Approval and Promulgation of Air Quality Implementation Plans; Texas; Motor Vehicle Inspection and Maintenance Program

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[TX-55-1-7335; FRL-5856-3]

Approval and Promulgation of Air Quality Implementation Plans;

Texas; Motor Vehicle Inspection and Maintenance Program

AGENCY: Environmental Protection Agency (EPA).

ACTION: Interim final rule.

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SUMMARY: The EPA is granting conditional interim approval of a State

Implementation Plan (SIP) revision submitted by Texas. This revision

establishes and requires the implementation of an enhanced inspection

and maintenance (I/M) program in the Houston/Galveston and El Paso

areas and a basic I/M program in the Dallas/Fort Worth area. The effect

of this action is to conditionally approve Texas's I/M program for an

interim period to last 18 months, based upon the good faith estimate of

the program's performance. This action is being taken under section 110

of the Clean Air Act (Act) and section 348 of the National Highway

Systems Designation Act (NHSDA).

DATES: This interim final rule is effective on August 11, 1997.

ADDRESSES: Copies of the documents relevant to this action are

available for public inspection during normal business hours at the

following locations. Persons interested in examining these documents

should make an appointment with the appropriate office at least 24

hours before the visiting day.

Environmental Protection Agency, Region 6, Air Planning Section (6PD-

L), 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733.

Texas Natural Resource Conservation Commission, 12100 Park 35 Circle,

Austin, Texas 78711-3087.

FOR FURTHER INFORMATION CONTACT: Mr. James F. Davis, Air Planning

Section (6PD-L), EPA Region 6, 1445 Ross Avenue, Dallas, Texas 75202-

2733, telephone (214) 665-7584.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Background

II. Public Comments/Response to Comments

III. Interim Final Rulemaking Action

IV. Conditional Interim Approval

V. Further Requirements for Permanent I/M SIP Approval

VI. Administrative Requirements

A. Executive Order 12866

B. Regulatory Flexibility Analysis

C. Unfunded Mandates Act

D. Submission to Congress & the General Accounting Office

E. Petitions for Judicial Review

I. Background

On October 3, 1996 (61 FR 51651), EPA published a Notice of

Proposed Rulemaking (NPR) for the State of Texas. The NPR proposed

conditional interim approval of Texas' I/M program, submitted to

satisfy the applicable requirements of both the Act and the NHDSA. The

formal SIP revision was submitted by Texas on March 14, 1996.

As described in that notice, the NHSDA directs EPA to grant interim

approval for a period of 18 months to approvable I/M submittals. The

NHSDA also directs EPA and the states to review the interim program

results at the end of that 18-month period, and to make a determination

as to the effectiveness of the interim program. Following this

demonstration, EPA will adjust any credit claims made by the state in

its good faith effort, to reflect the emissions reductions actually

measured by the state during the program evaluation period. The NHSDA

is clear that the interim approval shall last for only 18 months, and

that the program evaluation is due to EPA at the end of that period.

Therefore, EPA believes Congress intended for these programs to start

up as soon as possible, which EPA believes should be on or before

November 15, 1997, so that at least six months of operational program

data can be collected to evaluate the interim programs. The EPA

believes that in setting such a strict timetable for program

evaluations under the NHSDA, Congress recognized and attempted to

mitigate any further delay with the start-up of this program. If Texas

fails to fully start its program according to this schedule, this

conditional interim approval granted under the provisions of the NHSDA

will convert to a disapproval after a finding letter is sent to the

state. Unlike the other specified conditions of this rulemaking, which

are explicit conditions under section 110(k)(4) of the Act and which

will trigger an automatic disapproval should Texas fail to meet its

commitments, the startdate provision will only trigger a disapproval

upon EPA's notification to the State by letter that the startdate has

been missed. This letter will not only notify Texas that this

rulemaking action has been converted to a disapproval, but also that

the sanctions clock associated with this disapproval has been triggered

as a result of this failure. Because the startdate condition is not

imposed pursuant to a commitment to correct a deficient SIP under

section 110(k)(4), EPA does not believe it is necessary to have the SIP

approval convert to a disapproval automatically if the startdate is

missed. The EPA is imposing the startdate condition under its general

SIP approval authority of section 110(k)(3), which does not require

automatic conversion. It should be noted that the State of Texas has

already started major elements of its program in all three program

areas.

The program evaluation to be used by the state during the 18-month

interim period must be acceptable to EPA. The Environmental Council of

States (ECOS) group has developed such a program evaluation process

which includes both short term qualitative and long term quantitative

measures, and this process has been deemed acceptable to EPA. The core

requirement for the long term quantitative measure is that a Mass

Emission Transient Test be performed on 0.1 percent of the subject

fleet, as required by the I/M Rule at 40 CFR 51.353 and 366.

Per the NHSDA requirements, this conditional interim rulemaking

will expire on February 11, 1999. A full approval of Texas final I/M

SIP revision (which will include Texas' 18-month program evaluation) is

still necessary under section 110 and under sections 182, 184 or 187 of

the Act. After EPA reviews Texas' submitted program evaluation and

other required elements for final approval, final rulemaking on the

Texas' I/M SIP revision will occur.

[[Page 37139]]

Specific requirements of the Texas I/M SIP and the rationale for

EPA's proposed action are explained in the NPR and will not be restated

here.

II. Public Comments/Response to Comments

This section discusses the content of the comments submitted to the

docket during the Federal comment period for the notice of proposed

rulemaking, published in the October 3, 1996 Federal Register, and

provides EPA's responses to those comments. On November 18, 1996, EPA

granted a 60-day extension of the comment period which was requested by

four parties. The extended comment period closed on January 3, 1997.

Four sets of comments were received by the Region. The comments were

from the Texas Natural Resource Conservation Commission (TNRCC), the

Environmental Defense Fund (EDF), the Sierra Club (SC) and by the law

firm Bickerstaff, Heath, Smiley, Pollan, Kever, & McDaniel, L.L.P

(BHS). Copies of the original comment letters are available at EPA's

Region 6 office at the address listed in the ADDRESSES section of this

notice. The EPA has first grouped similar comments and summarized them,

followed by EPA's response to specific comments. For clarity, in some

cases EPA has provided background information within a comment on its

requirements or its proposed action relevant to Texas' SIP, prior to

summarizing the comment itself.

Comment--Legal Authority of Texas I/M Plan

The SC and BHS commented that the State program does not have

adequate authority to implement the program. The law firm BHS commented

that the State law (Senate Bill 178) the State is using to implement

the program is unconstitutional. The law firm BHS commented that a

written decision in favor of Texas is forthcoming and will be forwarded

to EPA when issued, thus EPA should not be considering approving the

State's program. The law firm BHS commented that even if Senate Bill

178 were constitutional it does not give the State authority to

implement major portions of its program including, reregistration

denial, enforcement of remote sensing, and test on resale provisions of

the program. Thus, EPA cannot approve the program based on the NHSDA

which requires that ``all'' authority be present for EPA to approve the

program. It is argued that EPA's proposal does not address whether the

State's submission meets the requirements of the NHSDA while other EPA

actions on NHSDA submittals do. The law firm BHS contends the NHSDA

only allows a brief window of 120 days for a submittal which is

required to include all authority. Since this window has already

passed, EPA cannot extend the deadline. The SC similarly noted that EPA

cannot postpone the deadline by using a conditional approval following

the Natural Resource Defense Council case of 1994.

Response to Comment

The EPA's proposal explicitly identified the lack of authority as a

deficiency which required correction by the imposition of major

conditions which if not fulfilled would convert the action to a

disapproval. Thus, EPA agrees that the State submittal does not meet

all of the requirements of the NHSDA and is deficient in this regard.

We also stated that the SIP contained enabling legislation that would

allow the State to implement ``most'' of its program and that the State

could get the legislative authority in the next legislative session. To

support the State's commitment on obtaining the additional required

authority the SIP included a Governor's Executive Order stating the

intention of the Governor to support the needed legislation in the 1997

legislative session. The Texas legislature meets only once every two

years and therefore obtaining the additional legislation four months

after passage of the NHSDA was impractical. Also, it is EPA's

understanding that the Texas legislature has recently passed

legislation during the 1997 session addressing legislative deficiencies

in the SIP. The EPA will be evaluating the legislation over the next

several months. The EPA is authorized to promulgate conditional

approvals under the Clean Air Act and does not believe the action

postpones the deadlines contained in the NHSDA. The NRDC case involved

postponing of a deadline by the use of a ``committal SIP'' which did

not include a substantive submittal of legislation, regulations, SIP

narrative, etc. Due to the substantive nature of the Texas submittal

EPA does not believe the submittal constitutes merely a ``committal

SIP.''

Texas has submitted a substantive I/M SIP, and has adequate legal

authority to adopt and implement that SIP. The SIP has several

deficiencies, which Texas has committed to remedy. It will require the

adoption of additional legislative authority to remedy the

deficiencies. The EPA believes it is authorized to conditionally

approve a substantive SIP submittal under the Act section 110(k)(4) in

these circumstances, and that such approval is consistent with the

holding of the court interpreting the Act section 110(k)(4), NRDC v.

EPA, 22 F.3d 1125, 1134 (D.C. Cir. 1994). The EPA further believes that

this action is consistent with the requirements of the NHSDA. The EPA

believes that so long as a state submits a substantative I/M SIP with

underlying statutory authority during the 120-day period specified in

the NHSDA, EPA can conditionally approve that SIP even if it contains

some deficiencies that require additional legislative authority to

remedy. Such authority must be obtained before EPA can give full final

approval to the I/M SIP.

Regarding the constitutionality of the State's authority, a Texas

Court ruled that the two laws creating the Texas Motorists' Choice

program, Texas Senate Bills 19 and 178, were in violation of both the

Texas and Federal Constitution. The Court ruled that those laws were an

unconstitutional ``taking'' and an unconstitutional interference with

contract, Tejas Testing Technologies I, et al, v. The State of Texas,

No. 95-1462 (126th Dist. Court, Travis County, Texas) (April 21, 1997).

The State has filed a Notice of Intent to Appeal the ruling. Texas

Rules of Appellate Procedure, Rule 47 and associated case law seem to

indicate that such a filing supersedes the finding of the lower court

pending determination by the Court of Appeals. See, Ammex Warehouse Co.

v. Archer, 381 S.W. 2d 478, 481 (Tex. 1964), Porth v. Currie, 613 S.W.

2d 534 (Tex. Civ. App., Austin 1981), and Texas Workers' Compensation

Commission v. Garcia, 893 S.W. 2d 504, 517 (Texas 1995). However, EPA

is not basing today's action on Senate Bill 19 and 178 because of the

uncertainty regarding the constitutionality of those laws after the

Court's ruling. In order to determine whether the program is supported

by adequate legislative authority, EPA reviewed the statute submitted

by Texas excluding the language added by Senate Bills 19 and 178. Based

on that review, EPA has determined that Texas has sufficient authority

to implement the program with the exception of remote sensing and

registration denial (as discussed in the conditions for final interim

approval).

Title 5 of the Texas Health and Safety Code, Section 382.037(a)

(Vernon's 1995) authorizes the promulgation of rules to ``establish,

implement and administer a program requiring emissions-related

inspections of motor vehicles to be performed at inspection facilities

consistent with the requirements of the Federal Clean Air Act.'' This

gives very broad authority to establish any type of vehicle inspection

[[Page 37140]]

program so long as that program is consistent with the Federal

requirements.

Enforcement of the program is authorized by Title 5 of the Texas

Health and Safety Code, Section 382.037(d), by a ``sticker-based''

program. As discussed elsewhere, a sticker-based program is not

acceptable without an adequate demonstration that the State's pre-1990

Act mechanism was more effective than its registration denial system.

Texas has not made such a demonstration, and either an adequate

demonstration must be submitted or authority for registration denial

must be submitted within one year to fulfill one of the conditions of

this approval. It is EPA's understanding that the Texas Legislature has

recently passed a law allowing for a registration denial program upon

EPA's finding that the State has not made a adequate demonstration that

sticker enforcement is more effective than registration denial. Section

382.037(n) authorizes audits to determine compliance, but was added by

the laws determined unconstitutional and, therefore, was not considered

by EPA. However, Sections 382.038(a) and 382.038(d) authorize the State

to pass appropriate regulations to conduct compliance audits.

Comment--Low Enhanced Performance Standard Issues

The TNRCC commented that although the Dallas/Fort Worth area is

only required to implement a basic I/M program the State submitted

modeling showing that the program also meets the low enhanced

performance standard. The SC and BHS commented that EPA cannot allow

the use of a ``low enhanced'' I/M program for areas such as Houston/

Galveston that need more effective I/M programs to meet air quality

goals. The law firm BHS cites EPA's proposed disapproval of the State's

original 15% Plan. They also note that EPA cannot approve the revised

15% Plan since it does not achieve the required reductions by 1996, and

that EPA cannot extend the deadline of the original November 15, 1993,

submittal date for a revision to the 15% Plan. The law firm BHS

commented that the revised program does not even start up prior to the

end of 1996, and notes the rising contribution of mobile sources to the

air quality problem in the area.

Response to Comment

The EPA agrees with the TNRCC's comment that the State's modeling

shows that the low enhanced performance standard is met in the Dallas/

Fort Worth area. However, the Dallas/Fort Worth area is only required

to implement a basic I/M program and all the elements of an enhanced I/

M program are not being implemented in the Dallas/Fort Worth program.

Therefore, EPA is approving the Dallas/Fort Worth program only as a

basic I/M program.

The EPA disagrees with the comment that the State is not eligible

for the low enhanced performance standard. While EPA proposed

disapproval of the State's original 15% Plan, the EPA has already

proposed an approval action on the State's revised 15% Plan. The Texas

I/M NPR stated that EPA would not finalize an interim action on the I/M

SIP unless an approval action was proposed on the 15% Plan which has

now been done. The I/M flexibility rules define eligibility and only

require that the State have an approved 15% Plan and not received

disapprovals on the other Rate of Further Progress or attainment plans.

Issues regarding the approval of the 15% Plan including late start up

dates for I/M programs are addressed in the proposed approval of the

State's revised 15% Plan. Those are issues relevant to approval of the

15% Plan and will not be further addressed in this notice on the I/M

plan. In the case of Texas, the State has already started most of the

major elements of its I/M Plan and no further reductions are possible

by the end of 1996 since this date already is historical. Also, States

may, and often do, make revisions to previously submitted SIPs as part

of the SIP process. Section 110 of the Act allows for and contemplates

revisions to SIPs.

The EPA agrees that mobile source pollution is a continuing and

significant source of pollution in the I/M nonattainment areas. The EPA

also believes that it may be necessary to expand the geographic

coverage or to improve effectiveness of the State's I/M Program in the

future. Additional emission reductions may be required in the Texas

nonattainment areas due to a continuing nonattainment status, or that

the reductions claimed as a ``good faith estimate'' are not achieved in

practice.

Comment--Geographic Coverage Requirements

The SC and BHS commented that the Beaumont/Port Arthur area should

be in the I/M program. The SC commented that the redesignation was not

completed and the area is an influence on the air quality of the

Houston/Galveston area. The law firm BHS commented that the 1990

urbanized area population for Beaumont/Port Arthur is 232,434 and

exceeds EPA's cutoff of 200,000.

The SC, BHS, and EDF commented that the Texas I/M program does not

adequately cover the entire urbanized area for Dallas/Fort Worth and

Houston/Galveston. The SC commented that remote sensing is not complete

coverage and incompletely evaluated for effectiveness. The law firm BHS

commented that exclusion of some of the urban population is allowed if

an equal number of residents is included and the State used vehicles

not residents in their analysis. The law firm BHS noted the uncertain

feasibility and effectiveness of remote sensing and the delay in the

State's data collecting phase of its remote sensing plan. The law firm

BHS also commented on the lack of enforcement authority for remote

sensing in the State's plan. The EDF commented that the exclusion of

the rapidly growing counties of Collin and Denton County will result in

dirtier air for the Region. The EDF commented that this exclusion will

result in the failure to inspect 147,000 commuting vehicles and an

additional 304,000 noncommuting vehicles.

Response to Comment

The Beaumont/Port Arthur area was reclassified from a serious to

moderate ozone nonattainment area on April 2, 1996 (61 FR 14496). While

the Beaumont/Port Arthur area is one moderate ozone nonattainment area

it is composed of at least two separate urbanized areas each with a

1990 urbanized area population of under 200,000. According to the

report entitled ``1990 Census of Population and Housing: Population and

Housing Unit Counts: Texas'' issued in March 1993 by the U.S. Bureau of

the Census, the 1990 population of the Beaumont urbanized area is

122,841. The 1990 population of the urbanized area population for Port

Arthur is 109,560. The I/M flexibility rule only requires that for

moderate ozone nonattainment areas outside the ozone transport region,

basic I/M programs be implemented in any 1990 Census-defined urbanized

area of 200,000 or more (40 CFR 51.350(a)(4)). Since the Beaumont/Port

Arthur area is a moderate area and contains no 1990 urbanized areas of

over 200,000, EPA does not require that I/M be implemented in the

Beaumont/Port Arthur nonattainment area.

The EPA agrees that the State's exclusion of counties in both the

Houston/Galveston area and the Dallas/Fort Worth area results in a less

effective I/M program which hinders each of the areas reaching

attainment of the National Ambient Area Quality Standard for ozone.

Specifically, the exclusion of heavily populated portions

[[Page 37141]]

of the nonattainment areas, such as portions of Collin and Denton

Counties, from the regular testing I/M program in the Dallas/Fort Worth

area in our view is hindering the State from reaching attainment of air

quality standards. However, in the proposed Federal Register notice

(FRN), EPA made allowance for the State's use of remote sensing to make

up deficiencies in the State's area of coverage plans. Nevertheless,

recognizing the uncertainty of the remote sensing program, EPA included

a provision in the proposed FRN that for permanent I/M SIP approval,

the remote sensing program must be demonstrated to be effective in

identifying and obtaining repairs on vehicles with high levels of

emissions, or the Texas I/M core program must be expanded to include

the entire urbanized area for both Dallas/Fort Worth and Houston. Also,

since I/M programs are designed to reduce emissions from vehicles, and

populations or persons do not directly equate to vehicle population,

EPA also allowed for an interpretation of its I/M rule which would

apply a ratio to the population shortfall to determine the minimum

number of vehicles required to be tested by the State from commuting

vehicles outside the I/M core program areas.

The EPA's proposal also identified the lack of authority for

enforcement of remote sensing as a deficiency which required correction

by the imposition of major conditions which if not fulfilled would

convert the action to a disapproval. We also stated that the State

could get the legislative authority in the next legislative session. To

support the State's commitment the SIP included a Governor's Executive

Order stating the intention of the Governor to support the needed

legislation in the 1997 legislative session. It is EPA's understanding

that the Texas legislature recently passed legislation for enforcement

of a remote sensing program.

Comment--Enforcement of Texas I/M Program

The TNRCC commented that the Texas Motorist Choice inspection

program is a sticker-based enforcement program with computer matching

enhancements. The State commented that it believes that it has

demonstrated that sticker-based enforcement is more effective than

registration denial. The State included a sticker survey from the I/M

areas which indicated that most vehicles (95 percent) had stickers

showing appropriate dates of compliance. The SIP also states that

unregistered vehicles range from 2 to 15 percent. The SC commented that

the lack of registration denial is a major inadequacy. The SC also

commented that the State's program to deter fraud and assure accuracy

is not adequate. The law firm BHS also commented that the State does

not have an effective enforcement system and does not have authority

for registration denial and had questions about exactly how the State's

plan would work. The law firm BHS argued that a sticker based program

without a demonstration of greater effectiveness with a vague undefined

threat of reregistration denial does not meet the requirements of the

Act. Also, BHS cited the EPA proposed disapproval for the District of

Columbia for its lack of similar but more comprehensive deficiencies in

its enforcement program. The District of Columbia program also did not

have authority for registration denial, and no penalty schedule

accompanying the SIP.

Response to Comment

The EPA's proposed approval was based upon the State commitment in

the SIP and specifically the commitment in the Governor's Executive

Order which specified the State's intention to support legislation for

the authority to enforce the program with reregistration denial. The

Clean Air Act and Federal I/M regulations specify that registration

denial must be the enforcement mechanism for a state unless an

alternative enforcement mechanism of a pre-1990 Act program is

demonstrated to be more effective. The demonstration is further

specified in the Federal I/M rule (40 CFR 51.361(b)). The State's

demonstration fails in relation to these requirements in two general

areas, the failure to tie stickers issued to tests given and more

accurate and substantiated data on the number of vehicles in compliance

with the registration requirements. The demonstration was also

deficient since it is required to be comprehensive, which the State's

current demonstration was not.

The EPA agrees that the lack of authority for enforcement through

registration denial is a major deficiency in the plan. The EPA's

proposal also identified the lack of authority for registration denial

as a deficiency which required correction by the imposition of a major

condition which if not fulfilled would convert the action to a

disapproval. We also stated that the State could get the legislative

authority in the 1997 legislative session. To support the State's

commitment the SIP included a Governor's Executive Order stating the

intention of the Governor to support the needed legislation in the 1997

legislative session. It is EPA's understanding that the Texas

Legislature has recently passed a law allowing for a registration

denial program upon EPA's finding that the State has not made a

adequate demonstration that sticker enforcement is more effective than

registration denial. The State's quality control and consumer

protection portions of the I/M plan were consistent with the I/M rule

(Secs. 51.360 and 51.368(b)). Regarding the District of Columbia's

proposed disapproval notice for enforcement deficiencies similar to the

Texas program, EPA was required to propose disapproval on this issue

because it did not have a commitment from the State to correct the

deficiencies in the District's plan. In the case of Texas, EPA had the

commitment in the Governor's Executive Order and the SIP narrative to

correct the major deficiencies and thus was able to propose conditional

interim approval of the plan.

Comment--Waivers in the Texas I/M Modeling

The TNRCC commented that, since the low income time extension is

not a waiver, it should not be required to be included in the projected

waiver rate.

Response to Comment

The EPA concurs with the State comment that the low income time

extension is not legally a waiver. However, the numbers of time

extensions granted by the State may impact the air quality benefits of

the program and should therefore be accounted for in the State's

modeling estimates if significant. If low income time extensions are

granted after a vehicle fails the emissions test, the emissions

characteristics of the vehicle for the purposes of emissions modeling

are identical to a vehicle that has received a waiver. If such time

extensions were granted prior to an initial test they should be

accounted for in the compliance rate estimates if significant.

Comment--Texas Good Faith Credit Estimates

The EDF commented that while the NHSDA removes EPA's 50 percent

credit discount for test-and-repair programs, it does not grant

presumptive equivalency between test-and-repair and test-only programs.

The SC also commented that the decentralized program fails to

demonstrate equivalency with the centralized program. The EDF commented

that TNRCC's claim of 100 percent effectiveness is not consistent with

other states implementing decentralized

[[Page 37142]]

programs and are not based on ``good faith estimates'' with a basis in

fact, but rather unsubstantiated assumptions. Additional features to

the program such as the electronically connected testing system may

increase effectiveness but do not substantiate the State's claim. The

law firm BHS similarly also commented that the State's credit estimates

are not made in good faith. The law firm BHS commented that the

estimates must have a ``basis in fact'' and cites EPA's position

contained in the I/M flexibility amendments that all the data gathered

from previously running I/M programs justify EPA's previously imposed

50 percent credit discount for test-and-repair programs. The law firm

BHS also notes EPA's December 12, 1995, guidance on the NHSDA, which

suggested that good faith estimates could be based upon innovative

program designs where no data, per se, exists but where the State can

make a reasonable argument that the level of enforcement and oversight,

and the innovative features included in the program to prevent or

eliminate improper testing will together achieve the claimed

reductions. In its guidance, EPA stated examples of such innovative

designs and BHS commented that the State's program did not include any

of these examples.

Response to Comment

The EPA agrees that the NHSDA does not grant presumptive

equivalency between test-only and test-and-repair programs, but rather

it calls upon the State to make a ``good faith estimate'' which has a

basis in fact of its program's effectiveness. The EPA is required by

the NHSDA to allow for such an estimate on an interim basis. The NHSDA

further specifies that EPA shall grant final approval to a program if

data collected from the operation of the program demonstrates the

credits are appropriate and the revision is otherwise in compliance

with the Act. The EPA agrees that a claim of 100 percent credit for the

test-and-repair network may be difficult to justify in the State's

program demonstration for final full approval. However, EPA believes it

is appropriate under the NHSDA to grant interim approval to the credit

based on the State's good faith estimate until the data collected from

the program is analyzed by the State and EPA.

In the State's response to comment from its public comment period

on this issue, the State cited the electronic data link, the use of

remote sensing technology, the test-on-resale component of the program,

recognized repair technicians, and the testing of heavy duty vehicles

as measures to be implemented which would help to improve the

effectiveness of the program. The EPA believes that of these items the

electronic data link, use of remote sensing technology, and the

recognized repair technician program offer the greatest potential of

substantially improving the program's effectiveness with regard to

network design. The EPA believes that credit obtained from these

enhanced features provides a basis in fact for the interim credit

claimed under the NHSDA. Thus, EPA will allow for the State's estimates

to be used on an interim basis. Permanent SIP approval of the credit

claim however, will be subject to the data collected during the program

demonstration.

Comment--Contingency Measures

The EDF commented that contingency measures should be identified

and immediately implemented in the likely event that the TNRCC will not

achieve the emission reductions claimed.

Response to Comment

The 15% Plan contains contingency measures equal to at least 3

percent reductions for each area required to submit a 15% SIP. If the

State's reduction estimates are not achievable by Texas, the State

would have to implement contingency measures in the event that a

shortfall exists in the State's 15% Plan. In addition, if the State's

I/M plan achieves less than the reductions required to meet the

appropriate I/M performance standards corrections to the State's I/M

plan would be required by EPA. Neither the Act nor the NHSDA require

contingency measures to support interim approval of an I/M program. If

credit is not demonstrated through the program evaluation, additional

control strategies or I/M program enhancements have to be adopted to

support final full approval.

Comment--Compliance Rate of Texas I/M Program

The EDF commented that a 96 percent compliance rate will be

difficult to achieve. The EDF cites an estimate by Texas Department of

Transportation that as many as 15 percent of the vehicles may fail to

meet registration requirements and thus effectiveness of the Texas

program is overstated.

Response to Comment

The EPA agrees that a 96 percent compliance rate may overstate the

State's actual I/M effectiveness. However, the State's estimates on

vehicles not meeting registration requirements is given in the SIP as

between 2 and 15 percent. Also, the State's SIP includes provisions to

help improve the current compliance rate such as the real time data

link of all test stations, remote sensing to catch vehicles with high

emissions, and computer matching of testing and registration data bases

to supplement an improved sticker enforcement program. These

enhancements hold the potential to make the State's enforcement

mechanism comparable to traditional registration denial. The EPA

assumes that a well-run registration denial based program will achieve

a compliance rate of 96 percent based upon prior experience with such

programs. For SIP purposes, states are required to commit to a

compliance rate which will be used in their modeling. States must also

commit to corrective actions should the actual compliance rate fall

below the modeled level.

Comment--Adequate Oversight of Texas I/M Program

The law firm BHS commented that the State's SIP does not provide

adequate oversight to protect against improper testing which is cited

as inherent in decentralized I/M programs. The law firm BHS also argues

that Texas's plan relies on an unproven data link and an inadequate

number of auditing staff. The law firm BHS also notes that the State

oversight test fee is only $1.75 per inspection, while in California

$7.00 is needed per inspection. Thus, a logical conclusion is that

Texas is underfunding its program.

Response to Comment

The EPA rules do not specify the exact oversight test fee or number

of employees each State is required to use in support of its I/M

program. Rather each State is required to assess and use sufficient

resources needed to support the program consistent with the SIP, and

identify the dedicated resources for I/M program implementation. The

EPA believes the State is in a better position to assess its specific

resource needs and fulfill EPA's general resource requirements. The EPA

believes that the oversight resources cited in the Texas SIP are

sufficient for the purposes of interim approval. As the Texas program

operates and undergoes evaluation, EPA will be better able to assess

the adequacy of the State resources. For example, the State commits in

the SIP to meet the numbers of EPA required covert and overt audits and

reporting requirements. If the State is unable to meet the EPA

requirements contained in the SIP, EPA could require the State to

correct the deficiency.

[[Page 37143]]

III. Interim Final Rulemaking Action

The EPA is conditionally approving the Texas I/M program as a

revision to the Texas SIP, based upon certain conditions. This

conditional approval satisfies the requirements of section 182 and the

NHSDA for low enhanced and basic I/M programs. For the purposes of

strengthening the SIP, EPA is also giving a limited approval under

section 110 if the State fulfills all of its commitments within 12

months of this final rulemaking. This limited approval under section

110 will not expire at the end of the 18 month interim period. Thus,

although an approved I/M SIP satisfying the requirements of section 182

may no longer be in place after the termination of the interim SIP

approval period provided by the NHSDA, this program will remain a part

of the Federally enforceable SIP. Should the State fail to fulfill the

conditions by the deadlines contained in each condition, the latest of

which is no more than one year after the date of EPA's final interim

approval action, this conditional interim approval will convert to a

disapproval pursuant to the Act section 110(k)(4). In that event, EPA

would issue a letter to notify the State of Texas that the conditions

had not been met and that the approval had converted to a disapproval.

IV. Conditional Interim Approval

Under the terms of EPA's October 3, 1996, proposed interim

conditional approval rulemaking, the State of Texas was required to

remedy three major deficiencies with the I/M program SIP (as specified

in the NPR), within twelve months of final interim approval. The

State's commitment to support the additional needed legislation was to

be carried out in Texas's 75th Legislative Session. The EPA will be

evaluating the I/M legislation that was passed during this session. As

discussed in detail later in this notice, this approval is being

granted on an interim basis, for an 18-month period under authority of

the NHDSA.

The major conditions for approvability of the SIP are as follows:

Texas must obtain all of the legal authority needed to implement

its program. The specific authority needed was outlined in EPA's

proposed approval action (61 FR 51651) and was identified in a February

27, 1996, Governor's Executive Order that was submitted as part of the

Texas I/M SIP. The legal authority identified in the Executive Order

includes: (1) The denial of reregistration of vehicles that have not

complied with I/M program requirements, (2) the establishment of a

class C misdemeanor penalty for operating a grossly polluting vehicle

in a nonattainment area (i.e., enforcement of remote sensing), and (3)

the requirement for an inspection within 60 days of resale and prior to

transfer of title to nonfamily member consumers in Dallas, Tarrant, or

Harris counties.

The EPA is aware that the State of Texas has expressed plans to

remove the ``test-on-resale'' provisions from their I/M plan. In

addition, EPA has recently received a SIP submission to remove the

``test-on-resale'' provision from the SIP. The EPA will be evaluating

the submission for completeness and approvability. Regarding the

``test-on-resale'' provisions of the State plan, EPA included a

condition for obtaining legal authority to implement this provision

based on the requirement in the NHSDA's that states have all of the

statutory authority needed for program implementation. While the

``test-on-resale'' provision was not required by the Act or the Federal

I/M rule, the provision was intended to improve program effectiveness

and consumer protection. Texas has stated that certain program changes

have made the program unnecessary and that the State is therefore

taking no credit for this particular element. The EPA agrees with the

State's assessment of the creditable impact of such a component. While

the EPA still believes that the ``test-on-resale'' authority may prove

to be beneficial for consumer protection and program effectiveness

should loaded mode testing develop as the program proceeds, EPA will

not require the State to obtain authority for and implement the ``test-

on-resale'' provisions of the current State plan if the State submits a

SIP revision.

V. Further Requirements for Permanent I/M SIP Approval

This approval is being granted on an interim basis for a period of

18 months, under the authority of section 348 of the National Highway

Systems Designation Act of 1995. At the end of this period, the

approval will lapse. At that time, EPA must take final rulemaking

action upon Texas' SIP, under the authority of section 110 of the Act.

Final approval of Texas' plan will be granted based upon the following

criteria:

(1) Texas has complied with all the major conditions of its

commitment to EPA,

(2) The EPA's review of Texas' program evaluation confirms that the

appropriate amount of program credit was claimed by the State of Texas

and achieved with the interim program,

(3) Final Texas Department of Public Safety program regulations are

submitted to EPA, and

(4) The Texas I/M program meets all of the requirements of EPA's I/

M rule, including those de minimus deficiencies identified in the

October 3, 1996, proposal (61 FR 51651) as minor for purposes of

interim approval.

(5) The remote sensing program proves to be effective in

identifying and obtaining repairs on vehicles with high levels of

emissions, or the Texas I/M core program area is expanded to include

the entire urbanized area for both Dallas/Fort Worth and Houston.

VI. Administrative Requirements

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.

A. Executive Order 12866

The Office of Management and Budget has exempted this regulatory

action from Executive Order 12866 review.

B. Regulatory Flexibility Analysis

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

prepares a regulatory flexibility analysis assessing the impact of any

proposed or final rule on small entities. See 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.

Conditional approvals of SIP submittals 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 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. EPA, 427

U.S. 246, 255-66 (1976); 42 U.S.C. 7410(a)(2).

[[Page 37144]]

If the conditional approval is converted to a disapproval under

section 110(k), based on the State's failure to meet the commitment, it

will not affect any existing state requirements applicable to small

entities. Federal disapproval of the state submittal does not affect

its state-enforceability. Moreover, EPA's disapproval of the submittal

does not impose a new Federal requirement. Therefore, EPA certifies

that this disapproval action does not have a significant impact on a

substantial number of small entities because it does not remove

existing requirements nor does it substitute a new Federal requirement.

C. Unfunded Mandates

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

signed into law on March 22, 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 private sector, of $100

million or more. Under Section 205, EPA must select the most cost-

effective and least burdensome alternative that achieves the objectives

of the rule and is consistent with statutory requirements. Section 203

requires EPA to establish a plan for informing and advising any small

governments that may be significantly or uniquely impacted by the rule.

The EPA has determined that the approval action promulgated does

not include a Federal mandate that may result in estimated costs of

$100 million or more to either State, local, or tribal governments in

the aggregate, or to the private sector. This Federal action approves

preexisting requirements under State or local law, and imposes no new

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

tribal governments, or to the private sector, result from this action.

D. Submission to Congress and the General Accounting Office

Under 5 U.S.C. 801(a)(1)(A) as added by the Small Business

Regulatory Enforcement Fairness Act of 1996, EPA submitted a report

containing this rule and other required information to the U.S. Senate,

the U.S. House of Representatives and the Comptroller General of the

General Accounting Office prior to publication of the rule in today's

Federal Register. This rule is not a ``major rule'' as defined by 5

U.S.C. 804(2).

E. Petitions for Judicial Review

Under section 307(b)(1) of the Clean Air Act, petitions for

judicial review of this action must be filed in the United States Court

of Appeals for the appropriate circuit by September 9, 1997.

Filing a petition for reconsideration by the Administrator of this

interim final rule to conditionally approve the Texas I/M SIP, on an

interim basis, does not affect the finality of this rule for the

purposes of judicial review, nor does it extend the time within which a

petition for judicial review may be filed, and shall not postpone the

effectiveness of such rule or action. This action may not be challenged

later in proceedings to enforce its requirements. (See section

307(b)(2) of the Administrative Procedures Act).

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Carbon monoxide,

Hydrocarbons, Intergovernmental relations, Nitrogen dioxide, Ozone,

Reporting and recordkeeping requirements.

Dated: July 1, 1997.

Jerry Clifford,

Acting Regional Administrator.

Chapter I, title 40, of the Code of Federal Regulations is amended

as follows:

PART 52--[AMENDED]

1. The authority citation for part 52 continues to read as follows:

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

Subpart SS--Texas

2. Section 52.2310 is added to read as follows:

Sec. 52.2310 Conditional approval.

The State of Texas' March 14, 1996, submittal for an motor vehicle

inspection and maintenance (I/M) program, is conditionally approved

based on certain contingencies, for an interim period to last eighteen

months. If the State of Texas fails to fully start its program by

November 15, 1997, at the latest, this conditional approval will

convert to a disapproval after EPA sends a letter to the State. If the

State of Texas fails to satisfy the following conditions within 12

months of August 11, 1997, this conditional approval will automatically

convert to a disapproval as explained under section 110(k) of the Clean

Air Act. The conditions for approvability are as follows:

Texas must obtain all of the legal authority needed to implement

its program. The specific authority needed was outlined in EPA's

proposed approval action and was identified in a February 27, 1996,

Governor's Executive Order that was submitted as part of the Texas I/M

SIP. The legal authority identified in the Executive Order includes:

The denial of reregistration of vehicles that have not complied with I/

M program requirements; the establishment of a class C misdemeanor

penalty for operating a gross polluting vehicle in a nonattainment

area; and the requirement for an inspection within 60 days of resale

and prior to transfer of title to nonfamily member consumers in Dallas,

Tarrant, or Harris counties (or regarding the third major condition,

the removal of the test-on-resale program element from the SIP). Texas

has committed to support additional needed legislation in Texas's 75th

Legislative Session. Should Texas fail to fulfill these conditions by

the end of the 75th Legislative Session, this approval will convert to

a disapproval. Texas must also fully start its I/M program by November

15, 1997, or this action will covert to a disapproval.

[FR Doc. 97-18245 Filed 7-10-97; 8:45 am]

BILLING CODE 6560-50-P