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###### Environmental Protection Agency

          - 40 CFR Part 52 
          - [EPA-R09-OAR-2009-0024; FRL-8930-4] 

# AGENCY:

Environmental Protection Agency (EPA). 

# ACTION:

Proposed rule. 

# SUMMARY:

EPA is proposing a limited approval and limited disapproval of revisions to the San Joaquin Valley Unified Air Pollution Control District portion of the California State Implementation Plan. These revisions concern a local fee rule that applies to major sources of volatile organic compound and nitrogen oxide emissions within the San Joaquin Valley ozone nonattainment area. We are approving a local rule that regulates these emission sources under the Clean Air Act as amended in 1990. We are taking comments on this proposal and plan to follow with a final action. 

# DATES:

                        Any comments must arrive by                         *August 13, 2009.*

# ADDRESSES:

Submit comments, identified by docket number EPA-R09-OAR-2009-0024, by one of the following methods: 

                        1.                         *Federal eRulemaking Portal: http://www.regulations.gov.*                         Follow the on-line instructions.                     

                        2.                         *E-mail:**steckel.andrew@epa.gov.*

                        3.                         *Mail or deliver:*                         Andrew Steckel (Air-4), U.S. Environmental Protection Agency Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901.                     

*Instructions:*                         All comments will be included in the public docket without change and may be made available online at                         *http://www.regulations.gov,*                         including any personal information provided, unless the comment includes Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Information that you consider CBI or otherwise protected should be clearly identified as such and should not be submitted through                         *http://www.regulations.gov*                         or e-mail.                         *http://      ( print page 33951)    www.regulations.gov*                         is an “anonymous access” system, and EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send e-mail directly to EPA, your e-mail address will be automatically captured and included as part of the public comment. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment.                     

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

# FOR FURTHER INFORMATION CONTACT:

                        Mae Wang, EPA Region IX, (415) 947-4124,                         *wang.mae@epa.gov.*

# SUPPLEMENTARY INFORMATION:

Throughout this document, “we,” “us” and “our” refer to EPA. 

## Table of Contents 

I. The State's Submittal 

A. What Rule did the State Submit? 

B. What is the Purpose of the Submitted Rule? 

C. Why was this Rule Submitted? 

II. EPA's Evaluation and Action 

A. How Is EPA Evaluating the Rule? 

B. Does the Rule Meet the Evaluation Criteria? 

C. What are the Rule Deficiencies? 

D. Proposed Action and Public Comment 

III. Statutory and Executive Order Reviews 

## I. The State's Submittal 

### A. What Rule Did the State Submit? 

The San Joaquin Valley Unified Air Pollution Control District (SJVUAPCD) adopted Rule 3170, Federally Mandated Ozone Nonattainment Fee, on May 16, 2002. This rule was submitted by the California Air Resources Board (CARB) on August 6, 2002, for incorporation into the California State Implementation Plan (SIP). On August 30, 2002, this rule submittal was found to meet the completeness criteria in 40 CFR Part 51 Appendix V, which must be met before formal EPA review. 

### B. What Is the Purpose of the Submitted Rule? 

                    SJVUAPCD Rule 3170 requires major stationary sources of volatile organic compounds (VOCs) and nitrogen oxides (NOX) in the San Joaquin Valley ozone nonattainment area to pay a fee to the SJVUAPCD if the area fails to attain the 1-hour national ambient air quality standard (NAAQS) for ozone by its Federally established attainment year. The fee must be paid beginning in the second year after the attainment year, and in each calendar year thereafter, until the area is redesignated to attainment of the 1-hour ozone standard.                 

### C. Why Was This Rule Submitted? 

                    Under sections 182(d)(3), (e), and 185 of the Clean Air Act as amended in 1990 (CAA or the Act), States are required to adopt an excess emissions fee regulation for ozone nonattainment areas classified as severe or extreme. The 1-hour ozone NAAQS classification for the San Joaquin Valley area is extreme (                    *see*69 FR 20550, April 16, 2004). The fee regulation specified by the Act requires major stationary sources of VOCs in the nonattainment area to pay a fee to the State if the area fails to attain the standard by the attainment date set forth in the Act. Section 182(f) of the Act requires States to apply the same requirements to major stationary sources of NOX                     as are applied to major stationary sources of VOCs. Emissions of VOCs and NOX                     play a role in producing ground-level ozone and smog, which harm human health and the environment. SJVUAPCD Rule 3170 applies to major sources of both NOX                     and VOCs. EPA's technical support document (TSD) has more information about this rule.                 

## II. EPA's Evaluation and Action 

### A. How is EPA Evaluating the Rule? 

                    Generally, SIP rules must be enforceable (                    *see*                     section 110(a) of the Act), and must not relax existing requirements (                    *see*                     sections 110(l) and 193). Due to the limited national guidance available relevant to these sorts of nonattainment fee rules, Rule 3170 was primarily evaluated for compliance with the requirements in CAA section 185. The rule was also evaluated for consistency with the CAA and EPA's general SIP policies, as well as a March 21, 2008, memorandum from William Harnett, Director of the Air Quality Policy Division, to the Regional Air Division Directors, entitled, “Guidance on Establishing Emissions Baselines under Section 185 of the Clean Air Act (CAA) for Severe and Extreme Ozone Nonattainment Areas that Fail to Attain the 1-hour Ozone NAAQS by their Attainment Date.” Guidance and policy documents that we use to help evaluate specific enforceability requirements typically include the following:                 

1. “Issues Relating to VOC Regulation Cutpoints, Deficiencies, and Deviations,” EPA, May 25, 1988 (the Bluebook). 

2. “Guidance Document for Correcting Common VOC & Other Rule Deficiencies,” EPA Region 9, August 21, 2001 (the Little Bluebook). 

                    3. “State Implementation Plans; Nitrogen Oxides Supplement to the General Preamble; Clean Air Act Amendments of 1990 Implementation of Title I; Proposed Rule,” (the NOX                     Supplement), 57 FR 55620, November 25, 1992.                 

### B. Does the Rule Meet the Evaluation Criteria? 

Rule 3170 improves the SIP by establishing an excess emissions fee regulation as required by the CAA. The rule is largely consistent with the CAA, as well as relevant policy and guidance regarding enforceability and SIP relaxations. Rule provisions which do not meet the evaluation criteria are summarized below and discussed further in the TSD. 

### C. What Are the Rule Deficiencies? 

The following provisions conflict with section 185 of the Act and prevent full approval of the SIP revision: 

Section 4.2 exempts units that begin operation after the attainment year. CAA Section 185 does not provide for such an exemption, so this exemption does not fully comply with the CAA. 

Section 4.3 exempts any “clean emission unit” from the requirements of the rule. Section 3.6 defines a clean emission unit as a unit that is equipped with an emissions control technology that either has a minimum 95% control efficiency (or 85% for lean-burn internal combustion engines), or meets the requirements for achieved-in-practice Best Achievable Control Technology as accepted by the APCO during the 5 years immediately prior to the end of the attainment year. The District's staff report for Rule 3170 states that the exemption is intended to address “the difficulty of reducing emissions from units with recently installed BACT.” Although EPA understands the District's intended purpose for including the exemption, the exemption does not comply with CAA section 185. 

                    Section 3.2.1 defines the baseline period as two consecutive years consisting of the attainment year and the year immediately prior to the attainment year. CAA Section 185(b)(2) provides the option for calculating baseline emissions over a period of more than one calendar year if a                           ( print page 33952)                        source's emissions are irregular, cyclical, or otherwise vary significantly from year to year. Since Section 3.2.2 allows an alternative baseline, then Section 3.2.1 should describe the normal baseline calculation which should be based only on the attainment year emissions.                 

Section 3.2.2 allows averaging over 2-5 years to establish baseline emissions. CAA Section 185(b)(2) states that EPA may issue guidance authorizing such an alternative method of calculating baseline emissions if a source's emissions are irregular, cyclical, or otherwise vary significantly from year to year. EPA issued guidance on alternative methods for calculating baseline emissions in the form of the memorandum from William Harnett, mentioned above. The averaging period allowed in Section 3.2.2 of Rule 3170 appears consistent with the March 21, 2008, guidance. However, the language in Section 3.2.2 allows such averaging “if those years are determined by the APCO as more representative of normal source operation.” This language is considered less stringent than the CAA criteria. The rule should be amended to specify use of the expanded averaging period only if a source's emissions are irregular, cyclical, or otherwise vary significantly from year to year. 

### D. Proposed Action and Public Comment 

As authorized in sections 110(k)(3) and 301(a) of the Act, EPA is proposing a limited approval of the submitted rule to improve the SIP. If finalized, this action would incorporate the submitted rule into the SIP, including those provisions identified as deficient. This approval is limited because EPA is simultaneously proposing a limited disapproval of the rule under section 110(k)(3). If this disapproval is finalized, sanctions will be imposed under section 179 of the Act unless EPA approves subsequent SIP revisions that correct the rule deficiencies within 18 months. These sanctions would be imposed according to 40 CFR 52.31. A final disapproval would also trigger the Federal implementation plan (FIP) requirement under section 110(c). Note that the submitted rule has been adopted by the SJVUAPCD, and EPA's final limited disapproval would not prevent the local agency from enforcing it. 

However, the limited approval of Rule 3170 does not override specific CAA mandates. If the area fails to attain by its 2010 attainment date, fees will accrue beginning in 2011 for emissions above 80% of source baselines for clean units and new units which are exempted from fee collection under the State rule. The State must adopt and submit a rule to collect fees for 2011 and future years from those units or, consistent with the Administrator's obligation under § 185(d), EPA will collect those fees. In addition, all sources are liable for fees calculated in accordance with the baseline definition in § 185(b)(2) and EPA guidance issued pursuant to that provision. The State must adopt and submit a rule that ensures fees are collected for 2011 and all future applicable years based on the statutory baseline requirement. If the State fails to do so, EPA will collect any additional fees owed pursuant to a Federal program under § 185(d). 

We will accept comments from the public on the proposed limited approval and limited disapproval for the next 30 days. 

## III. Statutory and Executive Order Reviews 

### A. Executive Order 12866, Regulatory Planning and Review 

The Office of Management and Budget (OMB) has exempted this regulatory action from Executive Order 12866, entitled “Regulatory Planning and 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.*                     Burden is defined at 5 CFR 1320.3(b).                 

### C. Regulatory Flexibility Act 

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. 

This rule will not have a significant impact on a substantial number of small entities because SIP approvals under section 110 and subchapter I, part D of the Clean Air Act do not create any new requirements but simply approve requirements that the State is already imposing. Therefore, because the Federal SIP approval does not create any new requirements, I certify that this action will not have a significant economic impact on a substantial number of small entities. 

                    Moreover, due to the nature of the Federal-State relationship under the Clean Air Act, preparation of flexibility analysis would constitute Federal inquiry into the economic reasonableness of State action. The Clean Air Act forbids EPA to base its actions concerning SIPs on such grounds.                     *Union Electric Co.,*                     v.                     *U.S. EPA,*                     427 U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).                 

### D. Unfunded Mandates Reform Act 

Under section 202 of the Unfunded Mandates Reform Act of 1995 (“Unfunded Mandates Act”), signed into law on March 22, 1995, EPA must prepare a budgetary impact statement to accompany any proposed or final rule that includes a Federal mandate that may result in estimated costs to State, local, or Tribal governments in the aggregate; or to the private sector, of $100 million or more. Under section 205, EPA must select the most cost-effective and least burdensome alternative that achieves the objectives of the rule and is consistent with statutory requirements. Section 203 requires EPA to establish a plan for informing and advising any small governments that may be significantly or uniquely impacted by the rule. 

EPA has determined that the approval action proposed does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or Tribal governments in the aggregate, or to the private sector. This Federal action proposes to approve pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or Tribal governments, or to the private sector, result from this action. 

### E. Executive Order 13132, Federalism 

*Federalism*                     (64 FR 43255, August 10, 1999) revokes and replaces Executive Orders 12612 (Federalism) and 12875 (Enhancing the Intergovernmental Partnership). Executive Order 13132 requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.” Under Executive Order 13132, EPA may not issue a regulation that has federalism implications, that imposes substantial direct compliance costs, and that is not                           ( print page 33953)                        required by statute, unless the Federal government provides the funds necessary to pay the direct compliance costs incurred by State and local governments, or EPA consults with State and local officials early in the process of developing the proposed regulation. EPA also may not issue a regulation that has federalism implications and that preempts State law unless the Agency consults with State and local officials early in the process of developing the proposed regulation.                 

This rule 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, as specified in Executive Order 13132, because it merely approves a State rule implementing a Federal standard, and does not alter the relationship or the distribution of power and responsibilities established in the Clean Air Act. Thus, the requirements of section 6 of the Executive Order do not apply to this rule. 

### F. Executive Order 13175, Coordination With Indian Tribal Governments 

Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000), requires EPA to develop an accountable process to ensure “meaningful and timely input by Tribal officials in the development of regulatory policies that have Tribal implications.” This proposed rule does not have Tribal implications, as specified in Executive Order 13175. It will not have substantial direct effects on Tribal governments, on the relationship between the Federal government and Indian Tribes, or on the distribution of power and responsibilities between the Federal government and Indian Tribes. Thus, Executive Order 13175 does not apply to this rule. 

EPA specifically solicits additional comment on this proposed rule from Tribal officials. 

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

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This rule is not subject to Executive Order 13045, because it approves a State rule implementing a Federal standard. 

### H. Executive Order 13211, Actions That Significantly Affect Energy Supply, Distribution, or Use 

This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (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 

Section 12 of the National Technology Transfer and Advancement Act (NTTAA) of 1995 requires Federal agencies to evaluate existing technical standards when developing a new regulation. To comply with NTTAA, EPA must consider and use “voluntary consensus standards” (VCS) if available and applicable when developing programs and policies unless doing so would be inconsistent with applicable law or otherwise impractical. 

The EPA believes that VCS are inapplicable to this action. Today's action does not require the public to perform activities conducive to the use of VCS. 

# List of Subjects in 40 CFR Part 52

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

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

Dated: June 30, 2009. 

Jane Diamond, 

Acting Regional Administrator, Region IX.

[FR Doc. E9-16642 Filed 7-13-09; 8:45 am] 

BILLING CODE 6560-50-P