Clean Air Act Approval and Promulgation of California State Implementation Plan for the San Joaquin Valley Unified Air Pollution Control District

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA 217-0180; FRL-6442-8]

Clean Air Act Approval and Promulgation of California State

Implementation Plan for the San Joaquin Valley Unified Air Pollution

Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: EPA is proposing to revise the California State Implementation

Plan (SIP) by approving rules from the San Joaquin Valley Unified Air

Pollution Control District (District). EPA is proposing to approve

these rules to meet new source review (NSR) requirements of the Clean

Air Act, as amended in 1990 (CAA or Act), for areas that have not

attained the National Ambient Air Quality Standards (NAAQS). The State

submitted Rules 2020 and 2201 to satisfy these Federal requirements for

an approvable NSR SIP. EPA evaluated Rules 2020 and 2201 based on CAA

guidelines for EPA action on SIP submittals and general rulemaking

authority.

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

October 25, 1999.

ADDRESSES: Comments must be submitted in writing to Ed Pike at the

Region IX mailing address listed below. Copies of the rules and EPA's

evaluation report are available for public inspection at EPA's Region

IX office during normal business hours. Copies of the submitted rules

are available for inspection at the following locations:

Permits Office (AIR-3), Air Division, Environmental Protection Agency,

Region IX, 75 Hawthorne Street, San Francisco, CA 94105

Environmental Protection Agency, Air Docket (6102), 401 ``M'' Street,

S.W., Washington, D.C. 20460

California Air Resources Board, Stationary Source Division, Rule

Evaluation Section, 2020 ``L'' Street, Sacramento, CA 95814

San Joaquin Valley Unified Air Pollution Control District, Central

Region, 1990 E. Gettysburg Avenue, Fresno CA 93726

FOR FURTHER INFORMATION CONTACT: Ed Pike, (telephone 415/744-1211), Air

Division (Air-3), U.S. Environmental Protection Agency, Region IX, 75

Hawthorne Street, San Francisco, CA 94105-3901, or [email protected].

SUPPLEMENTARY INFORMATION:

I. EPA Is Proposing to Approve District Rules 2020 and 2201

EPA is proposing to approve District Rules 2020 and 2201 into the

California SIP. Rule 2020 was adopted by the District on September 17,

1998, and submitted to EPA by the California Air Resources Board (CARB)

on October 27, 1998. Rule 2201 was adopted by the District on August

20, 1998 and submitted to EPA by CARB on September 29, 1998. This

proposed approval does not include Secs. 5.9 and 6.0 of Rule 2201,

which specify requirements for title V operating permits. The title V

requirements in Rule 2201 were addressed in EPA's April 24, 1996

rulemaking on the District's title V operating permits program (see 60

FR 55517 and 61 FR 18083), and the District has not submitted

substantive changes to these sections of Rule 2201 since that approval.

The District is composed of Fresno County, a portion of Kern County

1, Kings County, Madera County, Merced County, San Joaquin

County, Stanislaus County, and Tulare County. The eight former County

air pollution management agencies merged to form the unified Valley-

wide District in 1992. The District is designated as a serious

nonattainment area for ozone and particulate matter less than ten

microns in diameter (PM10). The District is designated

attainment for the nitrogen dioxide (NO2), sulfur dioxide

(SO2), and carbon monoxide (CO) NAAQS, although nitrogen

oxides (NOx) and sulfur oxide (SOx) are regulated

as precursors to other nonattainment pollutants. For the detailed area

designations that apply to the District, please refer to 40 CFR 81.305.

The CAA air quality planning requirements for nonattainment NSR are set

out in part D of Title I of the Act, with implementing regulations at

40 CFR 51.160 through 51.165.

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\1\ This District includes the portion of Kern County described

in District rule 1020 Sec. 3.44 (adopted November 13, 1996).

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The District submitted Rule 2020, Permit Exemptions, and Rule 2201,

New Source Review, to replace existing rules in the following SIPs:

Fresno County, Kern County, Kings County, Madera County, Merced County,

San Joaquin County, Stanislaus County, and Tulare County. As explained

below, EPA has evaluated Rule 2020 and 2201 and has determined that

they are consistent with the CAA, EPA regulations and EPA policy.

Therefore, EPA is proposing to approve Rule 2020 and Rule 2201 under

section 110(k)(3) of the CAA as meeting the requirements of section

110(a), and part D of Title I of the Act. Please see the Technical

Support Document for a complete list of the SIP NSR and Exemption rules

that would be replaced.

This proposed approval will also supercede an obsolete requirement

(see 40 CFR 52.232(a)(5), (6), (10), and (11)) to submit regulations

meeting the EPA NSR requirements that existed at the time that these

sub-sections were established in the 1980s. EPA is proposing to delete

these requirements.

The air quality planning requirements for nonattainment NSR are set

out in part D of title I of the Clean Air Act. EPA has issued a

``General Preamble'' describing EPA's preliminary views on how EPA

intends to review SIPs and SIP revisions submitted under part D,

including those State submittals containing nonattainment NSR SIP

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

28, 1992)). Because EPA is describing its interpretations here only in

broad terms, the reader should refer to the General Preamble for a more

detailed discussion. EPA has also proposed regulations to implement the

changes under the 1990 Amendments in the NSR provisions in part D of

Title I of the Act. (See 61 FR 38249 (July 23, 1996)). Upon final

promulgation of those regulations, EPA will review those NSR SIP

submittals on which it has already taken final action to determine

whether additional SIP revisions are necessary.

II. Summary of New Source Review Issues

A. Lowest Achievable Emission Rate

District rule 2201 (section 4) requires that sources meet the

Lowest Achievable Emission Rate (LAER) as defined at 40 CFR

51.165(a)(1)(xiii) for: (1) Any new emission unit with the potential to

emit two pounds or more per day; and (2) any existing unit with an

increase in permitted emissions of two pounds or more per day. EPA has

determined that the two lb/day requirement for LAER is as stringent as

the source-wide applicability triggers in title I part D of the CAA.

The CAA triggers range from 15 to 70 tons per year for non-attainment

pollutants depending on the pollutant and whether the increase occurs

at an existing major source.

[[Page 51494]]

District Rule 2201 uses the term ``Best Available Control

Technology'' or ``BACT'' (rather than LAER) to define the emission

limits required for new and modified emission units that exceed these

District thresholds. Section 3.9 of District Rule 2201 defines BACT to

require installation of all controls ``achieved in practice'' (section

3.9.1) or contained in a SIP unless the SIP limits are technologically

infeasible (section 3.9.2). Therefore, the District's ``BACT''

definition is as stringent as the federal LAER definition at 40 CFR

51.165(a)(1)(xiii). The District confirmed, in a letter dated January

21, 1999, that the District BACT definition requires emissions controls

as stringent as EPA's LAER definition.

B. Offset Equivalency Tracking System

The District has committed to demonstrate that its NSR rules will

require offsets that are, in the aggregate, equivalent to federal non-

attainment NSR program requirements. The District Governing Board

adopted a resolution on August 20, 1998 that requires the District to

show program-wide equivalency with federal offset requirements. As part

of this demonstration, the District must calculate the quantity of

offsets that would be required under federal non-attainment NSR

regulations. The District must also calculate the quantity of offsets

that meet all Clean Air Act requirements and are required under the

District program. The resolution requires that the Air Pollution

Control Officer propose amendments to the District NSR rule to correct

any shortfall if the total quantity (as an annual aggregate) of offsets

that meet all federal requirements is less than the total quantity

required by federal regulation. EPA is proposing to approve the offset

provisions of the District's NSR regulations based on this commitment

and the District's August 24, 1999 agreement on implementing this

offset equivalency tracking system. Failure to achieve equivalent

offset reductions, or failure to implement the tracking system, would

constitute grounds for future EPA rulemaking to require corrective rule

amendments.

There are several differences between the District's program and

federal offset requirements (offsets are generally referred to as

``Emission Reduction Credits'' in the District rules). The District

rules require offsets for some new sources that do not exceed the

federal major source thresholds for offsets (section 4.5 of Rule 2201).

Once the potential to emit a source exceeds the District offset

applicability thresholds, the source must provide offsets for both non-

major and major emission increases. In addition, ten percent of each

credit issued under Rule 2201 is deducted for air quality improvement.

Rule 2201 also differs from federal requirements because it does

not ensure that sources provide offsets that are surplus of all

regulatory requirements at the time of use. The District rule only

requires establishing that credits are surplus when they are generated.

In addition, Rule 2201 allows some sources to determine offset

applicability and quantities based on potential to emit. It also does

not require that new major sources offset their full permitted

emissions, as they are required to offset only the quantity of

emissions that exceed the District offset trigger. Please see EPA's

Technical Support Document (TSD) for additional information on the

offset requirements of the District regulation.

EPA has determined that Rule 2201 is equivalent to federal offset

requirements because the District's program will, overall, require that

sources provide as many offsets meeting federal requirements as are

required under federal regulations. The federal requirements for a

valid offset program include ensuring that the reductions used to

generate the credit are surplus (i.e. are not required by the Clean Air

Act or otherwise relied on, such as in an attainment plan); are based

on real reductions of actual emissions; and are quantifiable and

permanent. The District has guaranteed that the tracking system will

demonstrate equivalency each year.

EPA believes that it has discretion to approve this program based

on the statutory language set forth in section 182(d)(2) of the Act, 42

U.S.C. 7511a(d)(2). The Act provides for offset program approval upon

showing that the ``the ratio of total emission reductions of VOCs to

total increased emissions of such air pollutants shall be at least 1.3

to 1 * * * .'' The Act, therefore, allows EPA to approve a SIP program

that is based on demonstrating that the total annual aggregated

emissions offsets are equivalent to the federal offset requirement.

C. Interpollutant Trading

Rule 2201 allows for interpollutant trading to meet offset

requirements (section 4.13.3). EPA expects that only trades between

pollutants (including precursors) contributing to the same NAAQS will

be allowed by the District. For instance, the rule states that

interpollutant offsets between NOX and VOC may be allowed

(section 4.13.3.4). The rule does not contain an interpollutant offset

ratio, but states that the Air Pollution Control Officer shall impose

appropriate ratios based on an air quality analysis. The District

submitted a letter on January 21, 1999 that commits to following EPA

guidelines for setting appropriate trading ratios. In addition, the

rule requires that the applicant demonstrate that the new or modified

source will not cause or contribute to a violation of an Ambient Air

Quality Standard (which is defined to include all NAAQS; see sections

3.6 and 4.13.3). Therefore, EPA is proposing to approve this provision

of the District rule.

D. Pollution Control Project Exemption

District Rule 2201 contains an exemption from BACT (i.e. EPA LAER)

and offsets for ``an emission control technique performed solely for

the purpose of compliance with the requirements of District, State or

Federal air pollution control laws, regulations, or orders'' if certain

additional qualifications listed in sections 4.2.3 and 4.6.8 are met.

EPA's July 1, 1994 guidance entitled ``Pollution Control Projects and

New Source Review (NSR) Applicability'' allows the District to exempt

qualifying pollution control projects from certain NSR requirements,

including BACT or LAER. The District rule states that the project

cannot cause or contribute to a violation of a NAAQS, PSD increment, or

an Air Quality Related Value, as required by EPA's policy. The District

submitted a letter on January 21, 1999 confirming that the District

Rule also excludes replacement or reconstruction of an emission unit as

required by EPA's policy. In addition, the District's exemption

excludes projects that would result in a significant emission increase

of collateral pollutants to ensure that all significant emission

increases are mitigated. Therefore, EPA has determined that District

rule 2201 is consistent with the requirements of EPA's 1994 guidance

and is proposing to approve this exemption. If the District implements

Rule 2201 in a manner inconsistent with the 1994 guidance and January

21 letter, EPA may require compliance with the NSR requirements of the

SIP and conduct rulemaking to require corrective rule amendments.

E. Removing Conditions Established by Prior NSR SIP Approvals

In addition to our proposed approval of District Rules 2020 and

2201, we also propose to delete the special SIP obligations listed in

the table below. These conditions required the prior County agencies to

submit regulations consistent with the EPA regulations that

[[Page 51495]]

were current at the time these conditions were established in 1981,

1982, and 1985. These conditions are moot today because the District

has submitted revised NSR rules that comply with EPA's current

regulations and the 1990 CAA amendments.

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County Date of EPA action Regulatory citation

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Kern County........................ November 19, 1981......... 40 CFR 52.232(a)(5)(i)(A).

SJV Air Basin (all Counties)....... October 30, 1985.......... 40 CFR 52.232(a)(6)(i)(A).

Kings, Madera, Merced, Stanislaus, September 7, 1982......... 40 CFR 52.232(a)(10)(i)(A).

and Tulare Counties.

Fresno County...................... November 1, 1982.......... 40 CFR 52.232(a)(11)(i)(A).

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F. Additional Information

For additional description of how District Rules 2020 and 2201 meet

the Act's applicable requirements, please refer to EPA's Technical

Support Document for this action.

III. Administrative Requirements

A. Executive Order 12866

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

regulatory action from Executive Order 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 Executive

Order 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

Executive Order 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

Executive Order 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

Executive Order 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 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

[[Page 51496]]

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, New source

review, Nitrogen dioxide, Ozone, Particulate matter, Reporting and

recordkeeping requirements, Volatile organic compounds.

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

Dated: September 15, 1999.

Keith Takata,

Acting Regional Administrator, Region 9.

[FR Doc. 99-24841 Filed 9-22-99; 8:45 am]

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