Approving Implementation Plans; California State Implementation Plan Revision, San Diego County Air Pollution Control Agency

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 226-164; FRL-6415-4]

Approving Implementation Plans; California State Implementation

Plan Revision, San Diego County Air Pollution Control Agency

AGENCY: Environmental Protection Agency.

ACTION: Proposed rule.

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SUMMARY: EPA is proposing a limited approval and limited disapproval of

revisions to the California State Implementation Plan (SIP) which

concern New Source Review permitting requirements for stationary

sources in San Diego County. EPA also proposes to eliminate approval

conditions created in 1981 that are no longer relevant.

The intended effect of proposing limited approval and limited

disapproval is to ensure San Diego County's New Source Review rules are

consistent with the requirements of the Clean Air Act, as amended in

1990 (CAA or the Act). EPA's final action will incorporate these rules

into the federally approved SIP. Although strengthening the SIP, these

rules do not fully meet the CAA requirements for nonattainment areas.

The rules have been evaluated based on CAA guidelines for EPA action on

SIP submittals and general rulemaking authority.

DATES: Comments must be received on or before September 7, 1999.

ADDRESSES: Comments may be mailed to: David Wampler, Permits Office

[AIR-3], Air Division, U.S. Environmental Protection Agency, Region IX,

75 Hawthorne Street, San Francisco, CA 94105-3901.

Copies of the rules and EPA's evaluation report of the rules are

available for public inspection at EPA's Region 9 office during normal

business hours. Copies of the submitted rules are also available for

inspection at the following locations:

San Diego County Air Pollution Control District, 9150 Chesapeake Drive,

San Diego, California 92123-1096

California Air Resources Board, 2020 ``L'' Street, Sacramento,

California 95812

FOR FURTHER INFORMATION CONTACT: David Wampler, Permits Office, [AIR-

3], Air Division, U.S. Environmental Protection Agency, Region IX, 75

Hawthorne Street, San Francisco, CA 94105-3901; Telephone: (415) 744-

1256; E-mail: [email protected].

SUPPLEMENTARY INFORMATION: Throughout this document wherever ``we,''

``us,'' or ``our'' are used we mean EPA.

I. What Action is EPA Proposing?

A. New Source Review Rules

B. Remove Conditions in 1981 NSR SIP Approval

II. How Did EPA Arrive at the Proposed Action?

A. Overview

1. New Source Review Rules

2. How EPA Evaluates Past NSR Submittals

3. Removing Conditions in 1981 NSR SIP Approval

B. Rule Deficiencies

1. Deficiencies with Rule 20.1

2. Deficiency with Rules 20.3 and 20.4

3. Deficiency with Rule 20.2

4. Deficiency with Rules 20.1 through 20.4

III. EPA Solicits Comment on Two Special Issues:

A. Provision 20.1(d)(1)(ii)(C)--Exclusion of emissions from

portable equipment from a stationary source's potential to emit.

1. Overview

2. History of Portable Equipment Regulations in San Diego

3. Summary of the District's Current NSR Requirements for

Portable Emission Units in San Diego

a. Portable Emission Unit is Defined in rule 20.1(c)(49)

b. Offset Requirements for Type I and Type III units

c. LAER Requirements for Type I and Type III units

d. Air Quality Impact Analysis (AQIA) for Portable Equipment

e. Public notification requirements for Portable Equipment

4. Title V Consistency and Enforcement

B. Minor New Source Review Requirements in San Diego--Rule 20.2

1. Overview of Federal Minor NSR Requirements

2. San Diego Minor NSR Program

a. Minor source NSR public notification requirements

b. Air quality impact analysis

3. Federal Enforceability of Terms and Conditions of Minor NSR

Permits

4. Discussion on Minor NSR

IV. Overview of Limited Approval/Disapproval

V. Administrative Requirements

A. Executive Order 12866

B. Executive Order 12875

C. Executive Order 13045

D. Executive Order 13084

E. Regulatory Flexibility Act

F. Unfunded Mandates

I. What Action Is EPA Proposing?

A. New Source Review Rules

EPA today proposes a limited approval and limited disapproval of

revisions to the California State Implementation Plan (SIP) for San

Diego Air Pollution Control District (District or SDCAPCD) rules 20.1,

20.2, 20.3, and 20.4. Table 1 lists the number and title of the rules.

The rules were submitted to EPA by the California Air Resources Board

(CARB) on May 13, 1999 and found complete by EPA on June 10, 1999.

Table 1.--Rules Included in Today's Proposed Rulemaking

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Rule No. Rule Title--New Source Review

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20.1............................. General Provisions.

20.2............................. Non-Major Stationary Sources.

20.3............................. Major Stationary Sources and PSD

Stationary Sources.

20.4............................. Portable Emission Units.

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Upon final action, the rules will replace existing SIP rules of the

same number approved by EPA into the SIP on April 14, 1981. See 46 FR

21757 and 40 CFR 52.220(c)(64)(i)(A).1

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\1\ In addition to the approval for rules 20.1 through 20.4,

EPA's April 14, 1981 final rulemaking action also approved SDCAPCD

rules 20.5, ``Power Plants;'' 20.6, ``Standards for Permit to

Operate--Air Quality Analysis;'' and 20.7, ``Standards for Authority

to Construct: Significant Deterioration.'' The 4/14/81 approval of

Rule 20.7 was found to be incorrect and it was later rescinded from

the SIP in a final rulemaking on June 4, 1982 (47 FR 24308). Rules

20.5 and 20.6 remain fully approved into the SIP today and are

unaffected by this rulemaking.

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We evaluated the rules for consistency with the CAA, EPA

regulations, and EPA policy. We've found that the revisions are overall

more stringent than the rules of the same number that exist in the SIP.

Even though San Diego County APCD rules 20.1, 20.2, 20.3 and 20.4

will strengthen the SIP, these rules still contain deficiencies

(discussed below)

[[Page 42893]]

and are not fully approvable under Part D of the CAA. Therefore, EPA

today proposes a limited approval and limited disapproval of these four

rules. If our final action remains a limited approval and limited

disapproval, San Diego County APCD will have--from the date of the

final action--18 months to correct any deficiencies to avoid federal

sanctions. See CAA Sec. 179(b). Further the final disapproval triggers

the Federal implementation plan requirements under 110(c). A detailed

discussion of the rule deficiencies is included in the Technical

Support Document (TSD) for this rulemaking. The TSD is available from

the EPA Region IX office.

B. Remove Conditions in 1981 NSR SIP Approval

In addition to our action on the NSR rules, we propose to delete

the District NSR rule conditions identified when EPA finalized the NSR

rules in 1981. See 46 FR 21757 and 40 CFR 52.232(a)(4).

II. How Did EPA Arrive at the Proposed Action?

A. Overview

1. New Source Review Rules

EPA evaluated the rules for consistency with the requirements of

the CAA and EPA regulations, as found in section 110 and part D of the

CAA and 40 CFR part 51 (Requirements for Preparation, Adoption, and

Submittal of Implementation Plans). Our interpretation of these

requirements, which forms the basis for today's action, appears in the

various EPA policy guidance documents.

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.

The Act requires States to comply with 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

require 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 requires that plan

provisions for nonattainment areas shall meet the applicable provisions

of section 110(a)(2).

2. How EPA Evaluates Past NSR Submittals

Since 1981, numerous revisions to rules 20.1 through 20.4 have been

adopted by SDCAPCD and submitted by CARB to EPA for SIP approval. See

the TSD for a list of all previous NSR rule submittals for San Diego

County. Although EPA is acting only on the most recently submitted

version of May 13, 1999, EPA has reviewed materials associated with the

two most recent NSR SIP submittals dated July 13, 1994 and July 22,

1998.

Once approved as new rules into the California SIP for San Diego

County, the May 13, 1999, submitted SDCAPCD rules 20.1, 20.2, 20.3 and

20.4 will strengthen the existing SIP by:

Including major source and major modification thresholds

that are consistent with the 1990 Clean Air Act Amendments for major

stationary sources and major modifications locating in serious ozone

non-attainment areas;

Establishing the appropriate emissions offset ratio for

major stationary sources and major modifications locating in serious

ozone non-attainment areas.

3. Removing Conditions in 1981 NSR SIP Approval

In addition to our proposed limited action to approve SDCAPCD rules

20.1 through 20.4, we also propose to delete the District NSR rule

conditions identified when EPA finalized the NSR rules in 1981. See 46

FR 21757 and 40 CFR 52.232(a)(4). These conditions are moot today for

the following reasons:

The current rules will, upon final approval, supercede the

1980 rules.

EPA has not taken action on any revisions to SDCAPCD NSR

rules 20.1 through 20.6.

We have not issued final rulemaking to correct the

deficiencies of SDCAPCD NSR rules discussed in the April 14, 1981 final

rulemaking.

The District has revised and submitted new NSR rules to

comply with the 1990 CAA amendments.

B. Rule Deficiencies

The following rule deficiencies prevent EPA from being able to

fully approve SDCAPCD rules 20.1, 20.2, 20.3 and 20.4 contained in

today's action. In addition to identifying the deficiencies, we have

provided information on how to correct some of the deficiencies.

1. Deficiencies With Rule 20.1

20.1(b)(4) provides for an exemption from the offset

requirements of rule 20.2(d)(5) 2 or of rules 20.3(d)(5) and

(d)(8) for NOX emission increases from new, modified or

replacement emission units subject to the requirements of rule

69(d)(6). Rule 69, ``Electrical Generating Steam Boilers, Replacement

Units and New Units,'' is not SIP approved and CARB, on behalf of

SDCAPCD, does not intend to submit it to EPA for SIP approval. This

exemption from the offset requirements is a deficiency because CAA

section 173(c) requires offsets for all new major stationary sources or

major modifications as defined in CAA 182(c) for serious ozone non-

attainment areas. Rule 69 does not provide a recognized alternative to

the offset requirement because it is not a SIP-approved rule.

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\2\ Subsection (d)(5) of rule 20.2 was adopted locally by

SDCAPCD on 11/4/98 but not included in the May 13, 1999 CARB SIP-

submittal.

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Rule 20.1(c)(26) definition of ``Federally Enforceable.''

There are two reasons why this definition is a rule deficiency. First,

the definition allows Authority to Construct (ATC) terms and conditions

imposed pursuant to the SDCAPCD rules and regulations or state law to

be deemed ``non-federally enforceable'' unless otherwise requested by

the owner. SDCAPCD has not defined which ``rules and regulations''

could create permit terms and conditions that are not federally

enforceable. It is our position that SIP-approved rule 10

3--``Permits Required,'' and rule 21--``Permit Conditions''

create a SIP-approved permitting program for subject sources in San

Diego County. Additional SIP NSR rules for major and minor sources

add--or will add, upon SIP approval--more specific pre-construction

permitting requirements. Given the broad authority of SIP rules 10 and

21, it is our position that all permit terms and conditions in SIP-

approved permits are federally enforceable.4 The Air

Pollution Control Officer (APCO) cannot unilaterally deem a such a

permit condition ``non-federally-enforceable.''

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\3\ Rule 10 ``Permits Required'' is a broad rule that states in

subsection (a) ``Authority to Construct': ``Any person building,

erecting, altering or replacing any article, machine, equipment or

other contrivance * * * shall first obtain written authorization for

such construction from the Air Pollution Control Officer.''

\4\ See 40 CFR 52.23 and letter dated March 31, 1999 from John

Sietz to Mr. Doug Allard, President of CAPCOA.

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Second, the definition incorrectly states, ``* * * which term or

condition is imposed pursuant to * * * 40 CFR part 51, subpart I.''

Part 51, subpart I is not a permitting program that, on its own,

provides a state authority to impose permit terms and conditions.

Rather, part 51, subpart I contains

[[Page 42894]]

federal minor NSR (sections 51.160 through 51.166) and major non-

attainment NSR (sections 51.160 through 51.165) requirements that state

programs (i.e., rules) must contain before they can be SIP-approved.

Once SIP-approved pursuant to part 51, subpart I, the NSR rules, and

all terms and conditions of ATC permits issued pursuant to those rules,

become federally enforceable.

To correct the deficiencies, the District must do either of the

following:

1. The District could require all terms and conditions to be

federally enforceable. To create this, the District must eliminate the

entire paragraph that allows non-federally enforceable conditions to be

created and revise the statement in rule 20.1(c)(26)(ii) to state, ``*

* * which term or condition is imposed pursuant to * * * District rule

10, 21, 20.1 through 20.4 * * *'' EPA believes this option is the best

way to correct the deficiencies and would eliminate any ambiguity

surrounding the enforceability of the terms and conditions NSR permits.

2. Alternatively, if SDCAPCD would like the ability to separate NSR

permit terms into federally enforceable and non-federally enforceable

terms, SDCAPCD must revise and submit for SIP approval rules 10 and 21

and revise the statement in rule 20.1(c)(26)(ii) to state, ``* * *

which term or condition is imposed pursuant to * * * District rule 10,

21, 20.1 through 20.4 * * *''

20.1(d)(5) requires that offsets be ``actual emission

reductions'' but does not require offsets to be surplus at the time of

use. Further, rule 20.1(d)(4)(ii) and (iii) prescribe how actual

emission reductions are calculated (including any necessary

adjustments), at the time of generation, not at the time of use. EPA

requires that the emissions reductions used to offset any new or

modified major stationary source be surplus at the time of

use.5

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\5\ CAA section 173(c)(2) prohibits the use of emission

reductions that are ``otherwise required by this chapter.''

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To correct the deficiency the District must require offsets to be

surplus at the time of use.

20.1(d)(5) is deficient because the subsection contains a

reference to rule 27. Rule 27 has been submitted but contains a

deficiency at 27(c)(1)(vi)--``Other Emission Reduction Strategies.''

Rule 27(c)(1)(vi) would allow emissions reduction credits (ERCs) to be

created upon approval of the APCO and concurrence from ARB. EPA cannot

approve into the SIP a reference to a rule that allows such broad APCO

discretion as to how ERCs are created. Because the emission reductions

are used to offset emission increases from new or modified major

stationary sources, the district rules must be amended to assure that

emission increases from new and modified stationary sources are offset

by real reductions in actual emissions as required by Clean Air Act

section 173(c)(1).

The following are two possible options to correct the deficiency:

(1) Remove the reference to rule 27 in the subsections of

20.1(d)(5).

(2) Revise and submit to EPA for SIP approval a new version of rule

27 that is approvable. Such approval must occur within 18 months from

final approval of today's action.

2. Deficiency with Rules 20.3 and 20.4

Rules 20.3(d)(5)(vi) and 20.4(d)(5)(vi) allow the APCO to

authorize interpollutant 6 trading to satisfy the federal

offset requirements. Specific ratios are provided in the rule. For

example, a source may acquire, for every ton of NOX

increase, 2.0 tons of VOC emission reduction. Conversely, a one ton VOC

increase may be offset with one ton of NOX decrease. SDCAPCD

has not provided a justification as to how the interpollutant offset

ratios were obtained. Furthermore, to date, EPA has not developed a

policy that describes how a state could establish appropriate basin-

wide interpollutant offset ratios.

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\6\ Although the term ``interpollutant'' is used, the District

rules only allow for trades between the ozone precursors

NOX and VOC.

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To correct the deficiency in Rules 20.3 and 20.4 the District must

either delete the interpollutant ratios and add the requirement that

interpollutant ratios will be evaluated on a case-by-case basis with

public notice and EPA concurrence or provide modeling studies to

adequately support the ratio in the rule.

3. Deficiency with Rule 20.2

20.2(d)(2) establishes the air quality impact analysis

requirements for non-major (minor) sources in San Diego County. This

section does not require an analysis of the available increment as

required in 51.166(a)(1).

To correct the deficiency the District must revise the rule to add

the requirement that minor sources subject to the AQIA requirements

must evaluate their impact on the increment.

4. Deficiency with Rules 20.1 through 20.4

Rules 20.1 through 20.4 do not provide that the degree of

emission limitation required of any source for control of any air

pollutant must not be affected by so much of any source's stack height

that exceeds good engineering practice. Although subsection of

20.3(d)(3)--Prevention of Significant Deterioration--of the locally

adopted rule contains this requirement, rule 20.3(d)(3) has not been

submitted to EPA to be included in the SIP.

To correct this deficiency the District must revise the rules to

require that the degree of emission limitation required of any source

for control of any air pollutant must not be affected by so much of any

source's stack height that exceeds good engineering practice.

III. EPA Solicits Comment on Two Special Issues

In addition to the above deficiencies, there are two provisions in

the submitted rules for which EPA solicits comment:

(1) The provision in 20.1(d)(1)(ii)(C) that allows a stationary

source to exclude emissions from portable equipment from its aggregate

potential to emit; and

(2) The overall adequacy of the SDCAPCD minor source NSR program

requirements contained in submitted rule 20.2.

EPA is not proposing its limited approval, limited disapproval on

the basis of these two deficiencies.7 We are soliciting

comment on the provisions and will, after evaluating the comments,

either approve the above listed provisions, or cite the provisions as a

deficiency and as a further basis for limited disapproval in the final

rulemaking. The Agency's evaluation of the two provision are provided

below.

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\7\ Except that San Diego's minor NSR rule contains one

deficiency in that rule 20.2 does not require minor sources to

analyze the impact on the available increment.

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A. Provision 20.1(d)(1)(ii)(C)--Exclusion of emissions from portable

equipment from a stationary source's potential to emit (PTE)

1. Overview

By excluding the emissions from portable equipment from a

stationary source's aggregate PTE, major stationary sources could be

improperly classified as minor sources and avoid applicable

requirements.8 On the surface, it appears that

20.1(d)(1)(ii)(C) is not consistent with federal law. However, CARB has

submitted to EPA for SIP approval SDCAPCD rule 20.4 which is

[[Page 42895]]

dedicated entirely to the NSR regulation of portable equipment.

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\8\ SDCAPCD provided EPA an internal memo dated May 17, 1999

that explained how the District regulations would prevent a

stationary source from abusing portable equipment to avoid major NSR

requirements.

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EPA solicits comment on whether it is appropriate to exclude

emissions from portable equipment from a stationary source's PTE. In

general, EPA believes it could be appropriate if the portable equipment

is subject to NSR regulations separate from, and equivalent to,

stationary source NSR regulations. Without separate regulations,

however, EPA believes emissions from portable equipment should not be

excluded from the stationary source's PTE.

On a side note, Rule 20.1 (d)(1)(ii)(D) allows emissions from

military tactical support equipment, including gas turbines, to be

exempt from a stationary source's aggregate potential to emit. Based on

conversations with District staff and data provided by representatives

of the Department of Defense, EPA believes this is allowable in San

Diego County because: (1) Most of the emissions from military tactical

support equipment are from piston engines that are non-road engines and

are therefore not required to be considered part of a stationary

source; and (2) emissions from gas turbines (emission units that are

not covered under non-road engine regulations) are de minimus. If the

emissions from gas turbines exceed de minimus levels after approval of

this rule, the District must submit a revision deleting this exemption

or EPA will use its authority under section 110(k)(5) of the Act to

require the District to submit a SIP revision.

2. History of Portable Equipment Regulations in San Diego

Rule 20.1(d)(1)(ii)(C) allows emissions from all portable emission

units to be excluded from a stationary source's PTE. The exemption does

not distinguish between portable units that were previously permitted

(before regulations for portable units were adopted by SDCAPCD on May

17, 1994) 9 and those permitted after 1994. EPA solicits

comment on whether such a distinction is necessary for the exclusion to

be allowed. EPA believes that only portable equipment permitted after

May 17, 1994 should be eligible for the exclusion because portable

units permitted prior to that date were regulated as part of a

stationary source and may not have met appropriate federal NSR

requirements at that time.

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\9\ For example, many pre-1994 permits limited the portable unit

and the stationary source to less than 100 #/day NOX to

avoid BACT requirements.

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In addition, EPA solicits comment on specific portable equipment

NSR requirements contained in rule 20.4 as identified below.

3. Summary of the District's Current NSR Requirements for Portable

Emission Units in San Diego

a. Portable emission unit is defined in rule 20.1(c)(49). The

District's definition generally limits the amount of time a portable

unit could operate at one location (stationary source) to no more than

12 consecutive months. If the portable unit exceeds this time limit or

is otherwise operated in a manner to circumvent NSR, the portable unit

is considered ``relocated'' and subject to the requirements for

relocated units under 20.1, 20.2 and 20.3.

District rule 20.4 further defines two types of portable emissions

units: Type I and Type III. Type I portable units can locate at

stationary sources with an aggregate PTE less than 50 tpy and Type III

portable units can locate at any stationary source regardless of the

stationary source's aggregate PTE.

b. Offset Requirements for Type I and Type III units: According to

rule 20.4(d)(5), Type III units are required to obtain offsets at a

1.2:1 ratio for any emission increase prior to operation at a major

stationary source. Type I emission units are generally limited to

operation at non-major stationary sources only. However, they are

allowed, according to the District's definition of Type I, to operate

at a major stationary source if they provide emission offsets prior to

operation. Sources of emissions offsets may include same-pollutant or

interpollutant reductions,10 or emission reductions obtained

from the ``emission offset pool'' as allowed in 20.4(d)(5)(v).

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\10\ Interpollutant ratios established in the rule for Type III

(or Type I) portable units has been identified as a rule deficiency.

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We solicit comment on the definition of Type I Portable Emission

Unit (rule 20.4(c)(3)) that would allow Type I units to only obtain

offsets (at the levels required for Type III portable units) before it

locates at a major stationary source. This definition creates an

apparent loophole by allowing Type I portable equipment to locate at a

major stationary source without meeting the same LAER requirement as

Type III portable equipment.

Finally, we solicit comment on rule 20.4(d)(5)(v) that would allow

offsets from portable equipment to come from an ``emission offset

pool.'' According to the rule, the offset pool consists of emission

offsets which are designated for use by any number of portable emission

units. EPA believes this alternative mechanism is workable as outlined

in the rule provided the offsets are surplus emission reductions at the

time of use,11 enforceable, quantifiable, and permanent.

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\11\ The District rules do not require that NSR offsets are

surplus at the time of use. See rule Deficiency section and the TSD

for more information.

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c. LAER Requirements for Type I and Type III units: Only Type III

emission units are required to comply with LAER. See 20.4(d)(1)(ii). In

lieu of complying with LAER, this subsection allows Type III portable

units to obtain offsets at a 1.3:1 ratio from the stationary source at

which the portable unit will locate. 12 13

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\12\ Type I portable units are not required to comply with LAER

even if they plan to locate at a major stationary source (as allowed

in the definition of Type I).

\13\ The provision to allow ``internal'' offsets at a 1.3:1

ratio to be used in lieu of LAER is allowed under CAA section

182(c)(7) and (8) for major stationary source modifications in

serious ozone non-attainment areas. See SDCAPCD rule 20.3(d)(7) for

stationary source LAER requirements.

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We solicit comment on rule 20.4(d)(1)(ii) that allows Type III

portable units to obtain additional offsets from a stationary source in

lieu of LAER. While the CAA allows internal offsets to be used in lieu

of LAER for stationary sources, SDCAPCD's portable equipment rule--in

EPA's view--has decoupled portable equipment from the stationary

source, and therefore, stationary source reductions cannot be extended

to independent portable equipment.

d. Air Quality Impact Analysis (AQIA) for Portable Equipment: Type

III and Type I emission units are required to perform an AQIA if a

portable emission unit's proposed emissions are above the AQIA

thresholds specified in table 20.4-1 (reproduced below in Table 2). See

rule 20.4(d)(2). The AQIA requires that the portable unit perform such

analyses based on the location at which the unit will locate.

Furthermore, the APCO may require an AQIA even if the thresholds are

not exceeded. Finally, rule 20.4(d)(2)(ii) does not require an AQIA for

NOX and VOC impacts on ozone.

In general, an example of how the AQIA analysis will be performed

for portable equipment is discussed by the District in response to

written comment #96 in the District's 1992 NSR rule Workshop Report:

An applicant for a portable emission unit can perform a ``worst-

case'' AQIA, where the impact of an emission unit's maximum

emissions is analyzed and added to the maximum background

concentration in the County. If the applicant can demonstrate that

the proposed emissions do not cause or contribute to a violation of

any Ambient Air Quality Standard (AAQS), then further analysis would

not be required for that unit

[[Page 42896]]

when it is moved from one site to another. If a worst case analysis

cannot be made * * * then an AQIA would be required each time the

equipment moves from one site to another.

As with the other provisions in the portable equipment rule, EPA

solicits comment on the provisions for AQIA in 20.4(d)(2). In

particular, because 20.4(d)(2) does not require any analysis for

impacts related to a portable unit's potential VOC emissions, we

solicit comments on how to evaluate ambient air quality impacts from a

high VOC emitting portable source that moves from one location to

another within San Diego the County. Furthermore, EPA is soliciting

comment on whether or not there is any potential for this rule's

implementation to cause or contribute to any disparate impact in local

communities. We are not suggesting that this rule does have such an

impact, but we are aware of community concerns surrounding these issues

in San Diego and want to ensure that such concerns are not associated

with this rule.

Also, although 20.4(d)(2)(iv) gives the APCO the authority to

require an AQIA at any time--regardless of the portable unit's emission

rates--the District, through CARB, has not submitted any analyses to

justify the AQIA trigger levels in Table 20.4-1 (reproduced below in

Table 2). EPA is concerned that the trigger levels in Table 20.4-1 do

not account for multiple emission units that may independently locate

at a single stationary source. EPA, therefore, solicits comment on

whether the trigger levels in Table 20.4-1 are appropriate considering

that multiple emission units may independently locate at a single

stationary source.

e. Public Notification Requirements for Portable Equipment: If the

owner or operator of a portable unit, with proposed emission increases

above the thresholds in table 20.4-1, requests a permit, the APCO is

required to provide at least a 40 day public comment period. Within

that period, the APCO shall provide at least 30 days during which

comment on the proposed project may be received. All comments will be

considered prior to the APCO taking final action.

Federal regulations require at 40 CFR 51.161 public notification

requirements for minor and major stationary sources. While section

51.161 does not establish a deminimus threshold below which no public

notification is needed, 40 CFR 51.160(e) requires states to ``identify

types and sizes of facilities that will be subject to review * * *''

and ``discuss the basis for determining which facilities will be

subject to review.'' SDCAPCD, through CARB has not provided an analysis

that the sizes and types of emissions units regulated--and for which

public notice will be provided--will ensure the federal requirements of

section 51.160 are met.

EPA solicits comment on whether the trigger levels are

appropriately established in Table 20.4-1 to ensure the public has the

opportunity to review the proposed portable equipment permits.

4. Title V Consistency and Enforcement

The title V program in San Diego County does not allow a stationary

source to exclude emissions from portable equipment. See definition of

stationary source at SDCAPCD Regulation XIV, rule 1401(c)(45). Further,

the District requires emissions from insignificant emission units to be

included in the title V applicability determination of a stationary

source.

If the emissions from portable equipment are not required for NSR

applicability determinations, EPA is concerned that the separate

applicability determination requirements could create a source that is

non-major under NSR and major under title V. While EPA generally

promotes consistency across programs, an alternative may be acceptable

if there is a rational basis for treatment under one program compared

to the other. The EPA solicits comment on whether a separate permitting

requirement for portable units will lead to confusion for sources,

contractors operating portable units at those sources, the public and

the District.

Furthermore, EPA solicits comment on whether possible confusion

would lead to ill-informed, and incorrect compliance certifications

under title V because a stationary source operator may not examine the

Title V compliance requirements for certain portable equipment if the

equipment has been excluded under NSR.

B. Minor New Source Review Requirements in San Diego--Rule 20.2

EPA also requests comment on whether the minor source NSR

regulations contained in SDCAPCD rule 20.2--combined with the

requirements in existing SIP rules 10 and 21--are sufficient to assure

that the national air quality standards are achieved as required in CAA

section 110(a)(2)(C).

1. Overview of Federal Minor NSR Requirements

In addition to the regulation of major stationary sources as

required in part C (attainment areas) and part D (non-attainment areas)

of the Clean Air Act, states are also required to include in the SIP a

program to provide for the ``regulation of the modification and

construction of any stationary source * * * as necessary to assure that

national ambient air quality standards are achieved * * *'' [emphasis

added]. See CAA section 110(a)(2)(C).

The implementing regulations require states to develop ``legally

enforceable procedures'' to enable the state ``to determine whether the

construction or modification of a facility, building, structure or

installation, or combination of these will result in--(1) a violation

of applicable portions of the control strategy; or (2) interference

with attainment or maintenance of a national standard * * *'' See 40

CFR 51.160(a). However, instead of establishing sizes and types of

stationary sources that will be subject to minor new source review, EPA

allows states some discretion. This discretion is not unbounded,

however, and states are required to, ``discuss the basis for

determining which facilities will be subject to review.''

2. San Diego's Minor NSR Program

Rule 20.2, ``New Source Review--Non-Major Stationary Sources,'' is

part of the District's minor NSR rule. This rule supplements existing

SIP 14 rule 10, ``Permits Required,'' and rule 21, ``Permit

Conditions.'' Rule 20.2 applies to sources that are, after completion

of a project, not a major source. See rule 20.2(a). Rule 20.2 contains

two basic requirements: (1) an air quality impact analysis at

subsection (d)(2); and (2) the public notification requirements at

subsection (d)(4). The following is a discussion of the two substantive

requirements both of which are triggered if the emissions increase from

a project is greater than the levels indicated in the Table 2 below.

---------------------------------------------------------------------------

\14\ See 60 FR 62756 for discussion on minor NSR as it applies

to Title V permitting. In the discussion of the District's

definition of ``Federally Mandated New Source Review'' in Regulation

XIV, EPA identified--and SDCAPCD concurred--that SIP-approved rules

10 and 21 constitute the District minor NSR program, at that time.

On a side note, today's proposed rulemaking does not alter the

status of EPA's Title V interim approval in San Diego as it relates

to minor NSR.

[[Page 42897]]

Table 2.--San Diego's AQIA and Public Notification Trigger Levels for

Minor Sources and Portable Emission Units

------------------------------------------------------------------------

Air contaminant Lb/hr Lb/day Tons/yr

------------------------------------------------------------------------

Particulate matter(PM-10)...... ........... 100 15

NOX............................ 25 250 40

SOX............................ 25 250 40

CO............................. 100 550 100

Lead and Lead compounds........ ........... 3.2 0.6

------------------------------------------------------------------------

a. Minor source NSR public notification requirements: Rule

20.2(d)(4) requires that the APCO shall not issue an ATC or modified

PTO for any project subject to the AQIA requirements unless the APCO

provides the public with at least 40 days notice of the proposed

action. Within that time period, the APCO shall make available all

information relevant to the proposed action and provide at least 30-

days during which comments may be submitted.

b. Air quality impact analysis: An air quality impact analysis is

required for any project (including relocated and replacement emission

units) that has an emissions increase greater than or equal to the

applicable thresholds in table 20.2-1. See 20.2(d)(2). If an AQIA is

required, the applicant of a new, modified, replacement, or relocated

emission unit shall demonstrate to the satisfaction of the APCO that

the project will not:

``(A) cause a violation of a state or national ambient air standard

anywhere that does not already exceed such standard; nor 15

---------------------------------------------------------------------------

\15\ The District rule requires that the applicant analyze the

project's impact on state air quality standards. CARB has requested

that this subsection ``be submitted for inclusion in the SIP only

with respect to the NAAQS.'' EPA interprets this to mean that

sources are not required to assure compliance with the state air

quality standards for purposes of fulfilling the federal permitting

standards contained in the SIP.

---------------------------------------------------------------------------

(B) cause additional violations of a national ambient air quality

standard anywhere the standard is already being exceeded, nor

(C) cause additional violations of a state ambient air quality

standard anywhere the standard is already being exceeded, except as

provided for in Subsection (d)(2)(v), nor

(D) prevent or interfere with the attainment or maintenance of any

state or national ambient air quality standard.''

As discussed in the Rule Deficiencies Section of this proposed

rulemaking, San Diego's NSR rule for minor and major sources must

require an analysis of the source's impact on the air quality

increment.

3. Federal Enforceability of Terms and Conditions of Minor NSR Permits

As discussed in the Rule Deficiencies section above, EPA has

identified the District's definition of ``federally enforceable'' as a

rule deficiency. It is important to discuss how EPA interprets the

District's definition of ``federally enforceable'' as it applies to

terms and conditions of minor NSR permits.

For minor NSR, EPA interprets, and the District

concurs,16 that SIP-approved rules 10 and 21, combined with

new rule 20.2 (upon SIP-approval) constitute the District's minor NSR

rule. EPA recognizes that the District would like the ability to

separate minor and major NSR terms and conditions into federally

enforceable and non-federally enforceable terms and

conditions.17 EPA is concerned about the practical

implementation of a program that allows for separation of permit terms

and conditions because sources, the public, and regulators may

experience confusion if competing compliance obligations reside within

the same permit. Please see the Rule Deficiencies section for options

on how the District could change the definition of ``federally

enforceable.''

---------------------------------------------------------------------------

\16\ See Footnote 14.

\17\ See second to last paragraph of the district's definition

of federally enforceable that would allow for such separation

provided the term or condition is not created to fulfill a federal

requirement.

---------------------------------------------------------------------------

4. Discussion on Minor NSR

EPA solicits comment today on whether the thresholds for AQIA and

public notice contained in 20.2 are sufficient and/or whether

additional requirements are necessary in addition to the AQIA and

public notice requirements.

SDCAPCD, through CARB has not provided an analysis, as required in

section 51.160(e) that discusses the basis for determining which

(minor) facilities will be subject to review. This analysis is

important because it supports the ``legally enforceable procedures''

established in rule 20.2 (e.g., AQIA analysis). These ``procedures,''

in turn, must enable the District to determine whether the construction

or modification of a facility, building, structure, or installation, or

combination of these, will result in a violation of the applicable

control strategy or interfere with attainment of the NAAQS. See section

51.160(a).

While the District AQIA analysis requires an individual source with

expected emissions above the AQIA thresholds to analyze its air quality

impact, EPA is concerned that the District has not accounted for the

combined impact from multiple sources with emissions below the AQIA

thresholds.

Furthermore, in the past, EPA has accepted control requirements for

minor sources (e.g. minor source BACT) to support a state's

demonstration that minor source construction will not interfere with

attainment or violate an applicable portion of the control strategy.

Many air pollution control districts within the state of California

require air pollution controls on non-major (minor) sources. CARB,

however, has elected to not submit for SIP approval the state BACT

requirements at SDCAPCD rule 20.2(d)(1). San Diego explicitly requested

CARB to exclude the state BACT requirement (and other state

requirements) from the submittal. For a complete list of the sections

and subsections of this rule that are not included, please refer to the

TSD.

To conclude, EPA solicits comment on whether the requirements for

minor sources are adequate to assure that national ambient air quality

standards are achieved. EPA has not received a demonstration from San

Diego that shows the air quality impacts from individual or combined

minor sources will not interfere with attainment of the NAAQS or result

in a violation of the control strategy. We believe such a demonstration

is necessary and we solicit comments on what should be required (e.g.,

minor source BACT). Furthermore. EPA solicits comment on the practical

implementation of a minor source permitting program that allows for

separation of permit terms and conditions into federally enforceable

and non-federally enforceable. EPA believes such a permit program could

be

[[Page 42898]]

confusing to sources, regulators and the public.

IV. Overview of Limited Approval/Disapproval

A detailed discussion of rule 20.1 through 20.4 deficiencies, a

discussion of SDCAPCD's minor NSR program and portable emission unit

NSR rule, as well as other rule clarifications and EPA interpretations,

can be found in the Technical Support Document for Rules 20.1, 20.2,

20.3 and 20.4 which is available from the U.S. EPA, Region 9 office.

Because of the deficiencies identified in this rulemaking, rules

20.1, 20.2, 20.3 and 20.4 are not approvable pursuant to the section

182(a)(2)(A) of the CAA because they are not consistent with the

interpretation of sections 110(a)(2)(C) and 173 of the CAA, and may

lead to rule enforceability problems.

Because of the above deficiencies, EPA cannot grant full approval

of these rule(s) under section 110(k)(3) and part D. Also, because the

submitted rules are not composed of separable parts which meet all the

applicable requirements of the CAA, EPA cannot grant partial approval

of the rules under section 110(k)(3). However, EPA may grant a limited

approval of the submitted rules under section 110(k)(3) in light of

EPA's authority pursuant to section 301(a) to adopt regulations

necessary to further air quality by strengthening the SIP. The approval

is limited because EPA's action also contains a simultaneous limited

disapproval. In order to strengthen the SIP, EPA is proposing a limited

approval of San Diego County Air Pollution Control District's submitted

rule 20.1, 20.2, 20.3 and 20.4 under sections 110(k)(3) and 301(a) of

the CAA.

At the same time, EPA is also proposing a limited disapproval of

San Diego County Air Pollution Control District's rules 20.1, 20.2,

20.3 and 20.4 because they contain deficiencies and, as such, the rules

do not fully meet the requirements of part D of the Act. Under section

179(a)(2), if the Administrator disapproves a submission under section

110(k) for an area designated nonattainment, based on the submission's

failure to meet one or more of the elements required by the Act, the

Administrator must apply one of the sanctions set forth in section

179(b) unless the deficiency has been corrected within 18 months of

such disapproval. Section 179(b) provides two sanctions available to

the Administrator: highway funding and offsets. The 18 month period

referred to in section 179(a) will begin on the effective date of EPA's

final limited disapproval. Moreover, the final disapproval triggers the

Federal implementation plan (FIP) requirement under section 110(c). It

should be noted that the rules covered by this proposed rulemaking have

been adopted by the SDCAPCD and are currently in effect in the SDCAPCD.

EPA's final limited disapproval action will not prevent San Diego

County Air Pollution Control District or EPA from enforcing these

rules.

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.

V. Administrative Requirements

A. Executive Order 12866

The Office of Management and Budget (OMB) has exempted this

regulatory action from Executive Order (E.O.) 12866, Regulatory

Planning and Review.

B. Executive Order 12875

Under Executive Order 12875, Enhancing the Intergovernmental

Partnership, EPA may not issue a regulation that is not required by

statute and that creates a mandate upon a State, local or tribal

government, unless the Federal government provides the funds necessary

to pay the direct compliance costs incurred by those governments, or

EPA consults with those governments. If EPA complies by consulting,

Executive Order 12875 requires EPA to provide to the Office of

Management and Budget a description of the extent of EPA's prior

consultation with representatives of affected State, local and tribal

governments, the nature of their concerns, copies of any written

communications from the governments, and a statement supporting the

need to issue the regulation. In addition, Executive Order 12875

requires EPA to develop an effective process permitting elected

officials and other representatives of State, local and tribal

governments ``to provide meaningful and timely input in the development

of regulatory proposals containing significant unfunded mandates.''

Today's rule does not create a mandate on State, local or tribal

governments. The rule does not impose any enforceable duties on these

entities. Accordingly, the requirements of section 1(a) of E.O. 12875

do not apply to this rule.

C. Executive Order 13045

Protection of Children from Environmental Health Risks and Safety

Risks (62 FR 19885, April 23, 1997), applies to any rule that: (1) is

determined to be ``economically significant'' as defined under E.O.

12866, and (2) concerns an environmental health or safety risk that EPA

has reason to believe may have a disproportionate effect on children.

If the regulatory action meets both criteria, the Agency must evaluate

the environmental health or safety effects of the planned rule on

children, and explain why the planned regulation is preferable to other

potentially effective and reasonably feasible alternatives considered

by the Agency. This rule is not subject to E.O. 13045 because it is

does not involve decisions intended to mitigate environmental health or

safety risks.

D. Executive Order 13084

Under Executive Order 13084, Consultation and Coordination with

Indian Tribal Governments, EPA may not issue a regulation that is not

required by statute, that significantly or uniquely affects the

communities of Indian tribal governments, and that imposes substantial

direct compliance costs on those communities, unless the Federal

government provides the funds necessary to pay the direct compliance

costs incurred by the tribal governments, or EPA consults with those

governments. If EPA complies by consulting, Executive Order 13084

requires EPA to provide to the Office of Management and Budget, in a

separately identified section of the preamble to the rule, a

description of the extent of EPA's prior consultation with

representatives of affected tribal governments, a summary of the nature

of their concerns, and a statement supporting the need to issue the

regulation. In addition, Executive Order 13084 requires EPA to develop

an effective process permitting elected officials and other

representatives of Indian tribal governments ``to provide meaningful

and timely input in the development of regulatory policies on matters

that significantly or uniquely affect their communities.'' Today's rule

does not significantly or uniquely affect the communities of Indian

tribal governments. Accordingly, the requirements of section 3(b) of

E.O. 13084 do not apply to this rule.

E. Regulatory Flexibility Act

The Regulatory Flexibility Act (RFA) generally requires an agency

to conduct a regulatory flexibility analysis of any

[[Page 42899]]

rule subject to notice and comment rulemaking requirements unless the

agency certifies that the rule will not have a significant economic

impact on a substantial number of small entities. Small entities

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

governmental jurisdictions. This final rule will not have a significant

impact on a substantial number of small entities because SIP approvals

under section 110 and subchapter I, part D of the Clean Air 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 create any new requirements, I certify that this action will

not have a significant economic impact on a substantial number of small

entities. Moreover, due to the nature of the Federal-State relationship

under the Clean Air Act, preparation of flexibility analysis would

constitute Federal inquiry into the economic reasonableness of state

action. The Clean Air 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).

F. Unfunded Mandates

Under section 202 of the Unfunded Mandates Reform Act of 1995

(``Unfunded Mandates Act''), 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

annual 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.

EPA has determined that the approval action promulgated does not

include a Federal mandate that may result in estimated annual 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

pre-existing 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.

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Hydrocarbons,

Incorporation by reference, Intergovernmental relations, Ozone,

Reporting and recordkeeping requirements, Volatile organic compounds.

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

Dated: July 29, 1999.

Nara L. McGee,

Acting Regional Administrator, Region 9.

[FR Doc. 99-20311 Filed 8-5-99; 8:45 am]

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