Revisions to the California State Implementation Plan, South Coast Air Quality Management District, 1895-1900 [2012-447]
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Federal Register / Vol. 77, No. 8 / Thursday, January 12, 2012 / Proposed Rules
Federal Register for detailed
instructions on how to submit
comments.
FOR FURTHER INFORMATION CONTACT:
Sean Lakeman, Regulatory Development
Section, Air Planning Branch, Air,
Pesticides and Toxics Management
Division, U.S. Environmental Protection
Agency, Region 4, 61 Forsyth Street
SW., Atlanta, Georgia 30303–8960. The
telephone number is (404) 562–9043.
Mr. Lakeman can be reached via
electronic mail at
lakeman.sean@epa.gov.
SUPPLEMENTARY INFORMATION: For
additional information see the direct
final rule which is published in the
Rules Section of this Federal Register.
A detailed rationale for the approval is
set forth in the direct final rule. If no
adverse comments are received in
response to this rule, no further activity
is contemplated. If EPA receives adverse
comments, the direct final rule will be
withdrawn and all public comments
received will be addressed in a
subsequent final rule based on this
proposed rule. EPA will not institute a
second comment period on this
document. Any parties interested in
commenting on this document should
do so at this time.
Dated: December 22, 2011.
Gwendolyn Keyes Fleming,
Regional Administrator, Region 4.
[FR Doc. 2012–347 Filed 1–11–12; 8:45 am]
BILLING CODE 6560–50–P
ENVIRONMENTAL PROTECTION
AGENCY
40 CFR Part 52
[EPA–R09–OAR–2011–0876; FRL–9617–9]
Revisions to the California State
Implementation Plan, South Coast Air
Quality Management District
Environmental Protection
Agency (EPA).
ACTION: Proposed rule.
AGENCY:
In this action, we are
proposing to approve South Coast Air
Quality Management District
(SCAQMD) Rule 317, ‘‘Clean Air Act
Non-Attainment Fee,’’ as a revision to
SCAQMD’s portion of the California
State Implementation Plan (SIP). Rule
317 is a local rule submitted to address
section 185 of the Clean Air Act (CAA
or Act). We are proposing that Rule 317,
an equivalent alternative program, is not
less stringent than the program required
by section 185, and, therefore, is
approvable, consistent with the
principles of section 172(e) of the Act.
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SUMMARY:
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As part of this action, we are inviting
public comment on whether it is
appropriate for EPA to consider
equivalent alternative programs, and, if
so, whether Rule 317 would constitute
an approvable equivalent alternative
program. We are taking comments on
these proposals and plan to follow with
a final action.
Any comments must arrive by
February 13, 2012.
DATES:
Submit comments,
identified by docket number EPA–R09–
OAR–2011–0876, by one of the
following methods:
1. Federal eRulemaking Portal:
https://www.regulations.gov. Follow the
on-line instructions.
2. Email: 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 https://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
https://www.regulations.gov or email.
https://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
email directly to EPA, your email
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: Generally, documents in the
docket for this action are available
electronically at https://
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 at
https://www.regulations.gov, some
information may be publicly available
only at the hard copy location (e.g.,
copyrighted material, large maps), 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.
ADDRESSES:
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Lily
Wong, EPA Region IX, (415) 947–4114,
wong.lily@epa.gov.
SUPPLEMENTARY INFORMATION:
Throughout this document, ‘‘we,’’ ‘‘us’’
and ‘‘our’’ refer to EPA.
FOR FURTHER INFORMATION CONTACT:
Table of Contents
I. What did the State submit?
II. Are there other versions of this rule?
III. What action is EPA taking?
IV. Background
V. What is the legal rationale for this action?
VI. What is EPA’s analysis of SCAQMD’s
alternative program?
VII. Proposed Action
VIII. Statutory and Executive Order Reviews
I. What did the State submit?
On February 4, 2011, SCAQMD
adopted Rule 317, ‘‘Clean Air Act Nonattainment Fee,’’ to meet the
requirements of CAA section 185. On
April 22, 2011, the California Air
Resources Board (CARB) submitted
SCAQMD’s Rule 317 to EPA. On May
19, 2011, EPA determined that the
submittal met the completeness criteria
in 40 CFR part 51 Appendix V, which
must be met before formal EPA review.
SCAQMD provided supplemental
information in a letter dated
December 21, 2011.
II. Are there other versions of this rule?
There are no previous versions of
Rule 317 in the SIP. Although the
SCAQMD adopted an earlier version of
Rule 317 on December 5, 2008, that rule
was never submitted to EPA for
approval as a SIP revision.
III. What action is EPA taking?
EPA is proposing to approve Rule 317
as a revision to SCAQMD’s portion of
the California SIP. The purpose of Rule
317 is to satisfy the requirements of
sections 182 and 185 of the Act by
utilizing an equivalency approach
consistent with the principles of section
172(e) of the Act. Under Rule 317,
SCAQMD will track, calculate, analyze,
and report to demonstrate that the
requirements of section 185 of the Act
have been met. Rule 317 includes:
Calculation of CAA non-attainment
(section 185) fee obligation,
establishment of a ‘‘section 172(e) fee
equivalency account,’’ an annual
demonstration of equivalency, an
annual preliminary determination of
equivalency, reporting to CARB and
EPA, and a backstop provision for
failure to achieve equivalency. The
‘‘section 172(e) fee equivalency
account’’ will include funds from
qualified programs that are surplus to
the 1-hour ozone SIP and designed to
result in direct reductions or facilitate
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future reductions of VOC or NOX
emissions.
In this action, EPA is also proposing
to approve Rule 317 as an alternative to
the program required by section 185 of
the Act. We are proposing that
SCAQMD’s equivalent alternative
program is not less stringent than the
program required by section 185, and,
therefore, is approvable, consistent with
the principles of section 172(e) of the
Act as explained more fully below. We
are taking comments on these proposals
and plan to follow with a final action.
IV. Background
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Section 185 Fees
Under sections 182(d)(3), (e), (f) and
185 of the Act, states with ozone
nonattainment areas classified as Severe
or Extreme are required to submit a
revision to the SIP that would require
major stationary sources of VOC or NOX
to pay a fee for each ton of VOC or NOX
emitted in excess of 80% of baseline
emissions.1 Under section 185(a) of the
Act, the SIP revision must provide that
the fees be paid if the area to which the
SIP revision applies has failed to attain
the 1-hour ozone National Ambient Air
Quality Standard (NAAQS or standard)
by the applicable attainment date. A
source’s baseline emissions are its
actual emissions during the required
attainment year. The fee rate is $5,000
per ton in 1990 dollars, which must be
adjusted for inflation based on the
Consumer Price Index (CPI).
South Coast Air Quality Management
District
There are two 1-hour ozone
nonattainment areas within the
jurisdiction of the SCAQMD: The Los
Angeles-South Coast Air Basin Area
(South Coast Air Basin) and the
Coachella Valley region of Riverside
County in the Southeast Desert
Modified Air Quality Maintenance Area
(Riverside County portion of Southeast
Desert Modified AQMA).2 The South
Coast Air Basin is an Extreme
nonattainment area for the 1-hour ozone
standard; the attainment year is 2010.
The Riverside County portion of the
Southeast Desert Modified AQMA is a
Severe-17 nonattainment area for the
1-hour ozone standard; the attainment
year is 2007. Therefore, California was
required under sections 182(d)(3), (e)
1 VOC help produce ground-level ozone and
smog, which harm human health and the
environment. NOX helps produce ground-level
ozone, smog and particulate matter, which harm
human health and the environment.
2 ‘‘Riverside County portion of Southeast Desert
Modified AQMA’’ is the same geographic area as
‘‘Riverside County portion of the Salton Sea Air
Basin’’ and Rule 317 uses the latter terminology.
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and (f) to develop and submit a SIP
revision meeting the requirements of
section 185, which are discussed above.
On December 30, 2011, we published
a finding that the South Coast Air Basin
and the Southeast Desert Modified
AQMA failed to attain the 1-hour ozone
standard by their applicable attainment
dates (76 FR 82133).
Pursuant to California law, the
SCAQMD is responsible for developing
rules, such as Rule 317, that are
intended to meet CAA SIP requirements
for the two nonattainment areas
described above under SCAQMD
jurisdiction. Such rules are then
submitted to EPA after adoption by
CARB, which is the State agency
responsible for SIP matters on behalf of
the State of California. On April 22,
2011, CARB submitted Rule 317 to
satisfy SCAQMD’s obligations under
sections 182 and 185 of the Act.
V. What is the legal rationale for
equivalent alternative programs?
EPA is proposing that states can meet
the section 185 obligation arising from
the revoked 1-hour ozone NAAQS
through a SIP revision containing either
the fee program prescribed in section
185 of the Act, or an equivalent
alternative program. As further
explained below, EPA is proposing that
an alternative program may be
acceptable if EPA determines, through
notice-and-comment rulemaking, that it
is consistent with the principles of
section 172(e) of the CAA and is not less
stringent than a program prescribed by
section 185.3
Section 172(e) is an anti-backsliding
provision of the CAA that requires EPA
to develop regulations to ensure that
controls in a nonattainment area are
‘‘not less stringent’’ than those that
3 EPA has previously set forth this reasoning in
a memorandum from Stephen D. Page, Director,
Office of Air Quality Planning and Standards, to Air
Division Directors, ‘‘Guidance on Developing Fee
Programs Required by Clean Air Act Section 185 for
the 1-hour Ozone NAAQS,’’ January 5, 2010
(‘‘Section 185 Guidance Memo’’). On July 1, 2011,
the DC Circuit Court of Appeals vacated this
guidance, on the ground that it was final agency
action for which notice-and-comment rulemaking
procedures were required. NRDC v. EPA, No. 10–
1056, 2011 WL 2601560, C.A.D.C. 2011. EPA
subsequently set forth this reasoning in a
rulemaking action concerning an equivalent
alternative 185 program submitted as a SIP revision
to EPA by the State of California on behalf of the
San Joaquin Valley Unified Air Pollution Control
District (‘‘SJVUAPCD’’). 76 FR 45213 (July 28,
2011). In so doing, we were applying the court’s
directive to follow the rulemaking requirements set
forth in the Administrative Procedures Act to
inform consideration of section 185 and equivalent
alternative programs. In this action regarding
SCAQMD Rule 317, we are again applying the
court’s directive to follow rulemaking requirements
with respect to section 185 and equivalent
alternative programs.
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applied to the area before EPA revised
a NAAQS to make it less stringent. In
the Phase 1 Ozone Implementation Rule
for the 1997 ozone NAAQS published
on April 30, 2004 (69 FR 23951), EPA
determined that although section 172(e)
does not directly apply where EPA has
strengthened the NAAQS, as it did in
1997, it was reasonable to apply to the
transition from the 1-hour NAAQS to
the more stringent 1997 8-hour NAAQS,
the same anti-backsliding principle that
would apply to the relaxation of a
standard. Thus, as part of applying the
principles in section 172(e) for purposes
of the transition from the 1-hour
standard to the 1997 8-hour standard,
EPA can either require states to retain
programs that applied for purposes of
the 1-hour standard, or can allow states
to adopt equivalent alternative
programs, but only if such alternatives
are determined through notice-andcomment rulemaking to be ‘‘not less
stringent’’ than the mandated program.
EPA has previously identified three
types of alternative programs that could
satisfy the section 185 requirement: (i)
Those that achieve the same emissions
reductions; (ii) those that raise the same
amount of revenue and establish a
process where the funds would be used
to pay for emission reductions that will
further improve ozone air quality; and
(iii) those that would be equivalent
through a combination of both emission
reductions and revenues.4
We are proposing today to determine
through notice-and-comment
rulemaking that states can demonstrate
an alternative program’s equivalency by
comparing expected fees and/or
emissions reductions directly
attributable to application of section 185
to the expected fees, pollution control
project funding, and/or emissions
reductions from the proposed
alternative program. Under an
alternative program, states might opt to
shift the fee burden from a specific set
of major stationary sources to non-major
sources, such as owners of mobile
sources that also contribute to ozone
formation. EPA also believes that
alternative programs, if approved as
‘‘not less stringent’’ than the section 185
fee program, would encourage one-hour
ozone NAAQS nonattainment areas to
reach attainment as effectively and
expeditiously as a section 185 fee
program, if not more so, and therefore
satisfy the CAA’s goal of attainment and
maintenance of the NAAQS.
4 These types of programs were identified in our
rulemaking action concerning SJVUAPCD’s
alternative section 185 fee program 76 FR 45213
(July 28, 2011).
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While section 185 focuses most
directly on assessing emissions fees, we
believe it is useful to interpret antibacksliding requirements for section 185
within the context of the CAA’s ozone
implementation provisions of subpart 2
(which includes section 185). The
subpart 2 provisions are designed to
promote reductions of ozone-forming
pollutant emissions to levels that
achieve attainment of the ozone
NAAQS. In this context, to satisfy the
anti-backsliding requirements for
section 185 associated with the 1-hour
NAAQS we believe it is appropriate for
states to implement equivalent
alternative programs that maintain a
focus on achieving further emission
reductions, whether that occurs through
the incentives created by fees levied on
pollution sources or other funding of
pollution control projects, or some
combination of both. For any alternative
program adopted by a state, the state’s
demonstration that the program is not
less stringent should consist of
comparing expected fees and/or
emission reductions directly attributable
to application of section 185 to the
expected fees, pollution control project
funding, and/or emissions reductions
from the proposed alternative program.
For a valid demonstration to ensure
equivalency, the state’s submissions
should not underestimate the expected
fees and/or emission reductions from
the section 185 fee program, nor
overestimate the expected fees,
pollution control project funding, and/
or emission reductions associated with
the proposed alternative program.
We also note that the structure
established in Subparts 1 and 2 of the
CAA recognizes that successful
achievement of clean air goals depends
in great part on the development by
states of clean air plans that that are
specifically tailored to the nature of the
air pollution sources in each state. The
Act recognizes that states are best suited
to design plans that will be most
effective. Allowing states to put forward
an equivalent program under the
circumstances that pertain here, and
under the authority of 172(e), is
consistent with this principle of the Act.
In sum, in order for EPA to approve
an alternative program as satisfying the
1-hour ozone section 185 fee program
SIP revision requirement, the state must
demonstrate that the alternative
program is not less stringent than the
otherwise applicable section 185 fee
program by collecting fees from owner/
operators of pollution sources,
providing funding for emissions
reduction projects, and/or providing
direct emissions reductions equal to or
exceeding the expected results of the
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otherwise applicable section 185 fee
program. We are inviting public
comment on whether it is appropriate
for EPA to consider equivalent
alternative programs, and, if so, whether
Rule 317 would constitute an
approvable equivalent alternative
program.
VI. What is EPA’s analysis of
SCAQMD’s alternative program?
Summary of SCAQMD’s Alternative
Program
In today’s action, we are proposing to
approve SCAQMD Rule 317 as an
equivalent alternative program that
satisfies the section 185 requirement
under the principles of section 172(e).
Further information regarding Rule 317
is set forth below and in EPA’s
Technical Support Document (TSD) for
this action.
The purpose of Rule 317 is to satisfy
the requirements of section 185 of the
Act by utilizing an equivalency
approach consistent with the principles
of 172(e) of the Act. Under Rule 317,
SCAQMD will track, calculate, analyze,
and report to demonstrate that the
requirements of section 185 of the Act
have been met. Rule 317 includes:
Calculation of CAA non-attainment
(section 185) fee obligation;
establishment of a ‘‘section 172(e) fee
equivalency account’’ to track qualified
expenditures on pollution control
projects; an annual demonstration of
equivalency; an annual preliminary
determination of equivalency; reporting
to CARB and EPA; and a backstop
provision for failure to achieve
equivalency.
As described above, there are two
1-hour ozone nonattainment areas
within the jurisdiction of the SCAQMD.
By letter dated December 21, 2011,
SCAQMD clarified that they intend to
provide separate equivalency
demonstrations for the two nonattainment areas in that the equivalency
analyses will compare fee obligations
within each non-attainment area to
expenditures within the same nonattainment area.
SCAQMD will establish a ‘‘section
172(e) fee equivalency account’’ that
will be credited with expenditures from
qualified programs that meet the criteria
in section (c)(1)(A) of Rule 317: (i)
Surplus to the 1-hour ozone SIP and
approved by the District, CARB, and
EPA as being surplus to the SIP; (ii)
designed to result in direct VOC or NOX
reductions in SCAQMD, or to facilitate
future VOC or NOX reductions in
SCAQMD through vehicle/engine
fueling infrastructure or advanced
technology development efforts for
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implementation within the next 10
years, or for other uses approved by
EPA; (iii) expenditures occurring only
in calendar years subsequent to 2008
from eligible projects; 5 and (iv) only
monies actually expended from
qualified programs during a calendar
year shall be credited. Rule 317
provides that the equivalency account
may be pre-funded with expenditures
from the programs listed in Attachment
A of the rule.6
SCAQMD will annually calculate the
total amount of major stationary source
fees that would have been assessed in
the prior calendar year under a direct
implementation of section 185 of the
Act. A fee is calculated for each major
stationary source whose actual
emissions of VOC or NOX exceed 80%
of its baseline emissions. The fee rate is
$5,000 per ton in 1990 dollars, which
must be adjusted for inflation based on
the Consumer Price Index (CPI).
While CAA section 185 requires
baseline emissions to be based on the
lower of the source’s actual or
allowable 7 emissions during the
attainment year, it also allows the use of
an alternative period as provided in
EPA guidance. Rule 317 specifies that
baseline emissions of an existing source
in the South Coast Air Basin will be
based on an average of the source’s
actual emissions during fiscal years
2005–06 and 2006–07 (which are not to
exceed allowable emissions), and would
be programmatically adjusted by
SCAQMD to take into account the
effects of new requirements or
regulations from 2006 to 2010. In the
Salton Sea Air Basin, an existing
source’s baseline emissions are its
reported emissions during 2007, the
attainment year for the Southeast Desert
Modified AQMA. Rule 317 also
specifies that, for sources that become
subject to the rule after the attainment
year, baseline emissions are based on
allowable limits in the applicable
implementation plan or potential to
5 By letter dated December 21, 2011, SCAQMD
clarified that for the South Coast Air Basin
equivalency demonstration, SCAQMD intends only
to include expenditures that occurred in calendar
years 2010 and forward.
6 Attachment A of Rule 317 identifies potential
sources of funds for the section 172(e) fee
equivalency account. These potential funding
mechanisms include: Fees from motor vehicles
pursuant to AB 118 and AB 27866 and federal
grants to fund retrofitting of school buses and
trucks.
7 ‘‘Allowable’’ emissions are the amount of
emissions that are allowed under the source’s
permit, or if no such permit has been issued to the
source for the attainment year, the amount of
emissions allowed under the applicable attainment
plan (CAA section 185(b)(2)).
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emit, or holdings of RECLAIM Trading
Credits.
SCAQMD will annually demonstrate
that the funds in the section 172(e) fee
equivalency account for the prior year
are equal to or greater than the CAA
non-attainment (section 185) fee
obligation that would have been
assessed for the prior year.
SCAQMD will also annually project
whether adequate funding is expected to
be available in the section 172(e) fee
equivalency account in the current year
in accordance with the equation in
section (c)(4) of the rule. This
preliminary determination of
equivalency requires the projection to
show that the amount of funds in the fee
equivalency account are at least 110%
of the previous year’s fee obligation,
which serves as a surrogate for the
current year’s fee obligation.
SCAQMD will annually report to
CARB and EPA on the results of the
demonstration of equivalency and
preliminary determination of
equivalency, as well as information on
facilities’ fee obligations, programs and
expenditures included in the fee
equivalency account, and any surplus
funding carried over to the subsequent
calendar year.
If the annual demonstration of
equivalency fails to show sufficient
funds in the section 172(e) fee
equivalency account for the prior year,
or the preliminary determination of
equivalency shows that adequate
funding may not be available in the
current year, then Rule 317 requires the
SCAQMD Executive Officer (EO) to
submit to the Governing Board within
90 days of the finding a back-stop rule
that would require the EO to collect
and/or track adequate fees for any
shortfall. The Governing Board is
required to act on the backstop rule
within 120 days of the funding
inadequacy finding.
If SCAQMD adopts a backstop rule
applicable to major stationary sources,
Rule 317 states that the backstop rule
would include provisions that allow
sources to request an alternate baseline
period and multi-site aggregation of
baseline and emissions. Rule 317 also
states that stationary sources paying
such fees in the backstop rule shall
receive a credit for annual operating fees
and annual operating emission fees paid
to SCAQMD.
EPA’s TSD has more information
about SCAQMD’s equivalent alternative
program.
How is EPA evaluating SCAQMD’s
alternative program?
Generally, SIP rules must be
enforceable (see section 110(a) of the
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Act). Guidance and policy documents
that we use to evaluate enforceability
requirements consistently 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.
4. ‘‘Review of State Implementation
Plans and Revisions for Enforceability
and Legal Sufficiency; Section 110:
State Implementation Plans,’’ EPA,
September 23, 1987 Memorandum.
Also, SIP revisions must not interfere
with any applicable requirement
concerning attainment and reasonable
further progress (RFP) or any other
applicable requirement of the Act (CAA
section 110(l)).
SCAQMD’s equivalent alternative
program must also be evaluated against
section 185 of the Act, as described
above under section III of this
document. EPA also developed the
following guidance on establishing
baselines as allowed by section 185:
5. 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,’’ March 21, 2008.8
Does SCAQMD’s alternative program
meet the evaluation criteria?
As described below, we are proposing
to find that SCAQMD’s equivalent
alternative program is consistent with
the relevant policy and guidance
regarding enforceability, SIP revisions,
and sections 172(e) and 185 of the Act.
One initial step in the equivalency
demonstration is to determine the
benchmark for comparison, i.e., the
amount of fees that would have been
collected under direct implementation
of section 185. A fee is calculated for
each major stationary source whose
actual emissions of VOC or NOX exceed
80% of its baseline emissions. Rule 317
8 This guidance can be found at: https://
www.epa.gov/ttn/oarpg/t1/memoranda/
20080321_harnett_emissions_basline.pdf.
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reflects the method for calculation of the
fee set out in section 185(b)(1) of the
Act.
Section 185 specifies that baseline
emissions are the lower of a source’s
actual or allowable emissions during the
attainment year. Section 185 and EPA’s
March 21, 2008 baseline guidance
memorandum provide for determining
baseline emissions over a longer period
if a source’s emissions are irregular,
cyclical, or otherwise vary significantly
from year to year.
Rule 317 defines baseline emissions
for most existing stationary sources in
the South Coast Air Basin as an average
of actual emissions from two years
(fiscal years 2005–2006, and 2006–
2007), not to exceed allowable
emissions, and programmatically
adjusted to account for regulatory effects
between 2006 through 2010 for the
South Coast Air Basin. SCAQMD’s staff
report for Rule 317 explains that
SCAQMD selected this two-year
baseline period as more representative
of typical production and emissions
because it occurred before the economic
recession that began in 2008 and that
using 2010 attainment year actual
emissions as the baseline year would
lock sources to an atypical low
production year. SCAQMD provided
data on various indicators such as Gross
Domestic Product, regional
employment, and usage of fuels and
coatings and solvents to show the
recessionary effects on emissions
throughout the area.
By letter dated December 21, 2011,
SCAQMD provided source-specific
emissions data and analyses that
showed that all or almost all sources
had emissions that varied from year to
year. SCAQMD’s letter states that the
selection of fiscal years 2005–2006 and
2006–2007 as the baseline period for all
major stationary sources results in an
alternative baseline amount that is
conservative but more representative of
typical emissions. SCAQMD explains
that under EPA’s 2008 baseline
guidance, sources are allowed to choose
any recent historical 24-month
consecutive period, including a period
chosen by the source. See 40 CFR
52.21(48). SCAQMD’s analyses show
that the District’s selected baseline
period results in a lower baseline
overall than would result from a
regulatory approach that would allow
sources to propose their own baseline.
A lower baseline amount is conservative
because it establishes a lower threshold
for calculating the assessment of section
185 fees. EPA agrees the emissions
baseline provisions of Rule 317 are
appropriate. EPA’s TSD has more
information on the alternative baseline.
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Rule 317 requires SCAQMD to
establish a ‘‘section 172(e) fee
equivalency account’’ that will be
credited with expenditures from
qualified programs that meet the criteria
outlined in section (c)(1)(A) of the rule.
One criterion is whether the
expenditures, which result in emission
reductions, are surplus to the 1-hour
ozone SIP. The approved 1-hour ozone
SIP in the South Coast Air Basin is the
1997 Air Quality Management Plan, as
revised in 1999.9 The approved 1-hour
ozone SIP in the Southeast Desert
Modified AQMA is the 1994 Air Quality
Management Plan.10
Surplus reductions are those that are
not relied upon in the SIP, i.e.,
reductions that are not required nor
assumed by the SIP to provide for RFP
or attainment.11 At the time of rule
adoption, SCAQMD identified three
preliminary lists of qualified
programs—Rule 317 Attachment A,
‘‘List of Programs Pre-funding Section
172(e) Fee Equivalency Account,’’
Attachment B in the staff report, ‘‘List
of Potential Section 172(e) Fee
Equivalent Account Funding Programs
for Post-2011,’’ and Attachment C in the
staff report, ‘‘List of Potential Future
Section 172(e) Fee Equivalent Account
(Credit) Programs.’’
By letter dated December 21, 2011,
SCAQMD updated the lists of qualified
programs, which are attached to the
letter as Exhibit A ‘‘Qualified Programs
and Estimated Actual Expenditures for
2010 and 2011 Pre-funding the Section
172(e) Fee Equivalency Account’’ and
Exhibit B ‘‘Qualified Programs
Providing On-Going Funding for Post2010 to Section 172(e) Fee Equivalent
Account.12 ’’ The December 201l letter
also elaborates on the bases for the
conclusion that listed programs are
surplus and meet the criteria at Rule
317(c)(1)(A). EPA has reviewed this
documentation and agrees with
SCAQMD that the programs previously
9 This SIP was approved by EPA on April 10,
2000 (see 65 FR 18903).
10 This SIP was approved by EPA on January 8,
1997 (see 62 FR 1150).
11 ‘‘Surplus’’ is discussed in EPA’s guidance,
‘‘Improving Air Quality with Economic Incentive
Programs’’ published on January 2001 (EPA–452/R–
01–001) and available at https://www.epa.gov/ttn/
oarpg/t1/memoranda/eipfin.pdf.
12 When SCAQMD adopted Rule 317, the
programs listed in Attachment C were identified as
‘‘potential’’ programs for inclusion in the 172(e)
equivalency account because SCAQMD did not
have sufficient time to make a surplus
determination. Subsequent to rule adoption,
SCAQMD concluded in their letter dated December
21, 2011 that the programs listed in Attachment C
of the staff report are also surplus. Exhibit B of
SCAQMD’s December 21, 2011 letter included all
programs that were previously included in
Attachments B and C of the February 2011 staff
report.
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listed in Attachment A of Rule 317 and
Attachments B and C of the staff report
and listed as Exhibits A and B to the
December 21, 2011 letter are surplus.
This determination, with respect to
these programs only, addresses section
(c)(1)(A)(i) of the rule, which requires
EPA’s approval that the qualified
programs are surplus to the SIP. Future
determinations of ‘‘surplus’’ may be
necessary if SCAQMD relies on
programs or expenditures other than
those identified in Exhibits A and B of
the December 21, 2011 letter to offset
section 185 fee obligations.
Rule 317 requires that expenditures
from qualified programs result in direct
reductions or facilitate future reductions
of VOC or NOX emissions. In contrast,
section 185 of the Act requires states to
assess fees on stationary sources but
does not require that the fees be used for
activities beneficial in reducing ozone
formation. We believe this requirement
in Rule 317 to use the surplus funds for
reducing ozone formation will result in
further progress toward attainment.
SCAQMD is required to demonstrate
equivalency for the previous year’s fee
obligation in accordance with section
(c)(3) of the rule and report the results
to CARB and EPA. Equivalency is
demonstrated if the funds in the section
172(e) fee equivalency account are equal
to or greater than the CAA nonattainment (section 185) fee obligation
that would have been assessed for the
prior year. The rule includes the correct
equation to demonstrate equivalency.
If equivalency is demonstrated and
there are ‘‘unused’’ expenditures that
exceeded the amount of the fee
obligations, those ‘‘unused’’ funds are
carried forward into the following
assessment year. Since the expenditures
have been determined to be surplus and
there have been no other changes to the
SIP for the 1-hour ozone standard,
carrying these funds forward into the
following year is acceptable because
they would remain surplus. Also, if the
expenditure occurred in a year prior to
its use in an equivalency demonstration,
the emission reductions would occur
earlier, which is environmentally
beneficial.
As an added measure to demonstrate
equivalency, Rule 317 also has a
forward-looking measure to estimate
whether equivalency will likely be
demonstrated. SCAQMD is required to
preliminarily determine if expenditures
in the section 172(e) fee equivalency
account are at least 110% of the
previous year’s fee obligation, which
serves as a surrogate for the current
year’s fee obligation. If the preliminary
determination does not project
equivalency in accordance with the
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Sfmt 4702
1899
rule, that would trigger the requirement
for SCAQMD to adopt a backstop rule in
advance of the actual equivalency
demonstration. We believe this measure
provides an additional checkpoint for
ensuring equivalency.
If SCAQMD fails to either
demonstrate equivalency or the
preliminary determination of
equivalency does not show
expenditures in the account at least
equal to 110% of the estimated fee
obligation, Rule 317 requires the EO to
submit, within 90 days of the
determination, a backstop measure to
the Governing Board. Rule 317 also
requires the Governing Board to act on
the measure within 120 days of the
determination, to either collect and/or
track adequate fees to address the
shortfall.
Rule 317 identifies certain elements to
be included in a major stationary source
backstop rule. If the backstop rule
requires major stationary sources to pay
fees, Rule 317 states that the backstop
rule would allow sources to receive a
credit for fees paid for operating fees
and annual operating emissions fees.
Title V regulations at 40 CFR 70 require
the assessment of fees sufficient to cover
Title V program costs. While any
backstop rule would need to ensure that
this fee credit provision would not
adversely affect funds needed to cover
Title V program costs, this issue
ultimately needs to be addressed in the
rulemaking process for the backstop
rule.
Lastly, Rule 317 applies to SCAQMD
and requires SCAQMD to follow the
procedures to make the equivalency
demonstration and to adopt a backstop
rule to make up any shortfall if
equivalency is not initially
demonstrated. These provisions, if
approved into the SIP, would be
enforceable against SCAQMD.
In conclusion, Rule 317 requires
SCAQMD to demonstrate on an annual
basis, in accordance with the principles
of section 172(e), that its alternative
CAA section 185 program is not less
stringent than the program prescribed
by CAA section 185. EPA therefore
proposes to approve Rule 317 as
satisfying the 1-hour ozone section 185
fee program requirements. The TSD has
more information on our evaluation.
VII. Proposed Action
Because EPA believes SCAQMD Rule
317 fulfills all relevant requirements, we
are proposing to approve Rule 317 as a
SIP revision under section 110(k)(3) of
the Act. EPA believes that SCAQMD’s
equivalent alternative program is not
less stringent than the requirements set
forth in section 185 of the Act; therefore
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pmangrum on DSK3VPTVN1PROD with PROPOSALS
we are proposing to approve SCAQMD’s
alternative program as fulfilling the
requirements of sections 182, 185 and
172(e) of the Act. If finalized as
proposed, this action would
permanently terminate all CAA Section
110(c) Federal Implementation Plan
(FIP) implications associated with our
January 5, 2010 Finding of Failure to
Submit a SIP revision to satisfy section
185 requirements for the SCAQMD (75
FR 232). We will accept comments from
the public on these proposals for the
next 30 days.
VIII. 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, 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 Order 12866 (58 FR 51735,
October 4, 1993);
• 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
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Jkt 226001
• Does not provide 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, this proposed action does
not have tribal implications as specified
by Executive Order 13175 (65 FR 67249,
November 9, 2000), because the SIP is
not approved to apply in Indian country
located in the State, and EPA notes that
it will not impose substantial direct
costs on tribal governments or preempt
tribal law.
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: January 4, 2012.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2012–447 Filed 1–11–12; 8:45 am]
BILLING CODE 6560–50–P
DEPARTMENT OF THE INTERIOR
Fish and Wildlife Service
50 CFR Part 17
[Docket No. FWS–R8–ES–2011–0105;
4500030113]
Endangered and Threatened Wildlife
and Plants; 90-Day Finding on a
Petition To List the Humboldt Marten
as Endangered or Threatened
Fish and Wildlife Service,
Interior.
ACTION: Notice of petition finding and
initiation of status review.
AGENCY:
We, the U.S. Fish and
Wildlife Service (Service), announce a
90-day finding on a petition to list the
Humboldt marten (Martes americana
humboldtensis) as endangered or
threatened and designate critical habitat
under the Endangered Species Act of
1973, as amended (Act). Based on our
review, we find that the petition
presents substantial scientific or
commercial information indicating that
listing the Humboldt marten may be
warranted. Therefore, with the
publication of this notice, we are
initiating a review of the status of the
Humboldt marten to determine if listing
is warranted. To ensure that this status
review is comprehensive, we are
SUMMARY:
PO 00000
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Fmt 4702
Sfmt 4702
requesting scientific and commercial
data and other information regarding the
Humboldt marten. Based on the status
review, we will issue a 12-month
finding on the petition, which will
address whether the petitioned action is
warranted, as provided in section
4(b)(3)(B) of the Act.
DATES: To allow us adequate time to
conduct this review, we request that we
receive information on or before March
12, 2012. The deadline for submitting an
electronic comment using the Federal
eRulemaking Portal (see ADDRESSES
section, below) is 11:59 p.m. Eastern
Time on this date. After March 12, 2012,
you must submit information directly to
the Field Office (see FOR FURTHER
INFORMATION CONTACT section below).
Please note that we might not be able to
address or incorporate information that
we receive after the above requested
date.
ADDRESSES: You may submit
information by one of the following
methods:
(1) Electronically: Go to the Federal
eRulemaking Portal: https://
www.regulations.gov. In the Enter
Keyword or ID box, enter Docket No.
FWS–R8–ES–2011–0105, which is the
docket number for this action. Then
click on the Search button. You may
submit a comment by clicking on ‘‘Send
a Comment or Submission.’’
(2) By hard copy: Submit by U.S. mail
or hand-delivery to: Public Comments
Processing, Attn: FWS–R8–ES–2011–
0105; Division of Policy and Directives
Management; U.S. Fish and Wildlife
Service; 4401 N. Fairfax Drive, MS
2042–PDM; Arlington, VA 22203.
We will post all information we
receive on https://www.regulations.gov.
This generally means that we will post
any personal identifying information
you provide us (see the Request for
Information section below for more
details).
FOR FURTHER INFORMATION CONTACT:
Nancy J. Finley, Field Supervisor; by
mail at Arcata Fish and Wildlife Office,
1655 Heindon Road, Arcata, CA 95521;
by telephone at (707) 822–7201; or by
facsimile at (707) 822–8411. If you use
a telecommunications device for the
deaf (TDD), please call the Federal
Information Relay Service (FIRS) at
(800) 877–8339.
SUPPLEMENTARY INFORMATION:
Request for Information
When we make a finding that a
petition presents substantial
information indicating that listing a
species may be warranted, we are
required to promptly review the status
of the species (status review). For the
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[Federal Register Volume 77, Number 8 (Thursday, January 12, 2012)]
[Proposed Rules]
[Pages 1895-1900]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2012-447]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R09-OAR-2011-0876; FRL-9617-9]
Revisions to the California State Implementation Plan, South
Coast Air Quality Management District
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
-----------------------------------------------------------------------
SUMMARY: In this action, we are proposing to approve South Coast Air
Quality Management District (SCAQMD) Rule 317, ``Clean Air Act Non-
Attainment Fee,'' as a revision to SCAQMD's portion of the California
State Implementation Plan (SIP). Rule 317 is a local rule submitted to
address section 185 of the Clean Air Act (CAA or Act). We are proposing
that Rule 317, an equivalent alternative program, is not less stringent
than the program required by section 185, and, therefore, is
approvable, consistent with the principles of section 172(e) of the
Act. As part of this action, we are inviting public comment on whether
it is appropriate for EPA to consider equivalent alternative programs,
and, if so, whether Rule 317 would constitute an approvable equivalent
alternative program. We are taking comments on these proposals and plan
to follow with a final action.
DATES: Any comments must arrive by February 13, 2012.
ADDRESSES: Submit comments, identified by docket number EPA-R09-OAR-
2011-0876, by one of the following methods:
1. Federal eRulemaking Portal: https://www.regulations.gov. Follow
the on-line instructions.
2. Email: 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 https://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 https://www.regulations.gov or email. https://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 email directly to EPA, your email 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: Generally, documents in the docket for this action are
available electronically at https://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 at https://www.regulations.gov,
some information may be publicly available only at the hard copy
location (e.g., copyrighted material, large maps), 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: Lily Wong, EPA Region IX, (415) 947-
4114, wong.lily@epa.gov.
SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and
``our'' refer to EPA.
Table of Contents
I. What did the State submit?
II. Are there other versions of this rule?
III. What action is EPA taking?
IV. Background
V. What is the legal rationale for this action?
VI. What is EPA's analysis of SCAQMD's alternative program?
VII. Proposed Action
VIII. Statutory and Executive Order Reviews
I. What did the State submit?
On February 4, 2011, SCAQMD adopted Rule 317, ``Clean Air Act Non-
attainment Fee,'' to meet the requirements of CAA section 185. On April
22, 2011, the California Air Resources Board (CARB) submitted SCAQMD's
Rule 317 to EPA. On May 19, 2011, EPA determined that the submittal met
the completeness criteria in 40 CFR part 51 Appendix V, which must be
met before formal EPA review. SCAQMD provided supplemental information
in a letter dated December 21, 2011.
II. Are there other versions of this rule?
There are no previous versions of Rule 317 in the SIP. Although the
SCAQMD adopted an earlier version of Rule 317 on December 5, 2008, that
rule was never submitted to EPA for approval as a SIP revision.
III. What action is EPA taking?
EPA is proposing to approve Rule 317 as a revision to SCAQMD's
portion of the California SIP. The purpose of Rule 317 is to satisfy
the requirements of sections 182 and 185 of the Act by utilizing an
equivalency approach consistent with the principles of section 172(e)
of the Act. Under Rule 317, SCAQMD will track, calculate, analyze, and
report to demonstrate that the requirements of section 185 of the Act
have been met. Rule 317 includes: Calculation of CAA non-attainment
(section 185) fee obligation, establishment of a ``section 172(e) fee
equivalency account,'' an annual demonstration of equivalency, an
annual preliminary determination of equivalency, reporting to CARB and
EPA, and a backstop provision for failure to achieve equivalency. The
``section 172(e) fee equivalency account'' will include funds from
qualified programs that are surplus to the 1-hour ozone SIP and
designed to result in direct reductions or facilitate
[[Page 1896]]
future reductions of VOC or NOX emissions.
In this action, EPA is also proposing to approve Rule 317 as an
alternative to the program required by section 185 of the Act. We are
proposing that SCAQMD's equivalent alternative program is not less
stringent than the program required by section 185, and, therefore, is
approvable, consistent with the principles of section 172(e) of the Act
as explained more fully below. We are taking comments on these
proposals and plan to follow with a final action.
IV. Background
Section 185 Fees
Under sections 182(d)(3), (e), (f) and 185 of the Act, states with
ozone nonattainment areas classified as Severe or Extreme are required
to submit a revision to the SIP that would require major stationary
sources of VOC or NOX to pay a fee for each ton of VOC or
NOX emitted in excess of 80% of baseline emissions.\1\ Under
section 185(a) of the Act, the SIP revision must provide that the fees
be paid if the area to which the SIP revision applies has failed to
attain the 1-hour ozone National Ambient Air Quality Standard (NAAQS or
standard) by the applicable attainment date. A source's baseline
emissions are its actual emissions during the required attainment year.
The fee rate is $5,000 per ton in 1990 dollars, which must be adjusted
for inflation based on the Consumer Price Index (CPI).
---------------------------------------------------------------------------
\1\ VOC help produce ground-level ozone and smog, which harm
human health and the environment. NOX helps produce
ground-level ozone, smog and particulate matter, which harm human
health and the environment.
---------------------------------------------------------------------------
South Coast Air Quality Management District
There are two 1-hour ozone nonattainment areas within the
jurisdiction of the SCAQMD: The Los Angeles-South Coast Air Basin Area
(South Coast Air Basin) and the Coachella Valley region of Riverside
County in the Southeast Desert Modified Air Quality Maintenance Area
(Riverside County portion of Southeast Desert Modified AQMA).\2\ The
South Coast Air Basin is an Extreme nonattainment area for the 1-hour
ozone standard; the attainment year is 2010. The Riverside County
portion of the Southeast Desert Modified AQMA is a Severe-17
nonattainment area for the 1-hour ozone standard; the attainment year
is 2007. Therefore, California was required under sections 182(d)(3),
(e) and (f) to develop and submit a SIP revision meeting the
requirements of section 185, which are discussed above.
---------------------------------------------------------------------------
\2\ ``Riverside County portion of Southeast Desert Modified
AQMA'' is the same geographic area as ``Riverside County portion of
the Salton Sea Air Basin'' and Rule 317 uses the latter terminology.
---------------------------------------------------------------------------
On December 30, 2011, we published a finding that the South Coast
Air Basin and the Southeast Desert Modified AQMA failed to attain the
1-hour ozone standard by their applicable attainment dates (76 FR
82133).
Pursuant to California law, the SCAQMD is responsible for
developing rules, such as Rule 317, that are intended to meet CAA SIP
requirements for the two nonattainment areas described above under
SCAQMD jurisdiction. Such rules are then submitted to EPA after
adoption by CARB, which is the State agency responsible for SIP matters
on behalf of the State of California. On April 22, 2011, CARB submitted
Rule 317 to satisfy SCAQMD's obligations under sections 182 and 185 of
the Act.
V. What is the legal rationale for equivalent alternative programs?
EPA is proposing that states can meet the section 185 obligation
arising from the revoked 1-hour ozone NAAQS through a SIP revision
containing either the fee program prescribed in section 185 of the Act,
or an equivalent alternative program. As further explained below, EPA
is proposing that an alternative program may be acceptable if EPA
determines, through notice-and-comment rulemaking, that it is
consistent with the principles of section 172(e) of the CAA and is not
less stringent than a program prescribed by section 185.\3\
---------------------------------------------------------------------------
\3\ EPA has previously set forth this reasoning in a memorandum
from Stephen D. Page, Director, Office of Air Quality Planning and
Standards, to Air Division Directors, ``Guidance on Developing Fee
Programs Required by Clean Air Act Section 185 for the 1-hour Ozone
NAAQS,'' January 5, 2010 (``Section 185 Guidance Memo''). On July 1,
2011, the DC Circuit Court of Appeals vacated this guidance, on the
ground that it was final agency action for which notice-and-comment
rulemaking procedures were required. NRDC v. EPA, No. 10-1056, 2011
WL 2601560, C.A.D.C. 2011. EPA subsequently set forth this reasoning
in a rulemaking action concerning an equivalent alternative 185
program submitted as a SIP revision to EPA by the State of
California on behalf of the San Joaquin Valley Unified Air Pollution
Control District (``SJVUAPCD''). 76 FR 45213 (July 28, 2011). In so
doing, we were applying the court's directive to follow the
rulemaking requirements set forth in the Administrative Procedures
Act to inform consideration of section 185 and equivalent
alternative programs. In this action regarding SCAQMD Rule 317, we
are again applying the court's directive to follow rulemaking
requirements with respect to section 185 and equivalent alternative
programs.
---------------------------------------------------------------------------
Section 172(e) is an anti-backsliding provision of the CAA that
requires EPA to develop regulations to ensure that controls in a
nonattainment area are ``not less stringent'' than those that applied
to the area before EPA revised a NAAQS to make it less stringent. In
the Phase 1 Ozone Implementation Rule for the 1997 ozone NAAQS
published on April 30, 2004 (69 FR 23951), EPA determined that although
section 172(e) does not directly apply where EPA has strengthened the
NAAQS, as it did in 1997, it was reasonable to apply to the transition
from the 1-hour NAAQS to the more stringent 1997 8-hour NAAQS, the same
anti-backsliding principle that would apply to the relaxation of a
standard. Thus, as part of applying the principles in section 172(e)
for purposes of the transition from the 1-hour standard to the 1997 8-
hour standard, EPA can either require states to retain programs that
applied for purposes of the 1-hour standard, or can allow states to
adopt equivalent alternative programs, but only if such alternatives
are determined through notice-and-comment rulemaking to be ``not less
stringent'' than the mandated program. EPA has previously identified
three types of alternative programs that could satisfy the section 185
requirement: (i) Those that achieve the same emissions reductions; (ii)
those that raise the same amount of revenue and establish a process
where the funds would be used to pay for emission reductions that will
further improve ozone air quality; and (iii) those that would be
equivalent through a combination of both emission reductions and
revenues.\4\
---------------------------------------------------------------------------
\4\ These types of programs were identified in our rulemaking
action concerning SJVUAPCD's alternative section 185 fee program 76
FR 45213 (July 28, 2011).
---------------------------------------------------------------------------
We are proposing today to determine through notice-and-comment
rulemaking that states can demonstrate an alternative program's
equivalency by comparing expected fees and/or emissions reductions
directly attributable to application of section 185 to the expected
fees, pollution control project funding, and/or emissions reductions
from the proposed alternative program. Under an alternative program,
states might opt to shift the fee burden from a specific set of major
stationary sources to non-major sources, such as owners of mobile
sources that also contribute to ozone formation. EPA also believes that
alternative programs, if approved as ``not less stringent'' than the
section 185 fee program, would encourage one-hour ozone NAAQS
nonattainment areas to reach attainment as effectively and
expeditiously as a section 185 fee program, if not more so, and
therefore satisfy the CAA's goal of attainment and maintenance of the
NAAQS.
[[Page 1897]]
While section 185 focuses most directly on assessing emissions
fees, we believe it is useful to interpret anti-backsliding
requirements for section 185 within the context of the CAA's ozone
implementation provisions of subpart 2 (which includes section 185).
The subpart 2 provisions are designed to promote reductions of ozone-
forming pollutant emissions to levels that achieve attainment of the
ozone NAAQS. In this context, to satisfy the anti-backsliding
requirements for section 185 associated with the 1-hour NAAQS we
believe it is appropriate for states to implement equivalent
alternative programs that maintain a focus on achieving further
emission reductions, whether that occurs through the incentives created
by fees levied on pollution sources or other funding of pollution
control projects, or some combination of both. For any alternative
program adopted by a state, the state's demonstration that the program
is not less stringent should consist of comparing expected fees and/or
emission reductions directly attributable to application of section 185
to the expected fees, pollution control project funding, and/or
emissions reductions from the proposed alternative program. For a valid
demonstration to ensure equivalency, the state's submissions should not
underestimate the expected fees and/or emission reductions from the
section 185 fee program, nor overestimate the expected fees, pollution
control project funding, and/or emission reductions associated with the
proposed alternative program.
We also note that the structure established in Subparts 1 and 2 of
the CAA recognizes that successful achievement of clean air goals
depends in great part on the development by states of clean air plans
that that are specifically tailored to the nature of the air pollution
sources in each state. The Act recognizes that states are best suited
to design plans that will be most effective. Allowing states to put
forward an equivalent program under the circumstances that pertain
here, and under the authority of 172(e), is consistent with this
principle of the Act.
In sum, in order for EPA to approve an alternative program as
satisfying the 1-hour ozone section 185 fee program SIP revision
requirement, the state must demonstrate that the alternative program is
not less stringent than the otherwise applicable section 185 fee
program by collecting fees from owner/operators of pollution sources,
providing funding for emissions reduction projects, and/or providing
direct emissions reductions equal to or exceeding the expected results
of the otherwise applicable section 185 fee program. We are inviting
public comment on whether it is appropriate for EPA to consider
equivalent alternative programs, and, if so, whether Rule 317 would
constitute an approvable equivalent alternative program.
VI. What is EPA's analysis of SCAQMD's alternative program?
Summary of SCAQMD's Alternative Program
In today's action, we are proposing to approve SCAQMD Rule 317 as
an equivalent alternative program that satisfies the section 185
requirement under the principles of section 172(e). Further information
regarding Rule 317 is set forth below and in EPA's Technical Support
Document (TSD) for this action.
The purpose of Rule 317 is to satisfy the requirements of section
185 of the Act by utilizing an equivalency approach consistent with the
principles of 172(e) of the Act. Under Rule 317, SCAQMD will track,
calculate, analyze, and report to demonstrate that the requirements of
section 185 of the Act have been met. Rule 317 includes: Calculation of
CAA non-attainment (section 185) fee obligation; establishment of a
``section 172(e) fee equivalency account'' to track qualified
expenditures on pollution control projects; an annual demonstration of
equivalency; an annual preliminary determination of equivalency;
reporting to CARB and EPA; and a backstop provision for failure to
achieve equivalency.
As described above, there are two 1-hour ozone nonattainment areas
within the jurisdiction of the SCAQMD. By letter dated December 21,
2011, SCAQMD clarified that they intend to provide separate equivalency
demonstrations for the two non-attainment areas in that the equivalency
analyses will compare fee obligations within each non-attainment area
to expenditures within the same non-attainment area.
SCAQMD will establish a ``section 172(e) fee equivalency account''
that will be credited with expenditures from qualified programs that
meet the criteria in section (c)(1)(A) of Rule 317: (i) Surplus to the
1-hour ozone SIP and approved by the District, CARB, and EPA as being
surplus to the SIP; (ii) designed to result in direct VOC or
NOX reductions in SCAQMD, or to facilitate future VOC or
NOX reductions in SCAQMD through vehicle/engine fueling
infrastructure or advanced technology development efforts for
implementation within the next 10 years, or for other uses approved by
EPA; (iii) expenditures occurring only in calendar years subsequent to
2008 from eligible projects; \5\ and (iv) only monies actually expended
from qualified programs during a calendar year shall be credited. Rule
317 provides that the equivalency account may be pre-funded with
expenditures from the programs listed in Attachment A of the rule.\6\
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\5\ By letter dated December 21, 2011, SCAQMD clarified that for
the South Coast Air Basin equivalency demonstration, SCAQMD intends
only to include expenditures that occurred in calendar years 2010
and forward.
\6\ Attachment A of Rule 317 identifies potential sources of
funds for the section 172(e) fee equivalency account. These
potential funding mechanisms include: Fees from motor vehicles
pursuant to AB 118 and AB 27866 and federal grants to fund
retrofitting of school buses and trucks.
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SCAQMD will annually calculate the total amount of major stationary
source fees that would have been assessed in the prior calendar year
under a direct implementation of section 185 of the Act. A fee is
calculated for each major stationary source whose actual emissions of
VOC or NOX exceed 80% of its baseline emissions. The fee
rate is $5,000 per ton in 1990 dollars, which must be adjusted for
inflation based on the Consumer Price Index (CPI).
While CAA section 185 requires baseline emissions to be based on
the lower of the source's actual or allowable \7\ emissions during the
attainment year, it also allows the use of an alternative period as
provided in EPA guidance. Rule 317 specifies that baseline emissions of
an existing source in the South Coast Air Basin will be based on an
average of the source's actual emissions during fiscal years 2005-06
and 2006-07 (which are not to exceed allowable emissions), and would be
programmatically adjusted by SCAQMD to take into account the effects of
new requirements or regulations from 2006 to 2010. In the Salton Sea
Air Basin, an existing source's baseline emissions are its reported
emissions during 2007, the attainment year for the Southeast Desert
Modified AQMA. Rule 317 also specifies that, for sources that become
subject to the rule after the attainment year, baseline emissions are
based on allowable limits in the applicable implementation plan or
potential to
[[Page 1898]]
emit, or holdings of RECLAIM Trading Credits.
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\7\ ``Allowable'' emissions are the amount of emissions that are
allowed under the source's permit, or if no such permit has been
issued to the source for the attainment year, the amount of
emissions allowed under the applicable attainment plan (CAA section
185(b)(2)).
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SCAQMD will annually demonstrate that the funds in the section
172(e) fee equivalency account for the prior year are equal to or
greater than the CAA non-attainment (section 185) fee obligation that
would have been assessed for the prior year.
SCAQMD will also annually project whether adequate funding is
expected to be available in the section 172(e) fee equivalency account
in the current year in accordance with the equation in section (c)(4)
of the rule. This preliminary determination of equivalency requires the
projection to show that the amount of funds in the fee equivalency
account are at least 110% of the previous year's fee obligation, which
serves as a surrogate for the current year's fee obligation.
SCAQMD will annually report to CARB and EPA on the results of the
demonstration of equivalency and preliminary determination of
equivalency, as well as information on facilities' fee obligations,
programs and expenditures included in the fee equivalency account, and
any surplus funding carried over to the subsequent calendar year.
If the annual demonstration of equivalency fails to show sufficient
funds in the section 172(e) fee equivalency account for the prior year,
or the preliminary determination of equivalency shows that adequate
funding may not be available in the current year, then Rule 317
requires the SCAQMD Executive Officer (EO) to submit to the Governing
Board within 90 days of the finding a back-stop rule that would require
the EO to collect and/or track adequate fees for any shortfall. The
Governing Board is required to act on the backstop rule within 120 days
of the funding inadequacy finding.
If SCAQMD adopts a backstop rule applicable to major stationary
sources, Rule 317 states that the backstop rule would include
provisions that allow sources to request an alternate baseline period
and multi-site aggregation of baseline and emissions. Rule 317 also
states that stationary sources paying such fees in the backstop rule
shall receive a credit for annual operating fees and annual operating
emission fees paid to SCAQMD.
EPA's TSD has more information about SCAQMD's equivalent
alternative program.
How is EPA evaluating SCAQMD's alternative program?
Generally, SIP rules must be enforceable (see section 110(a) of the
Act). Guidance and policy documents that we use to evaluate
enforceability requirements consistently 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.
4. ``Review of State Implementation Plans and Revisions for
Enforceability and Legal Sufficiency; Section 110: State Implementation
Plans,'' EPA, September 23, 1987 Memorandum.
Also, SIP revisions must not interfere with any applicable
requirement concerning attainment and reasonable further progress (RFP)
or any other applicable requirement of the Act (CAA section 110(l)).
SCAQMD's equivalent alternative program must also be evaluated
against section 185 of the Act, as described above under section III of
this document. EPA also developed the following guidance on
establishing baselines as allowed by section 185:
5. 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,''
March 21, 2008.\8\
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\8\ This guidance can be found at: https://www.epa.gov/ttn/oarpg/t1/memoranda/20080321_harnett_emissions_basline.pdf.
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Does SCAQMD's alternative program meet the evaluation criteria?
As described below, we are proposing to find that SCAQMD's
equivalent alternative program is consistent with the relevant policy
and guidance regarding enforceability, SIP revisions, and sections
172(e) and 185 of the Act.
One initial step in the equivalency demonstration is to determine
the benchmark for comparison, i.e., the amount of fees that would have
been collected under direct implementation of section 185. A fee is
calculated for each major stationary source whose actual emissions of
VOC or NOX exceed 80% of its baseline emissions. Rule 317
reflects the method for calculation of the fee set out in section
185(b)(1) of the Act.
Section 185 specifies that baseline emissions are the lower of a
source's actual or allowable emissions during the attainment year.
Section 185 and EPA's March 21, 2008 baseline guidance memorandum
provide for determining baseline emissions over a longer period if a
source's emissions are irregular, cyclical, or otherwise vary
significantly from year to year.
Rule 317 defines baseline emissions for most existing stationary
sources in the South Coast Air Basin as an average of actual emissions
from two years (fiscal years 2005-2006, and 2006-2007), not to exceed
allowable emissions, and programmatically adjusted to account for
regulatory effects between 2006 through 2010 for the South Coast Air
Basin. SCAQMD's staff report for Rule 317 explains that SCAQMD selected
this two-year baseline period as more representative of typical
production and emissions because it occurred before the economic
recession that began in 2008 and that using 2010 attainment year actual
emissions as the baseline year would lock sources to an atypical low
production year. SCAQMD provided data on various indicators such as
Gross Domestic Product, regional employment, and usage of fuels and
coatings and solvents to show the recessionary effects on emissions
throughout the area.
By letter dated December 21, 2011, SCAQMD provided source-specific
emissions data and analyses that showed that all or almost all sources
had emissions that varied from year to year. SCAQMD's letter states
that the selection of fiscal years 2005-2006 and 2006-2007 as the
baseline period for all major stationary sources results in an
alternative baseline amount that is conservative but more
representative of typical emissions. SCAQMD explains that under EPA's
2008 baseline guidance, sources are allowed to choose any recent
historical 24-month consecutive period, including a period chosen by
the source. See 40 CFR 52.21(48). SCAQMD's analyses show that the
District's selected baseline period results in a lower baseline overall
than would result from a regulatory approach that would allow sources
to propose their own baseline. A lower baseline amount is conservative
because it establishes a lower threshold for calculating the assessment
of section 185 fees. EPA agrees the emissions baseline provisions of
Rule 317 are appropriate. EPA's TSD has more information on the
alternative baseline.
[[Page 1899]]
Rule 317 requires SCAQMD to establish a ``section 172(e) fee
equivalency account'' that will be credited with expenditures from
qualified programs that meet the criteria outlined in section (c)(1)(A)
of the rule. One criterion is whether the expenditures, which result in
emission reductions, are surplus to the 1-hour ozone SIP. The approved
1-hour ozone SIP in the South Coast Air Basin is the 1997 Air Quality
Management Plan, as revised in 1999.\9\ The approved 1-hour ozone SIP
in the Southeast Desert Modified AQMA is the 1994 Air Quality
Management Plan.\10\
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\9\ This SIP was approved by EPA on April 10, 2000 (see 65 FR
18903).
\10\ This SIP was approved by EPA on January 8, 1997 (see 62 FR
1150).
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Surplus reductions are those that are not relied upon in the SIP,
i.e., reductions that are not required nor assumed by the SIP to
provide for RFP or attainment.\11\ At the time of rule adoption, SCAQMD
identified three preliminary lists of qualified programs--Rule 317
Attachment A, ``List of Programs Pre-funding Section 172(e) Fee
Equivalency Account,'' Attachment B in the staff report, ``List of
Potential Section 172(e) Fee Equivalent Account Funding Programs for
Post-2011,'' and Attachment C in the staff report, ``List of Potential
Future Section 172(e) Fee Equivalent Account (Credit) Programs.''
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\11\ ``Surplus'' is discussed in EPA's guidance, ``Improving Air
Quality with Economic Incentive Programs'' published on January 2001
(EPA-452/R-01-001) and available at https://www.epa.gov/ttn/oarpg/t1/memoranda/eipfin.pdf.
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By letter dated December 21, 2011, SCAQMD updated the lists of
qualified programs, which are attached to the letter as Exhibit A
``Qualified Programs and Estimated Actual Expenditures for 2010 and
2011 Pre-funding the Section 172(e) Fee Equivalency Account'' and
Exhibit B ``Qualified Programs Providing On-Going Funding for Post-2010
to Section 172(e) Fee Equivalent Account.\12\ '' The December 201l
letter also elaborates on the bases for the conclusion that listed
programs are surplus and meet the criteria at Rule 317(c)(1)(A). EPA
has reviewed this documentation and agrees with SCAQMD that the
programs previously listed in Attachment A of Rule 317 and Attachments
B and C of the staff report and listed as Exhibits A and B to the
December 21, 2011 letter are surplus. This determination, with respect
to these programs only, addresses section (c)(1)(A)(i) of the rule,
which requires EPA's approval that the qualified programs are surplus
to the SIP. Future determinations of ``surplus'' may be necessary if
SCAQMD relies on programs or expenditures other than those identified
in Exhibits A and B of the December 21, 2011 letter to offset section
185 fee obligations.
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\12\ When SCAQMD adopted Rule 317, the programs listed in
Attachment C were identified as ``potential'' programs for inclusion
in the 172(e) equivalency account because SCAQMD did not have
sufficient time to make a surplus determination. Subsequent to rule
adoption, SCAQMD concluded in their letter dated December 21, 2011
that the programs listed in Attachment C of the staff report are
also surplus. Exhibit B of SCAQMD's December 21, 2011 letter
included all programs that were previously included in Attachments B
and C of the February 2011 staff report.
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Rule 317 requires that expenditures from qualified programs result
in direct reductions or facilitate future reductions of VOC or
NOX emissions. In contrast, section 185 of the Act requires
states to assess fees on stationary sources but does not require that
the fees be used for activities beneficial in reducing ozone formation.
We believe this requirement in Rule 317 to use the surplus funds for
reducing ozone formation will result in further progress toward
attainment.
SCAQMD is required to demonstrate equivalency for the previous
year's fee obligation in accordance with section (c)(3) of the rule and
report the results to CARB and EPA. Equivalency is demonstrated if the
funds in the section 172(e) fee equivalency account are equal to or
greater than the CAA non-attainment (section 185) fee obligation that
would have been assessed for the prior year. The rule includes the
correct equation to demonstrate equivalency.
If equivalency is demonstrated and there are ``unused''
expenditures that exceeded the amount of the fee obligations, those
``unused'' funds are carried forward into the following assessment
year. Since the expenditures have been determined to be surplus and
there have been no other changes to the SIP for the 1-hour ozone
standard, carrying these funds forward into the following year is
acceptable because they would remain surplus. Also, if the expenditure
occurred in a year prior to its use in an equivalency demonstration,
the emission reductions would occur earlier, which is environmentally
beneficial.
As an added measure to demonstrate equivalency, Rule 317 also has a
forward-looking measure to estimate whether equivalency will likely be
demonstrated. SCAQMD is required to preliminarily determine if
expenditures in the section 172(e) fee equivalency account are at least
110% of the previous year's fee obligation, which serves as a surrogate
for the current year's fee obligation. If the preliminary determination
does not project equivalency in accordance with the rule, that would
trigger the requirement for SCAQMD to adopt a backstop rule in advance
of the actual equivalency demonstration. We believe this measure
provides an additional checkpoint for ensuring equivalency.
If SCAQMD fails to either demonstrate equivalency or the
preliminary determination of equivalency does not show expenditures in
the account at least equal to 110% of the estimated fee obligation,
Rule 317 requires the EO to submit, within 90 days of the
determination, a backstop measure to the Governing Board. Rule 317 also
requires the Governing Board to act on the measure within 120 days of
the determination, to either collect and/or track adequate fees to
address the shortfall.
Rule 317 identifies certain elements to be included in a major
stationary source backstop rule. If the backstop rule requires major
stationary sources to pay fees, Rule 317 states that the backstop rule
would allow sources to receive a credit for fees paid for operating
fees and annual operating emissions fees. Title V regulations at 40 CFR
70 require the assessment of fees sufficient to cover Title V program
costs. While any backstop rule would need to ensure that this fee
credit provision would not adversely affect funds needed to cover Title
V program costs, this issue ultimately needs to be addressed in the
rulemaking process for the backstop rule.
Lastly, Rule 317 applies to SCAQMD and requires SCAQMD to follow
the procedures to make the equivalency demonstration and to adopt a
backstop rule to make up any shortfall if equivalency is not initially
demonstrated. These provisions, if approved into the SIP, would be
enforceable against SCAQMD.
In conclusion, Rule 317 requires SCAQMD to demonstrate on an annual
basis, in accordance with the principles of section 172(e), that its
alternative CAA section 185 program is not less stringent than the
program prescribed by CAA section 185. EPA therefore proposes to
approve Rule 317 as satisfying the 1-hour ozone section 185 fee program
requirements. The TSD has more information on our evaluation.
VII. Proposed Action
Because EPA believes SCAQMD Rule 317 fulfills all relevant
requirements, we are proposing to approve Rule 317 as a SIP revision
under section 110(k)(3) of the Act. EPA believes that SCAQMD's
equivalent alternative program is not less stringent than the
requirements set forth in section 185 of the Act; therefore
[[Page 1900]]
we are proposing to approve SCAQMD's alternative program as fulfilling
the requirements of sections 182, 185 and 172(e) of the Act. If
finalized as proposed, this action would permanently terminate all CAA
Section 110(c) Federal Implementation Plan (FIP) implications
associated with our January 5, 2010 Finding of Failure to Submit a SIP
revision to satisfy section 185 requirements for the SCAQMD (75 FR
232). We will accept comments from the public on these proposals for
the next 30 days.
VIII. 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, 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 Order
12866 (58 FR 51735, October 4, 1993);
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 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, this proposed action does not have tribal implications
as specified by Executive Order 13175 (65 FR 67249, November 9, 2000),
because the SIP is not approved to apply in Indian country located in
the State, and EPA notes that it will not impose substantial direct
costs on tribal governments or preempt tribal law.
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: January 4, 2012.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2012-447 Filed 1-11-12; 8:45 am]
BILLING CODE 6560-50-P
