[Federal Register Volume 60, Number 39 (Tuesday, February 28, 1995)]
[Proposed Rules]
[Pages 10819-10823]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-4891]



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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52

[CA 78-2-6824; FRL-5162-4]


Approval and Promulgation of Implementation Plans; California 
Implementation Plan Revision; South Coast Air Quality Management 
District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: EPA is proposing to conditionally approve revisions to the 
California State Implementation Plan (SIP) which concern the control of 
oxides of nitrogen (NO<INF>X) and oxides of sulfur (SO<INF>X) emissions 
using an emissions-limiting economic incentives program, the NO<INF>X 
and SO<INF>X Regional Clean Air Incentives Market (NO<INF>X and 
SO<INF>X RECLAIM). This program, which consists of twelve rules and 
associated appendices known as Regulation XX, applies to facilities in 
the South Coast Air Quality Management District (SCAQMD) with four or 
more tons of NO<INF>X or SO<INF>X emissions per year from permitted 
equipment. The subject facilities, in order to meet annual emission 
reduction requirements, will participate in an economic incentive 
program (EIP) in order to reduce emissions at a significantly lower 
cost.
    The intended effect of proposing approval of Regulation XX is to 
regulate emissions of NO<INF>X and SO<INF>X in accordance with the 
requirements of the Clean Air Act, as amended in 1990 (CAA or the Act). 
EPA's final action on this notice of proposed rulemaking (NPRM) will 
incorporate this regulation into the federally approved SIP. EPA has 
evaluated this regulation and is proposing to conditionally approve it 
under provisions of the CAA regarding EPA action on SIP submittals, 
SIPs for national primary and secondary ambient air quality standards 
and plan requirements for nonattainment areas. The EPA's final 
conditional approval is contingent on the SCAQMD providing the Agency 
with an enforceable commitment which addresses and cures all of the 
deficiencies associated with NO<INF>X and SO<INF>X RECLAIM within 12 
months of the publication of the proposed conditional approval. In the 
event that SCAQMD fails to provide EPA with such a commitment, then EPA 
will publish a final rule to approve NO<INF>X and SO<INF>X RECLAIM in 
the form of a limited approval/limited disapproval action. Both the 
conditional approval action and the limited approval/limited 
disapproval action are discussed in this NPRM.

DATES: Comments must be received on or before March 30, 1995.

ADDRESSES: Comments may be mailed to: Daniel A. Meer, Rulemaking 
Section (A-5-3), Air and Toxics Division, U.S. Environmental Protection 
Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 94105.
    Copies of the new regulation and EPA's evaluation report of the 
regulation are available for public inspection at EPA's Region 9 office 
(address above) during normal business hours. Copies of the submitted 
regulation are also available for inspection at the following 
locations:

California Air Resources Board, Stationary Source Division, Rule 
Evaluation Section, 2020 ``L'' Street, Sacramento, CA 95814.
South Coast Air Quality Management District, 21865 E. Copley Drive, 
Diamond Bar, CA 91765-4182.

FOR FURTHER INFORMATION CONTACT: Kenneth Israels, Rulemaking Section 
(A-5-3), Air and Toxics Division, [[Page 10820]] Environmental 
Protection Agency, 75 Hawthorne Street, San Francisco, CA 94105, 
Telephone: (415) 744-1194.

SUPPLEMENTARY INFORMATION:

Background

    On November 15, 1990, the Clean Air Act Amendments of 1990 (CAA) 
were enacted. Pub. L. 101-549, 104 Stat. 2399, codified at 42 U.S.C. 
7401-7671q. The air quality planning requirements for the reduction of 
NO<INF>X emissions through reasonably available control technology 
(RACT) are set out in section 182(f) of the CAA. On November 25, 1992, 
EPA published a NPRM entitled ``State Implementation Plans; Nitrogen 
Oxides Supplement to the General Preamble; Clean Air Act Amendments of 
1990 Implementation of Title I; Proposed Rule,'' (the NO<INF>X 
Supplement) which describes the requirements of section 182(f). The 
November 25, 1992, notice should be referred to for further information 
on the NO<INF>X requirements and is incorporated into this proposal by 
reference.
    Section 182(b)(2) requires submittal of RACT rules for major 
stationary sources of VOC emissions (not covered by a pre-enactment 
control technologies guidelines (CTG) document or a post-enactment CTG 
document) by November 15, 1992. There were no NO<INF>X CTGs issued 
before enactment and EPA has not issued a CTG document for any NO<INF>X 
sources since enactment of the CAA. The RACT rules covering NO<INF>X 
sources and submitted as SIP revisions are expected to require final 
installation of the actual NO<INF>X controls by May 31, 1995, for those 
sources where installation by that date is practicable. Section 182(f) 
of the Clean Air Act requires States to apply the same requirements to 
major stationary sources of NO<INF>X (``major'' as defined in section 
302 and section 182 (c), (d), and (e)) as are applied to major 
stationary sources of volatile organic compounds (VOCs), in moderate or 
above ozone nonattainment areas. The Los Angeles-South Coast Air Basin 
is classified as extreme,<SUP>1 therefore this area was subject to the 
RACT requirements of section 182(b)(2), cited above, and the November 
15, 1992 deadline.<SUP>2

    \1\The Los Angeles-South Coast Air Basin was designated 
nonattainment and classified by operation of law pursuant to 
sections 107(d) and 181(a) upon the date of enactment of the CAA. 
See 55 FR 56694 (November 6, 1991).
    \2\EPA made a finding of nonsubmittal for NO<INF>X RACT in 
SCAQMD on April 21, 1993. NO<INF>X RECLAIM in combination with other 
measures satisfy this requirement. On October 21, 1994, EPA found 
that SCAQMD had submitted measures satisfying the NO<INF>X RACT 
requirements.
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    On April 7, 1994, EPA published a final rule concerning EIPs 
entitled ``Economic Incentive Program Rules,'' (EIP Rules) in order to 
fulfill the requirements of section 182(g)(4)(A) of the Act (see 59 FR 
16690). The EIP Rules establish several requirements which State 
programs must meet.
    These requirements are:
    <bullet> Statement of goals and rationale. This element shall 
include a clear statement as to the environmental problem being 
addressed, the intended environmental and economic goals of the 
program, and the rationale relating the incentive-based strategy to the 
program goals.
    <bullet> Program scope. This element shall contain a clear 
definition of the sources affected by the program.
    <bullet> Program baseline. A program baseline shall be defined as a 
basis for projecting program results and, if applicable, for 
initializing the incentive mechanism (e.g., for marketable permits 
programs). The program baseline shall be consistent with, and 
adequately reflected in, the assumptions and inputs used to develop an 
area's reasonable further progress (RFP) plans and attainment and 
maintenance demonstrations, as applicable. The State shall provide 
sufficient supporting information from the areawide emissions inventory 
and other sources to justify the baseline used in the State or local 
EIP.
    <bullet> Replicable emission quantification methods. This program 
element, for programs other than those which are categorized as 
directionally-sound, shall include credible, workable, and replicable 
methods for projecting program results from affected sources and, where 
necessary, for quantifying emissions from individual sources subject to 
the EIP. Such methods, if used to determine credit taken in attainment, 
RFP, and maintenance demonstrations, as applicable, shall yield results 
which can be shown to have a level of certainty comparable to that for 
source-specific standards and traditional methods of control strategy 
development.
    <bullet> Source requirements. This program element shall include 
all source-specific requirements that constitute compliance with the 
program. Such requirements shall be appropriate, readily ascertainable, 
and State and federally enforceable.
    <bullet> Projected results and audit/reconciliation procedures. 
This program element includes a commitment to ensure the timely 
implementation of programmatic revisions or other measures which the 
State, in response to the audit, deems necessary for the successful 
operation of the program in the context of overall RFP and attainment 
requirements. (see 40 CFR 51.493(f)(3)(i))
    <bullet> Implementation schedule. The program shall contain a 
schedule for the adoption and implementation of all State commitments 
and source requirements included in the program design.
    <bullet> Administrative procedures. The program shall contain a 
description of State commitments which are integral to the 
implementation of the program, and the administrative system to be used 
to implement the program, addressing the adequacy of the personnel, 
funding, and legislative authority.
    <bullet> Enforcement mechanisms. The program shall contain a 
compliance instrument(s) for all program requirements, which is legally 
binding and enforceable by both the State and EPA. This program element 
shall also include a State enforcement program which defines 
violations, and specifies auditing and inspections plans and provisions 
for enforcement actions. The program shall contain effective penalties 
for noncompliance which preserve the level of deterrence in traditional 
programs. For all such programs, the manner of collection of penalties 
must be specified.
    The EIP Rule should be referred to for further information on the 
EIP requirements and is incorporated into this proposal by reference.
    The State of California submitted the regulation being acted on in 
this document on March 21, 1994. This document addresses EPA's proposed 
action for SCAQMD, Regulation XX, NO<INF>X and SO<INF>X RECLAIM. SCAQMD 
adopted Regulation XX on October 15, 1993. This submitted regulation 
was found to be complete on April 11, 1994, pursuant to EPA's 
completeness criteria that are set forth in 40 CFR Part 51, Appendix 
V,<SUP>3 and is being proposed for approval into the SIP.

    \3\EPA adopted the completeness criteria on February 16, 1990 
(55 FR 5830) and, pursuant to section 110(k)(1)(A) of the CAA, 
revised the criteria on August 26, 1991 (56 FR 42216).
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    NO<INF>X emissions contribute to the production of ground level 
ozone and smog. The regulation was adopted as part of SCAQMD's efforts 
to achieve the National Ambient Air Quality Standards (NAAQS) for ozone 
and in response to the CAA requirements cited above. The following is 
EPA's evaluation and proposed action for this regulation.

EPA Evaluation and Proposed Action

    In determining the approvability of a NO<INF>X regulation, EPA must 
evaluate the [[Page 10821]] regulation for consistency with the 
requirements of the CAA and EPA regulations, as found in section 110 
and Part D of the CAA and 40 CFR Part 51 (Requirements for Preparation, 
Adoption, and Submittal of Implementation Plans). The EPA 
interpretation of these requirements, which forms the basis for today's 
action, appears in the various EPA policy guidance documents.<SUP>4 
Among these provisions is the requirement that a NO<INF>X rule must, at 
a minimum, provide for the implementation of RACT for stationary 
sources of NO<INF>X emissions.

    \4\Among other things, the pre-amendment guidance consists of 
those portions of the proposed post-1987 ozone and carbon monoxide 
policy that concern RACT, 52 FR 45044 (November 24, 1987); ``Issues 
Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations, 
Clarification to Appendix D of November 24, 1987 Federal Register 
Notice'' (Blue Book) (notice of availability was published in the 
Federal Register on May 25, 1988).
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    For the purpose of assisting state and local agencies in developing 
RACT rules, EPA prepared the NO<INF>X supplement to the General 
Preamble, cited above (57 FR 55620). In the NO<INF>X supplement, EPA 
provides guidance on how RACT will be determined for stationary sources 
of NO<INF>X emissions. While most of the guidance issued by EPA on what 
constitutes RACT for stationary sources has been directed towards 
application for VOC sources, much of the guidance is also applicable to 
RACT for stationary sources of NO<INF>X (see section 4.5 of the 
NO<INF>X Supplement). In addition, pursuant to section 183(c) EPA is 
issuing alternative control technique documents (ACTs) that identify 
alternative controls for all categories of stationary sources of 
NO<INF>X. The ACT documents will provide information on control 
technology for stationary sources that emit or have the potential to 
emit 25 or more tons per year of NO<INF>X. However, the ACTs will not 
establish a presumptive norm for what is considered RACT for stationary 
sources of NO<INF>X. In general, the guidance documents cited above, as 
well as other relevant and applicable guidance documents, have been set 
forth to ensure that submitted NO<INF>X RACT rules meet federal RACT 
requirements and are fully enforceable and strengthen or maintain the 
SIP.
    In determining the approvability of an EIP, EPA must evaluate the 
regulation for consistency with the requirements of the CAA and EPA 
regulations, as found in section 110 and Part D of the CAA and 40 CFR 
Part 51 (Requirements for Preparation, Adoption, and Submittal of 
Implementation Plans). The EPA interpretation of these requirements, 
which forms the basis for today's action, appears in the various EPA 
policy guidance documents listed in footnote 4 of this notice. Among 
these provisions is the requirement that an EIP rule must, at a 
minimum, be consistent with attainment and RFP requirements found in 
the CAA.
    For the purpose of assisting state and local agencies in developing 
rules which incorporate economic incentive strategies, EPA prepared the 
EIP Rules, cited above (59 FR 16690). In the EIP Rules, EPA provides 
guidance on how EIPs can be designed to be consistent with the 
attainment and RFP requirements of the CAA. In general, the guidance 
documents cited above, as well as other relevant and applicable 
guidance documents, have been set forth to ensure that submitted EIPs 
meet federal requirements and are fully enforceable and strengthen or 
maintain the SIP.
    SCAQMD's Regulation XX, NO<INF>X and SO<INF>X RECLAIM, is a new 
rule which was adopted to control NO<INF>X and SO<INF>X emissions using 
an emissions-limiting economic incentives program applicable to 
facilities with four or more tons of NO<INF>X or SO<INF>X emissions per 
year. Facilities with NO<INF>X or SO<INF>X emissions from permitted 
equipment participate in a pollutant-specific market in order to reduce 
emissions at a significantly lower cost. The program subsumes fourteen 
SCAQMD Air Quality Management Plan (AQMP) control measures and is 
projected to reduce emissions by an equivalent amount.
    The regulation discussed below is being proposed for conditional 
approval under Section 110(k)(4) of the CAA because it strengthens the 
SIP and EPA is optimistic that the SCAQMD will provide EPA a commitment 
within 12 months of the publication of this proposal and prior to the 
publication of the final rule. Such a commitment must obligate the 
SCAQMD to revise Regulation XX to correct the identified Appendix D 
deficiencies, within one year after the date of publication of the 
final rule. The conditional approval shall be treated as a disapproval 
if the SCAQMD fails to comply with the submitted commitment.
    The NO<INF>X and SO<INF>X RECLAIM program strengthens the SIP by 
placing a declining emissions cap on subject facilities. The declining 
cap is based on the application of RACT (or requirements more stringent 
than RACT) at the facility and is reduced to overall emissions below 
RACT levels in order to bring the South Coast Air Basin into attainment 
of the ozone NAAQS. Regulation XX is comprised of 12 rules and 2 
associated appendices which are described below:
    <bullet> Rule 2000--General. This rule provides the program's 
objective, its purpose, and applicable definitions;
    <bullet> Rule 2001--Applicability. This rule provides the criteria 
for inclusion in NO<INF>X and SO<INF>X RECLAIM, requirements for 
sources electing to enter NO<INF>X and SO<INF>X RECLAIM and identifies 
provisions in SCAQMD rules and regulations that do not apply to 
NO<INF>X and SO<INF>X RECLAIM sources;
    <bullet> Rule 2002--Allocations for Oxides of Nitrogen (NO<INF>X) 
and Oxides of Sulfur (SO<INF>X). This rule establishes the methodology 
for calculating initial facility allocations for NO<INF>X and SO<INF>X 
RECLAIM;
    <bullet> Rule 2004--Requirements. This rule establishes 
requirements for operating under the NO<INF>X and SO<INF>X RECLAIM 
program. The rule includes provisions pertaining to permits, 
allocations, reporting, variances, penalties, and breakdowns;
    <bullet> Rule 2005--New Source Review (NSR) for RECLAIM. This rule 
sets forth pre-construction review requirements for new facilities 
subject to the requirements of the NO<INF>X and SO<INF>X RECLAIM 
program and for modifications to existing NO<INF>X and SO<INF>X RECLAIM 
facilities;
    <bullet> Rule 2006--Permits. This rule sets forth procedures for 
issuing and amending NO<INF>X and SO<INF>X RECLAIM facility permits;
    <bullet> Rule 2007--Trading Requirements. This rule defines the 
NO<INF>X and SO<INF>X RECLAIM trading credit (RTC) and establishes the 
trading requirements for NO<INF>X and SO<INF>X RECLAIM;
    <bullet> Rule 2008--Mobile Source Credits. This rule establishes 
criteria for and requirements on utilizing emission reductions 
generated from SCAQMD 1600 series rules as RTCs;
    <bullet> Rule 2010--Administrative Remedies and Sanctions. This 
rule specifies provisions to ensure that NO<INF>X and SO<INF>X RECLAIM 
facilities which exceed their allocation provide compensating emission 
reductions. This rule also provides for administrative penalties for 
NO<INF>X and SO<INF>X RECLAIM rule violations;
    <bullet> Rule 2011--Requirements for Monitoring, Reporting, and 
Recordkeeping for Oxides of Sulfur Emissions. This rule and its 
appendix (Appendix A) establish the monitoring, reporting, and 
recordkeeping requirements for SO<INF>X emissions under the NO<INF>X 
and SO<INF>X RECLAIM program;
    <bullet> Rule 2012--Requirements for Monitoring, Reporting, and 
Recordkeeping for Oxides of Nitrogen Emissions. This rule and its 
appendix (Appendix A) establish the monitoring, reporting, and 
recordkeeping [[Page 10822]] requirements for NO<INF>X emissions under 
the NO<INF>X and SO<INF>X RECLAIM program; and
    <bullet> Rule 2015--Backstop Provisions. This rule specifies 
NO<INF>X and SO<INF>X RECLAIM program auditing requirements and actions 
that the SCAQMD will take in the event that the environmental goals of 
RECLAIM program are not achieved.
    <bullet> Although the approval of Regulation XX will strengthen the 
SIP, the regulation still contains deficiencies, identified below and 
in the associated technical support document (TSD), which are required 
to be corrected pursuant to section 182(b)(2) of the CAA. The NO<INF>X 
and SO<INF>X RECLAIM program contains the following deficiencies:
    <bullet> The program allows the use of variances to avoid 
compliance with program requirements; this results in the program 
failing to meet the requirements of section 110(i) of the Act,
    <bullet> The program does not meet certain new source review 
requirements of the Act and Part D,
    <bullet> The program allows the use of Executive Officer discretion 
in the implementation of certain emissions monitoring provisions; this 
results in the program failing to meet the requirements of section 
110(i) of the Act,
    <bullet> The program's references to other programs, notably those 
involving the use of mobile source emission reduction credits (MERCs) 
is inconsistent with section 110(i) of the Act, and
    <bullet> The submittal does not provide all of the necessary 
demonstrations to ensure that the requirements of EPA's EIP Rules are 
being met.
    A detailed discussion of the rule deficiencies can be found in the 
TSD for Regulation XX (January 5, 1995), which is available from the 
U.S. EPA, Region 9 office. Because SCAQMD is not using Regulation XX as 
a means to achieve or maintain attainment of the SO<INF>2 NAAQS,<SUP>5 
the PM<INF>10 NAAQS,<SUP>6 or the NO<INF>2 NAAQS, EPA does not believe 
that Regulation XX will interfere with SCAQMD's ability to meet the 
requirements necessary in the Act for achieving or maintaining these 
standards. EPA believes that the penalty provisions found in RECLAIM 
Rule 2004 will be adequate for enforcement of the RECLAIM program. 
However, EPA does not believe that such penalty provisions would 
necessarily be adequate for other program designs. EPA will evaluate 
the penalty provisions of each program design on an individual basis, 
paying particular attention to the program elements found in the EIP 
rule (see 40 CFR 51.493(i) and 59 FR 16700-16701 dated April 7, 1994) 
where applicable.

    \5\SCAQMD is presently in attainment of the SO<INF>2 NAAQS.
    \6\In this instance, SCAQMD is not asserting and EPA is not 
finding that SO<INF>X RECLAIM is designed to be used as a means to 
identify or implement best available control measures (BACM) for 
PM<INF>10 in the South Coast Air Basin. If at some point in the 
future SCAQMD decides to use SO<INF>X RECLAIM as a means of 
fulfilling this requirement, an additional SIP submittal must be 
made at which time EPA will apply the appropriate review criteria.
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    Because of the above deficiencies, EPA cannot grant approval of 
this regulation under section 110(k)(3), section 110(a)(2), section 
169A, and Parts C and D of the Act. Also, because the submitted 
regulation is not composed of separable parts which meet all the 
applicable requirements of the CAA, EPA cannot grant partial approval 
of the regulation under section 110(k)(3). However, EPA may grant a 
conditional approval under section 110(k)(4) based on a commitment by 
the SCAQMD to revise the regulation to correct the identified 
deficiencies within one year of the Notice of Final Rulemaking of the 
conditional approval. EPA is optimistic that the SCAQMD will commit to 
adopt a regulation correcting the deficiencies within the required 
timeframe. The commitment letter must contain a schedule of interim 
steps (with dates) for the regulation. The State of California must 
submit the commitment letter to EPA. Therefore, EPA is proposing to 
give conditional approval to submitted Regulation XX under section 
110(k)(4) of the CAA.
    Under section 110(k)(4), the conditional approval shall be treated 
as a disapproval of a rule if the SCAQMD fails to adopt rules 
correcting the deficiencies within the time allowed. Under 179(a)(2), 
if the Administrator disapproves a submission under section 110(k) for 
an area designated nonattainment, based on the submission's failure to 
meet one or more of the elements required by the CAA, the Administrator 
must apply one of the sanctions set forth in section 179(b) unless the 
deficiency has been corrected within 18 months of such disapproval. 
Section 179(b) provides two sanctions available to the Administrator: 
highway funding and offsets. The 18 month period referred to in section 
179(a) will begin on the effective date of EPA's final disapproval. 
Moreover, the final disapproval triggers the federal implementation 
plan (FIP) requirement under section 110(c). It should be noted that 
the regulation covered by this NPRM has been adopted by the SCAQMD and 
is currently in effect in the SCAQMD.
    In the event that SCAQMD is unable to provide EPA with a commitment 
which addresses all of the deficiencies identified by EPA within 12 
months of the publication of this NPRM, then EPA will publish a final 
rule which finalizes a limited approval/limited disapproval action on 
the NO<INF>X and SO<INF>X RECLAIM program in lieu of publishing a final 
rule which finalizes a conditional approval action on the NO<INF>X and 
SO<INF>X RECLAIM program. In the instance in which SCAQMD fails to 
provide the commitment within 12 months of the publication of the NPRM, 
the limited approval/limited disapproval would be finalized based on 
the same deficiencies noted elsewhere in this document and the 
associated TSD. As noted above, because of the noted deficiencies, EPA 
cannot grant approval or partial approval of this regulation under 
section 110(k)(3) and part D. However, EPA may grant a limited approval 
of the submitted regulation under section 110(k)(3) in light of EPA's 
authority pursuant to section 301(a) to adopt regulations necessary to 
further air quality by strengthening the SIP. The approval is limited 
because EPA's action also contains a simultaneous limited disapproval. 
In the instance where a commitment from SCAQMD is not submitted within 
12 months of the publication of the NPRM, in order to strengthen the 
SIP, EPA will finalize a limited approval of SCAQMD's submitted 
Regulation XX under sections 110(k)(3) and 301(a) of the CAA.
    At the same time, EPA will also finalize a limited disapproval of 
this regulation because it contains deficiencies that have not been 
corrected as required by section 182(a)(2)(A) of the CAA, and, as such, 
the regulation does not fully meet the requirements of part D of the 
Act. As noted above, if the identified deficiencies are not corrected 
within 18 months of EPA's final limited disapproval, the sanctions 
described in section 179 of the CAA will be applied. It should be noted 
that the regulation covered by this NPRM has been adopted by the SCAQMD 
and is currently in effect in the SCAQMD. EPA's final limited 
disapproval action in this NPRM will not prevent the SCAQMD or the EPA 
from enforcing this regulation.
    Nothing in this action should be construed as permitting or 
allowing or establishing a precedent for any future request for 
revision to any state implementation plan. Each request for revision to 
the state implementation plan shall be considered separately in light 
of specific technical, economic, and environmental factors and in 
[[Page 10823]] relation to relevant statutory and regulatory 
requirements.

Regulatory Process

    Under the Regulatory Flexibility Act, 5 U.S.C. Section 600 et seq., 
EPA must prepare a regulatory flexibility analysis assessing the impact 
of any proposed or final rule on small entities. 5 U.S.C. 603 and 604. 
Alternatively, EPA may certify that the rule will not have a 
significant impact on a substantial number of small entities. Small 
entities include small businesses, small not-for-profit enterprises and 
government entities with jurisdiction over populations of less than 
50,000.
    Conditional approvals of SIP submittals under sections 110 and 301 
and subchapter I, Part D of the CAA do not create any new requirements, 
but simply approve requirements that the State is already imposing. 
Therefore, because the federal SIP-approval does not impose any new 
requirements, it does not have a significant impact on any small 
entities affected. Moreover, due to the nature of the federal-state 
relationship under the CAA, preparation of a regulatory flexibility 
analysis would constitute Federal inquiry into the economic 
reasonableness of state action. The CAA forbids EPA to base its actions 
concerning SIPs on such grounds. Union Electric Co. v U.S. E.P.A., 427 
U.S. 246, 256-66 (S.Ct. 1976); 42 U.S.C. 7410(a)(2). This discussion 
applies in the case where EPA finalizes a limited approval/limited 
disapproval action as well.
    If the conditional approval is converted to a disapproval under 
section 110(k), based on the State's failure to meet the submitted 
commitment, it will not affect any existing state requirements 
applicable to small entities. Federal disapproval of the state 
submittal does not affect its state-enforceability. Moreover, EPA's 
disapproval of the submittal does not impose a new federal requirement. 
Therefore, EPA certifies that this disapproval action does not have a 
significant impact on a substantial number of small entities because it 
does not remove existing state requirements nor does it impose any new 
federal requirements.
    The Office of Management and Budget (OMB) has exempted this action 
from review under Executive Order 12866.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Ozone, 
Hydrocarbons, Intergovernmental relations, Reporting and recordkeeping 
requirements, Volatile organic compounds, Nitrogen dioxide.

    Authority: 42 U.S.C. 7401-7671q.

    Dated: February 15, 1995.
Felicia Marcus,
Regional Administrator.
[FR Doc. 95-4891 Filed 2-27-95; 8:45 am]
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