Outer Continental Shelf Air Regulations Offset Remand

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 55

[FRL-5504-4]

RIN 2060-AG40 and AG39

Outer Continental Shelf Air Regulations Offset Remand

AGENCY: Environmental Protection Agency (EPA).

ACTION: Interim final rule.

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SUMMARY: The EPA is revising the outer continental shelf (OCS)

regulations in response to a decision by the U.S. Court of Appeals for

the District of Columbia Circuit. The OCS regulations establish air

pollution control requirements for certain sources located on the OCS.

On September 4, 1992, EPA promulgated the OCS regulations, which,

in part, set up special offset requirements for OCS sources located

within 25 miles of the States' seaward boundaries (the 25-mile limit).

The Santa Barbara County Air Pollution Control District filed a

petition for review of the regulations on several issues, including the

special offset provisions. Upon review, the court found that the

special offset provisions departed from the Clean Air Act directive,

vacated the regulation in part, and remanded it to EPA for further

consideration.

By this action, EPA is revising the OCS regulations to delete the

special offset provisions and to require that for sources located

within the 25-mile limit, offset requirements apply as they are

required in the corresponding onshore area (COA). The EPA is

promulgating these revisions as an interim final regulation and is

requesting comments on the revisions. The revisions will be in effect

during the interim period while EPA receives, reviews and responds to

any comments.

DATES: These rules shall be effective as of May 20, 1996. Written

comments on this action must be received by EPA at the address below on

or before June 19, 1996.

ADDRESSES: The public docket for this action is available for public

inspection and copying between 8:00 a.m. and 4:00 p.m., Monday through

Friday, at the Air and Radiation Docket and Information Center (6101),

Attention Docket A-95-06, South Conference Center, Room 4, 401 M

Street, SW, Washington, DC 20460. A reasonable fee for copying may be

charged.

FOR FURTHER INFORMATION CONTACT: Mr. David Stonefield, U.S. EPA, MD-15,

Research Triangle Park, NC 27711, telephone (919) 541-5350.

SUPPLEMENTARY INFORMATION:

I. Background and Purpose

A. Introduction

The Clean Air Act Amendments of 1990 (Act) (Pub. L. 101-549, 104

Stat. 2399 (1990)) added section 328 to the Act and transferred

authority to regulate sources on part of the OCS from the Department of

the Interior (DOI) to EPA. The DOI retained the authority to regulate

OCS sources in the Gulf of Mexico west of 87.5 degrees longitude. As to

the remaining portions of the OCS--the Atlantic, Pacific, and Arctic

coasts and the Gulf of Mexico east of 87.5 degrees--section 328

requires EPA

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to establish requirements for the control of air pollution from OCS

sources, to attain and maintain Federal and State ambient air quality

standards, and to comply with the provisions of part C of title I of

the Act. For sources within 25 miles of the States' seaward boundaries,

those requirements must be ``the same as would be applicable if the

source were located in the [COA]. * * *'' For sources beyond the 25-

mile limit, the Administrator has discretion in determining the

requirements. The EPA proposed (56 FR 63774, December 5, 1991) and

promulgated (57 FR 40792, September 4, 1992) regulations to implement

the requirements of section 328. Among other things, EPA said that it

would require OCS sources to meet the requirements of the operating

permits regulations (40 CFR part 71) and the enhanced monitoring

regulations when promulgated.

B. Offset Provisions

Generally, in nonattainment areas, a new source or existing source

undergoing modification which results in increased emissions must

secure emission reductions of an equal or greater amount from existing

sources in that area to ``offset'' its new emissions. In promulgating

the OCS regulations, EPA required that OCS sources obtain offsets based

on the requirements imposed in the COA and in accordance with special

offset requirements for OCS sources that EPA established in 40 CFR

55.5(d). The EPA set up three zones based upon where the offsets were

obtained and applied the offset program differently in each. Offsets

obtained seaward of the proposed source, zone 1, are subject to the

requirements of the COA including any distance penalty or discount.

Offsets obtained between the proposed source and the State's seaward

boundary, zone 2, are subject to the offset ratio of the COA but not

any distance discounting or penalties. Offsets obtained on the landward

side of the State's seaward boundary, zone 3, are subject to the

requirements of the COA including any distance penalty or discount, but

the proposed source is assumed to be located at the State's seaward

boundary (40 CFR 55.5(d) and 57 FR 40796).

C. Judicial Review

In November 1992, the Santa Barbara County Air Pollution Control

District (APCD) filed a petition for review of the OCS rule in the

Court of Appeals for the District of Columbia Circuit, claiming, among

other things, that section 328 of the Act requires that the offset

provision applicable to OCS sources must be the same as those that

apply within the COA (Santa Barbara County Air Pollution Control

District v. EPA, 31 F.3d 1179 (D.C. Cir. 1994)). The Santa Barbara

County APCD claimed EPA overstepped the statutory boundaries by

limiting the application of the COA offset provision with Federal

requirements. On August 12, 1994, the Court of Appeals vacated the

offset portion of the OCS regulations as it applied to zones 2 and 3,

finding that EPA should promulgate the same offset requirements for OCS

sources as would be applicable if the OCS sources were located in the

COA. The court remanded the provision to EPA for further consideration.

Another issue raised by the Santa Barbara County APCD petition

involved EPA's prohibition on the delegation of the authority to

implement and enforce the OCS regulations with respect to sources

located beyond the 25-mile limit. Pursuant to a request for a voluntary

remand, the court remanded this issue to EPA for reconsideration on

February 10, 1994. Elsewhere in today's Federal Register, EPA is

proposing revisions to the OCS regulations to delete that prohibition.

II. Revisions to the Regulations

By this action, EPA is addressing the court's August 12, 1994

decision by revising the offset provision that applies to OCS sources.

The EPA is revising section 55.5(d) of the OCS regulations to provide:

Offset requirements. Offsets shall be obtained based on the

applicable requirements of the COA, as set forth in Secs. 55.13 and

55.14 of this part.

The EPA will delete the final clause of current Sec. 55.5(d) and

the text of subparagraphs (1)-(7), which placed limitations on the

application of the offset requirements of the COA.

In accordance with the provisions of the Administrative Procedure

Act (APA), EPA is invoking the good cause exception in taking this

final action without prior notice and an opportunity for comment (5

U.S.C. 553(b)(B); Shell Oil Co. v. EPA, 950 F.2d 741, 752 (DC Cir.

1991); Mid-Tex Elec. Co-op., Inc. v. FERC, 822 F.2d 1123, 1131-34 (DC

Cir. 1987)). Because the court has vacated the existing regulations as

they apply to zones 2 and 3, there is a gap in continuity of the

regulation. The EPA believes good cause exists to make this action

final prior to providing an opportunity for notice and comment because

such a procedure is unnecessary in light of the court's holding. The

court decision clearly indicates that EPA was not entitled to interpret

section 328 so as to allow a different application of offsets from what

the COA's regulations provide. The court found that there is a clear

statutory mandate which EPA should have followed. Since there is no

judgment involved in the application of this provision, notice-and-

comment rulemaking is unnecessary. Furthermore, because of the gap in

continuity of the regulations, it is not practicable to cause notice

and an opportunity for public hearing prior to filling the gap, and it

is not in the public interest to do so since the gap could cause

confusion and delay with respect to permitting.

Finally, for the same reasons articulated above, EPA is invoking

the good cause exception to make this action effective immediately upon

publication (APA, 5 U.S.C. 553(d)(3)).

Although EPA is invoking the good cause exception to make this

action final without prior notice and opportunity for comment, EPA is

providing the public with the opportunity to comment on this interim

final action. Therefore, the final action is ``interim'' because EPA

will reevaluate its decision in light of any comments received during

the comment period and take a subsequent final action.

Appendix A to 40 CFR 55 identifies the State and local requirements

incorporated into EPA's OCS regulations. Section 55.12 requires EPA to

update appendix A to maintain consistency with onshore regulations.

During the next consistency review for each area, EPA will incorporate

any additional offset requirements necessary to comply with the

requirements of these revisions.

IV. Administrative Requirements

A. Executive Order 12866

Under Executive Order 12866, the Agency must determine whether the

regulatory action is significant and therefore subject to review by the

Office of Management and Budget (OMB) and the requirements of the

Executive Order. The Order defines significant regulatory action as one

that is likely to result in a rule that may:

(1) Have an annual effect on the economy of $100 million or more or

adversely affect in a material way the economy, productivity,

competition, jobs, the environment, public health or safety of State,

local, or tribal governments or communities;

(2) Create a serious inconsistency or otherwise interfere with an

action taken or planned by another Agency;

(3) Materially alter the budgetary impact of entitlements, grants,

user fees,

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or loan programs or the rights and obligations of recipients thereof;

or

(4) Raise novel legal or policy issues arising out of legal

mandates, the President's priorities, or the principles set forth in

the Executive Order.

It is estimated that the upper bound for the economic impact of

these revisions to the OCS rules is between $520,000 and $1,120,000 per

year. However, pursuant to the terms of Executive Order 12866, OMB has

determined that the revisions to the OCS rules are ``significant''

because the OCS sources would be regulated by two Federal agencies, EPA

and DOI. As such, this action was submitted to OMB for review. Changes

made in response to OMB suggestions or recommendations are documented

in the public record.

B. Unfunded Mandates Act

Section 202 of the Unfunded Mandates Act of 1995 requires that EPA

prepare a budgetary impact statement before promulgating a rule that

includes a Federal mandate that may result in expenditures by State,

local, and tribal governments, in aggregate, or by the private sector,

of $100 million or more in any 1 year. Section 203 requires EPA to

establish a plan for obtaining input from, informing, educating, and

advising any small governments that may be significantly or uniquely

affected by the rule.

Under section 205 of the Unfunded Mandates Act, EPA must identify

and consider a reasonable number of regulatory alternatives before

promulgating a rule for which a budgetary impact statement must be

prepared. The EPA must select from those alternatives the least costly,

most cost-effective, or least burdensome alternative that achieves the

objective of the rule, unless EPA explains why a particular alternative

is not selected or the selection of a particular alternative is

inconsistent with law.

Because this interim final rule does not impose any new mandates on

State, local, or tribal governments, and the rule is estimated to

result in the expenditures by State, local, and tribal governments or

the private sector of less than $100 million in any 1 year, EPA has not

prepared a budgetary impact statement or specifically addressed the

selection of the least costly, most cost-effective, or least burdensome

alternative. Because small governments will not be significantly or

uniquely affected by this rule, EPA is not required to develop a plan

with regard to small governments. However, EPA will work with State and

local air pollution control agencies that have received delegation of

authority to implement and enforce the OCS regulations.

C. Paperwork Reduction Act

These rule revisions do not contain any information collection

requirements subject to review by the OMB under the Paperwork Reduction

Act of 1980, 44 U.S.C. 3501, et seq.

D. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) of 1980 requires Federal

agencies to identify potentially adverse impacts of Federal rules upon

small entities. Small entities include small businesses, organizations,

and governmental jurisdictions. In instances where significant economic

impacts are possible on a substantial number of these entities,

agencies are required to perform a regulatory flexibility analysis.

Furthermore, EPA Guidelines for Implementing the Regulatory Flexibility

Act, issued on April 9, 1992, require the Agency to determine whether

regulations will have any economic impacts on small entities. As

explained in the September 4, 1992 final rule (57 FR 40792), the OCS

regulations do not apply to any small entities. Therefore, these

revisions to the OCS regulations neither impose any requirements on

small entities, nor require or exclude small entities from meeting the

requirements of the OCS regulations. As a result, EPA has determined

that these revisions will not have a significant impact on a

substantial number of small entities.

Therefore, as required under section 605 of the RFA, 5 U.S.C. 605,

I certify that these revisions do not have a significant impact on a

substantial number of small entities.

List of Subjects in 40 CFR Part 55

Environmental protection, Administrative practice and procedures,

Air pollution control, Continental shelf, Intergovernmental relations,

Nitrogen oxides, Ozone, Permits, Reporting and recordkeeping

requirements, Sulfur oxides.

Dated: May 13, 1996.

Carol M. Browner.

Administrator.

For reasons set out in the preamble, 40 CFR part 55 is revised and

amended as set forth below.

PART 55--OUTER CONTINENTAL SHELF AIR REGULATIONS

1. The authority citation for part 55 continues to read as follows:

Authority: Section 328 of the Clean Air Act (42 U.S.C. 7401, et

seq.) as amended by Public Law 101-549.4

2. Section 55.5 is amended by revising paragraph (d) to read as

follows:

Sec. 55.5 Corresponding onshore area designation.

* * * * *

(d) Offset requirements. Offsets shall be obtained based on the

applicable requirements of the COA, as set forth in Secs. 55.13 and

55.14 of this part.

* * * * *

[FR Doc. 96-12626 Filed 5-17-96; 8:45 am]

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