Clean Air Act Approval and Promulgation of New Source Review Implementation Plan for El Dorado County Air Pollution Control District

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[CA083-0182; FRL-6452-2]

Clean Air Act Approval and Promulgation of New Source Review

Implementation Plan for El Dorado County Air Pollution Control District

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA proposes three actions on rules submitted by El Dorado

Air Pollution Control District (District or EDCAPCD) for the purpose of

meeting requirements of the Clean Air Act, as amended in 1990 (CAA or

Act), with regard to new source review (NSR) in areas that have not

attained the national ambient air quality standards (NAAQS). First, EPA

proposes to approve the following rules into State Implementation Plan

(SIP): Rule 501, General Permit Requirements; Rule 520, Enhanced

Monitoring and Compliance Certification; Rule 524, Emission Reduction

Credits; and Rule 525, Priority Reserve. Second, EPA proposes a limited

approval and limited disapproval of Rule 523, New Source Review.

Finally, EPA proposes to rescind from the SIP 36 District rules that

will be replaced by the rules mentioned above. All of these rules were

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

requested SIP revision to satisfy certain federal requirements for an

approvable NSR SIP.

DATES: EPA is requesting comments on all aspects of the requested SIP

revision and EPA's proposed rulemaking action. Comments on this

proposed action must be received in writing by November 4, 1999.

ADDRESSES: To submit comments or receive further information, please

contact Roger Kohn, Environmental Protection Specialist, Permits

Office, Air Division (AIR-3), EPA Region 9, 75 Hawthorne Street, San

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

information are available for inspection during normal business hours

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

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

Sacramento, CA 95814; (3) El Dorado County Air Pollution Control

District, 2850 Fairlane Ct., Bldg. C, Placerville, CA 95667-4100. A

courtesy copy of these rules may be available via the Internet at

http://arbis.arb.ca.gov/drdb/ed/cur.htm. These versions of the District

rules, however, may be different from the versions submitted to EPA for

approval. Readers are cautioned to verify that the adoption date of the

rule listed is the same as the rule submitted to EPA for approval. The

official submittals are available only at the three addresses listed

above.

FOR FURTHER INFORMATION CONTACT: Roger Kohn, Permits Office, (AIR-3),

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

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

1238 E-mail: [email protected]

SUPPLEMENTARY INFORMATION:

I. What Action is EPA Proposing?

A. Today's Proposed Actions

B. Limited Approval and Limited Disapproval of Rule 523

C. Full Approval of Rules 501, 520, 524, and 525

D. Recission of 36 Rules

E. 1982 NSR SIP Conditional Approval

II. Rule 523 Deficiencies

A. Offset Ratio for Severe Ozone Nonattainment Area

B. Offsetting Total Emissions

C. Incomplete BACT Definition

D. Exemption for Regulatory Compliance

E. Interpollutant Trading

III. How Did EPA Arrive at the Proposed Action?

IV. 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. Today's Proposed Actions

EPA's proposed actions on NSR rules submitted by the District are

summarized in Tables 1, 2, and 3 below.

Table 1.--EPA Proposes Approval

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Rule No. Rule title

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501.............................. General Permit Requirements.

520.............................. Enhanced Monitoring and Compliance

Certification.

524.............................. Emission Reduction Credits.

525.............................. Priority Reserve.

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Table 2.--EPA Proposes Limited Approval and Limited Disapproval

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Rule No. Rule title

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523.............................. New Source Review.

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Table 3.--EPA Proposes Rescission From SIP

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Rule No Rule title

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401 through 407.................. Various--refer to TSD.

410, 411

415, 416

418 through 425

501 through 508

510 through 513

515

517 through 519

521

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[[Page 53974]]

B. Limited Approval and Limited Disapproval of Rule 523

EPA is proposing limited approval and limited disapproval of El

Dorado County Air Pollution Control District (EDCAPCD) Rule 523, New

Source Review into the California SIP. This rule consists of

definitions and standards, including applicability, major source and

major modification definitions, offsets, and Best Available Control

Technology. EPA is proposing simultaneous limited approval and limited

disapproval of this rule because, while it strengthens the SIP, it also

does not fully meet the CAA provisions regarding plan submissions and

requirements for nonattainment areas. The deficiencies that are the

basis for our action are identified in section II below. A detailed

discussion of the rule deficiencies is included in the Technical

Support Document (TSD) for this rulemaking.

If our final action remains a limited approval and limited

disapproval, the action would constitute a disapproval under section

179(a)(2) of the Act (see 57 FR 13566-13567). As provided under section

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

final SIP disapproval to correct the deficiencies that are the subject

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

District does not correct its SIP deficiencies within 18 months, then

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

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

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

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

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

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

be applied if any deficiencies are still not corrected after the

additional six month period.

In addition, a final disapproval would trigger section 110(c)

provisions for federal implementation plans. Section 110(c) requires

EPA to promulgate a federal implementation plan within two years of

disapproving a state implementation plan submittal in whole or in part.

C. Full Approval of Rules 501, 520, 524, and 525

EPA is proposing to approve rules 501, 520, 524, and 525 into the

California SIP. Rule 501, General Permit Requirements, contains

procedures for the review of new stationary sources of air pollution

and the modification and operation of existing sources through the

issuance of permits. In addition to these substantive requirements, the

rule also contains twelve definitions and twelve exemptions. EPA has

reviewed the submitted rule for consistency with applicable

requirements of the Act. The standards and definitions in the rule are

consistent with the CAA and EPA regulations, and the rule does not

exempt any stationary sources that are subject to federal review under

the Act. Therefore, EPA proposes to approve Rule 501 into the SIP.

Rule 501 contains a provision that states that an Authority to

Construct (ATC) permit ``shall remain in effect until a permit to

operate the equipment is granted or denied or the application is

cancelled.'' The expiration of ATC permits upon issuance of permits to

operate (PTO) appears to conflict with EPA policy, which requires that

terms and conditions of ATCs remain in effect for the life of a

facility. While the EDCAPCD provision is not the approach favored by

EPA, we believe the District's rule is approvable because PTOs will

contain the same permanent, enforceable conditions that were in the

ATCs. EPA interprets the rule to mean that when a PTO is issued, all

substantive terms and conditions of the ATC permit must be incorporated

into the PTO. This includes, but is not limited to, emission limits,

and all monitoring, record-keeping, and reporting necessary to verify

compliance.

Since EPA views ATC terms and conditions as federally enforceable

(see section 113(b)(1) of the CAA and 40 CFR 52.23), these conditions

remain federally enforceable when they are incorporated into the PTO.

Rule 520, Enhanced Monitoring and Compliance Certification,

provides standards by which compliance with CAA requirements can be

determined. The rule allows the use of any credible evidence, including

but not limited to EPA or EPA-approved reference test methods,

compliance assurance monitoring pursuant to 40 CFR part 64, and

periodic monitoring associated with part 70 federal operating permits,

to be used to demonstrate compliance with federally enforceable permit

conditions. This rule contains language recommended by EPA in a May 16,

1994 SIP-call. Since the rule submittal was responsive to the SIP-call

and satisfies the requirements of sections 110, 113, and 114 of the

CAA, EPA proposes approval into the SIP.

Rule 524, Emission Reduction Credits, allows the District to

quantify, adjust, and certify surplus emission reductions for later use

as offsets. This rule relates to new source review because these

credits can be obtained by new sources and used as offsets. Rule 524

satisfies EPA criteria that all emission reductions used as offsets be

real, surplus, quantifiable, enforceable and permanent.

Rule 525, Priority Reserve, is a mechanism to provide loans of

emission reductions for essential public services (publicly owned and

operated sources such as sewage treatment plants). The rule requires,

pursuant to Rule 524 (Emission Reduction Credits), that all offsets in

the Priority Reserve bank be real, enforceable, quantifiable, and

permanent. Therefore Rule 525 is consistent with CAA requirements and

EPA policy and EPA proposes approval into the SIP.

D. Recission of 36 Rules

On April 26, 1994, EDCAPCD repealed 43 rules and adopted four new

rules to replace them. Thirty-six of the repealed rules remained

federally enforceable because they are still in the El Dorado County

SIP. In its May 24, 1994 submittal to EPA, the California Air Resources

Board (CARB) requested that EPA rescind the repealed rules from the

SIP. The repealed rules, which are no longer enforced by the District,

constituted EDCAPCD's stationary source permitting program at the time

they were approved into the SIP in 1982 and 1983. After the 1990 CAA

amendments, however, the District substantially revised its rules to

include the substantive nonattainment new source review requirements

mandated by the 1990 amendments. The rules that EPA is proposing to

rescind from the SIP have been replaced by the more stringent rules

proposed for approval and limited approval today. Thus, EPA has

determined that the recission of the 36 repealed rules is approvable

because they are being replaced in the SIP by more stringent rules that

satisfy requirements mandated by the 1990 amendments. A summary

document that shows how the repealed rules correspond to the more

stringent rules that supercede them is included in the docket for this

rulemaking.

E. 1982 NSR SIP Conditional Approval

In a 1982 final rulemaking action (47 FR 29536, July 7, 1982), EPA

conditionally approved the nonattainment area plan (NAP) for the

Mountain Counties Air Basin, which includes El Dorado County. As a

result of that action, 40 CFR 52.232 was amended to require El Dorado

County to revise its NSR rules by October 30, 1985 in order to correct

deficiencies identified at the time. Today, we propose to delete from

40 CFR part 52

[[Page 53975]]

the requirement that the District correct NSR rule deficiencies

identified when EPA finalized the District's NSR rules in 1982 for the

following reasons:

The current rules will, upon final approval, supercede the

rules submitted in 1981.

EPA has not taken action on any revisions to EDCAPCD NSR

rules.

EPA has not done a final rulemaking to correct the

deficiencies of EDCAPCD NSR rules discussed in the July 7, 1982 final

rulemaking.

The District has revised and submitted new NSR rules to

comply with the 1990 CAA amendments.

II. Rule 523 Deficiencies

A. Offset Ratio for Severe Ozone Nonattainment Area

Section 523.3.C: This section allows an offset ratio of 1.2 to 1.0

for nonattainment pollutants if the offset is located within a 15-mile

radius and within the District. Most of El Dorado County was designated

as severe nonattainment for ozone in 1995. Section 182(d)(2) of the CAA

requires offset ratios of at least 1.3 to 1.0 for such areas, unless

the SIP requires all existing major sources in the nonattainment area

to apply Best Available Control Technology (BACT). Since the EDCAPCD

SIP does not contain such a provision, the District must revise the

ratio to comply with the CAA requirement.

B. Offsetting Total Emissions

Section 523.3.B: This section contains offset thresholds, and

requires new or modified sources to offset emissions that exceed these

thresholds. Section 173(c)(1) of the CAA requires that the total

tonnage of increased emissions be offset, not just the amount of

emissions that exceed the threshold. Accordingly, the District must

revise the rule to satisfy this federal requirement. The District could

do this by either revising the rule to require that all new and

modified sources that exceed federal offset thresholds offset down to

zero, or by tracking offsets and demonstrating on an on-going basis

that the implementation of Rule 523 creates a quantity of offsets that

meets or exceeds CAA requirements.

C. Incomplete BACT Definition

Section 523.2.G: The definition of BACT in this section does not

include the most stringent emissions limitation ``which is contained in

the implementation plan of any State for such class or category of

stationary source, unless the owner or operator of the proposed

stationary source demonstrates that such limitations are not

achievable.'' (40 CFR 51.165(a)(xiii)) This provision must be added to

the definition.

D. Exemption for Regulatory Compliance

Section 523.1.G: This section allows an exemption from NSR for

modifications that are necessary to comply with District prohibitory

rules. This exemption for regulatory compliance, as written, is not

allowed by the Clean Air Act. This provision must be either deleted or

revised to be consistent with EPA policy that allows exemptions for

pollution control projects if certain substantive and procedural

criteria are satisfied. (The policy is described in a July 1, 1994

memorandum entitled ``Pollution Control Projects and New Source Review

(NSR) Applicability'', included in the docket for this rulemaking.)

Under this policy, the District could exempt such projects, provided

that they are environmentally beneficial and do not cause or contribute

to a violation of a national ambient air quality standard, or PSD

increment, or adversely affect an air quality related value in a Class

1 area.

E. Interpollutant Trading

Section 523.3.D: This section allows interpollutant offsets

(trading among different precursors to the same secondary pollutant),

and must either be removed or revised. There are no provisions

addressing interpollutant trading in the CAA or EPA regulations. The

CAA and EPA regulations provide only for trading (offsets) of the same

pollutant. EPA has considered the approvability of interpollutant

trading if certain criteria are met. If the District wishes to retain

this provision, the District must revise the rule to require adequate

modeling to determine the appropriate offset ratio, public

notification, and EPA concurrence for all interpollutant trades.

III. How Did EPA Arrive at the Proposed Action?

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.

The Act requires States to observe certain procedural requirements

in developing implementation plans and plan revisions for submission to

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

implementation plan or revision to an implementation plan submitted by

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

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

nonattainment areas shall meet the applicable provisions of Section

110(a)(2).

Rules 501, 523, 524, and 525 were adopted by the District Board of

Directors on April 26, 1994. On that date, the District also repealed

36 rules that are in the EDCAPCD SIP. The newly adopted rules, along

with a request to rescind the repealed rules from the SIP, were

subsequently submitted by CARB to EPA as proposed revisions to the

California SIP on May 24, 1994. Rule 520 was adopted by the District on

June 27, 1995, and submitted by CARB to EPA as a SIP revision on

October 13, 1995. The submitted rules, which are new additions to the

SIP, constitute the District's New Source Review permitting

regulations.

Most of El Dorado County, except for that portion within the Lake

Tahoe basin, is included in the Sacramento Metro Area, which is

currently designated as severe nonattainment for ozone. For all other

pollutants, the County is designated as attainment or unclassifiable

with respect to the NAAQS. District NSR rules therefore apply to all

new or modified stationary sources proposing to emit VOC or NOx in the

nonattainment area. The nonattainment provisions must also apply to any

source which would contribute to a violation of the NAAQS. The Clean

Air Act requirements are found at sections 172 and 173 for

nonattainment NSR permitting. With certain exceptions, described in

section II above, the District's submittal satisfies these

requirements. For a detailed description of how the submitted rule

meets the applicable requirements, please refer to EPA's technical

support document (TSD).

IV. 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.

[[Page 53976]]

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 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, Intergovernmental

relations, Nitrogen dioxide, Particulate matter, Carbon monoxide,

Reporting and recordkeeping requirements, Sulfur dioxide, Volatile

organic compounds.

Dated: September 17, 1999.

Laura Yoshii,

Acting Regional Administrator, Region IX.

[FR Doc. 99-25835 Filed 10-4-99; 8:45 am]

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