Redesignation of the Yavapai-Apache Reservation to a PSD Class I Area; State of Arizona; Dispute Resolution

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[AZ 58-1-7131-b]

[FRL-5634-5]

Redesignation of the Yavapai-Apache Reservation to a PSD Class I

Area; State of Arizona; Dispute Resolution

AGENCY: Environmental Protection Agency (EPA).

ACTION: Announcement of dispute resolution.

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SUMMARY: The purpose of this action is to announce the EPA's resolution

of an intergovernmental dispute over a request by the Yavapai-Apache

Tribal Council to redesignate the Yavapai-Apache Reservation (``the

Reservation'') as a non-Federal Class I area under the Clean Air Act

program for prevention of significant deterioration of air quality. On

August 22, 1994 the Governor of Arizona raised concerns about EPA's

proposal to approve the request of the Yavapai-Apache Tribe to

redesignate its Reservation as a Class I area and asked EPA to initiate

the intergovernmental dispute resolution process provided for in

section 164(e) of the Clean Air Act. The State and the Tribe were

unable to reach an agreement concerning the redesignation. Section

164(e) of the Clean Air Act provides that EPA must therefore resolve

the dispute. After fully considering the concerns raised by the State

of Arizona, EPA declines in these particular circumstances to

disapprove the Tribe's decision to limit the amount of air quality

deterioration allowed within its Reservation. Therefore, as described

in a final rulemaking notice also published in today's Federal

Register, EPA is finalizing its proposed decision to redesignate the

Yavapai-Apache Reservation as a non-Federal Class I area. The Class I

designation will result in lowering the allowable increases in ambient

concentrations of particulate matter, sulfur dioxide, and nitrogen

dioxide within the Reservation.

EFFECTIVE DATE: December 2, 1996.

ADDRESSES: The public docket for this notice, which includes additional

information related to this decision and relevant materials submitted

to EPA, is available for public inspection and copying during normal

business hours. Please contact the EPA official listed below at the

given address. A reasonable fee may be charged for copying.

FOR FURTHER INFORMATION CONTACT: Jessica Gaylord, Air and Toxics

Division (A-5-1), U.S. EPA Region 9, 75 Hawthorne Street, San

Francisco, CA 94105-3901, (415) 744-1290. An electronic copy of this

Federal Register notice and other pertinent information is available on

the World Wide Web at this Internet address: http://www.epa.gov/

region09/air/yavapai/

SUPPLEMENTARY INFORMATION:

I. Summary of Final Rule Approving Yavapai-Apache Tribe's Request

for Redesignation

Elsewhere in today's Federal Register EPA has published a final

rulemaking notice granting the Yavapai-Apache Tribe's request to

redesignate its reservation as a Class I area under the Clean Air Act

(CAA) program for the prevention of significant deterioration of

[[Page 56451]]

air quality (PSD). The final rulemaking notice contains a discussion of

the following: (1) The PSD program and PSD area classifications; (2)

the PSD redesignation requirements; (3) the PSD class I redesignation

request submitted to EPA by the Tribe and the public process

accompanying EPA's review of the request; (4) the statutory and

regulatory limits on the scope of EPA's review; and (5) EPA's response

to public comments on EPA's proposed approval of the request, including

concerns about the potential impacts of the redesignation on areas

outside the reservation. While some aspects of the final rulemaking

notice are reiterated here, the reader is referred to the notice for a

more detailed discussion.

As explained in EPA's final rulemaking notice approving the

redesignation, section 164(b)(2) of the CAA provides that EPA may

disapprove a State or Tribal redesignation request only if it finds,

after notice and public hearing, that the redesignation does not

conform with the applicable procedural requirements. See also 40 CFR

52.21(g)(5). However, section 164(e) of the CAA also calls for EPA to

consider ``the extent to which the lands involved are of sufficient

size to allow effective air quality management or have air quality

related values of such an area'' in the narrow context where EPA is

resolving intergovernmental disputes relating to a PSD area

redesignation.

As explained in EPA's notice of final rulemaking, EPA's review of

the Tribe's request in light of the public comments revealed no

procedural error by the Tribe. In this notice, EPA examines the issues

raised by the State of Arizona and the Tribe in their intergovernmental

dispute, including the specific factors EPA is required to consider in

resolving intergovernmental disputes relating to redesignations. For

the reasons described below, EPA declines in these particular

circumstances to disapprove the Tribe's decision to limit the amount of

air quality deterioration allowed within its Reservation. Accordingly,

in the notice of final rulemaking also published in today's Federal

Register, EPA announces its approval of the Tribe's Class I

redesignation request.

II. Statutory and Regulatory Background

A. Description of the PSD Program: PSD Area Classifications,

Redesignations and Permit Requirements

The PSD program applies to areas designated ``attainment'' or

``unclassifiable'' under section 107 of the CAA relative to EPA's

national ambient air quality standards (NAAQS). See section 161 of the

CAA. Attainment areas are areas that meet the NAAQS and unclassifiable

areas are areas that cannot be determined on the basis of available

information as meeting or not meeting the NAAQS. See section

107(d)(1)(A) of the CAA. These areas are referred to as ``PSD areas.''

PSD areas are further categorized as Classes I, II or III. The

classification of an area determines the amount or ``increment'' of air

quality deterioration that is allowed over a baseline level. Class I

areas have the smallest increments and therefore allow the least amount

of air quality deterioration. Conversely, Class III areas have the

largest air quality increments and allow the greatest degradation.

EPA's PSD regulations establish the incremental amount of air quality

deterioration that is allowed for particulate matter, sulfur dioxide

and nitrogen dioxide in Class I, II and III areas. See 40 CFR 52.21(c).

In all instances, the NAAQS represent the overarching ceiling that may

not be exceeded in a PSD area, notwithstanding any increment.

When Congress enacted a statutory PSD program in the 1977

amendments to the Clean Air Act it provided that specified Federal

lands, including certain national parks and wilderness areas, must be

designated as Class I areas and may not be redesignated to another

classification. See section 162(a) of the CAA. These areas are called

mandatory Federal Class I areas. The statute also carried forward as

Class I areas any areas redesignated as Class I under EPA's pre-1977

PSD regulations. The Northern Cheyenne reservation was a redesignated

Class I area affected by this provision. See Nance v. EPA, 645 F.2d 701

(9th Cir. 1981), cert. denied, Crow Tribe of Indians v. EPA, 454 U.S.

1081 (1981).

In the 1977 amendments to the Clean Air Act, Congress provided that

all other PSD areas of the country would be designated as Class II

areas. See section 162(b) of the CAA. At the same time, Congress gave

States and Indian Tribes broad authority to redesignate Class II areas

as Class I. See section 164 of the CAA.

Section 164(c) of the CAA expressly provides for PSD area

redesignations by Federally recognized Indian Tribes:

Lands within the exterior boundaries of reservations of

federally recognized Indian tribes may be redesignated only by the

appropriate Indian governing body.

The Department of the Interior periodically publishes a list of Tribes

officially recognized by the Federal government. See 60 FR 9250

(February 16, 1995) (identifying Yavapai-Apache Nation of the Camp

Verde Reservation, Arizona).

The Clean Air Act establishes a narrow role for EPA in reviewing

State and Tribal PSD redesignations, providing for EPA disapproval of

redesignation requests only if EPA finds that the procedural

requirements applicable to redesignations have not been met. See

section 164(b)(2) of the CAA. Accordingly, EPA's implementing

regulations provide that EPA ``shall disapprove, within 90 days of

submission, a proposed redesignation of any area only if [it] finds,

after notice and opportunity for public hearing, that such

redesignation does not meet the procedural requirements of [40 CFR

52.21(g)].'' See 40 CFR 52.21(g)(5). EPA's final rulemaking notice

approving the Tribe's redesignation request published elsewhere in

today's Federal Register examines in detail the procedural

requirements, EPA's review role and related issues.

The EPA has previously approved Class I redesignation requests for

the Northern Cheyenne Indian Reservation, the Flathead Indian

Reservation, the Fort Peck Indian Reservation and the Spokane Indian

Reservation. See 40 CFR 52.1382(c) and 52.2497.

The PSD program is implemented through a preconstruction review

permit program. The permit program applies only to major stationary

sources located in PSD areas. In general, a major stationary source is

a large stationary source that has the potential to emit 250 tons per

year of a regulated air pollutant or, for a certain set of specifically

listed source categories (e.g., iron and steel mill plants, etc.), 100

tons per year of a regulated air pollutant. See 40 CFR 52.21(b)(1).

In broad overview, the PSD program calls for the owners and

operators of proposed major stationary sources locating in PSD areas to

submit a permit application containing an analysis of their air quality

impacts and to install ``best available control technology.'' See

sections 165(a) and 169(3) of the CAA. The air quality analysis,

performed using air quality modeling, must show that the proposed

source will not cause or contribute to an exceedance of an applicable

PSD increment, over a baseline concentration, or a NAAQS. See 40 CFR

52.21(c) and (d). The permitting authority reviews the permit

application and determines whether in its informed judgment, after

notice and public hearing, the PSD permit requirements have been met.

[[Page 56452]]

B. Yavapai-Apache Tribe Request To Redesignate Its Reservation From

Class II to Class I

On December 17, 1993, the Yavapai-Apache Tribal Council (``the

Tribal Council'' or ``the Tribe'') submitted to EPA a request to

redesignate the Yavapai-Apache Reservation from Class II to Class I.

The Tribe's submittal explains that its redesignation request is to

protect its air quality for its citizens:

The Yavapai-Apache Tribe desires to maintain high quality air

standards for its citizens by redesignating Reservation lands as a

Class I Clean Air area.

See Yavapai-Apache Tribe Air Quality Redesignation Plan, Sept. 1993 at

p. 1.

The Yavapai-Apache Reservation is located in the Verde Valley, in

the State of Arizona. The Reservation is comprised of five land parcels

which total approximately 635 acres. The Tribe's redesignation request

includes its entire Reservation. Maps of the Reservation are included

as appendices to the Tribe's September 1993 Air Quality Redesignation

Plan, which is available as part of the public docket identified at the

beginning of this notice.

The Reservation is approximately 90 miles north of Phoenix in the

Verde Valley of central Arizona. The Verde Valley is situated near the

``red rock'' country of Sedona and Oak Creek Canyon. Nearby national

forests include the Coconino National Forest, the Kaibab National

Forest and the Prescott National Forest. The Montezuma Castle,

Montezuma Well and Tuzigoot National Monuments are located within the

Verde Valley in the vicinity of the Reservation. In addition, the

Sycamore Canyon Wilderness Area, designated a mandatory Federal Class I

area under the CAA, is located a few miles north of the Town of

Clarkdale. See 40 CFR 81.403.

EPA reviewed the Tribe's redesignation request and preliminarily

determined that it met the applicable procedural requirements of 40 CFR

52.21(g)(4). On April 18, 1994, EPA published a notice of proposed

rulemaking in the Federal Register proposing to approve the request and

announced a 30-day period to receive public comments. See 59 FR 18346.

At the request of the Town of Clarkdale, located near the Clarkdale

parcel of the Reservation, EPA held a public hearing on the proposed

redesignation on June 22, 1994. EPA's public hearing notice indicated

that EPA would allow until July 6, 1994 for the submittal of written

comments. In order to facilitate public understanding about EPA's

proposed action, EPA began the public hearing with an explanation of

the Class I redesignation process and the PSD program.

Following the public hearing, the Town of Clarkdale requested an

extension of the public comment period. On July 20, 1994, EPA published

a Federal Register notice announcing an extension of the public comment

period, providing the public until August 22, 1994 to submit written

comments. See 59 FR 37018-19.

At the conclusion of the extended comment period, the Governor of

Arizona submitted an August 22, 1994 letter to EPA requesting EPA to

initiate dispute resolution pursuant to section 164(e) of the CAA. See

Letter from Fife Symington, Governor of Arizona, to Carol M. Browner,

EPA Administrator.

III. The Intergovernmental Dispute

A. Background

In broad overview, section 164(e) of the CAA provides a mechanism

for States and Tribes to resolve intergovernmental disagreements about

a PSD area redesignation or proposed permit. Specifically, section

164(e) provides in relation to PSD redesignations that if a State

affected by the redesignation of an area by an Indian tribe or an

Indian tribe affected by the redesignation of an area by a State

disagrees with such redesignation, the Governor or Indian ruling body

may request EPA to enter into negotiations with the governments

involved to resolve the dispute. The statute calls for EPA to resolve

the dispute if the governments involved do not reach agreement.

Further, section 164(e) provides that in resolving disputes related to

an area redesignation, EPA must ``consider the extent to which the

lands involved are of sufficient size to allow effective air quality

management or have air quality related values of such an area.'' See

also 40 CFR 52.21(t).

B. Concerns Raised by State and Tribe

In the discussion below, EPA has summarized the concerns that have

been raised by the State and Tribe. Because the State was raising

objections to the Tribe's redesignation request and because EPA has

ultimately decided to approve the request, the summary below

particularly focuses on the concerns raised by the State. Additional

information about EPA meetings with State and Tribal representatives is

contained in the public docket identified at the beginning of this

notice.

The Governor of Arizona's August 22, 1994 letter indicated that he

was concerned that ``[t]he effects of the proposed redesignation are

not apparent to all of the stakeholders, and confusion exists about the

potential impacts of the Agency's proposed action.'' The Governor

indicated that he was requesting EPA to initiate the dispute resolution

process so that ``the effects of the proposed action can be better

understood and outstanding concerns addressed for the benefit of all

stakeholders.'' See Letter from Fife Symington, Governor of Arizona, to

Carol M. Browner, EPA Administrator.

In an October 6, 1994 letter EPA asked the State to elaborate the

bases for its dispute, to help EPA facilitate resolution of the

disagreement. See Letter from John C. Wise, EPA Deputy Regional

Administrator, to Fife Symington, Governor of Arizona. In the letter,

EPA also offered to meet with the State to discuss options for

additional public outreach to address the State's concern that the

effects of the proposed redesignation were not understood by all of the

stakeholders.

The Governor's December 5, 1994 reply indicated that ``[t]he

purpose of invoking the dispute resolution is to raise the issues of

whether the Yavapai-Apache Reservation is of sufficient size to allow

effective air quality management or have air quality-related values.''

See Letter from Fife Symington, Governor of Arizona, to Felicia Marcus,

EPA Regional Administrator. The State's reply also referred to October

20, 1993 comments submitted by a State official during the Tribe's

public comment period. The October 20, 1993 letter raised the following

concerns:

The proposed [Yavapai-Apache Tribe Air Quality Redesignation]

Plan points out that the Reservation is comprised of five small,

scattered land parcels totaling 635 acres in the Verde Valley,

ranging in size from almost four to 458 acres, and located over a

range of approximately 30 miles. Reservation lands are separated by

relatively long distances and a variety of land ownership as well as

development patterns.

Considering the size and dispersed nature of the Reservation

lands, the [Arizona] Department [of Environmental Quality] has

concluded that redesignation of the Reservation to Class I status

would not necessarily result in effective air quality management.

Section 165 of the CAA prescribes the type of analysis which must be

conducted prior to the issuance of permits for Prevention of

Significant Deterioration in Class I areas. The Department has

concluded that it would be neither realistic nor practicable to

apply those requirements to all Reservation lands while

distinguishing those lands from surrounding Class II areas, which

would be subject to different air quality limitations.

See Letter from Edward Z. Fox, Director of the Arizona Department of

Environmental Quality, to Theodore

[[Page 56453]]

Smith, Sr., Chairman of the Yavapai-Apache Tribe.

The Tribe responded to the State's comments regarding the size of

the Reservation in the December 7, 1993 letter to EPA requesting

redesignation to Class I, as follows:

However, no where does the writer cite a law or regulation which

requires Class I areas to be a certain size, but rather the

regulations merely call for the EPA Administrator to consider the

extent to which the lands involved are of sufficient size. The U.S.

Congress, in passing the Clean Air Act, could not have intended that

only larger areas could receive clean air designations while smaller

areas must suffer from a lack of clean air. This is especially true

since Congress included in the Clean Air Act an explicit provision

for Indian Tribes to request redesignations and since Congress knew

that Indian Reservations would clearly vary in size.

See Letter from Theodore Smith, Sr., Chairman of the Yavapai-Apache

Tribe, to Matt Haber, EPA Region 9.

On January 12, 1995, EPA held a series of meetings in the Phoenix

area with representatives of the State and Tribe to facilitate

resolution of the dispute. EPA first met separately with

representatives of the State and Tribe, to allow each to express its

concerns in a non-adversarial setting, and then the two parties met

without EPA officials. Subsequently, EPA officials held a joint meeting

with representatives of the State and Tribe. In the joint meeting,

which was transcribed, representatives of both parties described their

concerns, summarized below.

Representatives of the State expressed concern about impacts

outside of the reservation:

The impact of the redesignation is significant with regard to

areas outside of the Indian territory, Indian lands. And because of

that, it has an impact which certainly was unforeseen or

unanticipated by the non-Indian residents of the Verde Valley.

The redesignation will have significant impacts on future growth

and growth trends, business trends, job opportunities in the Verde

Valley, and in a way which may or may not impact the ability to

manage the area for air quality values or to effectively manage the

area for air quality purposes. It is because of this what I consider

to be [the] extraterritorial effect of the redesignation from the

Tribe onto state and county and local lands that we believe the

redesignation to be inappropriate.

See January 12, 1995 EPA Dispute Resolution Proceedings, Transcript at

p. 7 (hereafter ``Transcript'').\1\

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\1\ A copy of the transcript is included in the public docket

for this action, identified at the beginning of this notice.

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The State also described its belief that in addressing the dispute

EPA is required to consider ``whether the area can be effectively

managed for air quality values, meaning the redesignated area, which is

the Tribal lands, or whether there are air quality related values on

the Reservation that need to be protected.'' See Trans. at ps. 7-8. The

State indicated that it believed the answer to both questions to be no

and therefore it is inappropriate for the Tribe unilaterally to seek

the redesignation:

It is our opinion that in both of those situations the answer is

no. And because of that, we believe that the health and effect of

the--All the residents of the Verde Valley, Tribal or non-Tribal

need to be protected, but be protected holistically, not one side

dictating to the other. And we believe that this redesignation is

indeed a dictation from one side to the other.

See Trans. at p. 8.

The State also raised concerns that the reservation consists of

separate parcels and that in the State's view it was untenable and

unworkable to manage air quality off of the disperse land parcels:

It is a Reservation that is made up of five individual parcels

spread out through the--five or six individual parcels throughout

the Verde Valley. * * *

* * * * *

* * * [G]iven what I believe to be a very untenable and

unworkable arrangement with regard to trying to manage air quality

off of these dispersed pieces of Indian land, we think the

designation is not appropriate.

See Trans. at ps. 7 & 9.

The State also objected to the redesignation because the

redesignation would not address the Tribe's concern about existing

health and welfare problems:

And so to the extent that there are current problems with the

health and welfare of the Tribal members, those issues don't get

resolved in this process anyway and they will have to be resolved

otherwise in some other form.

See Trans. at p. 8.

The Tribe stated that it had followed and met all of the procedural

requirements that apply to a Tribal class I redesignation. See Trans.

at p. 9. The Tribe indicated that it was concerned about the health and

welfare of its members:

While the Tribe respects the views of everyone, the Tribe holds

the health and welfare of its members at a premium.

See Trans. at p. 13.

Further, the Tribe suggested that the concerns about off

reservation impacts were based on misinformation and that the

redesignation would not preclude economic development off the

reservation:

Some people have said that the Class I status would affect

automobile emission standards or affect their ability to burn wood

in their fireplaces, others have said that the Class I status would,

quote, affect all development in the Verde Valley. Statements like

these have no basis in fact. Economic development can still happen.

See Trans. at p. 13.

The Tribe recounted the process its redesignation has been subject

to, as follows: (1) On September 11, 1993 the Tribal Council

unanimously approved the air quality redesignation request and the

description and analysis of its effects; (2) on October 21, 1993, the

Tribe held a public hearing on the Reservation at which 43 people

including 37 non-Indians voiced support for the redesignation and no

one opposed it; (3) in December 1993 the Tribe submitted its

redesignation request to EPA; (4) on April 18, 1994 EPA published a

Federal Register notice proposing to approve the redesignation; (5) on

May 18, 1994 the public comment period ended; (6) on May 20, 1994, EPA

reopened the process and decided to hold an EPA sponsored public

hearing in Arizona; (7) on June 22, 1994, EPA conducted a second public

hearing on the reservation--at which 40 people provided comments,

including at least 20 non-Indians, in support of the Tribe's request

and five people opposed the request--and extended the public comment

period for an additional two weeks; (8) on July 6, 1994 the extended

public comment period concluded; (9) on July 20, 1994 EPA published

another Federal Register notice extending the public comment period

again; and (10) on August 22, 1994 the public comment period ended and

that same day the Governor of Arizona sent a letter to EPA requesting

this dispute resolution process. See Trans. at ps. 9-11.

The Tribe expressed concern about the length of time that had

passed in arranging a meeting with the State to explore a resolution of

the dispute:

For over four months now, the Tribe has been patiently waiting

for the State to agree to even attend the dispute resolution

proceedings.

See Trans. at p. 11.

The Tribe expressed concern about the length of time that elapsed

before the State provided a list of reasons for disagreeing with the

redesignation:

On October 6th, 1994, the EPA formally requested from the

Governor a list or outline of his reasons for disagreeing with the

Tribe's proposal. That request was made to produce the document

within one week. Two months later, on December 5th, 1994, the

Governor finally responded with a one-page letter simply stating

that the issue was whether the Yavapai-Apache Reservation was of

[[Page 56454]]

sufficient size to allow effective air quality management [or have

air quality related values].

See Trans. at p. 11

After hearing the concerns expressed by the State and Tribe, EPA

attempted to explore whether there was common ground for a resolution.

See Trans. at p. 13. EPA adjourned the meeting when neither party

expressed an interest in further discussion. See Trans. at p. 15. EPA

subsequently encouraged the Tribe and the State to jointly meet again

to further explore possible resolution of the dispute. The parties,

however, declined.

IV. EPA's Resolution of the Intergovernmental Dispute

A. Introduction

Because the State and Tribe were unable to reach agreement, section

164(e) of the CAA calls for EPA to resolve the dispute. As noted,

section 164(b)(2) of the CAA provides that EPA may disapprove a

redesignation request submitted by a State or Tribe only if EPA finds,

after notice and public hearing, that the redesignation does not meet

the applicable procedural requirements. See also 40 CFR 52.21(g)(5). As

explained below, these statutory and regulatory provisions and their

associated legislative and administrative history indicate that so long

as the prescribed procedures for public input and involvement are

followed, EPA is to give States and Tribes broad latitude in deciding

what PSD classification is appropriate for lands within their

respective jurisdictions.

1. Statutory and Regulatory Background

EPA's pre-1977 PSD regulations authorized EPA to disapprove an area

redesignation request if EPA determined that the State or Tribe

proffering the request acted arbitrarily and capriciously in

considering certain factors. See 39 FR 42510, 42515 (Dec. 5, 1974). In

the 1977 Clean Air Act amendments Congress adopted major changes to the

CAA, including a PSD regime to supplant EPA's pre-1977 administrative

program. EPA's current regulations implement section 164(b)(2) of the

CAA, adopted with the 1977 Clean Air Act amendments, by providing for

disapproval of a State or Tribal redesignation only if EPA finds, after

notice and opportunity for public hearing, that the request does not

meet the applicable procedural requirements. EPA's regulations also

reflect the limited EPA review role by calling for EPA to make this

determination within 90 days of submission of a redesignation request.

See 40 CFR 52.21(g)(5).

The legislative history associated with Congress's adoption of the

1977 PSD program indicates that Congress deliberately intended to

curtail EPA's authority to disapprove a redesignation request under its

pre-1977 regulations, giving States and Tribes greater discretion in

this area:

The intended purpose of [the congressional PSD program] are * *

* (3) to delete the current EPA regulations and to substitute a

system which gives a greater role to the States[, Tribal 2,]

and local governments and which restricts the Federal Government in

the following ways: * * * (b) By eliminating the authority which the

Administrator has under current EPA regulations to override a

State's [or Tribe's] classification of an area on the ground that

the State [or Tribe] improperly weighed energy, environment, and

other factors.

\2\ The statute and the legislative history make it clear that

the references to State redesignation authority in the legislative

history apply equally to redesignations by Tribes. See, e.g., S.

Rep. No. 127, 95th Cong., 1st Sess. 9 (1977) reprinted in 1977 CAAA

Legislative History, vol. 3 at 1383.

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See H.R. Rep. No. 294, 95th Cong., 1st Sess. 7-8 (1977) reprinted in

Senate Comm. on the Environment and Public Works, 95th Cong., 2d Sess.,

A Legislative History of the Clean Air Act Amendments of 1977, vol. 4

at 2474-75 (1978) (hereafter ``1977 CAAA Legislative History''); see

also 1977 CAAA Legislative History, vol. 3 at 373 (colloquy between

Senators Garn and Muskie, during the Senate's consideration of the

Conference report, about the types of procedural error that might

trigger a disapproval).

Thus, Congress adopted the statutory provisions governing EPA's

review of State and Tribal redesignation requests to limit the scope of

Federal review. Under the current provisions, EPA's role is to

determine whether the requesting State or Tribe followed specific

procedural requirements, to ensure that the local decisionmaking

process provides ample opportunity for interested parties to express

their views. While EPA must ensure procedural rigor, it is generally

inappropriate for EPA to interpose superseding Federal views on the

merits of the resulting State or Tribal decisions. See, e.g., H.R. Rep.

No. 294 at 146-47 (1977) reprinted in 1977 CAAA Legislative History,

vol. 4 at 2613-14. The limited Federal review applies to both State and

Tribal redesignation requests and therefore would apply to EPA's review

of objections to a State's redesignation request.

In this instance, EPA examined the Yavapai-Apache Tribe's decision

to limit the amount of air quality deterioration within its Reservation

in light of significant comments and concluded that the redesignation

request is the product of a decision-making process that comports with

procedural requirements. The reader is referred to the notice approving

the Tribe's redesignation request, also published in today's Federal

Register. The notice contains a detailed discussion of these issues.

At the same time that section 164(b)(2) provides that EPA may

disapprove a redesignation request only if it determines that the

requesting State or Tribe has committed a procedural error, section

164(e) of the CAA calls for EPA to consider ``the extent to which the

lands involved are of sufficient size to allow effective air quality

management or have air quality related values of such an area'' in

resolving intergovernmental disputes about a PSD area redesignation.

EPA's regulations implementing section 164(e) simply repeat this

language and do not provide additional regulatory guidance. See 40 CFR

52.21(t).

However, the legislative history accompanying the adoption of

section 164(e) is pertinent, specifically indicating that the

intergovernmental dispute resolution provision was not intended to

encroach on Indian sovereignty. During the House of Representatives'

consideration of the Conference Committee report, Congressman Rogers,

Chairman of the House Subcommittee on Health and the Environment and

one of the conferees, admonished that EPA's review of Tribal

redesignations in resolving intergovernmental disputes should be

exercised with utmost caution and that EPA should reverse a Tribal

determination only under the most serious circumstances:

The conference bill provides that both States and Indian tribes

will continue to have the power they now have to redesignate their

lands to a new air quality classification. In cases where another

State may object to such classification, and when the two

jurisdictions cannot amicably come to agreement, the Administrator

is granted the power to review the redesignation. But it is intended

that the Administrator's review of such determinations by tribal

governments be exercised with utmost caution to avoid unnecessarily

substituting his judgment for that of the tribe. The concept of

Indian sovereignty over reservation lands is a critical one, not

only to native Americans, but to the Government of the United

States. A fundamental incident of that sovereignty is control over

the use of their air resources. Some statutes, I imagine, have

encroached upon Indian sovereignty, eroding treaty rights negotiated

at an earlier time. This is not such a bill, for the Administrator

should reverse the determination made by an Indian

[[Page 56455]]

governing body to reclassify its land, only under the most serious

circumstances.

See 1977 CAAA Legislative History, vol. 3 at 326.

Federal and Agency Tribal policies direct EPA to respect Tribal

sovereignty. For example, on January 24, 1983, President Reagan issued

a Federal Indian Policy, reaffirming and calling for implementation of

President Nixon's 1970 national policy of self-determination for Indian

Tribes as well as the ensuing 1975 Indian Self-Determination and

Education Assistance Act. The Policy Statement issued by President

Reagan stressed two related themes: (1) that the Federal government

will pursue the principle of Indian ``self-government'' and (2) that it

will work directly with Tribal governments on a ``government-to-

government'' basis. An April 29, 1994 Presidential Memorandum issued by

President Clinton reiterated that the rights of sovereign Tribal

governments must be fully respected. See 59 FR 22951 (May 4, 1994).

EPA's Tribal policies implement these principles, including recognizing

Tribal Governments as sovereign entities with primary authority and

responsibility for the reservation populace. See November 8, 1984 ``EPA

Policy for the Administration of Environmental Programs on Indian

Reservations''; Policy Reaffirmed by Administrator Carol M. Browner in

a Memorandum issued on March 14, 1994. See also Washington Department

of Ecology, 752 F.2d 1465, 1471-72 and n.5 (9th Cir. 1985). The United

States also has a unique fiduciary relationship with Tribes. See, e.g.,

Nance v. EPA, 645 F.2d 701, 710-11 (9th Cir.), cert. denied, Crow Tribe

of Indians v. EPA, 454 U.S. 1081 (1981).

Finally, a central purpose of the CAA is ``to protect and enhance

the quality'' of air resources ``to promote the public health and

welfare.'' See section 101(b)(1) of the CAA; see also Sierra Club v.

Ruckleshaus, 344 F. Supp 253 (D.D.C. 1972), aff'd per curiam, 4 Env't

Rep. Cases 1815 (D.C. Cir. 1972), aff'd by an equally divided court,

sub nom. Fri v. Sierra Club, 412 U.S. 541 (1973). The specific purposes

of the PSD program include: (1) protecting the public health and

welfare from any actual or potential adverse effect from air pollution,

notwithstanding attainment and maintenance of the NAAQS; (2) insuring

that economic growth will occur in a manner consistent with the

preservation of existing clean air resources; and (3) assuring that

emissions from any source in one jurisdiction will not interfere with

the prevention of significant deterioration in any other jurisdiction.

See section 160(1), (3), and (4) of the CAA.

2. Overview of Dispute Resolution

To disapprove the Tribe's Class I redesignation would wholly and

summarily deprive the Tribe of any air quality protection on its

Reservation that may be afforded by a more stringent classification.

The intergovernmental dispute resolution provisions of section 164(e)

provide a more narrowly tailored mechanism for addressing any disputes

that actually result from the Class I redesignation in the context of a

specific permit proceeding.

EPA would be the permitting authority for any proposed source

locating within the boundaries of the Indian Reservation and EPA, in

consultation with the Tribe, would implement the new Class I increment

within the Reservation. However, the State is the permitting authority

for PSD sources proposing to locate in the Verde Valley outside the

Reservation boundaries. If, in the context where the State is the

permitting authority, the governing body of the Tribe determines that a

proposed source locating outside the Reservation would cause or

contribute to an excess change in air quality within the Reservation,

section 164(e) provides that the Tribe may request that EPA enter into

negotiations with the State and Tribe to resolve the dispute. If the

parties do not reach agreement, EPA would be required to resolve the

dispute.

Thus, the Tribe may pursue specific concerns about a proposed

source's impact on possible violations of air quality standards within

the redesignated Class I area through EPA and the section 164(e)

dispute resolution process. Section 164(e) similarly authorizes an

affected State to invoke the dispute resolution process because of the

impacts of a proposed PSD source on the State's air quality.

The Tribe's authority to protect the non-Federal Class I area

within its jurisdiction is notably different from the authority of

Federal Land Managers under section 165(d) of the CAA to protect

Federal Class I areas. Federal Land Managers must directly certify that

a proposed source causing or contributing to a violation of the Class I

increment in a Federal Class I area will not adversely impact the area,

before permitting may proceed. See, e.g., section 165(d)(2)(C)(iii) of

the CAA.

In the specific circumstances at issue, EPA believes that fully

examining any State or Tribal concerns raised in the context of a

particular permit proceeding where the Tribe has actually determined

that a proposed source will cause or contribute to a violation of the

allowable increment within the Reservation pursuant to section 164(e)

is a more measured alternative to summarily disapproving the Tribe's

request for several reasons. First, a central concern raised by the

State (as well as public commenters) is the potential off-Reservation

impacts of the redesignation. As explained below and in the Federal

Register notice approving the redesignation request, EPA does not

expect that the Class I redesignation will have major off-Reservation

impacts. Further, if there are any actual permit controversies that

result from the Class I redesignation, at that juncture there will be

concrete facts and particularized, focused issues that are better fit

for resolution than more general allegations and objections. EPA is

committed to working with the State and Tribe to resolve any

intergovernmental permit disputes that actually arise as a result of

the Class I redesignation.

In addition, as explained further below, EPA will continue to

provide public education about the potential impacts of the Class I

redesignation. Further, EPA's technical staff do not expect that the

additional Class I area, comprised of five separate parcels, will

present substantial air quality management obstacles. EPA will work

with the State to overcome any particular air quality management

difficulties it encounters as a result of the Class I redesignation.

In the discussion below, EPA addresses the issues and concerns

raised by the State, including the specific factors EPA is directed to

consider pursuant to section 164(e) of the CAA. Ultimately, EPA

declines in these specific circumstances to disapprove the Tribe's

decision to limit the amount of air quality deterioration within its

Reservation. Thus, the Class I redesignation for the Reservation will

become part of the applicable implementation plan for the Yavapai-

Apache Tribe, as provided in the final rulemaking notice published

elsewhere in today's Federal Register.

B. Public Understanding of Redesignation Implications and Off-

Reservation Impacts

The August 22, 1994 letter from the Governor of Arizona stated that

the Governor was requesting EPA to initiate the dispute resolution

process so that the effects of EPA's proposal to approve the

redesignation can be better understood and outstanding concerns

addressed for the benefit of all

[[Page 56456]]

stakeholders. See Letter from Fife Symington, Governor of Arizona, to

Carol M. Browner, EPA Administrator.

At the January 12, 1995 meeting with EPA and Tribal

representatives, a State representative expressed concern that the

redesignation would have impacts outside of the Reservation that were

unanticipated by the non-Indian residents of the Verde Valley,

including significant impacts on future growth and growth trends,

business trends, and job opportunities in the Verde Valley. The State

representative objected to the redesignation because of this

``extraterritorial effect.'' See Trans. at p. 7.

The Tribe's redesignation request has been subject to a fairly

extensive public review process to provide an opportunity for public

input and to facilitate public understanding. The Tribe held a public

hearing during its development of the redesignation request. A number

of local citizens who are not Tribal members attended the Tribe's

public hearing and expressed support for the Class I redesignation.

To enhance public understanding, EPA's Federal Register notice

proposing to approve the redesignation request described the PSD

program and the implications of a Class I redesignation. See 59 FR

18346 (April 18, 1994). EPA held a public hearing on its proposed

approval of the redesignation request, to be responsive to a request

from the Town of Clarkdale, a town located near one of the Reservation

parcels. As indicated in the public notice announcing the public

hearing, EPA began the public hearing ``with an informational

discussion of the Class I redesignation process and an overview of the

air quality permitting program that is related to the Class I

redesignation'' to help the public understand the potential

implications of the proposed redesignation. See Red Rock News and Verde

Independent, both May 20, 1994. EPA also extended the public comment

period on its proposal to August 22, 1994, in response to a request

from the Town of Clarkdale. See 59 FR 37018 (July 20, 1994).

After receiving the Governor's August 22, 1994 letter expressing

concerns about the stakeholder's understanding, EPA wrote to the

Governor indicating that EPA ``would be pleased to meet with you to

discuss options for additional outreach and dissemination of

information.'' See Letter from John C. Wise, EPA Deputy Regional

Administrator, to Fife Symington, Governor of Arizona (October 6,

1994). The State's reply did not further pursue this issue. See Letter

from Fife Symington, Governor of Arizona, to Felicia Marcus, EPA

Regional Administrator (December 5, 1994).

In this notice and the final rulemaking notice approving the

Tribe's redesignation published elsewhere in today's Federal Register,

EPA has endeavored to explain the PSD program and the potential effects

of the Class I redesignation on areas outside the Reservation. The

final rulemaking notice contains a detailed discussion that addresses

concerns and misimpressions about potential economic and regulatory

impacts, in response to questions and comments raised by the Towns of

Camp Verde and Clarkdale and a mining company. This discussion was

included in the final rulemaking notice to promote public

understanding.

In the final rulemaking notice, EPA addressed, among other

concerns, misconceptions about the CAA requirements associated with a

PSD Class I redesignation. As explained, a PSD Class I redesignation

does not impose vehicle inspection and maintenance (i.e., motor vehicle

``smog check'') in the surrounding area or establish requirements for

controls on residential woodstoves in the surrounding area. EPA also

indicated that it does not expect the redesignation of the non-Federal

Class I area to adversely impact economic growth in the Verde Valley.

For example, Tucson, which is located in southern Arizona, is bordered

on its east and west by two separate parcels of a Federal Class I area,

the Saguaro National Monument, Tucson has a population size and

economic activity level that far exceeds that presently found in the

Verde Valley. The reader is referred to that notice for further

discussion of these issues.

Also, as explained in part II.A, the PSD preconstruction review

permit requirements only apply to major stationary sources in a PSD

area. The permit requirements apply to major stationary sources

proposing to locate in a PSD area or to major modifications at existing

major stationary sources. Major stationary sources are large sources

that have the potential to emit 250 tons per year of regulated air

pollutant or, for certain listed source categories, 100 tons per year

of regulated air pollutant. See 40 CFR 51.166(b)(1) and 52.21(b)(1). In

general terms, a major modification is a physical or operational change

at a major stationary source that would result in a significant net

emissions increase of a regulated air pollutant. See 40 CFR

51.166(b)(2) and 52.21(b)(2).

The area in the Verde Valley outside the Reservation boundaries is

designated a Class II area under the PSD provisions. The owner/operator

of a proposed major stationary source or proposed major modification to

an existing major stationary source in this area would have to

implement ``best available control technology'' irrespective of the PSD

classification of the Reservation. See 40 CFR 51.166(b)(12) &

51.166(j). In addition, the owner or operator would have to demonstrate

that emissions increases from the proposed source would not cause or

contribute to a violation of a NAAQS or increment. See 40 CFR

51.166(k). The Class I designation may influence this analysis because

in addition to assessing its air quality impact relative to the Class

II increment in effect where the source is located, the source may have

to assess its impact relative to the Class I increment applicable on

the Reservation. The Class I designation may also trigger PSD review

(including best available control technology and air quality analyses)

for a new major stationary source or major modification which would

construct within 10 kilometers of the Class I boundary and whose

emissions rate or net emissions increase would have an impact of 1

microgram per cubic meter (24-hour average) on the Class I area.

As noted, the intergovernmental dispute resolution provisions of

section 164(e) apply to permit disputes. If the Tribal governing body

determines that a proposed source locating outside the Reservation

would cause or contribute to an excess change in air quality within the

Reservation, the Tribe may request that EPA enter into negotiations

with the State to resolve the dispute. If the parties do not reach

agreement, EPA would be required to resolve the dispute:

In the event a dispute occurs over any development or activity

in an adjacent State, the Governor of the affected State [or the

Indian governing body of an affected Tribe] may request the

Administrator to enter into negotiations. If this is not successful,

the Administrator shall then resolve the dispute.

See 1977 CAAA Legislative History, vol. 3 at 530.

Thus, a Tribe or State with a non-Federal Class I area may pursue

their concerns about a proposed source's impact on excess air quality

deterioration within the area through the section 164(e) dispute

resolution process. This is in contrast with the broad authority

conferred on Federal Land Managers to protect Federal Class I areas.

For example, Federal Land Managers must directly certify that a

proposed source causing or contributing to a violation of a Class I

increment in a Federal Class I area nevertheless will

[[Page 56457]]

not adversely impact the area, before a permit may be issued. See,

e.g., section 165(d)(2)(C)(iii) of the CAA.

There is a dilemma that is created by virtue of the

interjurisdictional issues presented. The State has objected to the

Tribe's redesignation because of potential off-Reservation impacts on

economic development. However, to disapprove the Tribe's redesignation

because it may have impacts on activity outside the Reservation would

wholly deprive the Tribe of its decision to provide additional air

quality protection within the Reservation and allow the State to

effectively dictate the air quality increment appropriate for the

Reservation and its populace.

Congress, by the adoption of the permit dispute provisions of

section 164(e), has established a useful and reasonable mechanism to

address this dilemma--providing for consideration and resolution of the

reciprocal interjurisdictional concerns in particular permit

proceedings. In these circumstances, EPA elects to rely on this

statutory mechanism instead of disapproving the redesignation. For the

reasons outlined above and in the final notice approving the

redesignation, EPA does not expect the redesignation to have major off-

Reservation impacts. Further, resolving conflicts in any permit

controversy that actually does arise as a result of the Class I

redesignation is more narrowly tailored than the sweeping decision of

wholly disapproving the Tribe's request. At the same time, any

unresolvable State and Tribal concerns actually raised as a result of

the Class I redesignation may be considered in addressing the permit

dispute. In any actual permit controversy the parties would also be

resolving a dispute where the facts and issues are more concrete and

therefore more fit for resolution than disputes involving general

concerns and allegations. EPA is committed to working with the State

and Tribe to resolve any intergovernmental permit disputes that

actually arise as a result of the Class I redesignation.

Finally, by no means does EPA view the need to advance the public's

understanding of the Tribal Class I redesignation as ending with EPA's

approval of the Tribe's Class I redesignation request. EPA will

continue to help clarify any confusion or misunderstanding. Among other

efforts, EPA will continue to make staff available to answer any public

inquiries about the Class I designation and its potential effects.

Public inquiries should be directed to the EPA contact identified at

the beginning of this notice. Further, in conjunction with today's

decision, EPA is communicating with the Governor's office to reiterate

EPA's willingness to meet with State officials to plan and conduct

additional public outreach efforts.

C. Sufficient Size to Allow Effective Air Quality Management.

The State expressed concern that the redesignation of the

Reservation would not necessarily result in effective air quality

management. The State is concerned that the approximately 635 acre

Reservation is comprised of five land parcels ranging in size from

almost four to 458 acres, separated by different land uses and located

over a large area. The State is therefore concerned that ``it would be

neither realistic nor practicable'' to distinguish the Class I and II

areas in applying the PSD permitting requirements. See Letter from

Edward Z. Fox, Director of the Arizona Department of Environmental

Quality, to Theodore Smith, Sr., Chairman of the Yavapai-Apache Tribe

(Oct. 20, 1993). During the January 12, 1995 meeting with EPA and the

Tribe, the State representative reiterated that he objected to ``a very

untenable and unworkable arrangement with regard to trying to manage

air quality off of these dispersed pieces of Indian land.'' See Trans.

at p. 9.

As noted, in disputes resolving area redesignations, section 164(e)

calls for EPA to consider ``the extent to which the lands involved are

of sufficient size to allow effective air quality management.'' See

also 40 CFR 52.21(t). Neither the statute nor EPA's implementing

regulations elaborate on EPA's consideration of this factor.

The legislative history suggests that Congress intended to give

States and Tribes broad discretion regarding the size and boundaries of

areas redesignated. The report of the House Committee on Interstate and

Foreign Commerce provides that if a State or Tribe ``wished to

designate some parts class I and retain some class II areas, it may

draw classification boundaries in any way it chooses--by entire air

quality control regions, along county lines, or even along smaller

subcounty lines.'' See H.R. Rep. No. 294 at 147 (1977) reprinted in

1977 CAAA Legislative History, vol. 4 at 2614. Further, a colloquy

between Senators Garn and Muskie during the Senate's consideration of

the Conference report indicates that it would be permissible to

redesignate a single mine. See 1977 CAAA Legislative History, vol. 3 at

371.

The State did not specify why the Class I designation for the

Reservation parcels would create difficulty in distinguishing between

the Class I and II areas in implementing PSD permitting requirements,

rendering implementation of the PSD program ``untenable and

unworkable.'' EPA is uncertain what particular underlying concerns or

obstacles informed the State's objection.

Over the years, air quality management tools, techniques and

policies have become increasingly sophisticated and refined. Currently,

air quality planning and management strategies apply to a variety of

area sizes and configurations. For example, EPA, in coordination with

States, has established nonattainment areas in States for the purpose

of implementing nonattainment planning requirements for the lead NAAQS

that encompass areas of only a few square kilometers. See, e.g., 40 CFR

81.310 (lead nonattainment area in Florida that consists of ``[t]he

area encompassed within a radius of (5) kilometers centered at UTM

coordinates: 364.0 East, 3093.5 North, zone 17 (in city of Tampa)'')

and 40 CFR 81.311 (lead nonattainment area in Georgia that consists of

``[t]hat portion of [Muscogee] county which includes a circle with a

radius of 2.3 kilometers with the GNB, Inc., lead smelting and battery

production facility in the center''). Conversely, there is an ozone

transport region under the CAA for the purpose of ozone nonattainment

planning that spans from Maine to northern Virginia. See section 184(a)

of the CAA.

As noted in parts II.A and IV.B, a PSD permit applicant for a

source proposing to locate outside the Reservation may have to

demonstrate that the proposed source does not cause or contribute to a

violation of the applicable increment in either the Class II area in

which it is proposing to locate or within the Tribe's Class I area.

Thus, applicants may need to include additional receptor points in

their Class II area air quality modeling analyses to assess the effect

of potential emissions on the Class I area parcels. As the permitting

authority, the State would review the analyses to determine whether in

the State's informed judgment the demonstration is sound.

EPA's technical staff examined whether it would be difficult to

perform a PSD air quality modeling analysis that assessed the impacts

of a proposed source on the Class II area in which it was located as

well as the five separate, disperse Class I parcels. EPA staff

concluded that based on existing modeling tools it would be relatively

simple and practicable for a proposed source to project its impact on

the Class I area parcels and relatively straight-forward for the

reviewing permitting authority to evaluate the analyses. Further, such

Class I area analyses may

[[Page 56458]]

already be required for a source locating in the area based on the

source's proximity to the Sycamore Canyon Wilderness Area, a Federal

Class I area. This analysis is included in the EPA's Technical Support

Document, which is available for public review in the docket identified

at the beginning of this notice.

EPA is the permitting authority for new major stationary sources

that propose to locate within the boundaries of the Yavapai-Apache

Reservation. EPA does not believe that its ability or the State's

ability to effectively administer the PSD program within or outside the

Yavapai-Apache Reservation will be significantly affected by the

designation of the five separate parcels as Class I areas.

EPA, States and local governments routinely manage air quality

management situations that are of greater complexity than the

consideration of additional Class I areas within an area that is

exclusively subject to PSD, containing no overlapping nonattainment

areas and associated nonattainment planning requirements.

The State of Arizona contains a number of areas with complex air

quality situations. Phoenix, for example, has one set of boundaries for

ozone and carbon monoxide nonattainment planning purposes, another set

of boundaries for particulate matter nonattainment planning purposes

and overlapping portions of the City that are subject to PSD for other

pollutants that are attainment or unclassifiable with respect to the

NAAQS. See 40 CFR 81.303.

Arizona also has a number of Federal Class I areas. See 40 CFR

81.403. The City of Tucson contains a carbon monoxide nonattainment

area with a specific set of boundaries. The metropolitan area is

subject to PSD for other pollutants and is generally a Class II area.

In addition, the City is bordered on its eastern and western boundaries

by two separate parcels of the Saguaro National Monument, a Federal

Class I area. Thus, in the Tucson area, it may be necessary to manage

source impacts on the carbon monoxide nonattainment area, Class II

increments and the two separate Class I area parcels.

In the Verde Valley, the State manages a PSD program that

encompasses the Sycamore Canyon Wilderness Area, which is a mandatory

Federal Class I area. Therefore, under current circumstances, the State

may have to ensure that a major stationary source or major modification

proposing to locate in the area demonstrate whether emissions would

cause or contribute to violations of the Class I and II increments.

Thus, while the redesignation of the Yavapai-Apache Reservation as

a non-Federal Class I area may increase the number of Class I increment

analyses that the State would need to review, consideration of the

consumption of Class I increment in addition to the consumption of

Class II increment would not preclude the State from effectively

implementing the PSD program. The PSD program frequently applies in

areas that are comprised of disparate classifications and land uses. In

addition, EPA will make technical staff and resources available to the

State in the event the State encounters obstacles to effective air

quality management as a result of the Class I redesignation.

In the circumstances at issue, the Tribe has requested that its

entire Reservation be redesignated as a Class I area. EPA is reluctant

to establish rigid requirements regarding the geographic size,

geographic orientation, or population size of a Reservation, that would

disqualify certain Tribes as a threshold matter from exercising the

authority conferred under section 164(c) to redesignate lands within

Reservation boundaries.

EPA would be inclined to a different outcome regarding the

consideration of air quality management issues if EPA was faced with a

specious redesignation request. For example, EPA would be disinclined

to resolve an intergovernmental dispute by approving a Class I

redesignation for a very small portion of a State or Reservation where

the purpose of the request is not to provide air quality benefit for

the requesting jurisdiction but to interpose effects and accompanying

air quality management burdens outside of the jurisdiction.

Here, however, the Tribe's redesignation request indicates that

protecting the health and welfare of the Reservation population is a

primary concern. See Yavapai-Apache Tribe Air Quality Redesignation

Plan, Sept. 1993. Moreover, the Tribe has requested that its entire

Reservation be redesignated as a Class I area. That historical events

have diminished the size of the Tribe's Reservation should not

disqualify the Tribe from obtaining additional health and welfare

protection for its Reservation populace.

D. Air Quality Related Values

The State also questioned whether the Reservation ``is of

sufficient size to * * * have air quality-related values.'' See Letter

from Fife Symington, Governor of Arizona, to Felicia Marcus, EPA

Regional Administrator (Dec. 5, 1994). The State averred that in

addressing a redesignation dispute under section 164(e) EPA is required

to consider ``whether the area can be effectively managed for air

quality values, meaning the redesignated area, which is the Tribal

lands, or whether there are air quality related values on the

Reservation that need to be protected.'' See Trans. at ps. 7-8. The

State further contended that the redesignation is inappropriate because

the answer to both questions is no. See Trans. at p. 8.

The State's concern that the Reservation is of insufficient size to

have air quality related values was not clearly explained. The State's

December 5, 1994 letter raising this concern referred to a previous

October 20, 1993 correspondence between the State and the Tribe as

having specifically raised this issue. However, the October 20, 1993

correspondence does not mention air quality related values. See Letter

from Edward Z. Fox, Director Arizona Department of Environmental

Quality, to Theodore Smith, Sr., Yavapai-Apache Tribal Chairman.

Section 164(e) provides that in resolving disputes about area

redesignations EPA shall consider ``the extent to which the lands

involved are of sufficient size to allow effective air quality

management or have air quality related values of such an area.'' The

State appears to have combined the two criteria into one, objecting

that the redesignation should be denied because ``air quality values''

cannot be effectively managed on a Reservation of this size. In part

IV.C, EPA addressed the State's concerns about whether the Reservation

lands are of sufficient size to allow for effective air quality

management. In this discussion, EPA addresses the separate

consideration of ``air quality related values'' (AQRVs), including the

State's assertion that the Tribe's redesignation is not warranted

because there are no AQRVs on the Reservation that need to be

protected.

Section 164(e) does not make identification of AQRVs that need to

be protected a necessary condition of a redesignation. The final

sentence of section 164(e) provides that in resolving redesignation

disputes EPA must consider the extent to which the lands involved have

AQRVs. A preceding sentence in section 164(e) explicates the meaning of

this passage by calling for EPA to ``protect the air quality related

values of the lands involved'' in resolving intergovernmental disputes

over proposed PSD permits and redesignations. Thus, under section

164(e) EPA is to consider the AQRVs of

[[Page 56459]]

the lands involved in a redesignation, ensuring that any AQRVs are

adequately protected in resolving intergovernmental disputes.

The provisions of section 164(e) do not, by contrast, require EPA

to disapprove a decision by a State or Tribe to redesignate lands

because a disagreeing State or Tribe believes the area does not have

attributes that need to be protected. In addition to disputes over

Class I redesignations, the terms of section 164(e) apply to

intergovernmental disputes over a decision by a State or Tribe to give

their Class II lands less air quality protection by redesignating them

as Class III. The State's interpretation of section 164(e) that a

redesignation is inappropriate if the area does not have AQRVs that

need to be protected would not make sense in the context of a dispute

over a Class III redesignation. It would be illogical for EPA to

disapprove a redesignation to allow less air quality protection in an

area because the requesting State or Tribe has failed to demonstrate

that the lands involved have AQRVs that need to be protected.

Further, section 164(b) of the CAA and EPA's implementing

regulations governing redesignation requirements do not require that a

Tribe or State requesting a redesignation demonstrate or establish that

the affected lands have AQRVs. See 40 CFR 52.21(g)(4). In addition, the

legislative history accompanying the adoption of the PSD provisions,

discussed in part IV.A, indicates that Congress intended to give States

and Tribes broad discretion in redesignating areas and to restrict

EPA's authority to override or disapprove their judgment.

AQRVs are given special protection under section 164(e) at least in

significant part because of this local decisionmaking discretion. The

PSD program adopted by Congress in 1977 modified EPA's pre-1977

administrative program to provide greater local discretion in

redesignation decisions by ``removing the Federal land manager's

authority to control classification of Federal lands.'' See H.R. Rep.

No. 294 at 7-8 reprinted in 1977 CAAA Legislative History, vol. 4 at

2474-75.

Congress specified certain mandatory Federal Class I areas that may

not be redesignated. See section 162(a) of the CAA. Congress also

called for the Federal Land Managers to review certain Federal Class II

areas--national monuments, primitive areas, and national preserves--and

recommend to the affected States any appropriate areas for

redesignation as Class I ``where air quality related values are

important attributes of the area.'' See section 164(d) of the CAA.

However, as indicated, Congress ultimately left it to the judgment of

States, not the Federal Land Managers, to decide whether to redesignate

these Class II Federal lands as Class I areas. Thus, by calling for EPA

to protect any identified AQRVs in resolving intergovernmental

disputes, section 164(e) ensures AQRV protection when a State has

accepted the Federal Land Manager's recommendation under section 164(d)

to request a Class I redesignation for Class II Federal lands where

AQRVs are important attributes. See generally H.R. Rep. No. 294 at 148-

49 reprinted in 1977 CAAA Legislative History, vol. 4 at 2615-16; see

also section 160(2) of the CAA.

The term ``air quality related values'' is not defined in the CAA.

The term ``air quality related values (including visibility)'' is used

in conjunction with Federal Class I areas. See generally section 165(d)

of the CAA. For Federal lands, the legislative history indicates that

the term AQRVs includes: ``the fundamental purposes for which such

lands have been established and preserved by Congress and the

responsible Federal agency. * * * [U]nder the 1916 Organic Act to

establish the National Park Service * * * the purpose of such national

park lands `is to conserve the scenery and the natural and historic

objects and the wildlife therein and to provide for the enjoyment of

the same in such manner and by such means as will leave them unimpaired

for the enjoyment of future generations.''' See S. Rep. No. 197, 95th

Cong., 1st Sess. at 36 reprinted in 1977 CAAA Legislative History, vol.

3 at 1410. Federal Land Managers have identified, for example, values

such as visibility, sensitive streams and watershed, and park

vegetation as AQRVs for particular resources and impaired visibility,

stream acidification and foliar injury as potential adverse impacts.

See, e.g., 55 FR 38403 (Sept. 18, 1990).

The Tribe's redesignation request addresses the Tribe's desire to

ensure a clean and safe environment by maintaining high air quality

standards for its citizens including, in particular, the elderly and

young, to ensure that air quality within the Reservation is not

adversely impacted by harmful industrial development, and to ensure

that its resources are protected for future generations. The Tribe's

request recounts the history of the Reservation and the special

religious and cultural value it holds for Tribal members. The submittal

describes the importance of the Class I redesignation in protecting

vegetation, wildlife and water resources, and visual air quality, and

expresses the Tribe's concern about adverse impacts on these resources.

The Tribe's submittal describes the unique natural resources in the

area where the Reservation is located, including: the Montezuma Castle,

Montezuma Well and Tuzigoot National Monuments; the Prescott, Coconino

and Kaibab National Forests; the Sycamore Canyon Wilderness Area, which

is a Federal Class I area; and the ``red rock'' country near Sedona.

See Yavapai-Apache Tribe Air Quality Redesignation Plan, Sept. 1993.

There may be a number of reasons for a State or Tribe to propose

redesignation of its lands as Class I, including its judgment that

decreasing the amount of allowable air quality deterioration is in the

interests of the health and welfare of its community, independent of

AQRVs. The purposes of the PSD program are broad and include:

protection of health and welfare from actual or potential adverse

effects, notwithstanding attainment of the national ambient air quality

standards; and assuring that economic growth will occur in a manner

consistent with the preservation of existing clean air resources. See

section 160 (1) and (3) of the CAA.

The Yavapai-Apache Tribe has offered many reasons why it is

requesting a Class I redesignation. The Clean Air Act generally calls

for EPA to defer to such judgments. EPA declines to disapprove the

Tribe's redesignation request because of the State's concern that the

Tribe has not identified AQRVs that need to be protected.

E. Redesignation Does Not Resolve Current Air Quality Problems

The State's objection to the proposed redesignation because it does

not address the Tribe's concern about ``current problems with the

health and welfare of Tribal members'' and because such concerns ``will

have to be resolved otherwise in some other form'' is problematic. See

Trans. at p. 8.

If no steps were taken to protect current air quality until all

pre-existing air quality problems were addressed, new air quality

problems would be created in the interim that in turn require remedial

action. This would be at odds with the purpose of the CAA to ``protect

and enhance'' the quality of air resources. See section 101(b)(1).

Further, the PSD program is fundamentally premised upon the efficacy

of, at least, preventing existing air quality from significantly

deteriorating.

Moreover, as noted, Federal law and policy provide that the Tribe

as a sovereign government may decide whether requesting a Class I

[[Page 56460]]

redesignation for its Reservation is in the interests of Tribal health

and welfare. The Tribe summarized its decision to request a Class I

designation as follows:

All people need a clean environment. The Yavapai-Apache Tribe

desires to maintain high quality air standards for its citizens by

redesignating Reservation lands as a Class I Clean Air area.

* * * The Clean Air Act specifically provides a mechanism for

any Indian tribe to promote and maintain clean air by redesignating

reservation lands as Class I areas. Considering the uncertainty of

``safe levels'' of air pollution, the Yavapai-Apache Tribe seeks

additional protection by redesignating its lands to Class I air

quality under the Clean Air Act.

Presently, Reservation lands are designated Class II allowing

for increases in industrial pollution. A redesignation to Class I

would reduce the permissible levels of pollution to ensure a clean

and safe environment.

See Yavapai-Apache Tribe Air Quality Redesignation Plan, September 1993

at p. 1. EPA declines to disapprove the Tribe's decision to provide

prospective air quality protection because of the State's concern that

the redesignation will not remedy extant air quality problems.

F. Additional Concern Regarding Potential Future Redesignations

Governor Symington expressed the following additional concern in a

letter to U.S. EPA Administrator Browner dated October 3, 1995:

* * * approval of this redesignation may have effects far

beyond the Verde Valley area. Twenty-one reservations are located,

in whole or in part, in Arizona. A proliferation of redesignation

requests and approvals for other reservations could have far-

reaching consequences for the future of the State and its economic

well-being.

See Letter from Governor Fife Symington to Administrator Carol Browner.

In separate communication, Governor Symington posed whether Tribes

whose reservations were located in proximity to large urban areas may

redesignate to Class I. As discussed at length in both this notice and

the accompanying notice granting the Yavapai-Apache Tribe's request,

the Clean Air Act provides that federally recognized tribes may

redesignate their reservation lands as they deem appropriate. Each such

request must be individually evaluated as set forth in Section 164 of

the Act and the implementing regulations at 40 CFR 52.21(g). EPA's

action today redesignating the Yavapai-Apache Reservation is based on

consideration of the specific factors relevant to this redesignation

request. EPA does not believe that speculation concerning potential

future requests for redesignation by other tribes is an appropriate

consideration in granting or denying the request at hand.

Similarly, it would be difficult to speculate at this time about

the general impact, economic or otherwise, if such a request for

redesignation in proximity to an urban area were approved. We have

explained in the Federal Register notice for the Yavapai-Apache

Redesignation that a Class I designation creates requirements only for

the construction or modification of major sources of air pollution.

Smaller sources of air pollution would not be affected by a Class I

designation, and permit applications for ``major sources'' are

generally infrequent. On the other hand, the Class I area would be

afforded greater air quality protections if one or more major sources

were proposed for construction. Specifically, the Class I designation

establishes a more stringent air quality standard that allows less

emissions growth than in surrounding Class II areas over a certain

baseline. A Class I designation would generally only affect those

sources emitting pollutants for which an urban metropolitan area is

designated attainment. In contrast, emissions of those pollutants for

which the urban area is designated nonattainment would be mitigated by

emissions offsets and more stringent control technology requirements.

In addition, Tribes whose requests for redesignation have been approved

would be able to invoke the dispute resolution provisions in section

164(e) to contest the permitting of any major source emitting criteria

pollutants-- whether under PSD or nonattainment new source review--with

visibility impairment or other air quality related values serving as a

basis for the dispute.

With respect to the review of PSD permit applications for major

sources proposing to locate near tribal class I areas, EPA will publish

shortly an advance notice of proposed rulemaking (ANPR) that will

address issues related to non-federal class I areas. The decision to

develop an ANPR follows a June 4, 1996, meeting among Mary Nichols,

EPA's Assistant Administrator for Air and Radiation and representatives

for the state environmental agencies of Michigan and Wisconsin. The

state representatives expressed concern about the lack of specific

procedures governing the review of PSD permit applications for major

sources locating on state lands near tribal class I areas. In that

meeting, Assistant Administrator Nichols agreed that rules specifically

addressing the PSD permit review process for sources potentially

affecting non-federal class I areas might be useful in clarifying the

roles and responsibilities of the affected parties. The ANPR is

intended to raise specific issues and solicit input from all interested

parties. See Letters from Carol M. Browner, EPA Administrator, to

Michigan Governor John Engler and Wisconsin Governor Tommy G. Thompson,

both July 16, 1996.

While it is likely that issues and disputes will arise from time to

time regarding impacts on reservations which have been redesignated to

Class I, we do not expect such disputes to be frequent or

insurmountable. As we have noted, there are many Class I areas located

adjacent to communities that are Class II areas. We have mentioned

Tucson's proximity to the Saguaro National Monument, a Federal Class I

area. Economic growth is not inconsistent with the management of the

more stringent air quality standard of the Class I area, as economic

development in Tucson has not been hindered by its close proximity to

the Saguaro National Monument Class I area. In addition, there are

seven Class I areas either within or adjacent to the Los Angeles

metropolitan area.

V. Administrative Review

A. Executive Order 12866

The Office of Management and Budget has exempted this action from

centralized regulatory review pursuant to section 6 of Executive Order

12866.

B. Regulatory Flexibility Act

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

EPA must prepare a regulatory flexibility analysis assessing the impact

of any proposed or final rule on small entities. See 5 U.S.C. sections

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. The decision announced in this notice is not a rule within the

meaning of the Regulatory Flexibility Act. In any event, EPA's

resolution of the intergovernmental dispute and the final rulemaking

action to approve the Tribe's PSD redesignation request, published

elsewhere in today's Federal Register, do not impose new requirements

on small entities, may only potentially have an impact on major

stationary sources, as defined by 40 CFR 52.21, and therefore will not

have a significant economic impact on a substantial number of small

entities.

[[Page 56461]]

C. Unfunded Mandates Reform Act

Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), P.L.

104-4, establishes requirements for Federal agencies to assess the

effects of their regulatory actions on State, local, and tribal

governments and the private sector. Under section 202 of the UMRA, EPA

generally must prepare a written statement, including a cost-benefit

analysis, for proposed and final rules with ``Federal mandates'' that

may result in expenditures to State, local, and tribal governments, in

the aggregate, or to the private sector, of $100 million or more in any

one year. Before promulgating an EPA rule for which a written statement

is needed, section 205 of the UMRA generally requires EPA to identify

and consider a reasonable number of regulatory alternatives and adopt

the least costly, most cost-effective or least burdensome alternative

that achieves the objectives of the rule and is consistent with

statutory requirements. Section 205 allows EPA to adopt an alternative

other than the least costly, most cost-effective or least burdensome

alternative if EPA publishes with the final rule an explanation why

that alternative was not adopted.

The decision announced in this notice is not a regulation or rule

within the meaning of the UMRA. In any event, EPA's resolution of the

intergovernmental dispute announced in this notice and the final

rulemaking action to approve the Tribe's PSD redesignation request,

published elsewhere in today's Federal Register, are not subject to the

requirements of sections 202 and 205 of the UMRA because they do not

contain Federal mandates that may result in expenditures of $100

million or more for State, local, and Tribal governments, in the

aggregate, or the private sector in any one year.

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

List of Subjects in 40 CFR Part 52

Air pollution control, Carbon monoxide, Hydrocarbons,

Intergovernmental relations, Nitrogen dioxide, Ozone, Particulate

matter, Reporting and recordkeeping requirements, Sulfur oxides.

Dated: October 2, 1996.

Felicia Marcus,

Regional Administrator.

[FR Doc. 96-27848 Filed 10-31-96; 8:45 am]

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