Clean Air Act Approval and Promulgation of New Source Review and Prevention of Significant Deterioration Implementation Plan for Monterey Bay Unified Air Pollution Control District

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 157-0007; FRL-5460-7]

Clean Air Act Approval and Promulgation of New Source Review and

Prevention of Significant Deterioration Implementation Plan for

Monterey Bay Unified Air Pollution Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice of proposed rulemaking.

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

in the alternative Monterey Bay Unified Air Pollution Control District

(District) Rules 207 and 215 for the purpose of meeting requirements of

the Clean Air Act, as amended in 1990 (CAA or Act) with regard to new

source review (NSR) in areas that have not attained the national

ambient air quality standards (NAAQS). Rules 207 (Review of New and

Modified Sources) and 215 (Banking of Emission Reductions) were

submitted by the State of California on behalf of the District as a

requested State Implementation Plan (SIP) revision to satisfy certain

Federal requirements for an approvable nonattainment new source review

SIP. This submittal also satisfies the requirements for a Prevention of

Significant Deterioration (PSD) program. This proposed approval is

contingent upon the District correcting existing deficiencies in its

NSR and PSD submittal before EPA promulgates a final rulemaking on this

submittal. Should the District fail to correct all deficiencies in this

submittal, then this notice will serve as a proposed disapproval of the

submittal.

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

May 22, 1996.

ADDRESSES: To submit comments or receive further information, please

contact Steve Ringer, Environmental Engineer, New Source Section, Air &

Toxics Division (A-5-1), EPA Region 9, 75 Hawthorne Street, San

Francisco, CA 94105. Copies of the State's submittal and other

information are available for inspection during normal business hours

at the following locations: (1) EPA Region 9, 75 Hawthorne Street, San

Francisco, CA 94105; (2) Air Resources Board, 2020 L Street,

Sacramento, CA 95814; (3) Monterey Bay Unified Air Pollution Control

District, 24580 Silver Cloud Court, Monterey CA 93940.

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

SUPPLEMENTARY INFORMATION: The air quality planning requirements for

nonattainment NSR are set out in part D of title I of the Clean Air

Act. EPA has issued a ``General Preamble'' describing EPA's preliminary

views on how EPA intends to review SIPs and SIP revisions submitted

under part D, including those State submittals containing nonattainment

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

(April 28, 1992)]. Because EPA is describing its interpretations here

only in broad terms, the reader should refer to the General Preamble

for a more detailed discussion.

Procedural Background

The Act requires States to observe certain procedural requirements

in developing implementation plans and plan revisions for submission to

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

implementation plan or revision to an implementation plan submitted by

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

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

nonattainment areas shall meet the applicable provisions of Section

110(a)(2).

The District held a public hearing on May 17, 1995 to entertain

public comment on rules 207 and 215. On May 17, 1995, the rules were

adopted by the District Board of Directors and submitted to the State.

On August 10, 1995 the rules were submitted to EPA as a proposed

revision to the California SIP.

EPA deemed the submittal complete on October 4, 1995. The submittal

has since been reviewed and found to be complete but lacking certain

requirements that would make it fully approvable. The District has,

however, committed to correct the deficiencies described below and

submit a rule with these changes for inclusion into the SIP. Therefore,

contingent on the submittal of a fully approvable SIP revision, as

described below, EPA proposes to approve the District's nonattainment

NSR and attainment PSD SIP submittal. If the District fails to correct

the deficiencies in this submittal, then EPA's final action will be a

disapproval.

Summary of Rule Contents

The Monterey Bay Unified Air Pollution Control District submitted

to EPA for adoption into the applicable NSR SIP Rules 207 (Review of

New or Modified Sources) and 215 (Banking of Emissions Reductions).

Rule 207 is intended to replace existing NSR SIP Rule 207 (Review of

New or Modified Source); and Rule 215 is a new addition to the existing

SIP.

These submitted rules constitute the District's new source

permitting

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regulations. Rule 207 consists of definitions, requirements, including

applicability, major source definitions, offsets, increment analysis,

and Lowest Achievable Emission Rate/Best Available Control Technology.

Rule 215 establishes procedures for the creation, banking, and use of

emission reduction credits. This last rule has indirect bearing on new

source review, as these credits can be obtained by new sources and used

as offsets.

Within the District, Monterey County, San Benito County, and Santa

Cruz County are currently designated as Moderate nonattainment for

Ozone. All other areas within the District are designated as attainment

or unclassifiable with respect to the NAAQS. District nonattainment

rules must therefore apply to all major new or modified stationary

sources proposing to emit VOC or NOx in the nonattainment areas noted

above. The nonattainment provisions must also apply to any source which

would contribute to a violation of the NAAQS. The PSD provisions

submitted by the District apply to major new or modified stationary

sources proposing to emit attainment pollutants.

The Clean Air Act requirements are found at sections 172 and 173

for nonattainment NSR permitting and at section 165 for PSD permitting.

With certain exceptions, described below, the District's submittal

satisfies these requirements. For a detailed description of how the

submitted rule meets the applicable requirements, please refer to EPA's

technical support document.

Rule Deficiencies That Must Be Corrected

Rule 207

Section 4.2.9: Currently this section states that ``all emission

reductions must be in effect and enforceable by the time the new or

modified source commences operation''. However, section 173(a) of the

Clean Air Act requires that any emission reduction required as a

precondition of the issuance of a permit shall be made federally

enforceable prior to permit issuance. Therefore, the District must

change this language to meet the above Clean Air Act requirement.

Section 4.3.3.2: This section allows a source to obtain offsets

from a different air basin if the applicant provides them at the stated

ratios or at a ratio and distance approved by the District as long as

the source demonstrates a net air quality benefit. However, Section

173(c) of the Clean Air Act requires that emission reductions obtained

from another nonattainment area may be used only if (A) the other area

has an equal or higher nonattainment classification than the area in

which the source is located, and (B) emissions from such other area

contribute to a violation of the national ambient air quality standard

in the nonattainment area in which the source is located. Thus, the

rule should have language which explicitly requires the two conditions

above.

Proposed Action

EPA is proposing to approve, with disapproval in the alternative,

the plan revisions submitted by the California Resources Board on

behalf of Monterey Bay Unified Air Pollution Control District on August

10, 1995. Full approval as a final action on these rules is contingent

upon the District making the required changes listed above.

If the specified changes are not made before EPA's final action on

this submittal, then EPA's final action will be a disapproval. If

finalized, this disapproval would constitute a disapproval under

section 179(a)(2) of the Act (see 57 FR 13566-67). As provided under

section 179(a) of the Act, the District would have up to 18 months

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

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

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

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

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

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

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

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

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

be applied if any deficiencies are still not corrected after the

additional six month period.

EPA is requesting comments on all aspects of the requested SIP

revision and EPA's proposed rulemaking action. Comments received by the

date indicated above will be considered in the development of EPA's

final rule.

Administrative Review

Nothing in this action should be construed as permitting or

allowing or establishing a precedent for any future request for

revision to any state implementation plan. Each request for revision to

the state implementation plan shall be considered separately in light

of specific technical, economic, and environmental factors and in

relation to relevant statutory and regulatory requirements.

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

must prepare a regulatory flexibility analysis assessing the impact of

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

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

significant impact on a substantial number of small entities. Small

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

and government entities with jurisdiction over populations of less than

50,000.

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

do not create any new requirements, but simply approve requirements

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

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

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

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

preparation of a regulatory flexibility analysis would constitute

Federal inquiry into the economic reasonableness of State action. The

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

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

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

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

Unfunded Mandates

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

must prepare a budgetary impact statement to accompany any proposed or

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

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

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

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

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

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

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

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

action.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, hydrocarbons,

intergovernmental relations, new source review, nitrogen dioxide,

particulate matter, reporting and record-keeping requirements, sulfur

dioxide, and volatile organic compounds.

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

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Dated: April 10, 1996.

Felicia Marcus,

Regional Administrator.

[FR Doc. 96-9848 Filed 4-19-96; 8:45 am]

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