Document ID: EPA-R09-OAR-2018-0080-0001
Agency: epa
Document Type: Proposed Rule
Title: Air Quality State Implementation Plans; Approvals and Promulgations: California; Revisions to State Implementation Plan; Bay Area Air Quality Management District; Stationary Sources; New Source Review
Posted Date: 2018-03-01T05:00Z

[Federal Register Volume 83, Number 41 (Thursday, March 1, 2018)]
[Proposed Rules]
[Pages 8822-8827]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2018-04112]

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

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2018-0080; FRL-9974-95--Region 9]

Revisions to California State Implementation Plan; Bay Area Air 
Quality Management District; Stationary Sources; New Source Review

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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

SUMMARY: The Environmental Protection Agency (EPA) is proposing to 
approve revisions to the Bay Area Air Quality Management District 
(BAAQMD or District) portion of the California State Implementation 
Plan (SIP). These revisions concern permit program rules governing the 
issuance of permits for stationary sources, including review and 
permitting of major sources and major modifications under parts C and D 
of title I of the Clean Air Act (CAA). The revisions correct 
deficiencies in BAAQMD Regulation 2, Rules 1 and 2, and Regulation 2, 
Rule 4, previously identified by the EPA in final rules dated August 1, 
2016, and December 4, 2017, respectively. We are proposing to approve 
revisions that correct the identified deficiencies.

DATES: Any comments must arrive by April 2, 2018.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R09-
OAR-2018-0080 at http://www.regulations.gov, or via email to 
[email protected]. For comments submitted at Regulations.gov, follow 
the online instructions for submitting comments. Once submitted, 
comments cannot be removed or edited from Regulations.gov. For either 
manner of submission, the EPA may publish any comment received to its 
public docket. Do not submit electronically any information you 
consider to be Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. Multimedia 
submissions (audio, video, etc.) must be accompanied by a written 
comment. The written comment is considered the official comment and 
should include discussion of all points you wish to make. The EPA will 
generally not consider comments or comment contents located outside of 
the primary submission (i.e. on the web, cloud, or other file sharing 
system). For additional submission methods, please contact the person 
identified in the FOR FURTHER INFORMATION CONTACT section. For the full 
EPA public comment policy, information about CBI or multimedia 
submissions, and general guidance on making effective comments, please 
visit http://www2.epa.gov/dockets/commenting-epa-dockets.

FOR FURTHER INFORMATION CONTACT: Laura Yannayon, EPA Region 9, (415) 
972-3534, [email protected].

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

Table of Contents

I. The State's Submittal
    A. What rules did the State submit?
    B. Are there other versions of these rules?
    C. What is the purpose of the submitted rule revisions?
II. The EPA's Evaluation and Action
    A. How is the EPA evaluating the rules?
    B. Do the rules meet the evaluation criteria?
    1. Regulation 2, Rules 1 and 2
    2. Regulation 2, Rule 4
    3. Requirements of 40 CFR 51.165(a)(13)
    4. Sections 110(a)(2) and 110(l) of the Act
    5. Section 193 of the Act
III. Proposed Action and Public Comment
IV. Incorporation by Reference
V. Statutory and Executive Order Reviews

Definitions

    For the purpose of this document, we are giving meaning to certain 
words or initials as follows:
    (i) The word or initials Act or CAA mean or refer to the Clean Air 
Act, unless the context indicates otherwise.

[[Page 8823]]

    (ii) The word or initials APCO mean or refer to the Air Pollution 
Control Officer.
    (iii) The word or initials BAAQMD or District mean or refer to the 
Bay Area Air Quality Management District.
    (iv) The initials BACT mean or refer to Best Available Control 
Technology.
    (v) The words Bay Area mean or refer to the geographic area 
regulated by the Bay Area Air Quality Management District.
    (vi) The initials CARB mean or refer to the California Air 
Resources Board.
    (vii) The initials CFR mean or refer to Code of Federal 
Regulations.
    (viii) The initials or words EPA, we, us or our mean or refer to 
the United States Environmental Protection Agency.
    (ix) The initials ERC mean or refer to Emission Reduction Credit.
    (x) The initials FR mean or refer to Federal Register.
    (xi) The initials GHG mean or refer to greenhouse gases.
    (xii) The initials NAAQS mean or refer to National Ambient Air 
Quality Standards.
    (xiii) The initials NOX mean or refer to oxides of nitrogen.
    (xiv) The initials NSR mean or refer to New Source Review.
    (xv) The initials PM2.5 mean or refer to particulate matter with an 
aerodynamic diameter of less than or equal to 2.5 micrometers (fine 
particulate matter).
    (xvi) The initials POC mean or refer to precursor organic compound.
    (xvii) The initials PSD mean or refer to Prevention of Significant 
Deterioration.
    (xviii) The initials PTE mean or refer to potential to emit
    (xix) The initials SIP mean or refer to State Implementation Plan.
    (xx) The initials SO2 mean or refer to sulfur dioxide.
    (xxi) The initials VOC mean or refer to volatile organic compound.

I. The State's Submittal

A. What rules did the State submit?

    Table 1 lists the rules addressed by this proposal with the dates 
they were adopted by BAAQMD and submitted by the CARB, which is the 
governor's designee for California SIP submittals. Regulation 2, Rule 1 
contains general requirements that apply to all District air quality 
permitting programs. Regulation 2, Rule 2 contains the District's New 
Source Review (NSR) permit programs for both attainment and 
nonattainment pollutants. Regulation 2, Rule 4 contains requirements 
for banking emission reduction credits (ERCs).

                                            Table 1--Submitted Rules
----------------------------------------------------------------------------------------------------------------
             Regulation & Rule No.                         Rule title                 Amended        Submitted
----------------------------------------------------------------------------------------------------------------
Regulation 2, Rule 1 (Rule 2-1)...............  Permits, General Requirements...       12/6/2017        12/14/17
Regulation 2, Rule 2 (Rule 2-2)...............  Permits, New Source Review......       12/6/2017        12/14/17
Regulation 2, Rule 4 (Rule 2-4)...............  Permits, Emissions Banking......       12/6/2017        12/14/17
----------------------------------------------------------------------------------------------------------------

    On February 14, 2018, the EPA determined that the submittal of 
Regulation 2, Rules 1, 2 and 4 met the completeness criteria in 40 CFR 
part 51, appendix V, which must be met before formal EPA review.

B. Are there other versions of these rules?

    The existing SIP-approved NSR program for new or modified 
stationary sources in the Bay Area consists of the rules identified 
below in Table 2. The EPA's approval of the rules identified above in 
Table 1 would have the effect of entirely superseding our prior 
approval of these rules in the current SIP-approved program.

                                           Table 2--Existing SIP Rules
----------------------------------------------------------------------------------------------------------------
             Regulation & Rule No.                         Rule title              Approval date    FR citation
----------------------------------------------------------------------------------------------------------------
Regulation 2, Rule 1 (Rule 2-1)...............  Permits, General Requirements...        8/1/2016     81 FR 50339
Regulation 2, Rule 2 (Rule 2-2)...............  Permits, New Source Review......        8/1/2016     81 FR 50339
Regulation 2, Rule 4 (Rule 2-4)...............  Permits, Emissions Banking......       12/4/2017     82 FR 57133
----------------------------------------------------------------------------------------------------------------

C. What is the purpose of the submitted rule revisions?

    This SIP submittal is intended to correct deficiencies previously 
identified by the EPA in our August 1, 2016, limited approval and 
limited disapproval ction for Rules 2-1 and 2-2 (81 FR 50339), and our 
December 4, 2017, conditional approval action for Rule 2-4 (82 FR 
57133).

II. The EPA's Evaluation and Action

A. How is the EPA evaluating the rules?

    The evaluation criteria for the submitted rules includes compliance 
with the CAA's requirements for SIPs in CAA sections 110(a)(2), 110(l), 
and 193. In addition, the EPA evaluated the submitted rules for 
consistency with the regulatory provisions of 40 CFR part 51, subpart I 
(Review of New Sources and Modifications) (i.e., 40 CFR 51.160-51.166) 
and 40 CFR 51.307.

B. Do the rules meet the evaluation criteria?

    In our previous August 1, 2016, and December 4, 2017, actions we 
evaluated prior submissions of the submitted rules in accordance with 
the CAA and regulatory requirements listed in Section II.A of this 
document. In those actions, we determined that for the most part the 
submitted rules satisfied the applicable requirements for NSR permit 
programs. However, in each action we identified certain deficiencies 
that prevented full approval. For both of the previous actions, we list 
the identified deficiencies and evaluate whether the submitted rule 
revisions correct the deficiency. We also evaluate any additional rule 
revisions and whether the submittal complies with the requirements of 
sections 110(a)(2), 110(l) and 193 of the CAA.
1. Regulation 2, Rules 1 and 2
    Our August 1, 2016 action identified the following eleven 
deficiencies in Rules 2-1 and 2-2.
    First, the definitions of ``agricultural source'' in Section 2-1-
239 and ``large confined animal facility'' used in Section 2-1-424 rely 
on other definitions and provisions in District rules that are not SIP 
approved.
    Second, Section 2-1-234, subparagraph 2.2, is deficient because it

[[Page 8824]]

does not satisfy the PSD provisions at 40 CFR 51.166(a)(7) and 
51.166(r)(6) & (7), which require PSD programs to contain specific 
applicability procedures and recordkeeping provisions.
    Third, the same deficiency discussed above for the PSD provisions 
applies to the nonattainment NSR provisions. Section 2-1-234, 
subparagraph 2.1, does not satisfy the requirements of 40 CFR 
51.165(a)(2) and 51.165(a)(6) & (7), which require nonattainment NSR 
programs to contain specific applicability procedures and recordkeeping 
provisions.
    Fourth, the definition of the term ``PSD pollutant'' as defined in 
Section 2-2-223, which is used in place of the federal definition for 
the term ``regulated NSR pollutant,'' is deficient because it 
explicitly excludes nonattainment pollutants.
    Fifth, Section 2-2-305 does not require written approval of the 
Administrator prior to using any modified or substituted air quality 
model as provided in subsection 3.2.2 of 40 CFR part 51, appendix W.
    Sixth, Section 2-2-611 does not include the requirement regarding 
``any other stationary source category which as of August 7, 1980, is 
being regulated under section 111 or 112 of the Act'' in the list of 
source categories that must include fugitive emissions to determine 
whether a source is a major facility.
    Seventh, Section 2-2-401.4 only requires a visibility analysis for 
sources that are located within 100 km of a Class I area, rather than 
for any source that ``may have an impact on visibility'' in any 
mandatory Class I Federal Area, as required by 40 CFR 51.307(b)(2).
    Eighth, Section 2-2-411 pertaining to Offset Refunds does not 
contain any timeframe for obtaining an offset refund.
    Ninth, the Offset Program Equivalence demonstration required by 
Section 2-2-412 does not provide a remedy if the District fails to make 
the required demonstration.
    Tenth, Subsection 2-2-605.2 allows existing ``fully-offset'' 
sources to generate ERCs based on the difference between the post-
modification PTE and the pre-modification PTE. Emission reductions 
intended to be used as offsets for new major sources or major 
modifications are only creditable if they are reductions of actual 
emissions, not reductions in the PTE of a source.
    Eleventh, Subsection 2-2-606.2, as it applies to major 
modifications, does not require ``fully-offset'' sources to calculate 
the emission increases from a proposed major modification based on the 
difference between the post-modification PTE and the pre-modification 
actual emissions as required by 40 CFR 51.165(a)(3)(ii)(J).
    To address the first deficiency, the definition of ``agricultural 
source'' in Section 2-1-239 and the reference to ``large confined 
animal facility'' used in Section 2-1-424 have been revised to remove 
references to ``Regulation 2, Rule 10,'' which is not SIP approved. The 
District made additional edits to both of these provisions, as well as 
Subsection 2-1-113.1.2, to provide additional information due to the 
removal of the references to Regulation 2, Rule 10. These revisions 
cure this deficiency because the rules no longer reference rules which 
are not SIP approved.
    To address the second deficiency, Section 2-1-234 has been revised 
by adding two new subparagraphs (2.3 and 2.4) to include the specific 
applicability procedures and recordkeeping provisions required by 40 
CFR 51.166(a)(7) and 51.166(r)(6) & (7). These two new subparagraphs 
are acceptable to cure this deficiency.
    To address the third deficiency, Section 2-1-234 has been revised 
by adding two new subparagraphs (2.3 and 2.4) to include the specific 
applicability procedures and recordkeeping provisions required by 40 
CFR 51.165(a)(2) and 51.165(a)(6) & (7). These two new subparagraphs 
are acceptable to cure this deficiency.
    To address the fourth deficiency, Section 2-2-224 has been revised 
to reference the term ``Regulated NSR Pollutant'' rather than ``PSD 
pollutant.'' This revision cures the deficiency by ensuring that a 
Major PSD Facility determination (as specified in Subsection 224.1) is 
based on emissions of all regulated NSR pollutants, including any 
nonattainment pollutant.
    To address the fifth deficiency, Section 2-2-305.3--Air Quality 
Models, has been revised to require written EPA approval prior to using 
any modified or substituted air quality model. This revision cures this 
deficiency.
    To address the sixth deficiency, Section 2-2-611 has been revised 
to add the following language: ``or is in any other stationary source 
category that was being regulated under section 111 or 112 of the Clean 
Air Act as of August 7, 1980.'' This revision cures this deficiency by 
adding the missing required language.
    To address the seventh deficiency, Section 2-2-401.4 has been 
revised to indicate an analysis of potential impacts to air quality 
related values is required for a project which ``may have an impact on 
air quality related values (including visibility) within any Class I 
area(s),'' rather than only projects located within 100 km of a Class I 
area. In addition, language has been added to this section to clarify 
how such a determination is to be made by referencing the guidelines 
adopted by the Federal Land Managers Air Quality Related Values Work 
Group. These revisions cure this deficiency.
    To address the eighth deficiency, Section 2-2-411.1 has been 
revised to specify that if excess offsets are provided, an offset 
refund request must be made within 2 years of the issuance of the 
authority to construct or within 6 months of issuance of the permit to 
operate. Section 2-2-411.2 has been revised to specify that if a source 
is never constructed or operated, and the authority to construct for 
the source has expired or been surrendered, an offset refund request 
must be made within 2 years of the issuance or renewal of the authority 
to construct. These revisions cure this deficiency.
    To address the ninth identified deficiency, Section 2-2-415--
Additional Offset Requirements Where District Has Not Demonstrated 
NOX, POC or PM2.5 Offset Program Equivalence, has 
been added to specify that if the demonstration required by Section 2-
2-412 is not made by March 1 of each year (or other EPA-approved date), 
the Air Pollution Control Officer (APCO) shall require additional 
offsets for any subsequent Authority to Construct and/or Permit to 
Operate for a Federal Major NSR Source sufficient to make up for (i) 
any Federal Offsets Baseline Shortfall calculated pursuant to Section 
2-2-229 and (ii) any Federal Surplus-at-Time-of-Use Shortfall 
calculated pursuant to Section 2-2-230. The new provision also states 
that this requirement shall continue until the District has made the 
required equivalence demonstration.
    These new provisions cure this deficiency because they ensure an 
applicant will provide the full amount of federal offsets required for 
a new project if the District fails to make the required annual 
demonstration. The EPA recognizes that any shortfall for a year in 
which the District does not provide an adequate demonstration will not 
be immediately corrected, but it will be corrected prior to continued 
usage of the offset equivalence demonstration. The EPA finds this 
acceptable.
    To address the tenth identified deficiency, Subsection 2-2-605.1 
has been revised to clarify the requirements of an eligible emission 
reduction credit and Subsection 2-2-605.2 has been revised to eliminate 
a separate calculation methodology for ``fully-offset'' sources. The 
provision has also been revised to specify that the amount

[[Page 8825]]

of emission reduction shall be calculated as the difference between: 
(i) The source's adjusted baseline emissions before the change 
calculated pursuant to Section 2-2-603; and (ii) the source's potential 
to emit after the change. This revision cures this deficiency because 
it ensures that the amount of ERC is based on actual emission 
reductions.
    To address the eleventh identified deficiency, the calculation 
methodology specified in Subsection 2-2-606.2 was not revised. Instead, 
Section 2-2-412--Demonstration of NOX, POC and 
PM2.5 Offset Program Equivalence, was revised to require the 
District to provide an annual demonstration that the District's NSR 
program as a whole has obtained at least as many NOX, POC 
and PM2.5 offsets as would have been required pursuant to 
the provisions of 40 CFR 51.165 for federal major sources during the 
previous calendar year. We note that although section 2-2-412 was 
modified to include PM2.5, the revisions to Section 2-2-412 
do not contain any provisions for demonstrating equivalency with 
SO2 offset requirements. In section II.B.3 of this preamble 
we discuss our reasoning for proposing approval of Rule 2-2 without 
requiring an equivalency demonstration for SO2 offsets.
    In addition, new definitions for the terms Federal Major NSR 
Source, Federal Offsets Baseline Shortfall, Federal Surplus-at-Time of 
Use Shortfall and Equivalence Credit were added to define these terms 
as used in Section 2-2-412. We find these new definitions acceptable.
    In the current SIP, the annual Offset Program Equivalence 
Demonstration is only required to account for the difference between 
the quantity of offsets obtained by the District using ERCs surplus 
adjusted solely at the time of generation and the subset of those 
offsets that continue to be surplus at the time of use. The new 
provisions require the District to also calculate the difference 
between the amount of offsets provided pursuant to the provisions of 
Subsection 2-2-606.2, and the amount required pursuant to the 
provisions of 40 CFR 51.165, when applied to new and modified major 
sources. We have reviewed the language added to Section 2-2-412 and new 
Section 2-2-415, and have determined that the provisions of Rule 2-2 
will ensure that in the aggregate an equivalent number of ERCs will be 
provided as would otherwise be required by a NSR program without an 
equivalence mechanism that met the offset quantification provisions 
specified in 40 CFR 51.165. We find that these revised and new 
provisions are acceptable to cure this deficiency.
    In addition to the revisions made to address the identified 
deficiencies discussed above, the District made several additional 
minor rule revisions. In Rule 2-1, the definitions for the terms 
``Facility'' and ``New Source'' were revised to provide additional 
clarification regarding portable equipment. The provisions of 
Subsection 2-1-234.2 were revised to clarify which specific provisions 
of 40 CFR 51.165 (for nonattainment pollutants) and 40 CFR 52.21 (for 
other Federal NSR pollutants) must be used to determine if an emissions 
increase from a project will result in a major modification as defined 
in 40 CFR 51.165 or 52.21, as applicable. These revisions provide 
important clarifications to ensure the provisions are enforceable, as 
required by CAA section 110(a)(2)(C), and do not revise any of the 
requirements for determining if a project will result in a major 
modification. Therefore we find the revisions to Subsection 2-1-234.2 
acceptable. Section 2-1-413--Permits for Operation of Equipment at 
Multiple Locations Within the District, was revised by adding new 
Subsection 413.7. This new provision ensures that equipment permitted 
under this provision do not effectively become ``stationary source 
equipment'' by residing at a single stationary source for more than 12 
months. We find these revisions acceptable. Revisions were also made to 
Section 2-1-424--Loss of Exemption or Exclusion to remove the reference 
to non-SIP approved Rule 2-10, and provide additional clarification 
regarding the applicability of this provision. These revisions do not 
change the requirements of this section, therefore we find the 
revisions acceptable.
    In Rule 2-2, the definitions for the terms ``Adjustment to Emission 
Reductions for Federal Purposes'' and ``Fully Offset Source'' were 
deleted because the rule no longer uses these terms. In Section 2-2-
214, the definition of ``Greenhouse Gases'' was revised to remove the 
requirement that such gases be measured on a mass basis consistent with 
the Supreme Court's decision in Utility Air Regulatory Group v. EPA, 
and the subsequent Judgment in the United States Court of Appeals for 
the District of Columbia Circuit in Coalition for Responsible 
Regulation, Inc. v. EPA regarding the treatment of GHGs in the PSD 
program.\1\
---------------------------------------------------------------------------

    \1\ In 2014 the U.S. Supreme Court issued a ruling in Utility 
Air Regulatory Group v. EPA, 134 S.Ct. 2427 (2014) that interpreted 
several relevant provisions of the federal Clean Air Act regarding 
the Act's PSD permit program requirements. On April 10, 2015, the 
D.C. Circuit Court of Appeals effectuated the Supreme Court's 
judgment by vacating portions of the EPA's PSD regulations 
addressing GHGs. See Coalition for Responsible Regulation, Inc. v. 
EPA, 606 Fed. Appx. 6 (Apr. 10, 2015).
---------------------------------------------------------------------------

2. Regulation 2, Rule 4
    Our December 4, 2017 action identified the following three 
deficiencies in Rule 2-4.
    First, Rule 2-4 is deficient because it defines the term ERCs as 
emission reductions ``that are in excess of the reductions required by 
applicable regulatory requirements, and that are real, permanent, 
quantifiable, and enforceable,'' but does not contain any enforceable 
provisions requiring the APCO to determine that the emission reductions 
under review meet the offset integrity criteria prior to issuing an ERC 
Certificate.
    Second, Rule 2-4 is deficient because it incorporates the deficient 
emission reduction calculation procedures found in Rule 2-2 subsection 
605.2. This deficiency in Rule 2-2-605.2 is discussed in Section II.B.1 
of the present document, and is identified as deficiency number ten.
    Third, Rule 2-4 is deficient because Section 2-4-302.3 allows ERC 
Certificates to be issued that do not adequately ensure the permanency 
of an emission reduction due to a facility closure.
    To address the first deficiency, Section 2-4-301 has been revised 
by adding language clarifying that emission reductions may be banked 
only if the APCO determines (i) that the reductions satisfy all of the 
criteria necessary to constitute Emission Reduction Credits as defined 
in Section 2-2-211, including but not limited to the requirements that 
the reductions are real, permanent, quantifiable, and enforceable, and 
are calculated in accordance with Section 2-2-605; and (ii) that 
banking the reductions is not prohibited by Section 2-4-303. These 
revisions cure this deficiency because they ensure that emission 
reductions may only be banked after the APCO determines the offset 
integrity criteria have been met.
    To address the second deficiency, Section 2-2-605.2 has been 
revised to eliminate a separate calculation methodology for ``fully-
offset'' sources. This revision is discussed in more detail in section 
II.B.1 of the present document in the discussion of deficiency number 
ten. Because the second identified deficiency in Rule 2-4 stems from 
the incorporation of a deficiency in Section 2-2-605.2, and we found in 
Section

[[Page 8826]]

II.B.1 above that the District's amendments to Rule 2-2 cure this 
deficiency, we also find that the corresponding deficiency cited in 
Rule 2-4 pertaining to how the quantity of an emission reduction is 
calculated has been cured.
    To address the third identified deficiency, Section 2-4-302.3 has 
been removed from Rule 2-4. This revision cures this deficiency by 
removing the deficient provision.
    In addition to the revisions to Rule 2-4 discussed above, the 
District deleted Section 301.7, which provided an example of a bankable 
emission reduction. Because this was only an example, this deletion has 
no effect on the approvability of Rule 2-4.
    Our December 4, 2017, conditional approval action (82 FR 57133) was 
predicated on the state's commitment to submit SIP revisions to cure 
the three identified deficiencies. Because we are proposing to find 
that the present submission cures these deficiencies, we also propose 
to find that the state has fulfilled its commitment. If finalized as 
proposed, the EPA would fully approve the submitted version of Rule 2-4 
into the SIP, curing the previously identified deficiencies, and remove 
the conditional approval contained in 40 CFR 52.248(c).
3. Requirements of 40 CFR 51.165(a)(13)
    For any area designated nonattainment for PM2.5, 40 CFR 
51.165(a)(13) requires a nonattainment NSR program to require the same 
control requirements applicable to major stationary sources and major 
modifications of PM2.5 to all PM2.5 precursors. A 
permitting authority may exclude a specific precursor from this 
requirement if they submit--and the EPA approves--a precursor 
demonstration that meets the conditions for a nonattainment NSR 
precursor demonstration as set forth in 40 CFR 51.1006(a)(3). In our 
August 1, 2016 action we found that Rule 2-2 satisfied the requirements 
of CAA section 189(e), which are now enacted through 40 CFR 
51.165(a)(13), for SO2, NOX, and VOC, and we 
approved a demonstration for ammonia allowing it to be excluded from 
this requirement.\2\ A nonattainment NSR precursor demonstration must 
``evaluate the sensitivity of PM2.5 levels in the 
nonattainment area to an increase in emissions of a particular 
precursor.'' If the changes ``are not significant, based on the facts 
and circumstances of the area, the state may use that information to 
identify new major stationary sources and major modifications of [that] 
precursor that will not be considered to contribute significantly to 
PM2.5 levels that exceed the standard in the nonattainment 
area.'' As part of the current SIP submittal, the District has provided 
an analysis in accordance with the requirements of 40 CFR 
51.1006(a)(3).\3\
---------------------------------------------------------------------------

    \2\ See 80 FR 52236, 52242-3 (August 28, 2015), 81 FR 50339, 
50341.
    \3\ Final Report: Demonstration of SO2 Precursor Contributions 
to PM2.5 in the San Francisco Bay Area, Bay Area Air Quality 
Management District, with technical assistance from Ramboll Environ, 
November 30, 2017.
---------------------------------------------------------------------------

    The analysis used the Community Multiscale Air Quality (CMAQ) Model 
and California Puff Model (CALPUFF) to model the impacts of 7 new 
greenfield sources emitting 370 tpy of SO2 along with a 20% 
increase of current SO2 emissions from existing sources to 
determine if such increases would contribute significantly to 
PM2.5 levels that exceed the standard in the area. The 
District provided reasoned explanations for choosing the number, size 
and location of the new sources to be modeled. For the CMAQ and CALPUFF 
modeling, the maximum contribution was just under 0.6 [micro]g/m\3\ and 
0.68 [micro]g/m\3\, respectively. Both of these contribution estimates 
are well under the recommended insignificance threshold of 1.3 
[micro]g/m\3\ contained in EPA's draft PM2.5 Precursor Demonstration 
Guidance.\4\
---------------------------------------------------------------------------

    \4\ Draft PM2.5 Precursor Demonstration Guidance, EPA-454/P-16-
001, U.S. EPA OAQPS, November 17, 2016, available at https://www.epa.gov/pm-pollution/draft-pm25-precursor-demonstration-guidance.
---------------------------------------------------------------------------

    Based on the information provided in the District's submitted 
analysis, EPA is proposing to approve the District's demonstration that 
SO2 emissions from new and modified major SO2 
sources will not contribute significantly to 24-hour PM2.5 
concentrations exceeding the standard in the area. A more detailed 
summary of the District's demonstration and the EPA's analysis can be 
found in the docket for this action.
    Based on our approval of the District's non-significance 
demonstration for SO2, we find it acceptable that Section 2-
2-412--Demonstration of NOX, POC and PM2.5 Offset 
Program Equivalence, does not require an annual demonstration that an 
equivalent number of SO2 offsets are required under Rule 2-
2, as would otherwise be required under a fully compliant nonattainment 
NSR program. While Section 2-2-303 requires offsets for SO2 
emissions (as required by state law), the District will not be required 
to include any offsets provided for SO2 major sources in the 
annual equivalency demonstration required by Section 2-2-412--
Demonstration of NOX, POC and PM2.5 Offset 
Program Equivalence.
4. Sections 110(a)(2) and 110(l) of the Act
    We are proposing to find that Regulation 2, Rules 1, 2 and 4 
satisfy the requirements of sections 110(a)(2) and 110(l) of the CAA. 
These sections state that each SIP revision submitted by a State shall 
be adopted by such State after reasonable notice and public hearing. 
Section 110(l) also states that the Administrator shall not approve a 
SIP revision if the revision would interfere with any applicable 
requirement concerning attainment and reasonable further progress, or 
any other CAA applicable requirement.
    With respect to the procedural requirements of CAA sections 
110(a)(2) and 110(l), based on our review of the public process 
documentation included in the December 14, 2017 SIP submittal package, 
we find that BAAQMD has provided sufficient evidence of public notice 
and opportunity for comment and public hearings prior to adoption and 
submittal of these rules to the EPA.
    With respect to the substantive requirements of section 110(l), we 
have determined that our approval of the BAAQMD NSR SIP submittal 
represents a strengthening of BAAQMD's NSR program as compared to the 
District's current SIP-approved NSR program that was last approved on 
August 1, 2016, and that the revision would not interfere with any 
applicable CAA requirement. Therefore we are proposing full approval of 
the BAAQMD NSR SIP submittal under section 110(l) of the Act.
5. Section 193 of the Act
    Section 193 of the Act includes a savings clause which provides, in 
pertinent part: ``No control requirement in effect, or required to be 
adopted by an order, settlement agreement, or plan in effect before 
November 15, 1990, in any area which is a nonattainment area for any 
air pollutant may be modified after November 15, 1990, in any manner 
unless the modification insures equivalent or greater emission 
reductions of such air pollutant.''
    We have reviewed the provisions included in BAAQMD's NSR SIP 
submittal and find that they would ensure equivalent or greater 
emission reductions compared to the current SIP-approved NSR program. 
The BACT and offset requirements of the submitted rules, which are the 
primary control requirements of a NSR program, are equivalent to or 
more stringent than those contained in the existing SIP-approved NSR 
rules. Therefore, we can

[[Page 8827]]

approve the submitted NSR program under section 193 of the Act.

III. Proposed Action and Public Comment

    As authorized in section 110(k)(3) of the Act, the EPA is proposing 
to fully approve the submitted rules because we believe they fulfill 
all relevant requirements. In support of this proposed action, we have 
concluded that our approval of the submitted rules would comply with 
sections 110(a)(2), 110(l) and 193 of the Act because the amended rules 
would not interfere with any applicable requirement concerning 
attainment of the NAAQS in the Bay Area, and do not relax control 
technology and offset requirements. If we finalize this action as 
proposed, our action would be codified through revisions to 40 CFR 
52.220 (Identification of plan--in part), and removal of the 
conditional approval contained in 40 CFR 52.248(c).
    We will accept comments from the public on the proposed approval of 
Rules 2-1, 2-2, and 2-4 for the next 30 days.

IV. Incorporation by Reference

    In this rule the EPA is proposing to include in a final EPA rule 
regulatory text that includes incorporation by reference. In accordance 
with requirements of 1 CFR 51.5, the EPA is proposing to incorporate by 
reference the BAAQMD rules listed in Table 1 of this preamble. The EPA 
has made, and will continue to make, these materials available 
electronically through www.regulations.gov and in hard copy at the EPA 
Region IX Office (please contact the person identified in the FOR 
FURTHER INFORMATION CONTACT section of this preamble for more 
information).

V. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the Act and 
applicable federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). 
Thus, in reviewing SIP submissions, the EPA's role is to approve state 
choices, provided that they meet the criteria of the Clean Air Act. 
Accordingly, this proposed action merely proposes to approve state law 
as meeting federal requirements and does not impose additional 
requirements beyond those imposed by state law. For that reason, this 
proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Orders 
12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 
2011);
     Is not an Executive Order 13771 (82 FR 9339, February 2, 
2017) regulatory action because SIP approvals are exempted under 
Executive Order 12866;
     Does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     Is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     Does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255, August 10, 1999);
     Is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 
19885, April 23, 1997);
     Is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     Does not provide the EPA with the discretionary authority 
to address disproportionate human health or environmental effects with 
practical, appropriate, and legally permissible methods under Executive 
Order 12898 (59 FR 7629, February 16, 1994).
    In addition, the SIP is not approved to apply on any Indian 
reservation land or in any other area where the EPA or an Indian tribe 
has demonstrated that a tribe has jurisdiction. In those areas of 
Indian country, the rule does not have tribal implications and will not 
impose substantial direct costs on tribal governments or preempt tribal 
law as specified by Executive Order 13175 (65 FR 67249, November 9, 
2000).

List of Subjects in 40 CFR Part 52

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

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

    Dated: February 20, 2018.
Alexis Strauss,
Acting Regional Administrator, Region IX.
[FR Doc. 2018-04112 Filed 2-28-18; 8:45 am]
 BILLING CODE 6560-50-P