
[Federal Register Volume 79, Number 96 (Monday, May 19, 2014)]
[Proposed Rules]
[Pages 28650-28658]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-11481]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2013-0754; FRL-9911-01-Region-9]


Revision to the California State Implementation Plan; San Joaquin 
Valley Unified Air Pollution Control District; Quantification of 
Emission Reductions From Incentive Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The Environmental Protection Agency is proposing to approve a 
regulation submitted for incorporation into the San Joaquin Valley 
Unified Air Pollution Control District (SJVUAPCD or District) portion 
of the California State Implementation Plan (SIP). This regulation 
establishes requirements and procedures for the District's 
quantification of emission reductions achieved through incentive 
funding programs implemented in the San Joaquin Valley. The effect of 
this action would be to make these requirements and procedures 
federally enforceable as part of the California SIP. We are taking 
comments on this proposal and plan to follow with a final action.

DATES: Written comments must be received on or before June 18, 2014.

ADDRESSES: Submit your comments, identified by Docket ID Number EPA-
R09-OAR-2013-0754, by one of the following methods:
    1. http://www.regulations.gov: Follow the on-line instructions for 
submitting comments.
    2. Email: steckel.andrew@epa.gov.
    3. Fax: 415-947-3579.
    4. Mail or deliver: Andrew Steckel (AIR-4), U.S. Environmental 
Protection Agency, Region IX, 75 Hawthorne Street, San Francisco, CA 
94105-3901. Deliveries are only accepted during the Regional Office's 
normal hours of operation.
    Instructions: All comments will be included in the public docket 
without change and may be made available online at http://www.regulations.gov, including any personal information provided, 
unless the comment includes Confidential Business Information (CBI) or 
other information whose disclosure is restricted by statute. 
Information that you consider CBI or otherwise protected should be 
clearly identified as such and should not be submitted through http://www.regulations.gov or email. http://www.regulations.gov is an 
anonymous access system, and EPA will not know your identity or contact 
information unless you provide it in the body of your comment. If you 
send email directly to EPA, your email address will be automatically 
captured and included as part of the public comment. If EPA cannot read 
your comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment.
    Docket: Generally, documents in the docket for this action are 
available electronically at www.regulations.gov and in hard copy at EPA 
Region IX, 75 Hawthorne Street, San Francisco, California. While all 
documents in the docket are listed at www.regulations.gov, some 
information may be publicly available only at the hard copy location 
(e.g., copyrighted material, large maps), and some may not be publicly 
available in either location (e.g., CBI). To inspect the hard copy 
materials, please schedule an appointment during normal business hours 
with the contact listed in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Idalia Perez, EPA Region IX, 
perez.idalia@epa.gov, (415) 972-3248.

SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us'' and 
``our'' refer to EPA.

Table of Contents

I. Background
II. The State's Submittal
III. EPA's Evaluation of the State's Submittal
    A. SIP Procedural Requirements
    B. EPA Policy on Economic Incentives
    C. Sections 110(l) and 193 of the Act
IV. Proposed Action and Public Comment
V. Statutory and Executive Order Reviews

I. Background

    The San Joaquin Valley (SJV) \1\ is currently designated as 
nonattainment for several of the national ambient air quality standards 
(NAAQS) promulgated by EPA under the Clean Air Act (CAA) for ozone and 
fine particulate matter (PM2.5). See 40 CFR 81.305. Despite 
numerous air pollution control measures and programs that the SJVUAPCD 
has implemented over the years to reduce air pollution, the SJV 
continues to experience some of the worst air quality in the nation. 
See, e.g., 76 FR 57846 (September 16, 2011) (discussing California 
ozone plan for SJV) and 76 FR 41338 (July 13, 2011) (discussing 
California PM2.5 plan for SJV). As a result, the District 
has increasingly relied upon incentive programs and other innovative 
strategies to reduce air pollution in the SJV. See San Joaquin Valley 
Unified Air Pollution Control District, ``Final Staff Report: Proposed 
Rule 9610 (State Implementation Plan Credit for Emission Reductions 
Generated through Incentive Programs),'' dated June 20, 2013 (``Rule 
9610 Staff Report'') at 2, 3.
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    \1\ The SJV encompasses over 23,000 square miles and includes 
all or part of eight counties in California's central valley: San 
Joaquin, Stanislaus, Merced, Madera, Fresno, Tulare, Kings, and the 
valley portion of Kern.
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    In recent years, federal, state and local governments have begun to 
use a broader array of tools to manage environmental quality, including 
market-based economic incentives and other innovative strategies to 
reduce air pollution. Economic incentives are defined broadly as 
instruments that use financial means to motivate polluters to reduce 
the health and environmental risks posed by their facilities, 
processes, or products. See U.S. EPA (Office of Policy, Economics, and 
Innovation) and National Center for Environmental Economics, ``The 
United States Experience with Economic Incentives for Protecting the 
Environment,'' EPA-240-R-01-001, January 2001, Executive Summary. In 
light of the increasing incremental cost associated with further 
stationary and mobile source emissions reductions in many nonattainment 
areas, EPA supports and encourages the development of innovative 
approaches to air quality improvement, including economic incentives, 
to supplement traditional regulatory programs. See, e.g., ``Guidance on 
Incorporating

[[Page 28651]]

Voluntary Mobile Source Emission Reduction Programs in State 
Implementation Plans (SIPs),'' October 24, 1997 (``1997 VMEP''); 
``Incorporating Emerging and Voluntary Measures in a State 
Implementation Plan (SIP),'' September 2004 (``2004 Emerging and 
Voluntary Measures Guidance''); and ``Guidance on Incorporating Bundled 
Measures in a State Implementation Plan,'' August 16, 2005 (``2005 
Bundled Measures Guidance'').
    To qualify for emission reduction credit in a SIP, however, 
economic incentive programs and other innovative emission reduction 
control measures must satisfy certain minimum CAA requirements for SIP 
creditability. See id. In prior rulemaking actions on several 
California SIP submissions, EPA has noted that California's incentive 
programs would not qualify for SIP emission reduction credit without 
the requisite demonstration of SIP creditability. See, e.g., 76 FR 
69896 at 69915 (November 9, 2011) (final action on SJV PM2.5 
SIP for 1997 PM2.5 NAAQS) and 76 FR 26609 at 26613 (May 9, 
2011) (final action on SJVUAPCD Rule 9510, ``Indirect Source Review 
(ISR)''). The SJVUAPCD's stated intent in adopting Rule 9610 was to 
establish a regulatory framework to address these requirements for SIP 
creditability and obtain SIP emission reduction credit for incentive 
programs implemented in the SJV, including the Carl Moyer Memorial Air 
Quality Standards Attainment Program (Carl Moyer Program), the 
Proposition 1B: Goods Movement Emission Reduction Program (Prop 1B 
Program), and the Environmental Quality Incentives Program (EQIP) 
implemented by the U.S. Department of Agriculture. See Rule 9610 Staff 
Report at 2-13.
    The Carl Moyer Program is a California grant program established in 
1998 that provides funding to encourage the voluntary purchase of 
cleaner-than-required engines, equipment, and other emission reduction 
technologies. See generally CARB, ``The Carl Moyer Program Guidelines, 
Approved Revisions 2011,'' Release Date: February 8, 2013, at Chapter 1 
(available electronically at http://www.arb.ca.gov/msprog/moyer/moyer.htm). In its first 12 years, the Carl Moyer Program provided over 
$680 million in state and local funds to reduce air pollution from 
equipment statewide, e.g., by replacing older trucks with newer, 
cleaner trucks, retrofitting controls on existing engines, and 
encouraging the early retirement of older, more polluting vehicles. Id.
    The Prop 1B Program is a California grant program established in 
2007, as a result of State bond funding approved by voters, which 
provides $1 billion in funding to CARB to reduce air pollution 
emissions and health risks from freight movement along California's 
priority trade corridors. Under the enabling legislation (California 
Senate Bill 88 and Assembly Bill 201 (2007)), CARB awards grants to 
fund projects proposed by local agencies that are involved in freight 
movement or air quality improvements associated with goods movement 
activities. Upon receipt of such grants, the local agencies are then 
responsible for providing financial incentives to owners of equipment 
used in freight movement to upgrade to cleaner technologies, consistent 
with program guidelines adopted by CARB. See generally ``Strategic 
Growth Plan Bond Accountability, Goods Movement Emission Reduction 
Program,'' Approved February 27, 2008 (available electronically at 
http://www.arb.ca.gov/bonds/gmbond/docs/gm_accountability_with_links_2-27-08.pdf).
    The U.S. Department of Agriculture (USDA) administers the 
Environmental Quality Incentives Program (EQIP), which Congress 
established under section 334 of the Federal Agriculture Improvement 
and Reform Act of 1996 (Pub. L. 104-12, 16 U.S.C. 3839aa-3839aa-9). 
USDA has delegated authority to administer the program to the Natural 
Resources Conservation Service (NRCS). 7 CFR 2.61(a)(13)(viii). The 
purpose of EQIP is to promote agricultural production, forest 
management, and environmental quality as compatible goals, and to 
optimize environmental benefits. 16 U.S.C. 3839aa. Through this 
voluntary program, NRCS assists enrolled agricultural producers in 
implementing conservation measures on their private land to address 
soil, water, air, and related natural resources concerns, wildlife 
habitat, surface and groundwater conservation, and related natural 
resource concerns. 7 CFR 1466.1(a). The financial and technical 
assistance provided by NRCS under the program helps producers comply 
with environmental regulations and enhance agricultural and forested 
lands in a cost-effective and environmentally beneficial manner. Id. 
Funding for EQIP is currently authorized by section 2601(a)(5) of the 
Agricultural Act of 2014 (Pub. L. 113-79, 16 U.S.C. 3841(a)(5).\2\
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    \2\ See email dated March 31, 2014, from Stephanie Johnson, USDA 
Office of General Counsel, to Kerry Drake, EPA Region 9, Air 
Division, and email dated April 23, 2014, from Joshua Schnell, USDA 
Office of General Counsel, to Jeanhee Hong, USEPA Region 9, Office 
of Regional Counsel, RE: ``Summaries of 1619 and EQIP''.
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    Since 1992, the District has disbursed over $500 million in 
incentive funds through the Carl Moyer and Prop 1B programs, which has 
been matched by over $400 million in cost-sharing investments by 
participants and has resulted in the retrofit or replacement of 
hundreds of trucks, buses, tractors, forklifts and other equipment 
operating in the SJV. See 2013 Annual Demonstration Report at 4 and 
Data Sheet. Similarly, since 2009, NRCS has provided over $105 million 
in incentive grants through EQIP to replace over one thousand high-
emitting pieces of farm equipment in the SJV. See Rule 9610 Staff 
Report at 11 and 2013 Annual Demonstration Report, Appendix B.

II. The State's Submittal

    Table 1 lists the rule addressed by this proposal with the dates 
that it was adopted by the SJVUAPCD and submitted by the California Air 
Resources Board (CARB).

                                             Table 1--Submitted Rule
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           Local agency                 Rule No.             Rule title             Adopted         Submitted
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SJVUAPCD..........................            9610   State Implementation Plan        06/20/13         06/26/13
                                                      Credit for Emission
                                                      Reductions Generated
                                                      through Incentive
                                                      Programs.
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    On December 26, 2013, the submittal for SJVUAPCD Rule 9610 was 
deemed by operation of law under CAA section 110(k)(1)(B) to meet the 
minimum completeness criteria in 40 CFR Part 51 Appendix V, which must 
be met before formal EPA review.
    Rule 9610 establishes requirements and procedures for the District 
to quantify, for air quality planning purposes, emission reductions 
achieved

[[Page 28652]]

through implementation of incentive programs in the San Joaquin Valley. 
The stated purpose of the rule is to ``provide an administrative 
mechanism for the District to receive credit towards State 
Implementation Plan requirements for emission reductions achieved in 
the San Joaquin Valley Air Basin through incentive programs 
administered by'' the District, NRCS, or CARB. Rule 9610, section 1.0; 
see also Rule 9610 Staff Report at 12.
    Rule 9610 contains several key components designed to establish a 
regulatory framework for the District's quantification of emission 
reductions achieved through incentive programs and to provide 
opportunities for EPA, CARB, and the public to review and comment on 
the District's evaluations on an annual basis. First, the rule 
establishes definitions of key terms that apply to the District's 
evaluations and actions under Rule 9610, including definitions for the 
terms ``surplus,'' ``quantifiable,'' ``enforceable,'' and 
``permanent.'' See Rule 9610, section 2.0. As explained elsewhere in 
this notice, these terms apply to all discretionary EIPs and innovative 
measures that are relied on for SIP purposes and are intended to ensure 
that such programs and measures comply with the Act.
    Second, the rule identifies a number of incentive program 
``guidelines'' \3\ that specify, among other things, the terms and 
conditions that apply to each grant of incentive funds under three 
specific incentive funding programs implemented in the SJV: (1) The 
Carl Moyer Memorial Air Quality Standards Attainment Program (Carl 
Moyer Program), which is implemented jointly by CARB and the District; 
(2) the California Proposition 1B Goods Movement Emission Reduction 
Program (Prop 1B Program), also implemented jointly by CARB and the 
District; and (3) the Environmental Quality Incentives Program (EQIP), 
implemented by NRCS. See Rule 9610, section 3.1.
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    \3\ Rule 9610 defines the term ``incentive program guidelines'' 
as ``administrative procedures, quantification methodologies, 
eligibility criteria, cost effectiveness criteria, reporting 
practices, and/or other procedures and methodologies used to 
implement incentive programs.'' Rule 9610, section 2.15.
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    Third, the rule contains provisions requiring the District to make 
publicly available a ``Manual of Procedures'' that identifies each of 
the incentive program guidelines the District uses to quantify emission 
reductions under Rule 9610, i.e., any guidelines specifically listed 
under section 3.1 of the rule and any additional program guidelines not 
specifically listed that satisfy the conditions in section 3.2. See 
Rule 9610, sections 3.2 and 3.3.
    Fourth, the rule contains provisions requiring the District to 
submit each year to CARB and EPA, following public review, an ``annual 
demonstration report'' that provides updated information on emission 
reductions achieved in the SJV through these incentive programs and the 
District's progress in satisfying related SIP commitments. See Rule 
9610, section 4.0.
    Finally, Rule 9610 specifies minimum requirements that the District 
must address in each SIP submittal that relies on projections of 
emission reductions from incentive programs to satisfy CAA 
requirements. Among other things, each such SIP submittal must contain 
a demonstration that the applicable incentive program guidelines 
provide for ``SIP-creditable emission reductions'' (i.e., emission 
reductions that are surplus, quantifiable, enforceable, and permanent) 
\4\ and must contain an ``enforceable commitment'' on the District's 
part to track emission reductions on an annual basis and to adopt and 
submit substitute measures to EPA by a date certain if there is any 
shortfall in required emission reductions. See Rule 9610, section 7.0; 
see also Rule 9610 Staff Report at 23.
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    \4\ Rule 9610 defines the term ``SIP-creditable emission 
reduction'' to mean ``reductions of emissions achieved through 
incentive programs that are Surplus, Quantifiable, Enforceable, and 
Permanent, as those terms are defined in this rule.'' Rule 9610, 
section 2.25.
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    In sum, Rule 9610 establishes an administrative mechanism designed 
to ensure that each SIP submittal in which the District relies upon 
emission reductions achieved through implementation of incentive 
programs in the SJV will adequately address the requirements of the 
Act. The rule does not establish any emission limitation, control 
measure, or other requirement that applies directly to an emission 
source (e.g., any farm or truck that is the subject of an incentive 
grant).\5\ As discussed elsewhere in this notice, the requirements and 
procedures in the rule apply only to the District and lay the 
groundwork for the District's incorporation of incentive programs into 
air quality plans going forward. These requirements and procedures 
would become federally enforceable against the District upon EPA's 
final approval of the rule into the California SIP.
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    \5\ Accordingly, Rule 9610 is not intended to implement the 
reasonably available control technology (RACT) standard or any other 
control standard under the Act.
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III. EPA's Evaluation of the State's Submittal

A. SIP Procedural Requirements

    Sections 110(a)(2) and 110(l) of the Act require that revisions to 
a SIP be adopted by the State after reasonable notice and public 
hearing. EPA has promulgated specific procedural requirements for SIP 
revisions in 40 CFR part 51, subpart F. These requirements include 
publication of notices, by prominent advertisement in the relevant 
geographic area, of a public hearing on the proposed revisions, a 
public comment period of at least 30 days, and an opportunity for a 
public hearing.
    CARB's June 26, 2013 SIP submittal includes public process 
documentation for Rule 9610, including documentation of a duly noticed 
public hearing held by the District on June 20, 2013 on the proposed 
rule. On June 26, 2013, CARB adopted SJVUAPCD Rule 9610 as a revision 
to the California SIP and submitted it to EPA for action pursuant to 
CAA section 110(k) of the Act. We find that the process followed by the 
SJVUAPCD and CARB in adopting Rule 9610 complies with the procedural 
requirements for SIP revisions under CAA section 110 and EPA's 
implementing regulations.

B. EPA Policy on Economic Incentives

    The CAA explicitly provides for the use of economic incentives as 
one tool for states to use to achieve attainment of the NAAQS. See, 
e.g., CAA section 110(a)(2)(A) (requiring that each SIP ``include 
enforceable emission limitations and other control measures, means, or 
techniques (including economic incentives such as fees, marketable 
permits, and auctions of emissions rights), as well as schedules and 
timetables for compliance, as may be necessary or appropriate to meet 
the applicable requirements of [the Act]''); see also sections 
172(c)(6), 183(e)(4). Economic incentive programs (EIPs) use market-
based strategies to encourage the reduction of emissions from 
stationary, area, and/or mobile sources in an efficient manner. EPA has 
promulgated regulations for statutory EIPs required under section 
182(g) of the Act and has issued guidance for discretionary EIPs.\6\ 
See 59 FR 16690 (April 7, 1994) (codified at 40 CFR part 51, subpart U) 
and ``Improving Air Quality with Economic Incentive Programs,'' U.S.

[[Page 28653]]

EPA, Office of Air and Radiation, January 2001 (EPA-452/R-01-001) 
(``2001 EIP Guidance'').
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    \6\ A ``discretionary economic incentive program'' is ``any EIP 
submitted to EPA as an implementation plan revision for purposes 
other than to comply with the statutory requirements of sections 
182(g)(3), 182(g)(5), 187(d)(3), or 187(g) of the Act.'' 40 CFR 
51.491.
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    In light of the increasing incremental cost associated with further 
stationary and mobile source emissions reductions and the difficulty of 
identifying such additional sources of emissions reductions in many 
areas, EPA encourages innovative approaches to generating emissions 
reductions through EIPs and other nontraditional measures and programs, 
including ``voluntary'' and ``emerging'' measures. See generally 1997 
VMEP; ``Guidance on SIP Credits for Emission Reductions from Electric-
Sector Energy Efficiency and Renewable Energy Measures,'' August 5, 
2004 (``2004 Electric-Sector Guidance''); 2004 Emerging and Voluntary 
Measures Guidance; 2005 Bundled Measures Guidance; ``Roadmap for 
Incorporating Energy Efficiency/Renewable Energy Policies and Programs 
into State and Tribal Implementation Plans,'' July 2012 (``2012 EE/RE 
Guidance''); and ``Diesel Retrofits: Quantifying and Using Their 
Emission Benefits in SIPs and Conformity,'' February 2014 (``2014 
Diesel Retrofits Guidance''). EPA recognizes, however, that these 
nontraditional measures raise novel issues related to enforceability 
and quantification of the associated emission reductions. Accordingly, 
EPA's policies addressing nontraditional measures provide for some 
flexibility in meeting established SIP requirements for enforceability 
and quantification, provided the State takes clear responsibility for 
ensuring that the emission reductions necessary to meet applicable CAA 
requirements are achieved. See, e.g., 1997 VMEP at 5-7; 2004 Emerging 
and Voluntary Measures Guidance at 9; 2005 Bundled Measures Guidance at 
7; and 2012 EE/RE Guidance at 37-38.
    Importantly, EPA has consistently stated that nontraditional 
emission reduction measures submitted to satisfy SIP requirements under 
the Act must be accompanied by appropriate enforceable ``backstop'' 
commitments from the State to monitor emission reductions achieved and 
to rectify shortfalls in a timely manner. See, e.g., 1997 VMEP at 4-5; 
2004 Emerging and Voluntary Measures Guidance at 8-12; 2005 Bundled 
Measures Guidance at 7-12; and 2004 Electric-Sector Guidance at 6-7. 
For example, where a SIP submittal relies on emission reductions 
achieved through a program dependent on voluntary actions that the 
State does not directly implement, the State must be obligated to 
monitor, assess and report on the implementation of the program and the 
associated emission reductions, and to remedy emission reduction 
shortfalls in a timely manner should the voluntary measure not achieve 
the projected emission reductions. See 1997 VMEP at 6-7.
    We provide below a summary of our evaluation of Rule 9610 and the 
extent to which the requirements and procedures contained in the rule 
establish a framework for development of SIP submittals that satisfy 
the requirements of the Act, as interpreted in EPA policy on 
discretionary EIPs and other nontraditional emission reduction 
measures. In addition to reviewing the rule itself, EPA has reviewed 
several of the incentive program ``guidelines'' identified in the rule 
and in the District's supporting materials. Although these incentive 
program guidelines themselves are not part of Rule 9610,\7\ EPA has 
evaluated them as supporting material for the SIP submittal because the 
quantification protocols and other program requirements specified in 
these guidelines inform EPA's review of the criteria and procedures set 
out in Rule 9610. Our Technical Support Document (TSD) contains a more 
detailed evaluation of the rule and each of the three incentive 
programs that it addresses, including the applicable guidelines. EPA 
will review each SIP submittal developed pursuant to Rule 9610 on a 
case-by-case basis, following notice-and-comment rulemaking, to 
determine whether the applicable requirements of the Act are met.
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    \7\ The guidelines themselves are not subject to EPA action 
under CAA section 110(k) as they are neither contained within Rule 
9610 nor incorporated by reference therein, and the State has not 
separately submitted any of these guidelines for approval into the 
SIP.
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1. Programmatic ``Integrity Elements''
    Where a State relies upon a discretionary EIP or other 
nontraditional emission reduction measure in a SIP submittal, EPA 
evaluates the programmatic elements of the measure to determine whether 
the resulting emission reductions are quantifiable, surplus, 
enforceable and permanent. See, e.g., 2001 EIP Guidance at Section 4.1. 
These four fundamental ``integrity elements,'' which apply to all 
discretionary EIPs and other innovative measures relied on for SIP 
purposes, are designed to ensure that such programs and measures 
satisfy the applicable requirements of the Act. See, e.g., 2001 EIP 
Guidance at Section 4.1; 1997 VMEP at 6-7; 2004 Emerging and Voluntary 
Measures Guidance at 3-4; and 2014 Diesel Retrofits Guidance at 27-29. 
EPA has generally defined the four fundamental integrity elements for 
discretionary EIPs and other innovative emission reduction programs as 
follows:
     Quantifiable: Emission reductions are quantifiable if they 
are measured in a reliable manner and can be replicated;
     Surplus: Emission reductions are surplus if they are not 
otherwise required by or assumed in a SIP-related program (e.g., an 
attainment or reasonable further progress plan or a transportation 
conformity demonstration), any other adopted State air quality program, 
a consent decree, or a federal rule designed to reduce emission of a 
criteria pollutant or its precursors (e.g., a new source performance 
standard or federal mobile source requirement); additionally, emission 
reductions are ''surplus'' only for the remaining useful life of the 
vehicle, engine, or equipment being replaced.
     Enforceable: Emission reductions and other required 
actions are enforceable if they are independently verifiable; program 
violations are defined; those liable can be identified; the State and 
EPA may apply penalties and secure appropriate corrective action where 
applicable; citizens have access to all emissions-related information 
obtained from participating sources; and the required reductions/
actions are practicably enforceable consistent with EPA guidance on 
practical enforceability.
     Permanent: Emission reductions are permanent if the State 
and EPA can ensure that the reductions occur for as long as they are 
relied upon in the SIP; the time period that the emission reductions 
are used in the SIP can be no longer than the remaining useful life of 
the retrofitted or replaced engine, vehicle, or equipment.
    See 2001 EIP Guidance at Section 4.1; 1997 VMEP at 6-7; 2004 
Emerging and Voluntary Measures Guidance at 3-4; and 2014 Diesel 
Retrofits Guidance at 27-29.
    Rule 9610 contains specific definitions for each of these terms 
that are consistent with EPA policy. First, with respect to the term 
``quantifiable,'' the rule states that ``emission reductions are 
quantifiable if they can be reliably determined through the use of 
well-established, publicly available emission factors and calculation 
methodologies.'' Rule 9610, section 2.23. This definition ensures that 
the District will treat as ``quantifiable'' only those emission 
reductions that can consistently be measured in a reliable manner using 
widely available methods and assumptions, consistent with EPA's policy 
definition of this term.
    Second, with respect to the term ``surplus,'' Rule 9610 states that

[[Page 28654]]

``emission reductions are surplus when they are not otherwise required 
by any federal, state, or local regulation, or other legal mandate, and 
are in excess of the baseline emission inventories underlying a SIP 
attainment demonstration.'' Rule 9610, section 2.27. This definition 
ensures that the District will treat as ``surplus'' only those emission 
reductions that are not otherwise required by or assumed in a SIP-
related program (e.g., an attainment or reasonable further progress 
plan or a transportation conformity demonstration), any other adopted 
State or local regulation, a consent decree, or a federal rule designed 
to reduce emission of a criteria pollutant or its precursors, 
consistent with EPA's policy definition of this term.
    Third, with respect to the term ``enforceable,'' Rule 9610 states 
that ``emission reductions are enforceable if the incentive program 
includes provisions for ensuring the following: [1] The emission 
reductions are independently and practicably verifiable through 
inspections, monitoring, and/or other mechanisms; [2] Incentive program 
violations are defined through legally binding contracts, including 
identifying the party or parties responsible for ensuring that emission 
reductions are achieved; [3] Grantees are obligated to provide all 
records needed to demonstrate that emission reductions are achieved; 
and [4] The public has access to all emissions-related information for 
reductions claimed in the annual demonstration report, as outlined in 
Section 4.0 [of the rule].'' Rule 9610, section 2.8. Consistent with 
EPA's policy definition of the term ``enforceable,'' this definition 
ensures that the District will treat as ``enforceable'' only those 
emission reductions that can, as a practical matter, be independently 
verified and that result from a program or measure that defines 
violations clearly, allows for identification of responsible parties, 
requires grantees to provide all records needed to demonstrate that 
emission reductions are achieved, and provides for public access to 
emissions-related information.
    Finally, with respect to the term ``permanent,'' Rule 9610 states 
that ``emission reductions are permanent if actions are taken to 
physically destroy or permanently disable existing or baseline 
equipment or vehicles, or to permanently amend practices to ensure the 
reduction of emissions for the duration of the project life.'' Rule 
9610, section 2.18. This definition ensures that the District will 
treat as ``permanent'' only those emission reductions for which both 
the State/District and EPA can ensure that the reductions will occur 
for as long as they are relied upon in the SIP, consistent with EPA's 
policy definition of this term.
    These definitions in Rule 9610 adequately represent the four 
fundamental ``integrity elements'' that EPA has defined as guidelines 
for discretionary EIPs and other innovative emission reduction 
programs. Under Rule 9610, the term ``SIP-creditable emission 
reductions'' \8\ incorporates these integrity elements and is at the 
core of the key substantive requirements in the rule. For example, 
sections 3.1 and 3.2 of Rule 9610 require the District to quantify 
emission reductions in accordance with incentive program guidelines 
that ``provide for SIP-creditable emission reductions''; section 7.0 
identifies required SIP elements ``[w]here the District intends to rely 
on projections of SIP-creditable emission reductions under this rule to 
satisfy a federal Clean Air Act SIP requirement''; and section 4.0 
requires the District to ``annually prepare a report that demonstrates 
the quantity of SIP-creditable emission reductions.'' Rule 9610, 
sections 3.0, 4.0, 7.0. These provisions in Rule 9610 ensure that, in 
each SIP submittal that relies on an incentive program and in each 
subsequent annual demonstration report, the District will be obligated 
to demonstrate that the emission reductions relied upon to satisfy SIP 
requirements are surplus, quantifiable, enforceable, and permanent.
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    \8\ See n. 4, supra.
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    Rule 9610 does not specify the requirements that govern the 
incentive programs themselves and instead makes clear that the program 
``guidelines,'' which specify (among other things) the terms and 
conditions that apply to each grant of funds to an owner/operator of an 
emission source, contain the provisions necessary to determine whether 
a particular incentive program provides for ``SIP-creditable emission 
reductions.'' For example, section 3.1 of the rule requires the 
District to quantify emission reductions in accordance with specified 
``incentive program guidelines that provide for SIP-creditable emission 
reductions,'' and similarly section 3.2 states that the District may 
quantify emission reductions using other guidelines ``provided the 
District submits to EPA, pursuant to Section 7.0, a demonstration that 
each such guideline provides for SIP-creditable emission reductions.'' 
Rule 9610, sections 3.1 and 3.2. In the TSD accompanying this proposed 
rule, EPA has evaluated the guidelines listed in section 3.1 of the 
rule, together with several guidelines listed in the District's 
``Manual of Procedures,'' for consistency with the four integrity 
elements. Although EPA is not proposing to take any particular action 
on these guidelines,\9\ we provide our evaluation of them as a 
preliminary guide to assist the District in its effort to address CAA 
requirements in SIP submittals that rely on incentive programs going 
forward.
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    \9\ See n. 7, supra.
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    Many of the guidelines that we have reviewed establish emission 
reduction quantification protocols, reporting requirements, 
administrative procedures, and other requirements that are generally 
consistent with EPA's recommendations for nontraditional emission 
reduction programs. EPA will review each SIP submittal developed 
pursuant to Rule 9610 on a case-by-case basis, following notice-and-
comment rulemaking, to determine whether the applicable requirements of 
the Act are met.
2. Required Components of SIP Submittals
    EPA policies identify several key components that should be 
included in each SIP submittal that relies on an EIP or other 
innovative emission reduction program, to ensure that the program 
satisfies the requirements of the Act. First, the SIP submittal should 
contain a demonstration that the emission reductions resulting from the 
program are quantifiable, surplus, enforceable and permanent and should 
include reliable methodologies for quantifying the emission reductions 
\10\--i.e., assumptions and protocols for measuring emission reductions 
that can be understood and replicated by different users. See, e.g., 
1997 VMEP at 6-9; 2001 EIP Guidance at 34-36 and 61-67; 2004 Emerging 
and Voluntary Measures Guidance at 2-4; and 2014 Diesel Retrofits 
Guidance at 27-29; see also discussion above in Section III.B.1 
(``Programmatic `integrity elements''').
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    \10\ To account for uncertainties in the emission reduction 
estimates, EPA recommends that states apply an appropriate downward 
``adjustment'' to calculations of projected emission reductions. 
See, e.g., 2004 Emerging and Voluntary Measures Guidance at 16 
(identifying an assumed discount of 20 percent) and 1997 VMEP at 7. 
The actual amount of the discount factor should reflect: (1) The 
degree of uncertainty associated with quantifying the emissions 
reductions from the measures; (2) the amount of the emissions 
reductions being credited in the SIP; and (3) the degree of 
uncertainty associated with verifying the emissions reductions 
actually achieved by the measure(s). See 2005 Bundled Measures 
Guidance at 16.
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    Second, the SIP submittal should include enforceable commitments by 
the State to monitor emission reductions

[[Page 28655]]

achieved and to rectify any shortfall in required emission reductions 
in a timely manner. See, e.g., 1997 VMEP at 5-7; 2005 Bundled Measures 
Guidance at 7, 11-12, and 22; and 2014 Diesel Retrofits Guidance at 28, 
31-32. EPA policy places clear responsibility on the State to ensure 
that the emission reductions necessary to meet applicable CAA 
requirements are achieved. See id. To this end, the State's commitment 
should ensure that any shortfall in required emission reductions will 
be corrected as soon as possible, and generally no later than 1 year 
after the State learns of a shortfall. See 2005 Bundled Measures 
Guidance at 11 and 2004 Emerging and Voluntary Measures Guidance at 12. 
Importantly, however, if the emission reductions from the measure are 
necessary to show attainment or reasonable further progress (RFP), the 
deadline for correcting a shortfall cannot extend past the statutory 
attainment or RFP milestone date for the nonattainment area. See id.
    Third, the SIP submittal should include documentation that clearly 
shows how the emission reductions will be addressed in the emissions 
inventory, RFP plan, and attainment or maintenance plan, as applicable. 
See, e.g., 1997 VMEP at 8-9 and 2014 Diesel Retrofits Guidance at 27. 
Such documentation is important for purpose of demonstrating that the 
program or measure is consistent with SIP attainment, RFP, or 
maintenance requirements and other applicable requirements of the Act. 
See id. For example, to address potential double-counting of emission 
reductions, the SIP submittal should explain how the State will ensure 
that emission reductions already accounted for in the projected 
``baseline'' emissions underlying an attainment or RFP demonstration 
will not also be relied upon for SIP credit in the control strategy. 
See 2005 Bundled Measures Guidance at 24 (``emission reductions are not 
surplus for [ ] an attainment demonstration if they have already been 
assumed in that same attainment demonstration'') and 2004 EE/RE 
Guidance at 13-14 (noting that states may seek SIP credit only for 
emission reduction measures ``beyond [those] already included in the 
baseline assumptions'').
    Finally, the SIP submittal must demonstrate that the State has 
adequate funding, personnel, implementation authority, and other 
resources to implement the program/measure on schedule. See CAA section 
110(a)(2)(E)(i) (requiring that each SIP provide ``necessary assurances 
that the State [or local government as appropriate] will have adequate 
personnel, funding, and authority under State (and, as appropriate, 
local) law to carry out such implementation plan * * * ); see also 1997 
VMEP at 7; 2005 Bundled Measures Guidance at 22, 26; and 2014 Diesel 
Retrofits Guidance at 29-30.
    Rule 9610 contains several provisions designed to ensure that each 
SIP submittal in which the District seeks to rely on incentive programs 
for emission reduction credit will contain the necessary components and 
supporting documentation described in these policies. First, under 
section 7.0, each SIP submittal in which the District relies on 
projected emission reductions from incentive programs must ``contain a 
demonstration that the applicable incentive program guideline(s) 
continues to provide for SIP-creditable emission reductions''--i.e., 
emission reductions that are surplus, quantifiable, enforceable, and 
permanent.\11\ See Rule 9610, section 7.0. This demonstration must 
identify the specific guideline(s) applicable to the relevant projects 
(by title, year, and relevant chapters) and provide the District's 
rationale for concluding that the identified reductions are ``SIP-
creditable emission reductions'' in accordance with the requirements of 
Rule 9610. EPA expects that the District's integrity demonstration will 
reflect appropriate adjustments to emission reduction calculations to 
account for uncertainties in the emission reduction estimates, in 
particular where the District seeks to rely on incentive programs for 
larger amounts of SIP credit and/or there is a high degree of 
uncertainty in the means for verifying the emissions reductions 
actually achieved. See 2005 Bundled Measures Guidance at 16 (``[t]he 
greater the uncertainty or amount of reductions claimed, the greater 
the appropriate adjustment factor''). Additionally, consistent with the 
definition of ``SIP-creditable emission reductions'' in the rule, the 
demonstration must show that reliance on the identified Carl Moyer 
Program source categories for SIP emission reduction credit is 
consistent with SIP attainment, RFP, or maintenance requirements.
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    \11\ See n. 4, supra.
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    For the specific guidelines currently identified in the District's 
Manual of Procedures (including a number of those listed under section 
3.1 of Rule 9610), we expect the District to rely as appropriate on the 
technical discussion in EPA's TSD, which contains EPA's preliminary 
assessment of whether the specified guidelines provide for SIP-
creditable emission reductions and whether additional documentation is 
needed to ensure the integrity of the emission reductions. For all 
other guidelines not specifically addressed in the TSD, EPA commits to 
work with the District to develop the necessary demonstrations 
consistent with the requirements of Rule 9610 and the CAA, in the 
context of specific SIP submittals that rely on emission reductions 
quantified pursuant to those guidelines.
    Second, section 7.0 of Rule 9610 requires that each SIP submittal 
in which the District relies on projected emission reductions from 
incentive programs contain an ``enforceable commitment'' that: (1) 
Identifies incentive program guidelines used to generate projected SIP-
creditable emission reductions; (2) identifies emission reductions not 
to exceed the amount projected to be achieved through the use of 
secured or reasonably anticipated incentive program funding and the 
estimated availability of emission reduction projects and willing 
participants, (3) is specifically adopted by the District as part of 
the SIP and accounted for in the annual demonstration reports, and (4) 
states that ``if either the District or EPA finds that there is a SIP 
shortfall for a particular year, the District will adopt and submit to 
EPA, by specified dates, substitute rules and measures that will 
achieve equivalent emission reductions as expeditiously as practicable 
and no later than any applicable implementation deadline in the [CAA] 
or EPA's implementing regulations.'' Rule 9610, sections 7.1-7.4; see 
also Rule 9610 Staff Report at 23. To ensure that any necessary 
substitute measures are implemented by the statutory implementation 
deadline(s), we note that each SIP commitment should identify specific 
dates, well in advance of the applicable implementation deadline(s), by 
when the District will determine whether a SIP shortfall necessitates 
the development of substitute measures.
    Third, each SIP submittal in which the District relies on projected 
emission reductions from incentive programs must ``identify specific 
amounts of SIP-creditable emission reductions for a particular year or 
years in the relevant SIP.'' Rule 9610, section 7.0. For example, if 
the District intends to seek SIP credit in an ozone attainment plan for 
NOx emission reductions achieved through the Carl Moyer program, the 
ozone SIP submittal must specifically identify, among other things, the 
years for which the District is relying on those NOX 
reductions; the amounts of NOX reductions projected to be 
achieved in each of those years; the specific source categories relied 
on to achieve those

[[Page 28656]]

NOX reductions; and the specific Carl Moyer Program 
guidelines applicable to those source categories (identified by title, 
year, and relevant chapters). Consistent with the definition of ``SIP-
creditable emission reductions'' in the rule, the SIP submittal must 
include a demonstration that reliance on the identified Carl Moyer 
Program source categories for SIP emission reduction credit is 
consistent with SIP attainment, RFP, or maintenance requirements for 
the relevant years (e.g., that there is no double-counting of emission 
reductions).
    Finally, with respect to the required demonstration that the State 
has adequate funding, personnel, implementation authority, and other 
resources to implement the program/measure on schedule, this is a 
statutory requirement that is not specifically addressed by Rule 9610 
but nonetheless applies to each SIP submitted by a State. See CAA 
section 110(a)(2)(E)(i). Once the State submits an adequate 
demonstration that the State and District have adequate personnel, 
funding, and legal authority to carry out their implementation 
responsibilities with respect to the relevant incentive programs, we 
expect that future SIP submittals may rely, as appropriate, on such 
prior demonstration to satisfy this requirement.
3. Procedures for Public Disclosure of Information
    Like all other SIP control measures, discretionary incentive 
programs and other innovative emission reduction measures relied on for 
SIP purposes must ensure that EPA and the public have access to 
emission data in accordance with the requirements of section 114 of the 
CAA and EPA's implementing regulations in 40 CFR section 2.301. See, 
e.g., 2001 EIP Guidance at 59, 60 and 2004 Emerging and Voluntary 
Measures Guidance at 23 (Attachment A). To this end, EPA has 
recommended that discretionary EIPs contain program components such as 
the following: (1) Requirements for participants to disclose violations 
to the responsible state/local agency in an annual certification of 
compliance or non-compliance; (2) requirements for sources that violate 
program provisions to notify the affected community of the violations; 
(3) procedures for the responsible state/local agency to compile these 
disclosures into an annual comprehensive report on emissions and 
violations; and (4) procedures to submit these reports to EPA and make 
them available to the public. See id. EPA has also recommended that 
states disclose information in a manner that is transparent, allowing 
the public to easily and accurately calculate the emissions of the 
participating sources or source categories and to adequately assess the 
effectiveness of the program. See id.
    Rule 9610 contains several provisions designed to ensure that EPA 
and the public have access to adequate information regarding the 
specific incentive programs and associated emission reductions that the 
District intends to rely upon for SIP purposes. First, under section 
3.3 of the rule, the District is required to make publicly available a 
``Manual of Procedures'' \12\ that includes each of the incentive 
program guidelines the District uses to quantify emission reductions 
under Rule 9610, i.e., both those guidelines specifically listed under 
section 3.1 of the rule and any additional program guidelines not 
specifically listed that satisfy certain conditions. See Rule 9610, 
section 3.3; see also section 3.2 (allowing for use of other guidelines 
not listed in section 3.1 ``provided the District submits to EPA, 
pursuant to Section 7.0, a demonstration that each such guideline 
provides for SIP-creditable emission reductions * * *''). Under 
subsection 3.3.2, the Manual of Procedures must ``include[ ] a 
description of how the incentive program guidelines ensure that 
incentive program emission reductions are SIP-creditable.'' EPA expects 
that the information in the MOP, together with the project-specific 
information in the annual demonstration reports, will enable the public 
to calculate the emission reductions for each project relied upon for 
emission reduction credit in a SIP.
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    \12\ CARB's initial Rule 9610 SIP submittal included a Manual of 
Procedures dated June 20, 2013, which the District had made publicly 
available during its rulemaking process. On March 4, 2014, the 
District submitted a revised and clarified Manual of Procedures. 
Throughout this proposed rule, references to the Manual of 
Procedures (or ``MOP'') are to the revised version submitted March 
4, 2014 (dated January 31, 2014), which is available in the docket 
for this rulemaking and online at http://www.valleyair.org/MOP/mop9610_idx.htm.
---------------------------------------------------------------------------

    Second, under section 4.0 of Rule 9610, each year the District must 
prepare an ``annual demonstration report'' that provides updated 
information on emission reductions achieved through implementation of 
incentive programs in the SJV and includes the following: (1) A 
description of each incentive program guideline used by the District, 
NRCS, or CARB to implement those programs that the District seeks to 
rely upon for SIP purposes; (2) information about the types and 
quantities of emission reductions generated through these programs 
(e.g., the specific pollutants at issue, the years that the emission 
reductions occur, the relevant funding amounts, and the project types); 
(3) adjustments to emission reductions calculated for prior annual 
demonstration reports, as necessary to reflect updated project 
information or the adoption of new local, state, or federal 
requirements; (4) identification of SIP commitments adopted by the 
District that it has satisfied, in whole or in part, through SIP-
creditable emission reductions; (5) specific information concerning 
each project \13\ relied upon for emission reductions (including the 
unique project identification number, project location, project type, 
and project life); (6) identification of projects that do not satisfy 
contractual requirements; and additional project details as necessary 
to demonstrate that the emission reductions relied upon for SIP 
purposes are surplus, quantifiable, enforceable, and permanent. See 
Rule 9610, sections 4.0-4.6. Under section 5.0 of Rule 9610, the 
District must submit this annual demonstration report and information 
described in section 4.0 of the rule to both CARB and EPA no later than 
August 31 of each year, after providing an opportunity for public 
review of a draft report, and the final report must be made publicly 
available on the District's Web site. See Rule 9610, sections 5.1-5.3.
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    \13\ Section 2.19 of Rule 9610 defines the term ``project'' as 
follows: ``for purposes of this rule, actions taken to reduce 
emissions through incentive programs, as contracted between the 
Grantee and the District, NRCS, or CARB using incentive program 
guidelines at the time of contracting. Such actions include, but are 
not limited to, replacements, retrofits, new purchases, new 
practices, and repower.''
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    EPA has reviewed the ``2013 Annual Demonstration Report'' \14\ 
submitted by the District as supporting material for Rule 9610 and 
believes it contains most, though not all, of the information required 
by Section 4.0 of Rule 9610.\15\ To ensure that EPA and other 
interested parties can track the District's progress

[[Page 28657]]

in satisfying its SIP commitments, we expect that going forward each 
annual demonstration report will identify the specific projects (by 
unique project identification number) that the District has relied upon 
for emission reduction credit in a particular SIP, including necessary 
adjustments to emission reduction calculations.\16\ See Rule 9610, 
Section 4.3 and Section 4.5. EPA believes that a list of individual 
projects relied upon for each specific SIP would enable EPA and the 
public to enforce the District's SIP emission reduction commitments but 
requests public comment on other possible mechanisms for tracking 
compliance with SIP commitments through the annual demonstration 
reports.
---------------------------------------------------------------------------

    \14\ CARB's initial Rule 9610 SIP submittal included a ``2013 
Annual Demonstration Report'' dated June 20, 2013, which the 
District had made publicly available (in draft form) during its 
rulemaking process. On February 20, 2014, the District submitted a 
revised annual demonstration report containing technical 
clarifications recommended by EPA. See ``2013 Annual Demonstration 
Report,'' dated January 31, 2014. Throughout this proposed rule, 
references to the ``2013 Annual Demonstration Report'' are to the 
revised version dated January 31, 2014. For informational purposes, 
however, we provide both versions of the report in the docket for 
this rulemaking.
    \15\ Our TSD provides a detailed evaluation of the 2013 Annual 
Demonstration Report and our recommendations for improvement.
    \16\ The key purpose of the annual demonstration report is to 
specifically document the District's progress in achieving necessary 
emission reductions and to enable EPA and citizens to enforce the 
SIP emission reduction commitments by requesting project-specific 
documentation. It is not necessary, however, for the list of 
projects relied on in a particular SIP to be identical from year to 
year, as the District may appropriately eliminate those projects 
found to be in violation of contract requirements or otherwise not 
achieving expected emission reductions. See Rule 9610, Section 4.3.
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    Finally, under section 6.1 of Rule 9610, ``[a]ll documents created 
and/or used in implementing the requirements of Section 4.0 shall be 
kept and maintained as required by the applicable incentive program 
guidelines'' and ``shall be made available for public review'' 
consistent with the requirements of the California Public Records Act 
and related requirements. See Rule 9610, section 6.1. Additionally, the 
annual demonstration report must include information regarding the 
process for public review of such records. See id. Consistent with this 
requirement, the 2013 Annual Demonstration Report submitted by the 
District states that the public may request documents created and/or 
used in implementing the requirements of Section 4.0 (of Rule 9610) 
through the District's Public Records Release Request form, which is 
available on the District Web site. See 2013 Annual Demonstration 
Report at 8.
    Rule 9610 appears to contain one exception to the general public 
disclosure requirement in section 6.1 that applies only to documents 
associated with NRCS's implementation of the EQIP program. Section 6.2 
of Rule 9610 states that ``[r]ecords related to implementation of the 
NRCS Program Combustion System Improvement of Mobile Engines incentive 
program are prohibited from mandatory disclosure, pursuant to the 
Federal Food Security Act of 1985 (7 U.S.C. 608d(2)).'' We note that 7 
U.S.C. section 608d(2) concerns information relating to ``marketing 
agreements'' and ``marketing order programs'' under the Agricultural 
Adjustment Act (7 U.S.C. 601 et. seq.) and does not apply to the NRCS's 
implementation of EQIP. The key statutory provision that governs 
disclosure of information submitted by agricultural producers or owners 
of agricultural land to participate in EQIP is section 1619 of the 
Food, Conservation, and Energy Act of 2008 (Pub. L. 110-246, 7 U.S.C. 
8791).\17\ See email dated April 23, 2014, from Joshua Schnell, USDA, 
to Jeanhee Hong, EPA Region 9, RE: ``Summaries of 1619 and EQIP.'' We 
discuss below this statutory provision and certain information that we 
understand NRCS may make publicly available consistent with this 
provision.
---------------------------------------------------------------------------

    \17\ The general Freedom of Information Act exemptions in 5 
U.S.C. section 552(b) also apply to EQIP information.
---------------------------------------------------------------------------

    Under section 1619 of the Food, Conservation, and Energy Act of 
2008 (Pub. L. 110-246, 7 U.S.C. 8791), Congress has prohibited the 
Secretary of USDA and any officer or employee of USDA from disclosing 
``information provided by an agricultural producer or owner of 
agricultural land concerning the agricultural operation, farming or 
conservation practices, or the land itself, in order to participate 
in'' a USDA program. 7 U.S.C. 8791. Any contractor or cooperator of the 
USDA is similarly prohibited from disclosing such information. Id. 
There are several exceptions to this prohibition, including that USDA 
may disclose information if it is transformed into a statistical or 
aggregate form without naming any individual owner, operator or 
producer or a specific data gathering site. See email dated March 31, 
2014, from Stephanie Johnson, USDA, to Kerry Drake, EPA Region 9, RE: 
``Summaries of 1619 and EQIP.''
    Taking these statutory prohibitions into account, in March 2014, 
NRCS, EPA, CARB and the District signed the ``Addendum to the December 
2010 Statement of Principles Regarding the Approach to State 
Implementation Plan Creditability of Agricultural Equipment Replacement 
Incentive Programs Implemented by the USDA Natural Resources 
Conservation Service and the San Joaquin Valley Air Pollution Control 
District'' (``2014 Addendum''). The purpose of the 2014 Addendum is to 
identify information and documentation that NRCS will, consistent with 
its statutory responsibilities under 7 U.S.C. 8791, make publicly 
available to ensure that EPA and the District can carry out their 
respective implementation responsibilities under the CAA and Rule 9610. 
Among other things, the 2014 Addendum states that NRCS will provide to 
EPA and the District an annual report that includes information 
regarding emission reductions achieved by individual EQIP projects and 
that will be certified by the NRCS California State Conservationist. We 
believe the certified annual reports described in the 2014 Addendum, 
which NRCS has agreed to submit to EPA and the District by March 31 of 
each year, will provide information adequate to enable the District, 
EPA, and the public to verify the emissions of participating sources 
and to adequately assess the effectiveness of the EQIP program.
    To avoid confusion, however, EPA strongly recommends that the 
District revise section 6.2 of Rule 9610 at its earliest opportunity to 
remove the incorrect reference to 7 U.S.C. section 608d(2) and to 
provide an accurate description of NRCS's statutory obligations with 
respect to disclosure of information under 7 U.S.C. section 8791.
    Our TSD contains a more detailed discussion of the 2014 Addendum 
and EPA's understanding of the information-sharing activities that the 
signatory agencies have agreed to undertake, to enable the public to 
verify emission reductions relied upon for SIP purposes. See TSD at 10-
11. Additionally, the TSD contains a more detailed evaluation of both 
the 2013 Annual Demonstration Report and the Manual of Procedures and 
provides recommendations for improvement to ensure that these documents 
provide the information necessary to satisfy CAA requirements 
concerning public availability of emission data. See TSD at 52-55.
4. Provisions To Measure and Track Programmatic Results
    EPA recommends that each SIP submittal that relies on an EIP or 
other innovative emission reduction program contain specific evaluation 
procedures to retrospectively determine the overall effectiveness of 
the program and procedures to correct emissions projections as 
appropriate. See, e.g., 1997 VMEP at 9; 2001 EIP Guidance at 70-76; 
2005 Bundled Measures Guidance at 17-20; and 2014 Diesel Retrofits 
Guidance at 33. For example, EPA recommends that the SIP submittal 
include a State commitment to conduct program evaluations at least once 
every 3 years, to determine whether the program is in fact achieving 
projected emissions benefits; a schedule for submitting the results of 
these evaluations to EPA, following

[[Page 28658]]

opportunities for public comment; and ``reconciliation procedures'' to 
correct any differences between forecasted and actual emission 
reductions. See id.
    Rule 9610 establishes procedures for the District to annually 
report on the emission reductions achieved through specified incentive 
programs and to evaluate programmatic effectiveness on a periodic 
basis. Specifically, the provisions concerning annual demonstration 
reports under section 4.0 of the rule contain both substantive and 
procedural requirements for the District's development and submission 
of these reports to EPA. See discussion above in Section III.B.3 
(``Procedures for public disclosure of information''). Additionally, 
under section 4.7 of the rule, the District is required to ``perform a 
retrospective assessment of the performance of its incentive program to 
evaluate overall incentive program performance and develop 
recommendations for future enhancements to incentive program 
implementation'' and to include in this assessment ``a summary of the 
public process to receive comments on the draft [annual demonstration] 
report, as required by Section 5.0.'' Rule 9610, section 4.7.
    EPA supports the District's effort to keep EPA, CARB, and the 
public informed of its incentive program evaluations on an annual basis 
through the annual demonstration reports developed pursuant to section 
4.0 of Rule 9610. It is not clear, however, what sort of 
``retrospective assessment'' the District intends to conduct under 
section 4.7 of the rule and how this provision differs, if at all, from 
the requirements of section 4.0. We recommend that the District revise 
section 4.7 to clarify its procedures for evaluating program 
performance and whether it will retrospectively assess only those 
incentive programs that it directly implements, or whether the District 
will also assess the performance of the EQIP program implemented by 
NRCS and/or incentive programs implemented by CARB. Our TSD provides 
more detailed recommendations for these program evaluations. As 
previously explained, EPA will review each SIP submittal developed 
pursuant to Rule 9610 on a case-by-case basis, following notice-and-
comment rulemaking, to determine whether the applicable requirements of 
the Act are met.

C. Sections 110(l) and 193 of the Act

    Section 110(l) of the CAA prohibits EPA from approving any SIP 
revision that would interfere with any applicable requirement 
concerning attainment and RFP or any other applicable CAA requirement. 
Rule 9610 does not establish any emission limitation, control measure, 
or other requirement that applies directly to an emission source or 
that is necessary to meet CAA requirements. Additionally, the rule does 
not revise any requirement in the applicable SIP. The requirements and 
procedures in Rule 9610 apply only to the District and are designed to 
ensure that each SIP submittal in which the District relies upon 
emission reductions achieved through incentive programs in the SJV will 
adequately address the requirements of the Act. Nothing in Rule 9610 
supplants the applicable requirements of the CAA.\18\ We propose to 
determine that our approval of Rule 9610 would comply with CAA section 
110(l) because the proposed SIP revision would not interfere with the 
on-going process for ensuring that requirements for attainment of the 
NAAQS and other CAA provisions are met.
---------------------------------------------------------------------------

    \18\ EPA will review each SIP submittal developed pursuant to 
Rule 9610 on a case-by-case basis, following notice-and-comment 
rulemaking, to determine whether the applicable requirements of the 
Act are met.
---------------------------------------------------------------------------

    Section 193 of the Act does not apply to this proposed action 
because Rule 9610 does not modify any SIP-approved control requirement 
in effect before November 15, 1990.

IV. Proposed Action and Public Comment

    Under section 110(k)(3) of the Act, EPA is proposing to fully 
approve the submitted rule as a revision to the California SIP. We will 
accept comments from the public on this proposed action until the date 
noted in the DATES section above.

V. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a 
SIP submission that complies with the provisions of the Act and 
applicable Federal regulations (42 U.S.C. 7410(k); 40 CFR 52.02(a)). 
Thus, in reviewing SIP submissions, EPA's role is to approve State 
choices, provided that they meet the criteria of the Clean Air Act. 
Accordingly, this proposed action merely proposes to approve State law 
as meeting Federal requirements and does not impose additional 
requirements beyond those imposed by State law. For that reason, this 
proposed action:
     Is not a ``significant regulatory action'' subject to 
review by the Office of Management and Budget under Executive Order 
12866 (58 FR 51735, (October 4, 1993);
     does not impose an information collection burden under the 
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
     is certified as not having a significant economic impact 
on a substantial number of small entities under the Regulatory 
Flexibility Act (5 U.S.C. 601 et seq.);
     does not contain any unfunded mandate or significantly or 
uniquely affect small governments, as described in the Unfunded 
Mandates Reform Act of 1995 (Pub. L. 104-4);
     does not have Federalism implications as specified in 
Executive Order 13132 (64 FR 43255 (August 10, 1999));
     is not an economically significant regulatory action based 
on health or safety risks subject to Executive Order 13045 (62 FR 19885 
(April 23, 1997));
     is not a significant regulatory action subject to 
Executive Order 13211 (66 FR 28355 (May 22, 2001));
     is not subject to requirements of Section 12(d) of the 
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 
note) because application of those requirements would be inconsistent 
with the Clean Air Act; and
     does not provide EPA with the discretionary authority to 
address disproportionate human health or environmental effects with 
practical, appropriate, and legally permissible methods under Executive 
Order 12898 (59 FR 7629 (February 16, 1994)).
    In addition, this proposed action does not have tribal implications 
as specified by Executive Order 13175 (65 FR 67249(November 9, 2000)), 
because the SIP is not approved to apply in Indian country located in 
the State, and EPA notes that it will not impose substantial direct 
costs on tribal governments or preempt tribal law.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Incorporation by 
reference, Intergovernmental relations, Reporting and recordkeeping 
requirements.

    Authority: 42 U.S.C. 7401 et seq.

    Dated: May 6, 2014.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2014-11481 Filed 5-16-14; 8:45 am]
BILLING CODE 6560-50-P


