Clean Air Act Approval and Promulgation of New Source Review Implementation Plan for Mojave Desert Air Quality Management District

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 79-3-7211; AD-FRL-5322-1]

Clean Air Act Approval and Promulgation of New Source Review

Implementation Plan for Mojave Desert Air Quality Management District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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SUMMARY: The EPA proposes to approve with a contingency, and disapprove

in the alternative, Mojave Desert Air Quality Management District

(MDAQMD) rules 1301, 1302, 1304, 1305, 1306, 1307, 1308, 1310, 1311,

and 1312 (submitted rules) as a revision to the California State

Implementation Plan (SIP). The State of California has submitted these

rules for the purpose of meeting the new source review (NSR)

requirements of the Clean Air Act, as amended in 1990 (CAA or the Act)

for areas that have not attained the national ambient air quality

standards (NAAQS). The submitted rules contain a number of deficiencies

that prevent EPA from approving them as revisions to the SIP. However,

MDAQMD has agreed to correct these deficiencies, and has sent draft

rules (Initial Draft 3, 10/11/95--hereafter: ``proposed revisions'') to

EPA which contain acceptable language. This proposed approval is

therefore contingent upon MDAQMD adopting and submitting to EPA revised

rules which correct the deficiencies identified in this document before

EPA promulgates a final rulemaking on the submitted rules. Should

MDAQMD fail to adopt and submit its proposed revisions, then this

document will serve as a proposed disapproval of the submitted rules.

If the District adopts and submits rules which differ substantially

from those contained in its proposed revisions, then EPA will publish

an additional notice of proposed rulemaking for public review and

comment.

DATES: Comments on this proposed action must be received in writing by

November 30, 1995.

ADDRESSES: To submit comments or receive additional information, please

contact: Steve Ringer, Environmental Engineer, Air & Toxics Division

(A-5-1), EPA Region 9, 75 Hawthorne Street, San Francisco, CA 94105.

Copies of MDAQMD's submittal and other information are available for

inspection during normal business hours at the following locations: (1)

EPA Region 9, 75 Hawthorne Street, San Francisco, CA; (2) Mojave Desert

AQMD, 15428 Civic Drive, Suite 200, Victorville, CA 92932; (3) Air

Resources Board, 2020 ``L'' Street, Sacramento, CA 95814.

FOR FURTHER INFORMATION CONTACT: Steve Ringer at (415) 744-1260.

SUPPLEMENTARY INFORMATION: The air quality planning requirements for

nonattainment NSR are set out in Part D of Title I of the Act. EPA has

issued a ``General Preamble'' describing EPA's preliminary views on how

EPA intends to review SIPs and SIP revisions submitted under part D,

including those State submittals containing nonattainment NSR SIP

requirements (see 57 FR 13498 (April 16, 1992) and 57 FR 18070 (April

28, 1992)). Because EPA is describing its interpretations here only in

broad terms, the reader should refer to the General Preamble for a more

detailed discussion. EPA is currently developing proposed regulations

to implement the changes under the 1990 Amendments in the NSR

provisions in Parts C and D of Title I of the Act. EPA expects to

propose these regulations sometime during 1995 or 1996. Upon

promulgation of these regulations, EPA will review those NSR SIP

submittals on which it has taken final action to determine whether

additional SIP revisions are necessary.

Procedural Background

The Act requires States to observe certain procedural requirements

in developing implementation plans and plan revisions for submission to

EPA. Section 110(a)(2) and section 110(l) of the Act provide that each

implementation plan or revision to an implementation plan submitted by

a State must be adopted after reasonable notice and public hearing.

Section 172(c)(7) of the Act provides that plan provisions for

nonattainment areas shall

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meet the applicable provisions of Section 110(a)(2).

The MDAQMD Governing Board held a public hearing on September 22,

1993 to entertain public comment on the NSR implementation plan. The

plan was adopted by the State and submitted to EPA on March 29, 1994 as

a proposed revision to the SIP.

The SIP revision was not reviewed by EPA within six months to

determine completeness, and was therefore deemed complete by default.

The submittal has since been reviewed and found to be complete but

lacking certain requirements that would make it fully approvable.

However, as noted above, MDAQMD has agreed to make the required changes

and has submitted draft versions of its rules which address the

deficiencies described below. Therefore, contingent on the submittal of

a fully approvable SIP in the form of approved rules consistent with

the revised rules, EPA proposes to approve the MDAQMD's nonattainment

NSR SIP submittal. If the District fails to correct the deficiencies in

the submitted rules, then EPA's final action will be a disapproval. If

the District adopts and submits rules which differ substantially from

those contained in its proposed revisions, then EPA will publish an

additional notice of proposed rulemaking for public review and comment.

Summary of Rule Contents

MDAQMD submitted to EPA for adoption into the applicable NSR SIP

Rules 1301, 1302, 1304, 1305, 1306, 1307, 1308, 1310, 1311, and 1312.

These submitted rules constitute MDAQMD's new source permitting

regulations. Rule 1301 outlines the general requirements for

preconstruction review of permit applications. Rule 1302 defines terms

relating to new sources and modifications to existing sources of air

pollution, and their regulation. Rule 1304 allows an exemption from NSR

for a change of ownership. Rule 1305 describes the procedures for

submittal and review of permit modifications. Rule 1306 outlines

calculation methods for emissions increases and decreases, and for

offset requirements. Rule 1307 contains a description of which new and

modified sources require offsets. Rule 1308 outlines which sources are

eligible to create offsets. Rule 1310 describes District requirements

for completeness determinations, final action and public notice on a

permit submittal. Rule 1311 outlines the requirements for electrical

energy generating facilities. Rule 1312 contains an alternative siting

analysis requirement for major new sources and modifications. The

submitted rules are intended to replace the existing rules 1301 through

1313, which were adopted into the San Bernardino SIP by EPA on June 9,

1982. MDAQMD has adopted these new regulations in part to meet the 1990

CAA Amendments and the November 15, 1992 deadline for submittal. A

summary of the changes between the current SIP and the submitted rules

is contained in the Technical Support Document (TSD) for this action.

MDAQMD is currently designated as attainment or unclassifiable for

CO, NO2, Pb, and SO2, and moderate nonattainment for

PM10. In addition, part of the MDAQMD is designated severe

nonattainment for ozone [40 CFR 81.305]. The CAA requirements for

nonattainment NSR permitting are found at sections 172 and 173. With

certain exceptions, described below, MDAQMD's submittal satisfies these

requirements. For a detailed description of how the submitted rules and

MDAQMD's proposed revisions meet the CAA requirements, refer to EPA's

TSD.

Rule Deficiencies Requiring Correction

Below is a list of the deficiencies which must be corrected for EPA

to approve MDAQMD's NSR rules into the SIP.

Rule 1302

Actual Emissions

The definition of ``Actual Emissions'' in the submitted rules

should require that emissions calculations reflect actual production

rates, the actual amount of fuel burned, actual amounts of material

processed, and the actual hours of operation over the two years prior

to such a determination. Emission factors should be established by

source testing or obtained from a reliable source of emission factor

data such as EPA's AP-42.

Major Modification

The submitted rules do not contain this definition. Although the

submitted definition of ``Modification'' contains much of the language

from the definition of a major modification in 40 CFR 51.165(a)(1)(v),

the District must define a ``Major Modification'' as any modification

that results in a significant net emissions increase.

Modification

The definition of ``Modification'' in the submitted rules differs

from the published definition in 40 CFR 52.21(2)(i). The CFR defines a

modification as a ``physical change in or change in the method of

operation.'' The submitted rules, however, define this as ``any

equipment or process which undergoes a physical revision.'' The rules

should be changed to clarify that the term ``Modification'' refers to

the change, rather than to the equipment itself.

Volatile Organic Compound

The definition of ``Reactive Organic Compound'' in the submitted

rules contains a list of substances exempt from regulation as ROC's

which is inconsistent with the exemption list in 40 CFR 51.100(s). This

discrepancy should be corrected to avoid granting ROC emission

reduction credits, as well as requiring ROC offsets, for non-ozone-

precursor emissions. The definition in 40 CFR 51.100(s) should be

adopted verbatim into this section.

Additional Definitions:

In addition to the changes indicated above, it is necessary to add

the following terms to this section: Begin Actual Construction,

Commence Construction, Construction, Enforceable (or Federally

Enforceable), Net Emissions Increase, Secondary Emissions, and

Significant. These definitions should follow the language found at 40

CFR 51.165.

Rule 1306

Calculating Emissions Changes

This section uses a source's pre-modification potential to emit

(PTE), rather than its pre-modification actual emissions, as the

baseline for calculating the offset requirement for major modifications

in nonattainment areas. This method is not acceptable unless the source

has already offset its entire pre-modification PTE. The District must

amend the rule to calculate the offset requirement in this case as the

source's new PTE minus the source's pre-modification actual emissions.

Rule 1307

Determination of Offset Requirements (Non-major Facility)

Section (B)(2)(a) overlooks the case in which a non-major facility

undergoes a modification which is in itself major. In this case, the

entire modification must be offset, and not, as the rule states, only

the portion of the facility's PTE which exceeds the major source

threshold.

Obtaining Offsets

The submitted rules contain no provision, pursuant to section 173

of the Act, which requires that offsets be federally enforceable prior

to the issuance of an authority to construct

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permit, and in effect by the time operation commences. Such provisions

must be added.

Rule 1308

Mobile Source Emission Reductions

EPA has not developed mobile source emission reduction crediting

guidance. The rules should therefore include a case by case approval by

EPA.

Mobile Source Emission Reductions

Section (A)(3)(b) allows emissions reduction credits to be

generated by the ``substitution and use of high occupancy vehicles for

low occupancy vehicles.'' Due to the extreme difficulty in quantifying

these types of emissions reductions, and in making them permanently

enforceable, EPA cannot approve this as a means of generating offsets.

This provision should be removed from the District's rules.

Emission Reduction Credits From Vehicle Scrappage

In order for EPA to determine if the offsets to be generated from a

vehicle scrappage program will be federally approvable, the details of

the program must be submitted with this rule. Section (A)(3)(c), which

states that these are a potential source of offsets, should either

include these details, or reference another section or rule which

contains the details of the program.

Interpollutant Offsets

The use of interpollutant trading to satisfy nonattainment offset

requirements is generally allowable only under very specific

conditions. On April 13, 1995, the Director of EPA Region 9's Air and

Toxics Division sent a letter to MDAQMD outlining an acceptable method

for the use of interpollutant trading. MDAQMD should either incorporate

this method into its NSR rules, or require case-by-case advance

approval by EPA.

Source Eligibility

Energy conservation projects could be an acceptable source of

offsets, but a definition should be included to clarify what is meant

by these. Section (A)(4) should also include a statement that these

projects are subject to the same standards as other sources of offsets

(i.e., the reductions must be real, enforceable, quantifiable, surplus,

and permanent).

Intra-basin and Inter-district Offsets

Section (D) should include the CAA section 173(c)(1) requirements

that sources locating in a nonattainment area may only obtain offsets

from other nonattainment areas which (A) have equal or higher

nonattainment classification, and (B) contribute to a violation of the

NAAQS in the nonattainment area in which the source is located.

Additional Requirements

Surplus Requirement: The submitted rules contain insufficient

provisions to ensure that all emission reduction credits (ERC's) used

to satisfy the nonattainment offset requirements will be surplus. These

provisions must be added to MDAQMD's NSR rules.

Prior Shutdowns: The submitted rules do not prohibit the use of

``prior shutdown'' credits as required in 40 CFR 51.165(a)(1)(xxv).

This provision applies either when the District attainment plan has

been disapproved, or when this plan is not yet due, but a due date

during the creation of this plan is missed. In these cases, sources

which seek ERC's due to a shutdown must do so at the time operation of

the source ceases. This provision must be added to the District's

rules.

Class I Area Visibility Protection: The submitted rules lack the

Class I Area visibility protection provisions of 40 CFR 51.307(b)(2)

for any new major source or major modification, proposing to locate in

a non-attainment area, that may have an impact on visibility in any

mandatory Class I Federal Area. This requirement must be added to the

District's rules.

Applicability: The submitted rules contain no provisions which

require NSR for a source or modification which becomes major due to a

relaxation in a federally-enforceable limit. As described in 40 CFR

51.165(a)(5)(ii), such sources and modifications are subject to NSR

``as though construction had not yet commenced.'' This requirement must

be added to the District's rules.

Proposed Action

EPA is proposing to approve with contingencies, and to disapprove

in the alternative, the SIP revisions submitted by MDAQMD on March 29,

1994. Full approval as a final action on this SIP revision is

contingent upon MDAQMD making the required changes to the submitted

rules as listed above.

If the specified changes to the submitted rules are not made before

EPA's final action on this SIP revision, then EPA's final action will

be a disapproval. If finalized, this disapproval would constitute a

disapproval under section 179(a)(2) of the Act (see 57 FR 13566-13567).

As provided under section 179(a), MDAQMD would have up to 18 months

after a final SIP disapproval to correct the deficiencies that are the

subject of the disapproval before EPA is required to impose sanctions.

If the MDAQMD does not correct its SIP deficiencies within 18 months,

then section 179(a)(4) requires the immediate application of sanctions.

According to section 179(b), sanctions can take the form of a loss of

highway funds or a two to one emissions offset ratio. Once the

Administrator applies one of the section 179(b) sanctions, the State

will then have an additional six months to correct any deficiencies.

Section 179(a)(4) requires that both highway and offsets sanctions must

be applied if any deficiencies are still not corrected after the

additional six month period.

EPA is requesting comments on all aspects of this proposed

rulemaking action. Comments received by the date indicated above will

be considered in EPA's final action.

Administrative Review

Nothing in this action should be construed as permitting, allowing,

or establishing a precedent for any future request for a revision to

any SIP. Each request for revision to a SIP shall be considered

separately in light of specific technical, economic, and environmental

factors and in relation to relevant statutory and regulatory

requirements.

Under the Regulatory Flexibility Act, 5 U.S.C. 600 et seq., EPA

must prepare a regulatory flexibility analysis assessing the impact of

any proposed or final rule on small entities. 5 U.S.C. 603 and 604.

Alternatively, EPA may certify that the rule will not have a

significant impact on a substantial number of small entities. Small

entities include small businesses, small not-for-profit enterprises,

and government entities with jurisdiction over populations of less than

50,000.

SIP approvals under section 110 and subchapter I, part D of the Act

do not create any new requirements, but simply approve requirements

that the State is already imposing. Therefore, because the Federal SIP-

approval does not impose any new requirements, I certify that it does

not have a significant impact on any small entities affected. Moreover,

due to the nature of the Federal-State relationship under the Act,

preparation of a regulatory flexibility analysis would constitute

Federal inquiry into the economic reasonableness of State action. The

Act forbids EPA to base its actions concerning SIPs on such grounds.

Union Electric Co. v. U.S. E.P.A., 427 U.S. 246, 256-66 (S.Ct 1976); 42

U.S.C. 7410(a)(2). The Office of Management and Budget has exempted

this rule from the requirements of section 6 of Executive Order 12866.

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Unfunded Mandates

Under Section 202 of the Unfunded Mandates Reform Act of 1995, EPA

must prepare a budgetary impact statement to accompany any proposed or

final rule that includes a federal mandate that may result in estimated

costs to state, local, or tribal governments in the aggregate; or to

the private sector, of $100 million or more. EPA has determined that

the approval proposed in this document does not include such a federal

mandate, as this proposed federal action would approve pre-existing

requirements under state or local law, and would impose no new federal

requirements. Accordingly, no additional costs to state, local, or

tribal governments, or to the private sector, will result from this

action.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,

Intergovernmental relations, nitrogen dioxide, Particulate matter,

Reporting and recordkeeping requirements, Sulfur dioxide, Volatile

organic compounds.

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

Dated: October 17, 1995.

Felicia Marcus,

Regional Administrator.

[FR Doc. 95-26952 Filed 10-31-95; 8:45 am]

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