisions of the plan apply 
to the proposed construction of any new major stationary source or 
major modification in the MDAQMD that is major for a nonattainment 
pollutant, if the stationary source or modification is located anywhere 
in the designated nonattainment area.
    (3) What general provisions apply under the plan? The following 
general provisions apply to you as an owner or operator of a source:
    (i) If you propose to construct a new major source or a major 
modification in a nonattainment area in the MDAQMD, you must obtain a 
Federal NNSR permit (``permit'') under the plan before beginning actual 
construction. You may not begin actual construction after the effective 
date of the plan without applying for and receiving a Federal NNSR 
permit that authorizes construction pursuant to the plan.
    (ii) You must construct and operate your source or modification in 
accordance with the terms of your permit issued under the plan.
    (iii) Issuance of a permit under the plan does not relieve you of 
the responsibility to fully comply with applicable provisions of any 
EPA-approved implementation plan or FIP, and any other requirements 
under applicable law. This includes obligations to comply with any EPA-
approved SIP provisions that satisfy Federal new source review (NSR) 
requirements.
    (b) Definitions. For the purposes of the plan, the definitions in 
40 CFR part 51, appendix S, paragraph II.A, and 40 CFR 51.100 apply, 
except for paragraphs (b)(1) through (6) of this section, which replace 
the corresponding definitions found in part 51, appendix S:
    (1) Actual emissions means the actual rate of emissions of a 
regulated NSR pollutant from an emissions unit, as determined in 
accordance with paragraphs (b)(1)(i) and (ii) of this section, except 
that this paragraph (b)(1) shall not apply for calculating whether a 
significant emissions increase has occurred, or for establishing a PAL 
under paragraph IV.K of 40 CFR part 51, appendix S. Instead, 40 CFR 
part 51, appendix S, paragraphs II.A.24 and 30, shall apply for those 
purposes.
    (i) In general, actual emissions as of a particular date shall 
equal the average rate, in tons per year, at which the unit actually 
emitted the pollutant during a consecutive 24-month period that 
precedes the particular date and that is representative of normal 
source operation. The reviewing authority shall allow the use of a 
different time period upon a determination that it is more 
representative of normal source operation. Actual emissions shall be 
calculated using the unit's actual operating hours, production rates, 
and types of materials processed, stored, or combusted during the 
selected time period.
    (ii) For any emissions unit that has not begun normal operations on 
the particular date, actual emissions shall equal the potential to emit 
of the unit on that date.
    (2) Enforceable as a practical matter means that an emission 
limitation or other standard is both legally and practicably 
enforceable as follows:
    (i) An emission limitation or other standard is legally enforceable 
if the reviewing authority has the legal power to enforce it.
    (ii) Practical enforceability for an emission limitation or for 
other standards (design standards, equipment standards, work practices, 
operational standards, pollution prevention techniques) in a permit for 
a source is achieved if the permit's provisions specify:
    (A) A limitation or standard and the emissions units or activities 
at the source subject to the limitation or standard;
    (B) The time period for the limitation or standard (e.g., hourly, 
daily, monthly and/or annual limits such as rolling annual limits); and
    (C) The method to determine compliance, including appropriate 
monitoring, recordkeeping, reporting, and testing.
    (3) Environmental Appeals Board means the Board within the EPA 
described in 40 CFR 1.25(e).
    (4) Nonattainment pollutant means any regulated NSR pollutant for 
which the MDAQMD, or portion of the MDAQMD, has been designated as 
nonattainment, as codified in 40 CFR 81.305, as well as any precursor 
of such regulated NSR pollutant specified in 40 CFR part 51, appendix 
S, paragraph II.A.31.(ii)(b).
    (5) Reviewing authority means the Administrator of EPA Region IX, 
but it may include the MDAQMD if the Administrator delegates the power 
to administer the FIP under paragraph (g) of this section.
    (6) Significant means, in reference to an emissions increase or a 
net emissions increase, and notwithstanding the definition of 
``significant'' in 40 CFR part 51, appendix S, paragraph II.A.10, any 
increase in actual emissions of volatile organic compounds or oxides of 
nitrogen that would result from any physical change in, or change in 
the method of operation of, a major stationary source locating in a 
serious or severe ozone nonattainment area if such emissions increase 
of volatile organic compounds or oxides of nitrogen exceeds 25 tons per 
year when aggregated with all other net emissions increases from the 
source over any period of 5 consecutive calendar years that includes 
the calendar year in which such increase occurred.
    (c) Does the plan apply to me? (1) In any MDAQMD nonattainment 
area, the requirements of the plan apply to you under the following 
circumstances:
    (i) If you propose to construct a new major stationary source and 
your source is a major source of nonattainment pollutant(s).
    (ii) If you own or operate a major stationary source and propose to 
construct a major modification, where your source is a major source of 
nonattainment pollutant(s) and the

[[Page 106355]]

proposed modification is a major modification for the nonattainment 
pollutant.
    (2) At such time that a particular source or modification becomes a 
major stationary source or major modification solely by virtue of a 
relaxation in any enforceable limitation that was established after 
August 7, 1980, on the capacity of the source or modification otherwise 
to emit a pollutant, such as a restriction on hours of operation, then 
the requirements of the plan shall apply to the source or modification 
as though construction had not yet commenced on the source or 
modification.
    (d) Permit approval criteria--(1) What are the general criteria for 
permit approval? The criteria for approval of applications for permits 
submitted pursuant to the plan are provided in part D of title I of the 
Act and in 40 CFR 51.160 through 51.165 and 40 CFR part 51, appendix S.
    (2) What are the plan-specific criteria for permit approval? 
Consistent with the requirements in 40 CFR part 51, appendix S, the 
reviewing authority shall not approve a permit application unless it 
meets the following criteria:
    (i) The lowest achievable emission rate (LAER) requirement for any 
NSR pollutant subject to the plan and monitoring, recordkeeping, 
reporting, and testing as necessary to assure compliance with LAER.
    (ii) Certification that all existing major sources owned or 
operated by the applicant in California are in compliance or, on a 
schedule for compliance, with all applicable emission limitations and 
standards under the Act.
    (iii) Any source or modification subject to the plan must obtain 
emission reductions (offsets) from existing sources in the area of the 
proposed source (whether or not under the same ownership) such that 
there will be reasonable progress toward attainment of the applicable 
NAAQS. Notwithstanding 40 CFR part 51, appendix S, paragraph IV.G.5, 
interprecursor offsetting is not permitted between precursors of ozone. 
A demonstration of reasonable progress toward attainment shall include:
    (A) A demonstration that the emission offsets will provide a net 
air quality benefit in the affected area, as required under 40 CFR part 
51, appendix S, paragraph IV.A, Condition 4.
    (B) A demonstration that emissions reductions otherwise required by 
the Act are not credited for purposes of satisfying the offset 
requirements in this paragraph (d)(2)(iii) and part D of title I of the 
Act.
    (iv) An analysis of alternative sites, sizes, production processes 
and environmental control techniques for such proposed major source or 
major modification that demonstrates that the benefits of the proposed 
major source or major modification significantly outweigh the 
environmental and social costs imposed as a result of its location, 
construction, or modification.
    (3) What are the application requirements? The owner or operator of 
any proposed new major stationary source or major modification shall 
submit a complete application using EPA Region IX's electronic system, 
which is described in paragraph (d)(3)(ii) of this section. The 
application must include the information listed in this paragraph 
(d)(3) as well as the demonstrations to show compliance with paragraphs 
(d)(2)(i) through (iv) of this section. The reviewing authority's 
designation that an application is complete for purposes of permit 
processing does not preclude the reviewing authority from requesting or 
accepting any additional information.
    (i) Application content requirements. (A) Identification of the 
permit applicant, including contact information.
    (B) Address and location of the new or modified source.
    (C) Identification and description of all emission points, 
including information regarding all nonattainment pollutants emitted by 
all emissions units included in the new source or modification.
    (D) A process description of all activities, including design 
capacity, that may generate emissions of nonattainment pollutants, in 
sufficient detail to establish the basis for the applicability of 
standards.
    (E) A projected schedule for commencing construction and operation 
for all emissions units included in the new source or modification.
    (F) A projected operating schedule for each emissions unit included 
in the new source or modification.
    (G) A determination as to whether the new source or modification 
will result in any secondary emissions.
    (H) The emission rates of all regulated NSR pollutants, including 
fugitive and secondary emission rates, if applicable. The emission 
rates must be described in tons per year (tpy). If necessary, shorter-
term rates must be described to allow for compliance using the 
applicable standard reference test method or other methodology 
specified (i.e., grams/liter, parts per million volume (ppmv) or parts 
per million weight (ppmw), lbs/MMBtu).
    (I) The calculations on which the emission rate information is 
based, including fuel specifications, if applicable, and any other 
assumptions used to determine the emission rates (e.g., higher heating 
value (HHV), sulfur content of natural gas, VOC content).
    (J) The calculations, pursuant to 40 CFR part 51, appendix S, 
paragraph IV.I and IV.J, that are used to determine applicability of 
the plan, including the emission calculations (increases or decreases) 
for each project that occurred during the contemporaneous period, as 
applicable.
    (K) The calculations, pursuant to 40 CFR part 51, appendix S, 
paragraph IV.A, used to determine the quantity of offsets required for 
the new source or modification.
    (L) Identification of actual emission reductions that meet the 
offset integrity criteria of being real, surplus, quantifiable, 
permanent and federally enforceable.
    (M) If applicable, a description of how performance testing will be 
conducted, including test methods and a general description of testing 
protocols.
    (N) Information necessary to determine whether issuance of such 
permit:
    (1) May adversely affect federally-listed threatened or endangered 
species or the designated critical habitat of such species; or
    (2) Has the potential to cause adverse effects on historic 
properties.
    (ii) Application process requirements. To submit an application 
required under the plan, applicants may submit electronically through 
the Central Data Exchange (CDX)/Compliance and Emissions Data Reporting 
Interface (CEDRI) or submit by mail.
    (A) CDX/CEDRI is accessed through https://cdx.epa.gov. First-time 
users will need to register with CDX. The CDX platform will also be 
used for any permit reporting requirements.
    (B) Applicants that do not apply using CDX/CEDRI shall mail a 
signed application using certified mail (do not request signature) to: 
Air and Radiation Division, Permits Office (Air-3-1), U.S. EPA, Region 
9, 75 Hawthorne Street, San Francisco, CA 94105.
    (C) Applicants that apply using certified mail must email a copy of 
the application and the certified mail tracking number to provide 
notification of delivery receipt to [email protected].
    (4) What are the requirements for monitoring, recordkeeping, and 
reporting? The reviewing authority shall require in the conditions of a 
permit such monitoring, recordkeeping, and reporting as necessary to 
facilitate

[[Page 106356]]

compliance with the terms of a permit and to make them enforceable as a 
practical matter.
    (e) Public participation requirements--(1) What permit information 
will be publicly available? With the exception of any confidential 
information as defined in 40 CFR part 2, subpart B, the reviewing 
authority must make available for public inspection the documents 
listed in paragraphs (e)(1)(i) through (iv) of this section. The 
reviewing authority must make such information available for public 
inspection at the appropriate EPA Regional Office and in at least one 
location in the area affected by the source, such as the MDAQMD 
headquarters location or a local library.
    (i) All information submitted as part of your permit application as 
required under paragraph (d)(3) of this section.
    (ii) Any additional information requested by the reviewing 
authority.
    (iii) The reviewing authority's analysis of the application and any 
additional information submitted by you, including the LAER analysis 
and, where applicable, the analysis of your emissions reductions 
(offsets), your demonstration of a net air quality benefit in the 
affected area and your analysis of alternative sites, sizes, production 
processes and environmental control techniques.
    (iv) A copy of the draft permit or the draft decision to deny the 
permit with the justification for denial.
    (2) How will the public be notified and participate? (i) Before 
issuing a permit under the plan, the reviewing authority must prepare a 
draft permit and provide adequate public notice to ensure that the 
affected community and the general public have reasonable access to the 
application and draft permit information, as set out in this paragraph 
(e)(2)(i) and paragraph (e)(2)(ii) of this section. The public notice 
must provide an opportunity for public comment and notice of a public 
hearing, if any, on the draft permit.
    (A) The reviewing authority must mail a copy of the notice to you 
(the permit applicant), the MDAQMD (or the EPA if there is a delegation 
under paragraph (g) of this section), and the California Air Resources 
Board (CARB).
    (B) The reviewing authority must comply with the methods listed in 
paragraph (e)(2)(i)(B)(1) or (2) of this section:
    (1) The reviewing authority must post the notice on its website.
    (2) The reviewing authority must publish the notice in a newspaper 
of general circulation in the area affected by the source.
    (3) The reviewing authority may also include other forms of notice 
as appropriate. This may include posting copies of the notice at one or 
more locations in the area affected by the source, such as at post 
offices, libraries, community centers or other gathering places in the 
community.
    (ii) The notices required pursuant to paragraph (c)(2)(i) of this 
section must include the following information at a minimum:
    (A) Identifying information, including the name and address of the 
permit applicant (and the plant name and address if different);
    (B) The name and address of the reviewing authority processing the 
permit application;
    (C) The regulated NSR pollutants to be emitted, and identification 
of the emissions unit(s) whose emissions of a regulated NSR pollutant 
could be affected by the project, including any emission limitations 
for these emissions unit(s);
    (D) The emissions change involved in the permit action;
    (E) Instructions for requesting a public hearing;
    (F) The name, address and telephone number of a contact person in 
the reviewing authority's office from whom additional information may 
be obtained;
    (G) Locations and times of availability of the information, listed 
in paragraph (e)(1) of this section, for public inspection; and
    (H) A statement that any person may submit written comments, a 
written request for a public hearing or both, on the draft permit 
action. The reviewing authority must provide a period of at least 30 
days from the date of the public notice for comments and for requests 
for a public hearing.
    (3) How will the public comment and will there be a public hearing? 
(i) Any person may submit written comments on the draft permit and may 
request a public hearing. The comments must raise any reasonably 
ascertainable issue with supporting arguments by the close of the 
public comment period (including any public hearing). The reviewing 
authority must consider all comments in making the final decision. The 
reviewing authority must keep a record of the commenters and of the 
issues raised during the public participation process, and such records 
must be available to the public.
    (ii) The reviewing authority must extend the public comment period 
under paragraph (e)(2) of this section to the close of any public 
hearing under this section. The hearing officer may also extend the 
comment period by so stating at the hearing.
    (iii) A request for a public hearing must be in writing and must 
state the nature of the issues proposed to be raised at the hearing.
    (iv) If requested, the reviewing authority may hold a public 
hearing at its discretion to give interested persons an opportunity for 
the oral presentation of data, views, or arguments, in addition to an 
opportunity to make written statements. The reviewing authority may 
also hold a public hearing at its discretion, whenever, for instance, 
such a hearing might clarify one or more issues involved in the permit 
decision. The reviewing authority must provide notice of any public 
hearing at least 30 days prior to the date of the hearing. Public 
notice of the hearing may be concurrent with that of the draft permit, 
and the two notices may be combined. Reasonable limits may be set upon 
the time allowed for oral statements at the hearing.
    (v) The reviewing authority must make the written transcript of any 
hearing available to the public.
    (f) Final permit issuance and administrative and judicial review--
(1) How will final action occur and when will my Federal NNSR permit 
become effective? After making a decision on a permit application, the 
reviewing authority must notify you, the permit applicant, of the 
decision in writing, and, if the permit is denied, provide the reasons 
for such denial and the procedures for appeal. If the reviewing 
authority issues a final permit to you, it must make a copy of the 
permit available at any location where the draft permit was made 
available. In addition, the reviewing authority must provide adequate 
public notice of the final permit decision to ensure that the affected 
community, the general public and any individuals who commented on the 
draft permit have reasonable access to the decision and supporting 
materials. A final permit becomes effective 30 days after service of 
the final permit decision, unless:
    (i) A later effective date is specified in the permit;
    (ii) Review of the final permit is requested under paragraph (f)(3) 
of this section; or
    (iii) No comments requested a change in the draft permit or a 
denial of the permit, in which case the reviewing authority may make 
the permit effective immediately upon issuance.
    (2) What is the administrative record for each final permit? (i) 
The reviewing authority must base final permit decisions on an 
administrative record consisting of:

[[Page 106357]]

    (A) All comments received during any public comment period, 
including any extension or reopening;
    (B) The tape or transcript of any hearing(s) held;
    (C) Any written material submitted at such a hearing;
    (D) Any new materials placed in the record as a result of the 
reviewing authority's evaluation of public comments;
    (E) Other documents in the supporting files for the permit that 
were relied upon in the decision-making;
    (F) The final Federal NNSR permit;
    (G) The application and any supporting data furnished by you, the 
permit applicant;
    (H) The draft permit or notice of intent to deny the application or 
to terminate the permit; and
    (I) Other documents in the supporting files for the draft permit 
that were relied upon in the decision-making.
    (ii) The additional documents required under paragraph (f)(2)(i) of 
this section should be added to the record as soon as possible after 
their receipt or publication by the reviewing authority. The record 
must be complete on the date the final permit is issued.
    (iii) Material readily available or published materials that are 
generally available and that are included in the administrative record 
under the standards of paragraph (f)(2)(i) of this section need not be 
physically included in the same file as the rest of the record as long 
as it is specifically referred to in that file.
    (3) Can permit decisions be appealed? (i) Permit decisions may be 
appealed under the permit appeal procedures of 40 CFR 124.19, and the 
provisions of that section applicable to prevention of significant 
deterioration (PSD) permits shall apply to permit decisions under the 
FIP. A petition for review must be filed with the Clerk of the 
Environmental Appeals Board within 30 days after the reviewing 
authority serves notice of the issuance of a final permit decision 
under the plan, in accordance with 40 CFR 124.19.
    (ii) An appeal under paragraph (f)(3)(i) of this section is, under 
section 307(b) of the Act, a prerequisite to seeking judicial review of 
the final agency action.
    (4) Can my permit be reopened? The reviewing authority may reopen 
an existing, currently-in-effect permit for cause on its own 
initiative, such as if it contains a material mistake or fails to 
assure compliance with requirements in this section. However, except 
for those permit reopenings that do not increase the emission 
limitations in the permit, such as permit reopenings that correct 
typographical, calculation and other errors, all other permit 
reopenings shall be carried out after the opportunity for public notice 
and comment and in accordance with one or more of the public 
participation requirements under paragraph (e)(2) of this section.
    (5) Can my permit be rescinded? (i) Any permit issued under this 
section, or a prior version of this section, shall remain in effect 
until it is rescinded under this paragraph (f)(5).
    (ii) An owner or operator of a stationary source or modification 
who holds a permit issued under this section for the construction of a 
new source or modification that meets the requirement in paragraph 
(f)(5)(iii) of this section may request that the reviewing authority 
rescind the permit or a particular portion of the permit.
    (iii) The reviewing authority may grant an application for 
rescission if the application shows that the provisions of the plan 
would not apply to the source or modification.
    (iv) If the reviewing authority rescinds a permit under this 
paragraph (f), the public shall be given adequate notice of the 
rescission determination in accordance with paragraph (e)(2)(i)(B) of 
this section.
    (g) Administration and delegation of the Federal nonattainment 
major NSR plan in the MDAQMD--(1) Who administers the FIP in the 
MDAQMD? (i) The Administrator is the reviewing authority and will 
directly administer all aspects of the FIP in the MDAQMD under Federal 
authority.
    (ii) The Administrator may delegate Federal authority to administer 
specific portions of the FIP to the MDAQMD upon request, in accordance 
with the provisions of paragraph (g)(2) of this section. If the MDAQMD 
has been granted such delegation, it will be the reviewing authority 
for purposes of the provisions for which it has been granted 
delegation.
    (2) Delegation of administration of the FIP to the MDAQMD. This 
paragraph (g)(2) establishes the process by which the Administrator may 
delegate authority to the MDAQMD in accordance with the provisions in 
paragraphs (g)(2)(i) through (iv) of this section. Any Federal 
requirements under the plan that are administered by the delegate 
MDAQMD are enforceable by the EPA under Federal law.
    (i) Information to be included in the Administrative Delegation 
Request. To be delegated authority to administer the FIP or specific 
portions of it, the MDAQMD must submit a request to the Administrator.
    (ii) Delegation Agreement. A Delegation Agreement will set forth 
the terms and conditions of the delegation, will specify the provisions 
that the delegate MDAQMD will be authorized to implement on behalf of 
the EPA and will be entered into by the Administrator and the MDAQMD. 
The Agreement will become effective upon the date that both the 
Administrator and the MDAQMD have signed the Agreement or as otherwise 
stated in the Agreement. Once the delegation becomes effective, the 
MDAQMD will be responsible, to the extent specified in the Agreement, 
for administration of the provisions of the FIP that are subject to the 
Agreement.
    (iii) Publication of notice of the Agreement. The Administrator 
will publish a notice in the Federal Register informing the public of 
any Delegation Agreement. The Administrator also will publish the 
notice in a newspaper of general circulation in the MDAQMD. In 
addition, the Administrator will mail a copy of the notice to persons 
on a mailing list developed by the Administrator consisting of those 
persons who have requested to be placed on such a mailing list.
    (iv) Revision or revocation of an Agreement. A Delegation Agreement 
may be modified, amended or revoked, in part or in whole, by the 
Administrator after consultation with the MDAQMD.

[FR Doc. 2024-30513 Filed 12-27-24; 8:45 am]
BILLING CODE 6560-50-P
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