Document ID: EPA-R09-OAR-2010-1078-0017
Agency: epa
Document Type: Rule
Title: South Coast Portion of the California State Implementation Plan; Revisions: CPV Sentinel Energy Project AB 1318 Tracking System
Posted Date: 2011-04-20T04:00Z

[Federal Register Volume 76, Number 76 (Wednesday, April 20, 2011)]
[Rules and Regulations]
[Pages 22038-22044]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2011-9460]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2010-1078; FRL-9293-6]

Revision to the South Coast Portion of the California State 
Implementation Plan, CPV Sentinel Energy Project AB 1318 Tracking 
System

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is taking final 
action to approve a source-specific State Implementation Plan (SIP) 
revision for the South Coast Air Quality Management District (District) 
portion of the California SIP. This source-specific SIP revision is 
known as the CPV Sentinel Energy Project AB 1318 Tracking System. The 
SIP revision consists of enabling language and the AB 1318 Tracking 
System to revise the District's SIP approved New Source Review (NSR) 
program. The SIP revision allows the District to transfer offsetting 
emission reductions for particulate matter less than 10 microns in 
diameter (PM10) and one of its precursors, sulfur oxides 
(SOX), to the CPV Sentinel Energy Project, which will be a 
natural gas fired power plant.

DATES: This final rule is effective on May 20, 2011.
    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: Laura Yannayon, EPA Region IX, (415) 
972-3524, yannayon.laura@epa.gov.

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

Table of Contents

I. Background
II. Evaluation of Source-Specific SIP Revision
    A. What action is EPA finalizing?
    B. Public Comments and Responses to Comments
III. EPA Action
IV. Statutory and Executive Order Reviews
    A. Executive Order 12866, Regulatory Planning and Review and 
Executive Order 13563: Improving Regulation and Regulatory Review 
13563
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132, Federalism
    F. Executive Order 13175, Coordination With Indian Tribal 
Governments
    G. Executive Order 13045, Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211, Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Population

I. Background

    The proposed Sentinel Energy Project is designed to be a nominally 
rated 850 megawatt electrical generating facility covering 
approximately 37 acres within Riverside County, adjacent to Palm 
Springs, California. EPA's proposal for this action contained a 
detailed description of the project and the Clean Air Act's (CAA) 
requirements for offsets during New Source Review permitting. 76 FR 
2294 (January 13, 2011) With our proposal to approve this SIP revision, 
EPA attached the complete list of PM10 and SOX 
offsetting emission reductions that are being transferred in the AB 
1318 Tracking System to our Technical Support Document (TSD). 
Documentation for each of the offsetting emission reductions listed in 
the attachment to the TSD was included in the docket for the proposal 
in hard copy at EPA's offices as well as other locations. For 
additional background information please see the January 13, 2011 
proposed notice for this action. (76 FR 2294)

II. Evaluation of Source-Specific SIP Revision

A. What is the rule that EPA is finalizing?

    EPA is finalizing a SIP revision for the South Coast portion of the 
California SIP. The SIP revision will be codified in 40 CFR 52.220 by 
incorporating by reference the Offset Requirements for the Proposed CPV 
Sentinel Power Plant, including the CPV Sentinel Energy Project AB 1318 
Tracking System, as adopted by the District.
    The SIP revision provides a federally approved and enforceable 
mechanism for the District to transfer PM10 and 
SOX offsetting emissions reductions from the District's 
internal bank to the Sentinel Energy Project and to track those 
emissions credits through the AB 1318 Tracking System.

B. Public Comment and Final Action

    In response to our January 13, 2011 proposed rule, we received four 
comments, one each from the South Coast Air Quality Management District 
(District), Michael Carroll of Latham & Watkins LLP, the Natural 
Resources Defense Council (NRDC), and the Law Offices of Angela 
Johnson-Mezaros on behalf of California Communities Against Toxics and 
Communities for a Better Environment (jointly referred to herein as 
``CCAT''). Copies of each comment letter have been added to the docket 
and are accessible at regulations.gov. The comment from the District 
supported EPA's analysis and proposed source-specific SIP revision and 
provided an errata sheet correcting minor typos and the amount of 
SOX offsets available in the AB1318 Tracking System (reduced 
the quantity by 92 lbs). The comment from Latham & Watkins was also 
supportive of our proposed action. The comment from NRDC generally 
opposed the SIP revision but did not provide any specific grounds for 
its opposition or raise any specific issues. To the extent that NRDC 
generally opposes the SIP revision, our response to its general 
opposition is included below with our response to CCAT's more specific 
comments. We have summarized CCAT's comments (based on the structure of 
their comment letter) and provide our response to each comment below.
    Comment I: CCAT comments that EPA did not allow meaningful public 
participation on the SIP revision for several reasons and that approval 
of the SIP revision based on the available information would be 
arbitrary and capricious.
    Comment I.A: CCAT contends the regulatory text of the SIP revision 
is too

[[Page 22039]]

vague and incomplete to be federally enforceable. CCAT contends that 
the SIP revision consists of preambular or background language and that 
the list of emissions credits being transferred is not included in the 
SIP revision.
    Response I.A: CCAT is incorrect on both points. EPA's proposed 
approval quoted the text of the proposed source-specific revision in 
the section of the proposal entitled ``What is in the SIP Revision?'' 
(76 FR at 2295) and also posted the text in the docket at Index No. I-
B. Upon finalizing the approval, EPA will codify this revision at 40 
CFR 52.220. The SIP revision, therefore, consists of the regulatory 
text that was quoted in EPA's proposed rule. Before quoting the 
language in the proposed approval, we identified the language stating: 
``The text of the proposed source-specific SIP revision is * * *'' 76 
FR at 2295. This is the language that will be incorporated by reference 
in 40 CFR 52.220. Therefore it is not preambular or background language 
as stated by CCAT. The SIP revision language was available to the 
public. This comment contains other conclusory statements such as 
characterizing the SIP revision as being too vague to be enforceable 
because it does not provide an enforceable mechanism for generating 
emissions credits. These additional statements are generally repeated 
elsewhere in the comment letter with more specificity. We have 
responded to the more detailed comments rather than the very general 
and conclusory statements in this section of the comment letter.
    The full list of the credits that will be transferred is 
incorporated by reference into the SIP revision. Incorporation by 
reference of materials such as the list of the emissions credits being 
transferred is permissible and there is no requirement for EPA to 
include the list of credits in the regulatory text that will be 
published in the Code of Federal Regulations. See Use of Incorporation 
by Reference as a Mechanism for Shortening Federal Register Notices, 
from Gerald H. Yamada, Principal Deputy General Counsel to Regulatory 
Policy Group, dated Jan. 12, 1995. See also 1 CFR part 51.
    The comment also contends that the SIP revision is insufficient 
because it does not contain a ``mechanism for generating and validating 
the credits''. The SIP revision does not purport to provide a mechanism 
for generating credits. This SIP revision provides an enforceable 
mechanism for the District to transfer previously generated emissions 
credits and incorporates the list of those emissions credits. The 
Sentinel Energy Project is a source that is not authorized to receive 
emissions credits from the District's internal accounts in the absence 
of this SIP revision because it is not a source category or type of 
project listed in Rule 1304 as exempt or in Rule 1309.1 as a priority 
reserve source. Thus, the general assertions submitted by CCAT that the 
public did not have adequate notice for a variety of reasons does not 
provide any basis for EPA to alter its proposed approval of this SIP 
revision.
    Comment I.B: CCAT contends the Federal Register Notice and TSD are 
unclear and provide an inconsistent description of the proposed SIP 
revision.
    Response I.B: EPA disagrees with the comment and notes that CCAT 
has not provided any specific examples in which the proposal and TSD 
are vague or inconsistent. CCAT also contends that AB 1318 is of minor 
relevance to this action. EPA agrees with this comment. EPA did not 
propose approval of this action based on the State legislation and has 
discussed that action only as background. EPA proposed to approve this 
SIP revision because it complies with the requirements of the CAA.
    Within this comment, CCAT also asserts that EPA's record for 
proposing approval of the District's SIP revision provides an 
inadequate justification. CCAT contends that EPA's record is deficient 
because it does not acknowledge or explain that the proposed SIP 
revision purportedly does three separate things: first, codify in 
Federal law an entirely new method for the SCAQMD to generate emission 
credits; second, apply that generation method to specific reductions 
dating back to 1999; and third, transfer the credits out of the 
SCAMQD's internal bank. See CCAT Letter at 3.
    CCAT's first contention is that EPA does not explain or acknowledge 
that it is codifying into Federal law a new method for the District to 
generate emissions credits. The problem with CCAT's comment is that EPA 
is not codifying a new method for the District to generate emissions 
credits.\1\ The emissions credits the District is transferring pursuant 
to its AB 1318 Tracking System are emission credits that existed in the 
District's internal accounts. The AB 1318 Tracking System contains the 
District's accounting of these specific credits and a mechanism for 
transferring these emissions credits from the District's internal 
account to Sentinel. The SIP revision does not establish a new method 
for the District to generate emission credits. EPA reviewed the 
submitted documentation demonstrating that a sufficient number of these 
specific emissions credits being transferred meet the Federal integrity 
criteria required by section 173 of the CAA.
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    \1\ On February 4, 2011, the District adopted Rule 1315--Federal 
New Source Review Tracking System--which does provide a general rule 
for the District to credit and debit emissions credits in its 
internal accounts. The District has submitted Rule 1315 to EPA as a 
SIP revision. EPA will be acting on the Rule 1315 submittal in a 
separate Notice of Proposed Rulemaking and will provide a 30 day 
comment period with that action. Some of CCAT's comments on this 
proposal may be more properly directed to any action that EPA 
proposes to take on District Rule 1315.
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    CCAT's second contention is that the District is now generating 
credits from emissions reductions that occurred up to two decades ago 
and also that the District's internal bank accounts have negative 
balances. While some of the emissions credits that the District is 
transferring arose from events in 1999, most occurred after 2003, 
therefore characterizing 1999 as being two decades ago may be 
technically correct but somewhat misleading. CCAT also states that no 
evidence of the actual dates of when the reductions occurred is 
contained in the public record. This is incorrect. The support 
documentation, which is voluminous and was available for review in hard 
copy, explicitly contains this information. In any event, we have 
reviewed the documentation for the emissions reductions, including 
those associated with events that occurred in 1999 and consider those 
1999 emissions credits to meet the requirements of section 173 of the 
CAA.
    CCAT also contends the District has ``negative balances'' in its 
internal accounts. For the purposes of this SIP revision, the balance 
of the District's internal accounts is not relevant, since EPA examined 
each of the specific emission reduction actions that are the basis for 
the credits being transferred pursuant to this SIP revision and found a 
sufficient quantity--compared to the amount needed for the CPV Sentinel 
Energy Project, to meet the CAA offset requirements.
    CCAT, NRDC and associated groups raised the same issue in a 
Petition to the Administrator in December 2010. In responding to the 
Petition, the Administrator examined the emission credits in the 
District's internal accounts following passage of SB 827. SB 827 was a 
companion bill to AB 1318 which directed the District to transfer 
emissions credits from their internal accounts to exempt sources 
covered by Rule 1304 and priority reserve sources covered by Rule 
1309.1 beginning in January 2011. A copy of the Administrator's 
petition response letter

[[Page 22040]]

is attached to and incorporated into this Response to Comments because 
the same general issues arise with respect to AB 1318 and SB 827. The 
Administrator's letter details the Agency's determination that the 
District may use emissions reductions from previously shutdown sources, 
including minor source orphan shutdowns, to fund its internal accounts. 
The Administrator's letter also disagrees with assertions that the 
District's internal accounts have negative balances. Thus, for all of 
the reasons set forth in the Administrator's letter, EPA disagrees with 
CCAT that this SIP revision constitutes codifying a new system of 
generating emissions credits, that the District's internal accounts 
have negative balances or that the emission credits are invalid because 
they were created more than two decades ago.
    CCAT's third contention is that this SIP revision allows the 
District to transfer ownership of emission credits out of the 
District's internal bank. EPA agrees with this contention but CCAT has 
not raised any specific reason that such a transfer is contrary to the 
requirements of the CAA and this comment does not provide any basis for 
EPA to alter its proposal to approve the SIP revision providing a 
Federal mechanism to enforce the transfer of ownership of these 
emission credits. The District's decision to transfer valid emission 
credits is a policy decision.
    CCAT states that the project description of the SIP revision is 
confusing because it does not ``admit'' that EPA is approving a 
revision to SIP-approved Rules 1303 and 1309.1. CCAT's assertion that 
this action constitutes a revision of either Rule 1303 or 1309.1 is 
incorrect. Instead, as stated in the actual SIP revision, the action is 
providing an additional federally enforceable mechanism for the 
District to transfer emission credits from its internal bank to the 
Sentinel project. But the District has not revised and EPA is not 
approving a revision to Rules 1303 and 1309.1.
    Comment I.C: CCAT asserts that EPA did not include critical 
documents in the docket for this proposed rulemaking.
    Response I.C: CCAT appears to be criticizing the fact that scanned 
copies of voluminous records documenting the validity of each pound of 
emissions credits being transferred from the District bank to Sentinel 
were not provided in electronic form on the regulations.gov Web site. 
These documents consist of the ``Offset Source Calculation/Verification 
Form'' and supporting documentation for each form. The District's 
submittal consisted of a CD, with 62 separate documents, comprising 
more than 1,000 pages. The forms show a facility's name, the type of 
equipment that had been operated, the emission inventory data for the 
two years prior to shut down, the date when the facility's permit was 
inactivated, verification of the shutdown and various emissions 
calculations using this data. EPA's proposed approval of the SIP 
revision relied on these documents to demonstrate that a sufficient 
number of the emissions credits the District transferred met the 
integrity criteria in Section 173 of the CAA.
    Our proposed approval of this SIP revision stated that we had 
attached a ``complete list of PM10 and SOx 
offsetting emissions reductions'' to our Technical Support Document and 
that ``[d]ocumentation for each of these offsetting emission reductions 
is included in the docket for this proposal.'' EPA's proposed approval 
also stated: ``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 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.'' (76 FR 2294) 
Therefore, the proposed approval provided notice to the public to 
contact EPA to inspect the documentation for each offsetting emission 
reduction listed in the attachment to our Technical Support Document.
    EPA is not required to post all of the documents in its docket for 
a proposed rulemaking to the regulations.gov Web site, otherwise known 
as the ``EDOCKET''. The hard copy documents in the Region's office are 
the official docket for the rulemaking. We post many documents from the 
official docket to the EDOCKET for the convenience of the public but 
there is no requirement to post all of the documents. EPA did not post 
the voluminous Offset Source Calculation/Verification Forms on the 
EDOCKET although a hard copy was readily available in our offices. A 
copy of the documents was also available at the District and CARB 
offices.
    CCAT also contends that EPA was required to specifically list the 
Offset Source Calculation/Verification Forms in the index to the 
docket. There is no legal requirement for EPA to provide an index to 
the docket. We frequently provide an index as a courtesy to the public. 
If we provide an index, we are not required to identify every 
background or supporting document provided in a submitted SIP revision.
    Because EPA cannot anticipate every question the public may have on 
our proposed rulemakings, EPA's Federal Register notice proposing to 
approve this SIP revision contained contact information for EPA staff 
who would be knowledgeable about the proposal and could provide copies 
of the specific documents in our docket. CCAT did not try to contact 
any EPA staff to obtain a copy of the Offset Source Calculation/
Verification Forms or request EPA to provide further specificity in the 
docket index. Finally, the same records were provided to CCAT by the 
District long before our proposed approval was published. (South Coast 
Public Records Response 61991 and 61991B)
    In summary, CCAT has not provided any authority indicating that the 
Offset Source Calculation/Verification Forms were required to be 
identified in the index we posted on the EDOCKET or posted 
electronically in the EDOCKET. These documents were available in hard 
copy at the District's office, at the offices of the California Air 
Resources Board as part of the SIP submission and EPA's office in San 
Francisco.
    CCAT suggests that EPA may be treating some of the information in 
the records as confidential. The suggestion is incorrect. None of the 
information in the record for this SIP revision approval is 
confidential and all of the information on which EPA based its proposed 
approval has been available to the public. EPA does acknowledge that 
some information, such as the individual evaluation record for each 
emission reduction, was only available in hard copy. However, if CCAT 
had requested copies of these records, EPA would have made them 
available in our office for review, as the Federal Register stated, or 
we could have mailed a CD with the documents, since they were too large 
to send by e-mail.
    Comment II: CCAT asserts that EPA's approval of the SIP revision 
would be arbitrary and capricious because EPA fails to explain the 
basis for its decision.
    Response II: CCAT in this comment points to a background paragraph 
in EPA's TSD and argues that EPA's proposal to approve this SIP 
revision constitutes approving a ``new but equivalent'' process for 
generating offsets. EPA disagrees. The ``new but equivalent'' method 
referred to in the Federal Register notice was not a new process for 
generating credits, but instead an additional way for a source to 
comply with the Rule 1303 requirements that offsets be provided 
pursuant to Rule 1309 or by allocations from the Priority Reserve in 
accordance

[[Page 22041]]

with the provisions of Rule 1309.1. That is the intent of a source-
specific SIP revision: to revise the existing SIP to account for an 
action that only applies to a single source. See, e.g. 76 FR 2263 
(January 8, 2011) CCAT also cites a NRDC v. EPA, 571 F.3d 1245 (D.C. 
Cir. 2009). However, nothing in the decision or in this SIP revision 
can provide a basis for CCAT to challenge EPA's action in 1996 on 
Regulation XIII. The time for challenging EPA's action in 1996 has past 
and our action in this SIP revision does not change or revise 
Regulation XIII.
    Comment III: CCAT asserts that the SIP revision is a violation of 
CAA section 173(c) and 40 CFR 51.165(a)(3)(ii)(C)(1)(i)-(ii).
    Comment III (1): CCAT contends the District's emission credits are 
not real because the District's internal accounts are ``balanced in the 
aggregate'' and there is a ``negative balance''.
    Response III (1): EPA disagrees that the District's internal 
accounts are balanced in the aggregate. Instead, a more accurate 
description is that the District demonstrates that their local NSR 
program provides at least as many offsets ``in the aggregate'' as would 
otherwise be required under a strictly Federal NSR program, on a 
project by project basis. The emissions credits that are the subject of 
this action represent ``real'' emissions reductions that occurred from 
sources in the District. The District provided comprehensive 
documentation for each emission credit, including documentation of when 
the source was shutdown, verification that it was actually shutdown, 
actual emission inventory data for each source for the two years prior 
to shutdown, and other supporting information. The emission credits 
transferred to the AB 1318 Tracking System were individually subtracted 
from the District's internal accounts and are not included in the 
District's annual ``in the aggregate'' equivalency demonstration. CCAT 
also alleges that the District's accounts have a negative balance. This 
allegation has been thoroughly addressed in EPA Administrator Jackson's 
letter dated September 23, 2010, which we are incorporating by 
reference into this response. Administrator Jackson's letter sets forth 
the background during which EPA requested the District to remove pre-
1990 emission credits for which the District did not have adequate 
documentation from its internal accounts. However, the District could 
replace those subtractions with previously uncounted emissions 
reductions from minor source orphan shutdowns. See p. 7-8. Therefore, 
the District's internal bank is adequately funded and does not have 
``negative balances.'' The support cited by CCAT for the proposition 
that the District's balances are insufficient is an opinion in CCAT's 
State court litigation pertaining to the California Environmental 
Quality Act (CEQA), which is not relevant to EPA's evaluation of this 
SIP revision. Finally, CCAT contends that there is insufficient 
documentation to demonstrate the emission reductions occurred. EPA 
disagrees. The District's documentation provides the name and location 
of the source that made the reduction, when the source was shutdown, 
verification that it was actually shutdown, the amount of the 
reduction, including documentation of actual emission inventory data 
for each source for the two years prior to shutdown, and other 
supporting information.
    Comment III (2): CCAT contends that the emission reductions are not 
quantifiable.
    Response III (2): EPA disagrees. The District provided documents 
with the SIP revision showing precisely how many pounds of pollutant 
had been reduced or eliminated to support each emission credit. These 
amounts were based on actual emission inventory data or production 
records for each source. This issue was also raised in conjunction with 
SB 827 and the Administrator's letter dated September 23, 2011 contains 
our further response.
    Comment III (3): CCAT alleges that the emissions reductions are not 
surplus.
    Response III (3): EPA disagrees. Emission credits would need to be 
adjusted to ensure they are surplus to any new or modified standards 
for PM10 and/or SOx emissions from power plants, 
aggregate operations, spray booths, etc. The District has not 
promulgated new rules or standards that would apply to these types of 
sources, and thus no adjustments to the credits were required.
    Comment III (4): CCAT contends that the emission reductions are not 
enforceable, citing the Ninth Circuit's decision in El Comite para el 
Bienestar de Earlimart v. Warmerdam, 539 F.3d 1062 (9th Cir. 2008).
    Response III (4): EPA disagrees. In this action the emission 
reductions will be enforceable because EPA's SIP revision has 
incorporated by reference the transfer of a specific amount of emission 
credits. In Warmerdam, EPA had not incorporated by reference certain 
letters between CARB and EPA into the SIP. Here, the language that EPA 
is placing into the SIP clearly incorporates by reference all the 
individual emission reductions being transferred to the Sentinel Energy 
Project. While ultimately the Director of the Federal Register Office 
must determine that incorporation by reference complies with the 
requirements of 1 CFR 51.7, this type of material is generally within 
the type accepted for such treatment. See Use of Incorporation by 
Reference as a Mechanism for Shortening Federal Register Notices, from 
Gerald H. Yamada, Principal Deputy General Counsel to Regulatory Policy 
Group, dated Jan. 12, 1995. CCAT can enforce the District's transfer of 
the emission credits and can also confirm that the permit from which 
the emission credit was created has been inactivated or review the 
conditions of a permit revised to create the emission reductions.
    Comment III (5): CCAT asserts that some of the emissions reductions 
are not creditable.
    Response III (5): EPA disagrees. Emission reductions are considered 
creditable if they have not been relied upon to demonstrate attainment, 
RFP or any other permit action. The District accounts for the use 
credits from their internal accounts by adding the average annual 
quantity of ERCs used over the last eight years to the projected 
inventory for years 2014 and 2020, i.e., the AQMP assumes that these 
emissions are in the air. By including such emissions in the inventory, 
the attainment plan has not relied on these emission reductions, thus 
they remain creditable for other purposes, such as NSR offsets. In 
addition, these emission reductions are being transferred from the 
Districts internal offset account and are therefore not available for 
any other permit action.
    Comment IV: CCAT contends that EPA cannot approve the District's 
transfer of the emission credits to the Sentinel Energy Project because 
the emission reductions have been relied upon in other permitting 
actions and for demonstrating attainment.
    Comment IV.A.1: CCAT asserts that the offsets being transferred do 
not meet the requirements of Federal law because the District's 
internal accounts have negative balances.
    Response IV.A.1: This portion of CCAT's comment letter is a 
repetition of prior comments. With respect to the purported negative 
balance, EPA has responded previously. We repeat that the District does 
not have a negative balance. As fully set forth in the Administrator's 
petition response letter dated September 23, 2010, EPA requested the 
District to remove any pre-1990 emission credits for which the District 
did not have adequate documentation. The District did so and

[[Page 22042]]

then added in credits from minor source orphan shutdowns that it had 
not previously counted. EPA has determined that funding the District's 
bank with minor source orphan shutdowns complies with the CAA. The 
District's balance of credits for each pollutant is positive when 
credits from minor orphan shutdowns are included.
    Comment IV.A.2: CCAT also contends that the emissions credits being 
transferred that were based on shut-down equipment may not be used if 
they were shut down before the base year for the SIP planning process.
    Response IV.A.2: CCAT contends that the District has relied on the 
emission reduction credits generated from shutdown sources which 
occurred before the 2002 baseline in the 2007 AQMP. EPA disagrees. As 
explained in Response III (5), the District adds in a portion of the 
pre-baseline banked emission credits into the inventory for each future 
year. The amount added for each pollutant is determined based on 
historical usage of offsets in the basin. Since the baseline inventory 
is adjusted to account for an adequate number of pre-baseline emission 
reductions due to shutdowns, the District is complying with the 
requirements of 40 CFR 51.165(a)(3)(ii)(C)(1)(ii) and may use such 
reductions as current offsets.
    Comment IV.A.3: CCAT contends that ``crediting these purported 
emission reductions to the SCAQMD's Offset Accounts Violates CCA [sic] 
section 110(l)''.
    Response IV.A.3: Under section 110(l) of the CAA, EPA may not 
approve any SIP revision that would interfere with attainment, 
reasonable further progress (RFP) or any other CAA requirement.
    In our proposed approval, EPA stated that this revision will not 
interfere with attainment or RFP because the emission credits in the AB 
1318 Tracking System are not relied on for attainment or RFP in the 
District's most recent attainment demonstrations. We also indicated 
that this revision did not interfere with any other CAA requirement. In 
addition, we stated that the District supplied a copy of its air 
quality analysis for the CPV Sentinel Energy Project which shows that 
operation of the facility will not interfere with the ability of the 
District to reach attainment.\2\ CCAT has provided no specific 
information to refute this discussion regarding CAA 110(l) from our 
proposal.
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    \2\ Air Quality Demonstration: SIP Revision for CPV Sentinel 
Energy Project.
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    Comment IV.A.3.i: CCAT again contends that the emission reductions 
have been relied upon by the District in past permitting actions and in 
its 2007 AQMP, therefore not making them available for the Sentinel 
Energy Project.
    Response IV.A.3.i: Please see earlier responses on these same 
points in responses III(5) and IV.A.2.
    Comment IV.A.3.ii: CCAT contends that it is inadequate for EPA to 
meet its burden for rational decision-making regarding compliance with 
section 110(l) by not being aware of interference the proposed action 
would have with other CAA requirements.
    Response IV.A.3.ii: EPA disagrees. The TSD (pages 5-6) discusses 
how the project complies with the CAA requirements that this SIP action 
is subject to, and this statement is simply affirming that there are no 
other CAA requirements for which the action is subject.
    Comment IV.A.3.iii: CCAT contends that EPA fails to describe the 
``new but equivalent mechanism * * * for satisfying the offset 
requirements of CAA Sec.  173'', and that the record does not provide 
any proof, facts or analysis that EPA engaged in a rational 
consideration of all facts for its decision.
    Response IV.A.3.iii: EPA disagrees. The TSD (pages 5-6) provides a 
discussion of all five of the CAA Sec.  173 offset integrity criteria, 
and explains the rationale for EPA's conclusion that the proposed 
offsets meet these criteria. The ``new but equivalent mechanism'' EPA 
was referring to in the FR notice was not for generating credits, but 
instead refers to the ability of the source to provide emission 
reduction credits for their project which were not provided pursuant to 
Rule 1309 or allocations from Rule 1309.1.
    Comment IV.A.3.iii: CCAT contends that in an analysis undertaken by 
the California Energy Commission, staff concluded that the Sentinel 
facility would contribute to existing exceedences in the area, and 
supplied the text from the CEC analysis.
    Response IV.A.3.iii: The submitted CEC modeling does not evaluate 
the impacts of the project on the District's ability to attain the 
PM10 standard, which is the required evaluation criteria, 
but instead models a worst case scenario assuming the highest 
background concentrations, the highest PM10 emission rate 
from the plant and the worst meteorological conditions would all occur 
at the same time and at the same location. CEC staff acknowledges that 
all of these worst case conditions are ``not likely to occur.'' In 
addition, the modeling did not take into account the reductions 
expected from other District control measures or the offsets provided 
for this project. The air quality analysis prepared by the District is 
consistent with EPA guidance for determining the impacts of projects on 
an area's ability to attain a NAAQS.
    Comment IV.A.3.iv: CCAT contends that EPA must analyze this 
submission together with the District's recently approved Rule 1315.
    Response IV.A.3.iv: EPA disagrees. We note that the District has 
submitted and EPA will be taking action in the future on District Rule 
1315. Rule 1315 provides in regulatory language the District 
methodology for debiting and crediting offsets for sources that qualify 
under Rules 1304 and 1309.1. Rule 1315 is not the subject of, nor is it 
related to this rulemaking in anyway. The merits of Rule 1315 will be 
considered in a separate action which will be subject to public notice 
and comment.
    CCAT has not provided any specific comments showing that the 
factual statements in our proposed approval were incorrect or 
insufficient. CCAT merely repeats general and conclusory allegations of 
violations of section 110(l). That provision is not a general bar to 
revising a SIP. Accordingly, section 110(l) does not prevent us from 
taking final action to approve this source-specific SIP revision 
independent of action on Rule 1315.
    Comment V.: CCAT contends that through this source-specific SIP 
revision EPA has re-opened its 1996 approval of the California SIP's 
creation of a SCAQMD internal bank, and how the credits in the bank are 
generated, tracked and validated.
    Response V: EPA approved Regulation XIII in 1996. Regulation XIII 
comprised the District's comprehensive new source review program, 
including two provisions that allowed the District to provide offsets 
from its internal bank of emission credits to certain exempt and 
priority reserve sources which would otherwise be required to obtain 
offsets for meeting Federal CAA requirements. Our approval of 
Regulation XIII was not challenged following our rulemaking action in 
1996.
    CCAT's contention that our approval of this source-specific SIP 
revision re-opens our 1996 approval of Regulation XIII is without 
merit. This source-specific SIP revision allows the District to 
transfer certain emissions credits to one stationary source, the 
Sentinel Energy Project. The action does not modify or revise any 
provision of Regulation XIII. CCAT notes that it has litigation in the 
Court of Appeals regarding its belief that District Rule 1309 applies 
to the District's internal bank. This source-specific SIP revision is 
unrelated. In this action, we have found that the specific amount of 
emission credits the District is

[[Page 22043]]

transferring to Sentinel meet the integrity criteria of Federal law in 
the amounts calculated to offset Sentinel's emissions increases.
    CCAT's comment also contends that this action is establishing ``an 
alternate generation system.'' We disagree, as noted previously.
    Comment V.1.: CCAT lastly alleges that the source-specific SIP 
revision violates CAA section 172(e).
    Response V.1.: CCAT has not explained how this source-specific SIP 
revision triggers the requirements in section 172(e) that apply to the 
Administrator following promulgation of a national ambient air quality 
standard. CCAT states that any emission credits that are not 
``generated'' according to Rule 1309 ``must accrue to the benefit of 
air quality'' apparently based on section 172(e). EPA does not agree 
that section 172(e) establishes such an obligation.

III. EPA Action

    This source-specific SIP revision complies with all relevant CAA 
requirements and is consistent with EPA's guidance for NSR. Therefore, 
as authorized in section 110(k)(3) of the Act, EPA is fully approving 
this source-specific SIP revision into the California SIP.

IV. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review and Executive 
Order 13563: Improving Regulation and Regulatory Review 13563

    This action will approve the source-specific SIP revision known as 
the CPV Sentinel Energy Project AB 1318 Tracking System into the 
California SIP. This type of action is exempt from review under 
Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 
3821, January 21, 2011).

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 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 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 CAA, preparation of 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. EPA, 427 U.S. 246, 255-66 (1976); 42 U.S.C. 
7410(a)(2).

D. Unfunded Mandates Reform Act

    Under sections 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 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 CAA. 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.

[[Page 22044]]

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.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Population

    Executive Order 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
Federal executive policy on environmental justice. Its main provision 
directs Federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA lacks the discretionary authority to address environmental 
justice in this rulemaking.

List of Subjects in 40 CFR Part 52

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

    Dated: April 4, 2011.
Jared Blumenfeld,
Regional Administrator, Region IX.

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

PART 52--[AMENDED]

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

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

Subpart F--California

0
2. Section 52.220 is amended by adding paragraph (c)(384) to read as 
follows:

Sec.  52.220  Identification of plan.

* * * * *
    (c) * * *
    (384) New and amended regulations for the following APCD's were 
submitted on September 10, 2010 by the Governor's designee.
    (i) Incorporation by Reference
    (A) South Coast Air Quality Management District
    (1) Resolution No. 10-20, dated July 9, 2010.
    (2) ``Revision to the State Implementation Plan for the South Coast 
Air Quality Management District, State of California: Sulfur Oxides and 
Particulate Matter Offset Requirements for the Proposed CPV Sentinel 
Power Plant to be Located in Desert Hot Springs, California, Including 
AB 1318 Offset Tracking System'', which is incorporated by reference in 
Resolution No. 10-20, dated July 9, 2010.
    (3) ``CPV Sentinel Energy Project AB 1318 Tracking System'', which 
is incorporated by reference in Resolution No. 10-20, dated July 9, 
2010.
* * * * *
[FR Doc. 2011-9460 Filed 4-19-11; 8:45 am]
BILLING CODE 6560-50-P