
[Federal Register Volume 80, Number 68 (Thursday, April 9, 2015)]
[Rules and Regulations]
[Pages 19020-19033]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2015-07972]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2013-0754; FRL-9924-69-Region 9]


Revisions 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: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is finalizing a 
limited approval and limited disapproval of a revision to the San 
Joaquin Valley Unified Air Pollution Control District (SJVUAPCD) 
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. Under authority of 
the Clean Air Act (CAA or the Act), this action simultaneously approves 
the local rule and directs California to correct rule deficiencies.

DATES: This rule will be effective on May 11, 2015.

ADDRESSES: EPA has established docket number EPA-R09-OAR-2013-0754 for 
this action. Generally, documents in the docket for this action are 
available electronically at http://www.regulations.gov or in hard copy 
at EPA Region IX, 75 Hawthorne Street, San Francisco, California 94105-
3901. While all documents in the docket are listed at http://www.regulations.gov, some information may be publicly available only at 
the hard copy location (e.g., copyrighted material, large maps, multi-
volume reports), and some may not be available in either location 
(e.g., confidential business information (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 P[eacute]rez, EPA Region IX, 
(415) 972-3248, perez.idalia@epa.gov.

SUPPLEMENTARY INFORMATION:

Table of Contents

I. Proposed Action
II. Public Comments and EPA Responses
III. Final Action
IV. Incorporation by Reference
V. Statutory and Executive Order Reviews

I. Proposed Action

    On May 19, 2014 (79 FR 28650), EPA proposed to fully approve the 
following rule, which the California Air Resources Board (CARB) 
submitted for incorporation into the California SIP.

[[Page 19021]]



 
----------------------------------------------------------------------------------------------------------------
               Local agency                  Rule #              Rule title               Adopted     Submitted
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SJVUAPCD..................................     9610  State Implementation Plan Credit      06/20/13     06/26/13
                                                      for Emission Reductions
                                                      Generated through Incentive
                                                      Programs.
----------------------------------------------------------------------------------------------------------------

    We proposed to fully approve Rule 9610 based on a proposed 
conclusion that the rule satisfied the applicable CAA requirements. We 
noted, however, that section 6.2 of the rule contained an incorrect 
statutory reference and inaccurately described the statutory 
obligations of the U.S. Department of Agriculture's Natural Resources 
Conservation Service (NRCS) with respect to disclosure of information 
concerning implementation of the Environmental Quality Incentives 
Program (EQIP). See 79 FR 28650 at 28657 (May 19, 2014). We strongly 
recommended that the District revise section 6.2 of the rule at its 
earliest convenience to remove the incorrect reference and to provide 
an accurate description of NRCS's statutory obligations with respect to 
disclosure of information related to EQIP. See id.
    Based on additional evaluation of this rule and in response to 
public comments, we continue to believe that Rule 9610 largely 
satisfies the applicable CAA requirements but find that the 
deficiencies in section 6.2 of the rule, as described in our proposed 
rule, necessitate a limited disapproval. We provide our rationale for 
this limited disapproval in our responses to comments below.

II. Public Comments and EPA Responses

    EPA's proposed rule provided a 30-day public comment period. During 
this period, we received comments from the following entities:
    1. Paul Cort, Earthjustice; letter dated June 18, 2014.
    2. Seyed Sadredin, SJVUAPCD; letter dated June 17, 2014.
    We summarize these comments and provide our responses below.
    Comment 1: Earthjustice states that EPA should withdraw its 
proposed approval of Rule 9610 because approval of the rule will 
``create legal confusion over the requirements that must be met for 
approval of voluntary incentive measures into the State Implementation 
Plan (`SIP').'' Earthjustice further claims that the rule adds no value 
to the SIP and that EPA's proposal does not fully identify all of the 
``legal defects'' in the rule. ``At best,'' according to Earthjustice, 
``EPA's approval of Rule 9610 does nothing, because compliance with 
Rule 9610 will not be enough to support approval of future incentive 
programs into the SIP,'' and at worst ``it will create legal confusion 
over the governing criteria'' and waste resources by encouraging the 
development of faulty programs.
    Response 1: We disagree with these comments. We believe Rule 9610 
is consistent with the flexibility accorded states in incorporating 
discretionary, innovative and non-traditional emission reduction 
programs in their SIPs, under CAA sections 110(a)(2)(A) and 172(c)(6). 
The CAA establishes a system of cooperative federalism in which EPA 
provides national leadership, sets standards for environmental 
protection and conducts oversight of state implementation, while states 
play a larger role in implementation of these standards including 
developing SIPs and adopting emission reduction measures. See CAA 
sections 101 and 102. Under section 110 of the Act, states have broad 
discretion to choose the mix of emission limitations and other control 
measures, means, or techniques (including economic incentive programs) 
that they will implement to provide for attainment of the national 
ambient air quality standards (NAAQS). See Union Electric Co. v. EPA, 
427 U.S. 246 (1976) (``So long as the national standards are met, the 
State may select whatever mix of control devices it desires.'').
    As we explained in our proposal, Rule 9610 contains key provisions 
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. 
See 79 FR 28650 at 28652. We believe the criteria and procedures in 
Rule 9610 establish a useful starting point for the District's 
development of such programs and for public participation in the 
District's development of air quality plans that rely on such 
programs.\1\ Upon incorporation of Rule 9610 into the SIP, the 
requirements and procedures in the rule become federally enforceable 
against the District, enabling EPA and citizens to hold the District 
accountable for compliance with these requirements.
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    \1\ EPA has promulgated regulations for statutory EIPs required 
under section 182(g) of the Act. See 40 CFR part 51, subpart U. For 
discretionary EIPs, EPA has issued guidance entitled ``Improving Air 
Quality with Economic Incentive Programs,'' U.S. EPA, Office of Air 
and Radiation, January 2001 (EPA-45/R-01-001) (``2001 EIP 
Guidance''). Because the 2001 EIP Guidance is non-binding and does 
not represent final agency action on discretionary EIPs, EPA uses 
the 2001 EIP Guidance as an initial screen to evaluate potential 
approvability issues. Final action on any discretionary EIP occurs 
when EPA acts on it after its submission as a SIP revision.
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    As we also stated in the proposed rule, nothing in Rule 9610 
supplants the applicable requirements of the CAA, and EPA will review 
each SIP submittal developed pursuant to Rule 9610 and EPA guidance on 
a case-by-case basis, following notice-and-comment rulemaking, to 
determine whether the applicable requirements of the Act are met. See 
79 FR 28650 at 28658. EPA specifically identified a number of 
shortcomings in Rule 9610 to ensure that the State and District are 
aware of the rule's limitations. See, e.g., 79 FR 28650 at 28656 
(noting that Rule 9610 does not specifically address CAA requirements 
concerning funding, personnel, and implementation authority) and 28657 
(discussing incorrect statutory reference in section 6.2 of Rule 9610). 
To the extent our proposal did not make clear that Rule 9610 in no way 
substitutes for the requirements of the CAA, we hereby clarify that the 
requirements of the CAA continue to apply to each SIP submitted by the 
State and District, notwithstanding any provision in Rule 9610, and 
that our action on this rule does not constitute an endorsement of its 
content as an adequate representation of the requirements of the Act. 
Additionally, we are finalizing a limited approval and limited 
disapproval of Rule 9610 because of the deficiencies in section 6.2 
concerning disclosure of records related to the NRCS's implementation 
of the EQIP program. We explain our reasons for disapproving the rule 
on this basis in Response 3.h below.
    Given that the District's stated purpose in adopting Rule 9610 was 
to establish an administrative mechanism for crediting emission 
reductions achieved through incentive programs toward SIP requirements, 
EPA discussed in the proposed rule ``the extent to which the 
requirements and procedures contained in the rule

[[Page 19022]]

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.'' 79 FR 28650 at 28653. In the Technical Support Document 
(TSD), EPA also provided evaluations of the specific incentive program 
guidelines listed in Section 3.1 of the rule, 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.'' 79 FR 28650 
at 28654; see also U.S. EPA Region 9 Air Division, ``Technical Support 
Document for EPA's Notice of Proposed Rulemaking for the California 
State Implementation Plan, San Joaquin Valley Unified Air Pollution 
Control District's Rule 9610, State Implementation Plan Credit for 
Emission Reductions Generated through Incentive Programs,'' May 2014 
(hereafter ``Proposal TSD''). We provided these evaluations to explain 
the minimum statutory requirements that apply to SIPs that rely on 
economic incentive programs; to inform the District of both provisions 
in Rule 9610 that adequately represent these requirements and 
shortcomings in the rule that should be corrected to avoid confusion; 
and to invite public comment on EPA's understanding of the way in which 
the District would implement Rule 9610 going forward. See, e.g., 79 FR 
28650 at 28653 (discussing EPA's recommended programmatic ``integrity 
elements'' for innovative measures), 28654 (discussing EPA's 
recommended SIP components for innovative measures); and 28657 
(recommending rule corrections to avoid confusion concerning NRCS's 
statutory obligations and requesting public comment on mechanisms for 
tracking the District's compliance with SIP commitments). EPA's limited 
approval and limited disapproval of Rule 9610 into the SIP does not, in 
any way, constitute endorsement of the rule as a substitute for CAA 
requirements.
    Section 110 of the CAA requires each state to submit to EPA for 
approval a ``plan which provides for implementation, maintenance, and 
enforcement'' of each primary and secondary NAAQS, and EPA is required 
to approve a SIP submittal that relates to these purposes and satisfies 
the applicable federal requirements. See CAA section 110(k)(3), 42 
U.S.C. 7410(k)(3) and 40 CFR 52.02(a). Rule 9610 establishes 
requirements and procedures for the District's quantification of 
reductions in emissions of NAAQS pollutants (e.g., nitrogen oxides 
(NOx) and fine particulate matter (PM2.5)) achieved through 
incentive programs and, therefore, relates to the requirements of CAA 
section 110. See generally 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),'' June 20, 2013. With the exception of the 
deficiencies in section 6.2 of the rule, Rule 9610 satisfies the 
requirements concerning enforceability in section 110(a)(2)(A) and SIP 
revisions in section 110(l) of the Act. See 79 FR 28650 at 28652 
(summarizing rule provisions enforceable against the District) and 
28658 (explaining that approval of Rule 9610 would not interfere with 
applicable requirements concerning attainment and other CAA 
requirements) and Proposal TSD at 3-8; see also Response 3.h 
(discussing deficiencies in section 6.2 of Rule 9610). Additionally, 
EPA has reviewed Rule 9610 for conflicts with CAA requirements and 
identified one provision (section 6.2 of the rule) that clearly 
conflicts with the requirements of the Act. Based on these evaluations, 
we conclude that Rule 9610 satisfies the statutory requirements for 
approval into the SIP, except for the disclosure provision in section 
6.2, which we are disapproving. See Response 3.h.
    We expect the District to address the applicable requirements of 
the CAA in each individual SIP submittal that relies on incentive 
programs, and our recommendations in both the proposal and today's 
final rule are intended to provide the District with general guidance 
on how these requirements, as interpreted in EPA guidance, apply to 
future SIP submittals developed pursuant to Rule 9610 and the 
requirements of the Act. To the extent our action on Rule 9610 and the 
related public process provide a forum for EPA and the public to 
comment on the statutory requirements that the District must address in 
future SIP submittals that rely on incentive programs, we view this as 
an important step toward clarifying the applicable CAA requirements and 
ensuring transparency in SIP actions going forward. In any case, as EPA 
stated in the proposed rule, EPA will review each SIP submittal 
developed pursuant to Rule 9610 (including the necessary evaluation of 
the applicable incentive program guidelines) on a case-by-case basis, 
following notice-and-comment rulemaking, to determine whether the 
applicable requirements of the Act are met. See 79 FR 28650 at 28654, 
28658. Nothing in today's action prohibits EPA from disapproving a SIP 
relying on incentive-based emission reductions that fails to satisfy 
the requirements of the CAA.
    Comment 2: Earthjustice states that the CAA requires emission 
reductions resulting from incentive programs to be ``quantifiable, 
surplus, enforceable and permanent'' and asserts that the District's 
new definitions for these terms in Rule 9610 are an attempt to redefine 
these four integrity elements for ``SIP creditability.'' Quoting EPA's 
statement that ``[n]othing in Rule 9610 supplants the applicable 
requirements of the CAA,'' Earthjustice states that ``compliance with 
the SIP-creditability definitions in Rule 9610 does not mean that a 
given incentive program is, in fact, SIP creditable.'' Earthjustice 
claims that the potential confusion and conflict caused by EPA's action 
beg the question why EPA is approving Rule 9610 and claims that the 
purpose of the rule and EPA's action are not evident in the proposal. 
In support of these claims, Earthjustice cites a statement in the 
Proposal TSD in which EPA disagrees with the District's claims that 
Rule 9610 identifies ``pre-approved incentive program guidelines'' for 
claiming SIP credit and that certain Carl Moyer programs provide SIP 
creditable emission reductions. Earthjustice further asserts that the 
District's definitions in Rule 9610 do not meet all of EPA's criteria 
and that EPA's analysis of the District's definitions ``notes some of 
these deficiencies but ignores others,'' leaving readers to ``puzzle 
through'' the reason for EPA's approval of the rule.
    Response 2: We agree that the CAA requires emission reductions 
resulting from incentive programs to be ``quantifiable, surplus, 
enforceable and permanent'' in order to qualify for emission reduction 
credit in a SIP. We disagree, however, with the commenter's claim that 
the definitions of the terms ``quantifiable,'' ``surplus,'' 
``enforceable'' and ``permanent'' in Rule 9610 represent an attempt by 
the District to redefine the CAA's requirements for SIP creditability. 
As we stated in our proposed action, the SJVUAPCD's stated intent in 
adopting Rule 9610 was to establish a regulatory framework to address 
the CAA's requirements for crediting incentive-based emission 
reductions in SIPs. See 79 FR 28650 at 28651. Upon incorporation of 
Rule 9610 into the SIP, its requirements will become federally 
enforceable under the CAA and thereby supplement, but not supplant, the 
requirements of the Act.

[[Page 19023]]

    As we explained in the proposed rule and further in the Proposal 
TSD, Rule 9610 does not represent all of the CAA requirements 
applicable to SIPs that rely on incentive programs for emission 
reduction credit (see, e.g., 79 FR 28650 at 28656, 28657 and Proposal 
TSD at 50-52), and we agree with Earthjustice that compliance with the 
SIP-creditability definitions in Rule 9610 does not necessarily mean 
that a given incentive program is, in fact, SIP creditable under the 
CAA. Additionally, as Earthjustice notes, EPA's Proposal TSD identifies 
several statements in the District's 2013 Annual Demonstration Report 
that improperly characterize the effect of compliance with the rule 
(e.g., the District's statement that ``Section 3.1 of Rule 9610 
identifies pre-approved incentive program guidelines''). See Proposal 
TSD at 53. As we explained in both the proposed rule and the Proposal 
TSD, EPA is taking no action on the incentive program guidelines as the 
guidelines themselves are not part of Rule 9610, and the State has not 
separately submitted any of these guidelines for approval into the SIP. 
See 79 FR 28650 at 28653, n. 7 and 28654. It follows that EPA cannot, 
in today's action, approve (or ``pre-approve'') any of these guidelines 
for use in quantifying SIP emission reduction credit.\2\
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    \2\ We understand that CARB and the District do not intend to 
submit any incentive program guidelines to EPA for approval into the 
SIP, given that SIP-approval of an incentive program guideline per 
se is not necessary to demonstrate that the emission reductions 
associated with that program satisfy CAA requirements for SIP 
emission reduction credit.
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    We continue to believe, however, that the definitions of the terms 
``quantifiable,'' ``surplus,'' ``enforceable'' and ``permanent'' in 
Rule 9610 generally represent the four fundamental ``integrity 
elements'' defined in EPA guidance for discretionary EIPs and other 
innovative emission reduction programs, provided the District 
interprets these terms consistent with our interpretations in this 
rulemaking, which are the bases for our limited approval of the 
rule.\3\ If the District implements Rule 9610 (including its 
definitions) in a manner that is consistent with EPA's interpretation 
and the recommendations provided in our proposed and final rulemaking 
documents, we expect that future SIPs developed in accordance with Rule 
9610 would adequately address EPA's policy recommendations with respect 
to these four integrity elements.\4\ Conversely, to the extent the 
District implements Rule 9610 in a manner that departs significantly 
from EPA's understanding of the rule and related recommendations, we 
expect such future SIPs would not adequately address the requirements 
of the Act. Although we make no determination today concerning SIP 
emission reduction credit for any particular incentive program, we 
believe that our interpretations of Rule 9610, our related 
recommendations for corrections or clarifications to the rule, and our 
preliminary reviews of the incentive program guidelines referenced in 
the rule (as discussed in the Proposal TSD) provide general guidance to 
the State and District that will help clarify the applicable CAA 
requirements for future SIPs, compared to EPA inaction on Rule 9610.
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    \3\ Should the District's implementation of Rule 9610 going 
forward reveal a conflict between a provision of the rule and the 
requirements of the CAA, EPA may exercise its authorities under CAA 
sections 110(k)(5) or 110(k)(6) to issue a SIP call or to revise 
this action as appropriate.
    \4\ Nothing in the comments submitted by the District on EPA's 
proposed rule (see Comment 6) indicates that the District disagrees 
with EPA's interpretation of Rule 9610, as provided in the proposed 
rule and Proposal TSD.
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    Comment 3: Earthjustice claims that Rule 9610 does not ensure 
``surplus'' and ``enforceable'' emission reductions and disagrees with 
several aspects of EPA's evaluation of the rule's definitions of these 
terms.
    Response 3: EPA is finalizing a limited approval and limited 
disapproval of Rule 9610 based on our conclusion that the rule relates 
to the requirements of CAA section 110 and, with one exception, 
satisfies the statutory criteria for approval into the SIP. See 
Response 1 and Response 2, above; see also Response 3.h (discussing 
deficiencies in section 6.2 of Rule 9610).
    Nonetheless, the commenter raises a number of important concerns 
regarding the adequacy of Rule 9610 as a legal framework for 
quantifying SIP emission reduction credit for incentive programs, and 
in an effort both to respond to these comments and to provide the 
District with specific guidance on the requirements of the Act that 
each SIP must satisfy, we respond below (in Response 3.a through 
Response 3.j) to each of these concerns.
    Comment 3.a: Earthjustice states that according to EPA, ``emission 
reductions are surplus only if they are not otherwise required by or 
assumed in a SIP-related program,'' any other adopted State air quality 
program, a consent decree, or a federal rule designed to reduce 
emissions of a criteria pollutant or its precursors, and that measures 
are only surplus for ``the remaining useful life of the vehicle, 
engine, or equipment being replaced.'' Rule 9610, on the other hand, 
defines ``surplus'' to mean that the emission reductions 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'' (citing Rule 9610, section 
2.27). Earthjustice claims that this definition in Rule 9610 is not 
consistent with EPA's definition, for example because ``the District's 
definition leaves out various other assumptions built into SIP-related 
programs, such as growth factors in attainment and other plans, 
turnover assumptions in conformity demonstrations, etc.'' and does not 
incorporate the ``useful life'' concept into its definition. 
Earthjustice claims that EPA's proposal gives only ``short shrift'' to 
these differences and provides an unsupported claim that the District's 
new definition will ``treat as `surplus' only those emission 
reductions'' that meet EPA's definition of the term.
    Response 3.a: We disagree with the commenter's claims about the 
definition of ``surplus'' in Rule 9610 and believe that this definition 
is generally consistent with EPA's guidance on ``additionality'' of 
emission reductions, provided the District interprets the term 
consistent with EPA's interpretation, as explained further below.
    Section 2.27 states that ``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.'' 
First, we understand that ``any federal, state, or local regulation, or 
other legal mandate'' would include: (1) Any federal rule designed to 
reduce emissions of a criteria pollutant or its precursors (e.g., a new 
source performance standard or federal mobile source requirements); (2) 
any State or local regulation concerning air pollutant emissions; and 
(3) any obligation in a consent decree, settlement agreement, or other 
legal mandate. Read accordingly, the definition would prohibit emission 
reductions required by any of these types of legal obligations from 
being treated as ``surplus.'' Second, we understand that the phrase 
``baseline emission inventories underlying a SIP attainment 
demonstration'' means the projection year emission inventories that 
provide the basis for the attainment-related demonstrations in a SIP. 
Read accordingly, emission reductions ``in excess of the baseline 
emission inventories underlying a SIP attainment demonstration'' would 
mean

[[Page 19024]]

emission reductions that go beyond those already assumed in a SIP-
related program, taking into account growth factors, assumptions 
concerning fleet turnover, and other relevant planning assumptions--
that is, any emission reductions assumed in a SIP-related program 
(e.g., an attainment or reasonable further progress plan or a 
transportation conformity demonstration) would not be treated as 
``surplus.''
    Read in its entirety, section 2.27 provides that only those 
emission reductions that are not otherwise required by or assumed in a 
SIP-related program, any other adopted State air quality program, a 
consent decree, or a federal rule designed to reduce criteria pollutant 
or precursor emissions will qualify for treatment as ``surplus'' 
emission reductions, consistent with EPA's definition of the term in 
longstanding guidance. See, e.g., ``Guidance on Incorporating Voluntary 
Mobile Source Emission Reduction Programs in State Implementation Plans 
(SIPs),'' EPA, Office of Air and Radiation, October 24, 1997 (hereafter 
``1997 VMEP'') at 6; ``Improving Air Quality with Economic Incentive 
Programs,'' EPA, Office of Air and Radiation, January 2001 (hereafter 
``2001 EIP Guidance'') at 35; ``Incorporating Emerging and Voluntary 
Measures in a State Implementation Plan,'' EPA, Office of Air and 
Radiation, September 2004 (hereafter ``2004 Emerging and Voluntary 
Measures Guidance'') at 3; and ``Diesel Retrofits: Quantifying and 
Using Their Emission Benefits in SIPs and Conformity,'' EPA, Office of 
Transportation and Air Quality, February 2014 (hereafter ``2014 Diesel 
Retrofits Guidance'') at 27.
    One component of EPA's various policy recommendations that the 
definition of ``surplus'' in section 2.27 does not explicitly address 
is the recommendation concerning the remaining useful life of the 
vehicle, engine, or equipment being replaced. See 2014 Diesel Retrofits 
Guidance at 30 (recommending that states ``consider factors that may 
affect emission reductions and their surplus status overtime, including 
changing patterns of operations or use, vehicle deterioration factors, 
equipment useful life, and government emission standards''). Rule 9610 
does, however, contain a definition of ``project life'' in section 2.20 
that addresses this recommendation. Specifically, section 2.20 defines 
``project life'' to mean ``the period of time over which an incentive 
program project achieves SIP-creditable emission reductions'' and 
states that ``[p]roject life shall not exceed the useful life of 
equipment, vehicles, or practices funded through incentive programs, 
and may vary across incentive programs and project types.'' As we 
explained in the Proposal TSD, in future SIP submittals developed 
pursuant to Rule 9610, we expect the State and/or District will 
demonstrate: (1) How the ``project life'' for each funded project 
relied on for SIP credit takes into account the remaining useful life 
of the vehicle, engine, or equipment being replaced, and (2) how the 
State and/or District ensure that the emission reductions relied on for 
SIP credit are in excess of the reductions attributed to normal fleet 
turnover and other assumptions built into future year emissions 
inventories (i.e., that the same emission reductions are not ``double 
counted''). See Proposal TSD at 18 and 48.
    Comment 3.b: Earthjustice asserts that EPA's analysis of the 
District's definition of ``enforceable'' is arbitrary. Quoting from 
section 110(a)(2)(A) of the CAA and EPA's interpretative statements in 
``State Implementation Plans; General Preamble for the Implementation 
of Title I of the Clean Air Act Amendments of 1990'' (57 FR 13498, 
April 16, 1992) (hereafter ``General Preamble''), Earthjustice states 
that even those ``nontraditional techniques'' for reducing pollution 
authorized by section 110(a)(2)(A) must be ``enforceable.'' 
Additionally, Earthjustice quotes from an EPA docket memorandum for a 
rulemaking entitled ``State Implementation Plans: Response to Petition 
for Rulemaking; Findings of Substantial Inadequacy; and SIP Calls to 
Amend Provisions Applying to Excess Emissions During Periods of 
Startup, Shutdown, and Malfunction,'' February 4, 2013 (hereafter 
``2013 SSM Memo''), in which EPA highlights the importance of the EPA 
and citizen enforcement authorities established by Congress to ensure 
compliance with CAA requirements and states that SIP provisions that 
function to bar effective enforcement by the EPA or citizens for 
violations would be inconsistent with the regulatory scheme established 
in title I of the Act. Earthjustice quotes from this memorandum to 
support its assertion that according to EPA policy, SIPs must be built 
upon emission reductions that are ``enforceable,'' meaning that ``EPA 
and citizens must have the ability to bring enforcement actions to 
assure compliance.'' For example, Earthjustice states, EPA will not 
approve control measures that include ``director discretion'' to define 
or redefine compliance requirements and also will ``not allow SIPs to 
include state affirmative defenses that would foreclose EPA or other 
enforcement.'' Earthjustice further asserts that ``[a] state cannot 
claim SIP credit from control measures that shield pollution sources 
from independent enforcement actions.'' Earthjustice also references 
the 2001 EIP Guidance in support of these arguments.
    Response 3.b: We agree that under the CAA, as interpreted in EPA 
policy, all measures approved into a SIP, including those 
``nontraditional techniques'' for reducing pollution identified in 
section 110(a)(2)(A) of the Act, must be ``enforceable'' to qualify for 
SIP emission reduction credit and that EPA and citizens must be able to 
bring enforcement actions to assure compliance. See, e.g., General 
Preamble at 13556. We disagree, however, with the claim that EPA's 
analysis of the definition of ``enforceable'' in Rule 9610 is 
arbitrary.
    In our proposed rule and Proposal TSD, we compared the Rule 9610 
definition of ``enforceable'' with EPA's recommended enforceability 
factors for voluntary and other nontraditional emission reduction 
measures, and we found the Rule 9610 definition to be generally 
consistent with EPA's recommendations. See 79 FR 28650 at 28654 
(discussing components of Rule 9610, section 2.8 that reflect EPA 
recommendations) and Proposal TSD at 8-11. Specifically, we highlighted 
key components of EPA's policy recommendations concerning 
enforceability and found that the District's definition of the term 
``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.'' See 79 FR 28650 at 28653, 28654. We 
provided these analyses not to support a regulatory determination 
concerning the enforceability of any particular incentive program or 
air quality plan that relies on incentive programs, as no such program 
or plan is before us in this action, but rather to highlight the 
District's obligation under Rule 9610 to ensure that any incentive 
program relied upon in a SIP requires documentation adequate for EPA 
and the public to independently verify that the necessary emission 
reductions have occurred. See 79 FR 28650 at 28654 (noting District's 
obligation to demonstrate, in each SIP submittal that relies on an 
incentive program, that the

[[Page 19025]]

emission reductions relied upon to satisfy SIP requirements are 
surplus, quantifiable, enforceable, and permanent).\5\ That is, we 
highlighted these provisions of section 2.8 of Rule 9610 in an effort 
to ensure that future SIPs that rely on incentive programs in the SJV 
will, at minimum, satisfy the rule's enforceability requirements, which 
reflect important components of EPA's recommendations concerning 
enforceability under the CAA. See 79 FR 28650 at 28654.
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    \5\ Such documentation is necessary to hold the District 
accountable for any SIP commitments developed in accordance with 
Section 7.0 of Rule 9610, as explained further in Response 3.h.
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    Earthjustice asserts generally that ``[a] state cannot claim SIP 
credit from control measures that shield pollution sources from 
independent enforcement actions.'' But nothing in Rule 9610 shields 
pollution sources from independent enforcement actions and Earthjustice 
does not identify any provision that does so. As further explained in 
Response 3.d., the CAA authorizes EPA and citizens to enforce 
requirements of an ``applicable implementation plan'' \6\ and certain 
requirements of the Act. See CAA sections 113 and 304(a), 42 U.S.C. 
7413, 7604(a). Specifically, under section 113 of the Act, EPA may 
bring an enforcement action against any individual or government agency 
for violation of ``any requirement or prohibition of an applicable 
implementation plan,'' \7\ and under section 304(a) citizens may bring 
suit against any individual or government agency alleged to be in 
violation of ``an emission standard or limitation,'' including a 
schedule or timetable of compliance which is in effect under an 
applicable implementation plan.\8\ To the extent Earthjustice intended 
to argue that Rule 9610 would ``shield'' pollution sources from an 
action to enforce the requirements of an ``applicable implementation 
plan''--e.g., the requirements of an EPA-approved SIP--we disagree as 
Rule 9610 does not apply to any pollution source. See 79 FR 28650 at 
28652 (``the requirements and procedures in [Rule 9610] apply only to 
the District . . . [and] would become federally enforceable against the 
District upon EPA's final approval of the rule into the California 
SIP'') (emphases added). Earthjustice does not identify any provision 
in Rule 9610 that would apply to a pollution source or preclude 
enforcement of SIP requirements against a pollution source.
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    \6\ Section 302(q) of the CAA defines ``applicable 
implementation plan,'' in relevant part, as ``the portion (or 
portions) of the implementation plan, or most recent revision 
thereof, which has been approved under section 110 of [title I of 
the Act] . . . and which implements the relevant requirements of 
[the Act].'' 42 U.S.C. 7602(q).
    \7\ Section 113 of the CAA authorizes EPA to issue notices and 
compliance orders, assess administrative penalties, and bring civil 
actions against any ``person,'' including a state agency, who ``has 
violated or is in violation of any requirement or prohibition of an 
applicable implementation plan. . . .'' CAA 113(a)(1)-(2), 42 U.S.C. 
7413(a)(1)-(2); CAA 302(e), 42 U.S.C. 7602(e) (defining ``person'' 
to include a State or political subdivision thereof).
    \8\ Section 304(a)(1) of the CAA authorizes any person to bring 
a civil action against any ``person,'' including a state agency (to 
the extent permitted by the Eleventh Amendment to the Constitution), 
``who is alleged to have violated or to be in violation of . . . an 
emission standard or limitation. . . .'' 42 U.S.C. 7604(a)(1); CAA 
302(e), 42 U.S.C. 7602(e) (defining ``person'' to include a State or 
political subdivision thereof). An ``emission standard or 
limitation'' is defined in section 304(f), in relevant part, to mean 
``a schedule or timetable of compliance'' which is in effect under 
the Act ``or under an applicable implementation plan.'' 42 U.S.C. 
7604(f)(1). ``Schedule and timetable of compliance'' is broadly 
defined in section 302(p) to mean ``a schedule of required measures 
including an enforceable sequence of actions or operations leading 
to compliance with an emission limitation, other limitation, 
prohibition, or standard.'' 42 U.S.C. 7602(p).
---------------------------------------------------------------------------

    We understand that Earthjustice may have intended to argue that 
Rule 9610 would encourage future development of programs that preclude 
EPA or citizen enforcement against pollution sources, rather than to 
comment on the enforceability of Rule 9610 itself.\9\ Under CAA section 
110(a)(2)(A), however, the relevant inquiry is not whether EPA or 
citizens may directly sue pollution sources but whether the 
``measure,'' ``means,'' or ``technique'' for reducing emissions is 
``enforceable.'' Section 110 of the Act requires 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 Act's requirements. CAA 110(a)(2)(A), 42 U.S.C. 7410(a)(2)(A). 
Thus, according to the plain language of the statute, SIPs may contain 
``means'' or ``techniques'' including economic incentives and/or 
``schedules and timetables for compliance'' that EPA considers 
``appropriate'' for attainment, so long as they are ``enforceable.'' 
Courts have long held that citizen suits can be brought to enforce 
specific measures, strategies, or commitments by state or local 
agencies that are designed to ensure compliance with the NAAQS. See, 
e.g., BCCA Appeal Group v. EPA, 355 F.3d 817 (5th Cir. 2003), reh'g 
denied, BCCA Appeal Group v. EPA, 2004 U.S. App. LEXIS 215 (5th Cir. 
2004); Conservation Law Foundation, Inc. v. James Busey et al., 79 F.3d 
1250, 1258 (1st Cir. 1996) (citing, inter alia, Wilder v. EPA, 854 F.2d 
605 at 613-14) and Citizens for a Better Env't v. Deukmejian, 731 F. 
Supp. 1448, 1454-59 (N.D. Cal.), modified, 746 F. Supp. 976 (1990).
---------------------------------------------------------------------------

    \9\ Earthjustice does not appear to question EPA's statement 
that Rule 9610 itself is enforceable against the District and that 
our approval of the rule would make it federally enforceable by EPA 
and citizens under the CAA.
---------------------------------------------------------------------------

    Nothing in Rule 9610 undermines the ability of EPA or citizens to 
bring enforcement actions to assure compliance with SIP requirements, 
nor does the rule contain or authorize the District to develop any 
``director discretion'' or ``affirmative defense'' provision that will 
apply to SIP requirements. To the contrary, section 7.0 of Rule 9610 
requires that the District maintain responsibility for ensuring that 
SIP emission reductions occur through an ``enforceable commitment,'' 
which becomes federally enforceable by EPA and citizens upon approval 
into the SIP under CAA section 110(k). See 79 FR 28650 at 28655 (citing 
Rule 9610, section 7.0). EPA has approved enforceable commitments in 
the past and courts have enforced these commitments against states that 
failed to comply with them. See, e.g., American Lung Ass'n of N.J. v. 
Kean, 670 F. Supp. 1285 (D.N.J. 1987), aff'd, 871 F.2d 319 (3rd Cir. 
1989); NRDC, Inc. v. N.Y. State Dept. of Env. Cons., 668 F. Supp. 848 
(S.D.N.Y. 1987); Citizens for a Better Env't v. Deukmejian, 731 F. 
Supp. 1448, recon. Granted in par, 746 F. Supp. 976 (N.D. Cal. 1990); 
Coalition for Clean Air v. South Coast Air Quality Mgt. Dist., No. CV 
97-6916-HLH (C.D. Cal. Aug. 27, 1999). We believe it is appropriate to 
allow California to rely in its SIP on voluntary incentive programs, 
provided the State and/or District retain clear responsibility through 
an enforceable commitment to ensure that the emission reductions 
necessary to meet applicable CAA requirements are achieved, which EPA 
or citizens may enforce under sections 113 or 304 of the Act, 
respectively.
    As we noted previously, following the State's submittal of a 
specific air quality plan or measure that relies on incentive programs 
for necessary emission reductions, EPA will evaluate that plan or 
measure to determine whether it satisfies the enforceability 
requirements of the Act. We provide these responses to the commenter's 
concerns only as a preliminary explanation of the enforceability 
requirements that future SIPs developed through the Rule 9610 process 
must satisfy, and we encourage the commenter and the public at large

[[Page 19026]]

to participate in future rulemakings on specific air quality plans or 
measures that rely on incentive programs for SIP emission reduction 
credit.
    Comment 3.c: Citing a 2004 guidance entitled, ``Incorporating 
Emerging and Voluntary Measures in a State Implementation Plan'' 
(September 2004) (hereafter ``2004 Emerging and Voluntary Measures 
Guidance''), Earthjustice states that according to EPA, ``emission 
reductions are `voluntary,' and therefore subject to a cap on SIP 
credit, when the emission reductions are not enforceable against 
individual sources.'' According to Earthjustice, ``Rule 9610 suggests 
that measures could be SIP creditable even if EPA and the public have 
to rely entirely on the State and local air District to ensure source 
compliance,'' and that this runs counter to EPA's longstanding policy 
and statutory interpretations, under which EPA ``has only been willing 
to allow such programs with a cap on the SIP credit that can be 
claimed.''
    Response 3.c: We agree with Earthjustice's characterization of 
``voluntary'' measures as those that are not directly enforceable 
against individual emission sources. See, e.g., 1997 VMEP at 4; 2004 
Emerging and Voluntary Measures Guidance at 1, 19; and 2005 Bundled 
Measures Guidance at 2, n. 1. We disagree, however, with the 
commenter's suggestion that emission reductions from voluntary measures 
are ``subject to'' a specific cap on SIP emission reduction credit 
because they are unenforceable for SIP purposes under the CAA.
    Under longstanding guidance, EPA has recommended presumptive limits 
(sometimes referred to as ``caps'') on the amounts of emission 
reductions from certain voluntary and other nontraditional measures 
that may be credited in a SIP. Specifically, for voluntary mobile 
source emission reduction programs (VMEPs),\10\ EPA has identified a 
presumptive limit of three percent (3%) of the total projected future 
year emission reductions required to attain the appropriate NAAQS, and 
for any particular SIP submittal to demonstrate attainment or 
maintenance of the NAAQS or progress toward attainment (RFP), 3% of the 
specific statutory requirement. See 1997 VMEP at 5. As explained in the 
2001 EIP Guidance, EPA recommended this 3% cap (per pollutant) on the 
credit allowed for VMEPs because states are ``not required to play a 
direct role in implementing these programs, the programs are not 
directly enforceable against participating parties, and there may [be] 
less experience in quantifying the emission benefits from these 
programs.'' 2001 EIP Guidance at 158; see also 1997 VMEP at 5 
(recommending 3% cap due to ``innovative nature of voluntary measures 
and EPA's inexperience with quantifying their emission reductions''). 
For voluntary stationary and area source measures, EPA has identified a 
presumptive limit of 6% of the total amount of emission reductions 
required for RFP, attainment, or maintenance demonstration purposes. 
See 2004 Emerging and Voluntary Measures Guidance at 9 (``EPA believes 
it is appropriate to limit these measures to a small portion of the SIP 
given the untested nature of the control mechanisms'') and 
``Incorporating Bundled Measures in a State Implementation Plan 
(SIP),'' August 2005 (hereafter ``2005 Bundled Measures Guidance'') at 
8 (recommending limits ``[d]ue to the innovative nature of voluntary 
and emerging measures''). EPA has also long stated, however, that 
states may justify higher amounts of SIP emission reduction credit for 
voluntary programs on a case-by-case basis, and that EPA may approve 
measures for SIP credit in excess of the presumptive limits ``where a 
clear and convincing justification is made by the State as to why a 
higher limit should apply in [its] case.'' 2004 Emerging and Voluntary 
Measures Guidance at 9; see also 2005 Bundled Measures Guidance at 8, 
n. 6 and 2014 Diesel Retrofits Guidance at 12. Thus, the presumptive 
``cap'' on SIP credit referenced by Earthjustice is not a specific 
regulatory cap but a general policy recommendation, which states and 
EPA may justify departing from on a case-by-case basis, subject to 
notice-and-comment rulemaking on a particular SIP.
---------------------------------------------------------------------------

    \10\ A voluntary mobile source emission reduction program (VMEP) 
is a mechanism that supplements traditional emission reduction 
strategies through voluntary, nonregulatory changes in local 
transportation sector activity levels or changes in in-use vehicle 
and engine fleet composition, among other things. See 1997 VMEP at 
3.
---------------------------------------------------------------------------

    Importantly, EPA has consistently stated that SIP credit may be 
allowed for a voluntary or other nontraditional measure only where the 
State submits enforceable mechanisms to ensure that the emission 
reductions necessary to meet applicable CAA requirements are achieved--
e.g., an enforceable commitment to monitor and report on emission 
reductions achieved and to rectify any shortfall in a timely manner. 
See 79 FR 28650 at 28653 (citing, inter alia, 1997 VMEP at 4-7; 2004 
Emerging and Voluntary Measures Guidance at 8-12; 2005 Bundled Measures 
Guidance at 7-12; and 2004 Electric-Sector EE/RE Guidance at 6-7). 
Thus, if California intends to satisfy a SIP requirement through 
reliance on an incentive program that EPA and citizens may not directly 
enforce against participating sources, the State/District must take 
responsibility for assuring that SIP emission reduction requirements 
are met through an enforceable commitment, which EPA and citizens may 
enforce against the State/District upon EPA's approval of the 
commitment into the SIP. EPA continues to believe that voluntary 
incentive measures accompanied by an enforceable commitment to monitor 
emission reductions achieved and timely rectify any shortfall meet the 
SIP control measure requirements of the Act. See Response 3.b above.
    Should California submit a SIP that relies on incentive programs to 
satisfy a CAA requirement, EPA intends to evaluate the submittal to 
determine whether the necessary emission reductions may be enforced by 
EPA and citizens through an enforceable State/District commitment. 
Additionally, should such a SIP rely on incentive-based emission 
reductions in amounts that exceed EPA's presumptive limits, as 
discussed in EPA's longstanding guidance, EPA intends to evaluate the 
SIP submittal to determine whether the State and/or District have 
provided a clear and convincing justification for such higher amounts.
    Comment 3.d: Citing both the 2001 EIP Guidance and the 2004 
Emerging and Voluntary Measures Guidance, Earthjustice states that 
emission reductions are ``enforceable'' against the source if: (1) They 
are independently verifiable; (2) program violations are defined; (3) 
those liable for violations can be identified; (4) the District, State 
and EPA maintain the ability to apply penalties and secure appropriate 
corrective actions where applicable; (5) citizens have access to all 
the emissions-related information obtained from the source; (6) 
citizens can file suits against sources for violations; and (7) they 
are practicably enforceable in accordance with other EPA guidance on 
practicable enforceability. Earthjustice states that EPA's proposed 
rule recites all of these criteria except for citizen suit 
enforceability and questions whether this was an oversight or a 
deliberate attempt to mislead the public on the criteria for 
enforceability. In any case, Earthjustice contends that ``nothing in 
Rule 9610 would require incentive programs to provide for such citizen 
enforcement'' and that the rule ``would only require that violations be 
defined through contracts, [which] can only be

[[Page 19027]]

enforced by the parties to the contract.'' Earthjustice asserts that 
citizens would have no recourse to ``file suits against sources for 
violations,'' and that EPA's proposal includes ``no explanation of how 
this requirement is met or why it does not apply.'' To the extent EPA 
believes it is the latter, Earthjustice states, ``it has now afforded 
the public no opportunity to respond to any reasoning behind that 
assertion.''
    Response 3.d: First, to the extent the commenter argues that all 
SIP emission reduction techniques must provide for citizen suits 
directly against emission sources, we disagree. Section 110(a)(2)(A) of 
the Act explicitly includes ``economic incentives'' among the ``control 
measures, means, or techniques'' that states may use to meet SIP 
requirements, and EPA has long interpreted the Act to allow SIPs to 
rely on nontraditional emission reduction techniques--including 
voluntary measures that are not directly enforceable against emitting 
sources--provided the State submits enforceable mechanisms to assure 
that the requirements of the Act are met. See Response 3.b and Response 
3.c, above. As Earthjustice correctly notes, EPA's 2001 EIP Guidance 
states that emission reductions and related actions are ``enforceable'' 
if, among other things, ``[c]itizens can file suits against sources for 
violations. . . .'' 2001 EIP Guidance at 35-36.\11\ As with all 
guidance, however, the 2001 EIP Guidance provides only non-binding 
recommendations and does not represent final agency action concerning 
the requirements for SIPs containing discretionary EIPs. See id. at 12, 
19, and 119. Moreover, in several other policies concerning 
nontraditional measures, EPA has indicated that provisions for citizen 
suits against a state or other responsible entity (other than the 
emission source) may suffice to meet the Act's enforceability 
requirements. See Response 3.c above. For example, the 2004 Emerging 
and Voluntary Measures Guidance recommends provisions authorizing 
citizen suits against sources for ``emerging measures'' \12\ but states 
that for ``voluntary measures,'' emission reductions and other required 
actions are enforceable if, among other things, ``EPA maintains the 
ability to apply penalties and secure appropriate corrective action 
from the State where applicable and the State maintains the [ability 
to] secure appropriate corrective action with respect to portions of 
the program that are directly enforceable against the source. . . .'' 
2004 Emerging and Voluntary Measures Guidance at 3, 4 (emphases added); 
see also 2005 Bundled Measures Guidance at 25 (also discussing EPA 
enforcement against State) and 1997 VMEP at 6-7 (``[a] State's 
obligations with respect to VMEPs must be enforceable at the State and 
Federal levels'') (emphasis added). In other guidance concerning 
nontraditional emission reduction measures, EPA has indicated that 
provisions for enforcement against a ``responsible party'' may be 
acceptable in lieu of enforcement directly against the emitting source. 
See, e.g., ``Guidance on SIP Credits for Emission Reductions from 
Electric-Sector Energy Efficiency and Renewable Energy Measures,'' 
August 5, 2004 (hereafter ``2004 Electric-Sector EE/RE Guidance'') at 
5, 6 (distinguishing emission reductions that are ``enforceable 
directly against the source'' from those that are ``enforceable against 
another party responsible for the energy efficiency or renewable energy 
activity'') and 2014 Diesel Retrofits Guidance at 28 (emission 
reductions are federally enforceable only if, among other things, 
``[c]itizens can file lawsuits against the responsible party for 
violations'') (emphases added). Thus, a number of EPA policies 
concerning nontraditional measures indicate that provisions for EPA and 
citizen enforcement against the State or against some other 
``responsible party'' other than the source may satisfy the Act's 
requirements for enforceability. Earthjustice fails to identify any 
statutory or regulatory support for a claim that all emission reduction 
measures approved into a SIP must provide for citizen suits directly 
against emitting sources.
---------------------------------------------------------------------------

    \11\ The 2001 EIP Guidance states that ``[e]mission reductions 
use, generation, and other required actions are enforceable if'': 
(1) They are independently verifiable; (2) program violations are 
defined; (3) those liable for violations can be identified; (4) the 
State and EPA maintain the ability to apply penalties and secure 
appropriate corrective actions where applicable; (5) citizens have 
access to all the emissions-related information obtained from the 
source; (6) citizens can file suits against sources for violations; 
and (7) they are practicably enforceable in accordance with other 
EPA guidance on practicable enforceability. See 2001 EIP Guidance at 
35-36.
    \12\ EPA has described ``emerging measures'' as new emission 
reduction measures for which pollutant reductions are more difficult 
to accurately quantify than traditional SIP emission reduction 
measures. See 2004 Emerging and Voluntary Measures Guidance at 13 
and 2005 Bundled Measures Guidance at 2.
---------------------------------------------------------------------------

    Second, Earthjustice's claim that Rule 9610 ``would only require 
that violations be defined through contracts'' which ``can only be 
enforced by the parties to the contract'' overlooks an important 
provision in the rule that requires the District to provide a mechanism 
for EPA and citizen enforcement in each submitted SIP that relies on an 
incentive program. Specifically, section 7.0 of Rule 9610 requires that 
each SIP submission in which the District relies on projections of SIP-
creditable emission reductions to satisfy a CAA SIP requirement 
contain, among other things, an ``enforceable commitment'' that: (1) 
Identifies the applicable incentive program guidelines; (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 projects and willing 
participants, based on historical participation and estimates of 
remaining equipment; (3) is specifically adopted by the District as 
part of the SIP and accounted for in 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 Clean 
air Act or EPA's implementing regulations.'' See 79 FR 28650 at 28655 
(citing Rule 9610, sections 7.1-7.4). A District commitment adopted in 
accordance with these requirements would, upon approval into the SIP, 
become enforceable by EPA and citizens under sections 113 and 304 of 
the Act, respectively. See Response 3.b. Thus, although Rule 9610 does 
not require that incentive programs provide for citizen enforcement 
directly against emission sources for contract violations,\13\ the rule 
does require that each SIP in which the District relies on incentive 
program emission reductions contain, among other things, an enforceable 
commitment that enables EPA and citizens to hold the District 
accountable for violations of the SIP. We therefore disagree with the 
commenter's suggestion that Rule 9610 deprives citizens of the ability 
to enforce SIP emission reduction requirements.
---------------------------------------------------------------------------

    \13\ Under the Carl Moyer, Prop 1B, and EQIP funding programs, 
each grantee must sign a contract specifying terms and conditions of 
the grant which are enforceable by the funding agency. See, e.g., 
CARB, ``The Carl Moyer Program Guidelines, Approved Revisions 
2011,'' Release Date: July 11, 2014, at Chapter 3, Section Y 
(``Minimum Contract Requirements'') (available electronically at 
http://www.arb.ca.gov/msprog/moyer/guidelines/2011gl/2011cmpgl_12_30_14.pdf).
---------------------------------------------------------------------------

    Finally, with respect to Earthjustice's claim that EPA's proposal 
provides ``no explanation of how this requirement is met or why it does 
not apply,'' it appears that Earthjustice is referring to

[[Page 19028]]

EPA's policy recommendation concerning citizen suits against emission 
sources as a ``requirement.'' As discussed above in this response, 
however, the CAA does not limit SIPs to those emission reduction 
techniques that citizens may directly enforce against an emission 
source, nor do EPA's guidance documents establish any requirement that 
nontraditional emission reduction measures provide specifically for 
citizen suits against sources. In our proposed rule, we referenced 
numerous EPA guidance documents addressing nontraditional emission 
reduction measures that ``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.'' 79 FR 28650 at 28653 (citing, inter alia, 1997 VMEP, 2004 
Emerging and Voluntary Measures Guidance, and 2005 Bundled Measures 
Guidance). Consistent with these guidance documents, our proposed rule 
highlighted the importance of the enforceable ``backstop'' commitment 
from the State to monitor emission reductions achieved and to rectify 
shortfalls in a timely manner, which must accompany any nontraditional 
emission reduction measure submitted for SIP purposes. Id. and 79 FR 
28650 at 28654-55 (discussing necessary components of a SIP submittal 
that relies on nontraditional emission reduction measures). Our 
proposed rule also discussed the requirements concerning enforceable 
SIP commitments in section 7.0 of Rule 9610 and provided specific 
recommendations for the District to consider in its development and 
adoption of such commitments, to ensure that the requirements of the 
Act are met. Id. at 28655. We believe these explanations are adequate 
to inform the public of EPA's policies concerning enforceability of 
nontraditional emission reduction measures and to provide a preview of 
the factors that EPA intends to apply in reviewing enforceable 
commitments submitted by the District going forward. As EPA also 
explained at proposal, EPA will review each SIP submittal developed 
pursuant to Rule 9610 (including the necessary evaluation of the 
applicable incentive program guidelines) on a case-by-case basis, 
following notice-and-comment rulemaking, to determine whether the 
applicable requirements of the Act are met. See 79 FR 28650 at 28654, 
28658.
    To the extent the commenter disagrees with EPA's interpretations of 
the Act, we encourage the commenter to submit comments on the SIP 
rulemakings through which EPA takes final action on air quality plans 
or measures that rely on incentive program emission reductions. Nothing 
in our approval of Rule 9610 today deprives the public of these 
opportunities to comment on these future SIP actions.
    Comment 3.e: Earthjustice states that ``[t]he structure of the CAA 
reinforces EPA's conclusion that Congress was not willing to rely on 
states alone to guarantee that the claimed emission reductions would 
occur or be enforced.'' According to Earthjustice, section 113 of the 
Act gives EPA authority to ensure compliance whenever any person is in 
violation of any requirement of the Act and section 304 allows citizens 
to enforce the requirements of the Act. Earthjustice also quotes from 
the Supreme Court's decision in Pennsylvania v. Del. Valley Citizens' 
Council for Clean Air, 478 U.S. 546, 560 (1986), to support its 
statement that Congress enacted section 304 specifically to encourage 
citizen participation in the enforcement of standards and regulations 
established under the Act and ``to afford citizens very broad 
opportunities to participate in the effort to prevent and abate air 
pollution.''
    Response 3.e: We do not dispute the importance of federal 
enforcement under section 113 of the Act and citizen enforcement under 
section 304 of the Act. As explained in our proposed rule and further 
in these responses to comments, EPA has consistently stated in 
longstanding guidance that SIP credit may be allowed for a voluntary or 
other nontraditional emission reduction measure only where the State 
submits enforceable mechanisms to ensure that the emission reductions 
necessary to meet applicable CAA requirements are achieved (e.g., an 
enforceable commitment to monitor and report on emission reductions 
achieved and to timely rectify any shortfall), which EPA and citizens 
may enforce under CAA sections 113 and 304, respectively, upon approval 
into the SIP. See 79 FR 28650 at 28653-28655 and Response 3.b above. We 
encourage citizens to participate in the effort to prevent and abate 
air pollution by requesting information from the District concerning 
the commitments it has adopted under Rule 9610 and enforcing these 
commitments in the U.S. district courts in accordance with section 304 
of the Act.
    Comment 3.f: Earthjustice claims that the Rule 9610 definition of 
``enforceable'' would not only waive any notion that citizens can file 
a suit to enforce the reductions but ``would also waive any requirement 
that EPA have any `ability to apply penalties and secure appropriate 
corrective actions' against the source.'' The commenter asserts that 
EPA cannot enforce the conditions of a contract between the District 
and the source and that ``the State and District are free to shield 
sources from enforcement, or even amend or rescind these contracts 
altogether without EPA oversight.'' According to Earthjustice, ``EPA 
simply has no claim that it can apply penalties or secure corrective 
actions against the sources responsible for reducing emissions'' and 
``no basis for asserting that [the enforceability] criterion is met.''
    Response 3.f: Although we agree that EPA cannot enforce the 
conditions of a contract issued by the District pursuant to a state 
incentive program that is not approved into the SIP under CAA section 
110, we disagree with the claim that this renders the emission 
reductions achieved by such a program unenforceable by citizens under 
the Act. As explained in response to comment 3.d., above, Rule 9610 
requires the District to provide a mechanism for EPA and citizen 
enforcement in each submitted SIP that relies on an incentive program. 
Specifically, section 7.0 of Rule 9610 requires that each SIP 
submission in which the District relies on projections of SIP-
creditable emission reductions to satisfy a CAA SIP requirement 
contain, among other things, an ``enforceable commitment'' containing 
specific provisions to ensure that the District remains accountable for 
the required emission reductions. Upon EPA's approval of an enforceable 
SIP commitment by the District, section 113 of the Act authorizes EPA 
to apply penalties and secure appropriate corrective actions to enforce 
the requirements of the commitment against the District. See Response 
3.b. A SIP-approved commitment cannot be modified except through a SIP 
revision adopted by the State after reasonable notice and public 
hearing and approved by the EPA through notice-and-comment rulemaking. 
See CAA section 110(l); 5 U.S.C. 553; 40 CFR 51.105. Consequently, 
should the District's amendment or rescission of contracts issued to 
participating sources result in a shortfall in the emission reductions 
required under a SIP commitment, EPA may enforce the District's 
obligation to implement a remedy, provided the District's SIP 
commitment includes a schedule for adoption and submittal of

[[Page 19029]]

substitute measures to remedy any shortfalls as required by Rule 9610. 
See Rule 9610, section 7.4; see also Response 3.d above (discussing 
requirements of Rule 9610, section 7.0). EPA would not approve a 
submitted SIP revision under Rule 9610 that did not contain such a 
schedule.
    Comment 3.g: Earthjustice states that ``EPA seems to imply that it 
is enough that EPA can push for the District to fulfill any shortfall 
in emission reductions through other means'' but claims that EPA ``has 
not analyzed this rule through the relevant criteria for enforceable 
SIP commitments, which are subject to limits on quantity, etc.'' As a 
result, Earthjustice asserts that commenters have no basis for 
unraveling EPA's legal rationale.
    Response 3.g: Because we are not approving any State or District 
commitments in today's action, it is not necessary to evaluate this SIP 
submittal in accordance with the criteria that EPA has historically 
applied in approving enforceable commitments. We will apply the 
relevant criteria for evaluating enforceable SIP commitments when we 
take action on a SIP that relies on a commitment to satisfy the control 
measure requirements of the Act.
    Comment 3.h: Earthjustice claims that the Rule 9610 definition of 
enforceable does not allow for independent verification or even the 
identification of liable sources. Earthjustice states that EPA 
identified several defects in the District's rule that would limit the 
disclosure of information necessary to verify compliance, such as 
``problems in [the] Annual Report'' and ``the District's mistaken 
interpretation of, and reference to, the Federal Food Security Act.'' 
Based on these defects alone, the commenter claims that it is unclear 
why EPA is still proposing to approve the rule.
    Response 3.h: We continue to believe that the definition of 
``enforceable'' in Rule 9610 generally allows for independent 
verification of emission reductions and identification of liable 
sources. As we explained in our proposed rule, 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 Rule 9610].'' 79 FR 28650 at 28654 (citing Rule 9610, section 2.8). 
Additionally, Rule 9610 requires that each SIP in which the District 
relies on emission reductions achieved through incentive programs 
contain an ``enforceable commitment'' by the District to adopt and 
submit substitute measures to EPA by specified dates if there is a 
shortfall in required emission reductions for a particular year, among 
other things. See Rule 9610, section 7.4. Read together, these 
provisions of Rule 9610 obligate the District to include, with each SIP 
submittal that relies on incentive programs for necessary emission 
reductions, an enforceable commitment that enables EPA and citizens to 
obtain records adequate to independently confirm whether necessary 
emission reductions have occurred. Going forward, we intend to review 
each SIP commitment submitted by the District for compliance with these 
``enforceability'' requirements in section 2.8 and the provisions 
concerning commitments in section 7.0 of Rule 9610, in addition to the 
applicable requirements of the Act.
    One significant exception to the general enforceability provisions 
in Rule 9610 is the provision in section 6.2 that categorically 
prohibits public disclosure of records related to NRCS's implementation 
of the EQIP program. As explained in our proposed rule (see 79 FR 28650 
at 28657 and Proposal TSD at 9-10), section 6.2 of Rule 9610 does not 
accurately describe NRCS's statutory obligations with respect to 
disclosure of information concerning the EQIP program. Based on further 
evaluation of this provision and in response to Earthjustice's 
comments, we find that this provision necessitates a limited 
disapproval of Rule 9610 because, in addition to stating NRCS's 
statutory obligations incorrectly, the provision creates a potential 
conflict between the requirements of Rule 9610 and the requirements of 
the CAA concerning public availability of emission data. See CAA 114(c) 
and 40 CFR 2.301(a)(2); see also 2001 EIP Guidance at section 5.1d 
(``Procedures for public disclosure of information''). Therefore, EPA 
is finalizing a limited approval and limited disapproval of Rule 9610 
on the basis of this deficiency in section 6.2 of the rule. This 
limited disapproval does not trigger any sanctions clocks under CAA 
section 179(a) because Rule 9610 was not submitted to address a 
requirement of part D, title I of the Act or in response to a finding 
of substantial inadequacy as described in CAA section 110(k)(5) (i.e., 
a ``SIP Call''), but it does trigger an obligation on EPA to promulgate 
a federal implementation plan (FIP) to correct the deficiency, unless 
the State submits and EPA approves a corrective SIP revision within two 
years of the disapproval (see CAA section 110(c)(1)(B)). EPA expects 
the District to revise section 6.2 at its earliest opportunity to 
correct the errors in this provision and to ensure that the rule does 
not preclude disclosure of emission data related to the EQIP program.
    With respect to any future SIP submittal that relies on emission 
reductions achieved through EQIP to satisfy a CAA requirement, we 
expect that the annual reports certified by NRCS, as described in the 
March 2014 Addendum signed by NRCS, EPA, CARB and the District,\14\ 
will provide information that enables EPA and the public to verify the 
emissions of participating sources with an adequate level of accuracy 
and to determine whether the District has violated any SIP emission 
reduction commitment. See 79 FR 28650 at 28657 and Proposal TSD at 10-
11. Additionally, in order for emission reductions achieved through 
EQIP to be enforceable under the CAA, the District will have to submit 
an enforceable SIP commitment to specifically describe the information 
obtained from NRCS in the relevant annual demonstration reports, to 
incorporate project-specific information obtained from NRCS in the 
electronic ``Data Sheet'' associated with each of these annual 
demonstration reports, and to make the NRCS's certified annual reports 
themselves available to the public upon request. See id. and Rule 9610, 
sections 6.1 and 7.0. EPA would not approve any SIP submittal that 
relies on emission reductions achieved through EQIP (or any other 
incentive program) if it does not provide for public availability of 
emission data consistent with CAA requirements. 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. We encourage the District 
to consult with us during its

[[Page 19030]]

development of any SIP commitments under section 7.0 of Rule 9610 to 
ensure that these commitments will be legally and practically 
enforceable by EPA and citizens, in accordance with the requirements of 
the Act. See Response 3.i, below.
---------------------------------------------------------------------------

    \14\ See ``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'' (``NRCS Addendum'').
---------------------------------------------------------------------------

    With respect to the 2013 Annual Demonstration Report, we provided 
suggestions for future reports in the Proposal TSD. See Proposal TSD at 
52-55. We expect the District to consider these recommendations as it 
develops its annual demonstration reports for future years.
    Comment 3.i: Earthjustice argues that EPA's analysis ignores ``the 
more fundamental defect which is that EPA and citizens can only rely on 
data submitted to, or collected by the District'' and that this defect 
undermines any claim that the rule will ensure that citizens have 
access to all emissions-related information obtained from participating 
sources. According to Earthjustice, EPA has no authority to inspect 
sources for compliance with the contracts between the District and the 
source--i.e., EPA cannot collect its own information, conduct 
inspections, demand additional reporting, or enforce the failure to 
submit required reports. Earthjustice contends that EPA's ability to 
verify any of these emission reductions is limited because the emission 
reductions are secured through contracts that do not include EPA. Thus, 
Earthjustice claims, EPA ``lacks the ability to independently verify 
compliance and instead must rely on the District and State to determine 
compliance.'' For example, with respect to information regarding 
sources of EQIP funding, Earthjustice argues that because EPA and the 
public will not be provided with any information that can be 
independently verified or that identifies the participating sources, 
there is no way for EPA or the public to ``verify compliance by `the 
source' as EPA's definition of enforceability requires'' or to ``even 
identify sources liable for violations.''
    Response 3.i: We disagree with the commenter's claim that EPA's 
definition of enforceability ``requires'' that EPA and the public have 
the ability to verify compliance by ``the source.'' The commenter cites 
two guidance documents (the 2001 EIP Guidance and 2004 Emerging and 
Voluntary Measures Guidance \15\) to support its claim that, to be 
``enforceable,'' an emission reduction measure must allow citizens to 
``file suits against sources for violations.'' As explained above in 
Response 3.d, however, the CAA does not limit SIPs to those emission 
reduction techniques that citizens may directly enforce against 
emission sources, and EPA has indicated in a number of other guidance 
documents that provisions for EPA and citizen enforcement against a 
state or against some other ``responsible party'' (other than the 
source) may satisfy the Act's requirements for enforceability. See 
Response 3.d above.
---------------------------------------------------------------------------

    \15\ As explained in Response 3.d., the 2004 Emerging and 
Voluntary Measures Guidance recommends provisions authorizing 
citizen suits against sources for ``emerging measures'' but states 
that for ``voluntary measures,'' emission reductions and other 
required actions are enforceable if, among other things, ``EPA 
maintains the ability to apply penalties and secure appropriate 
corrective action from the State where applicable and the State 
maintains the [ability to] secure appropriate corrective action with 
respect to portions of the program that are directly enforceable 
against the source. . . .'' 2004 Emerging and Voluntary Measures 
Guidance at 3, 4 (emphases added).
---------------------------------------------------------------------------

    We continue to believe that Rule 9610 generally ensures that 
citizens will have access to all emissions-related information obtained 
by the District from sources participating in incentive programs, with 
one significant exception in section 6.2 of the rule. As we explained 
in the proposed rule, section 6.1 of Rule 9610 specifically requires 
the District to keep and maintain ``[a]ll documents created and/or used 
in implementing the requirements of Section 4.0'' of the rule and to 
make these documents available for public review consistent with the 
requirements of the California Public Records Act and related 
requirements. See 79 FR 28650 at 28657 (citing Rule 9610, section 6.1). 
Section 4.0 of Rule 9610, in turn, requires the District to annually 
prepare a public report that contains, among other things, 
identification of the amounts of ``SIP-creditable emission reductions'' 
from incentive programs that the District is relying on for SIP 
purposes; descriptions of the applicable incentive program guidelines; 
and detailed information about the individual projects relied upon to 
achieve the required emission reductions. See 79 FR 28650 at 28656 
(citing Rule 9610, sections 4.0-4.6). Additionally, section 7.0 of the 
rule requires the District to make enforceable commitments that enable 
EPA and citizens to obtain records adequate to independently confirm 
whether necessary emission reductions have occurred. See Response 3.d 
and Response 3.h, above. Many of the incentive program guidelines 
identified in section 3.1 of Rule 9610 require that the District 
maintain specific documentation of pre-project and post-project 
inspections for each funded project and that all grantees submit 
detailed compliance-related documentation to the District on an annual 
or biennial basis. See, e.g., Proposal TSD at 15-16 (discussing 
provisions of Carl Moyer program guidelines) and 44-45 (discussing 
provisions of Prop 1B program guidelines). Provided the District 
commits to make these project records and other compliance-related 
documents available to the public upon request, consistent with the 
requirements of sections 6.1 and 7.0 of Rule 9610, EPA and citizens 
would have access to emissions-related information that the District 
obtains from participating sources.\16\
---------------------------------------------------------------------------

    \16\ Although EPA or citizen enforcement of a SIP commitment 
adopted in accordance with section 7.0 of Rule 9610 generally 
depends upon project-related information maintained by the District, 
this does not preclude independent verification of the emission 
reductions if the applicable incentive program guidelines require 
participating sources to regularly submit compliance-related 
documentation to the District and require the District to maintain 
these records for specified amounts of time. See, e.g., 2011 Carl 
Moyer Guidelines at 3-31 and Proposal TSD at 15.
---------------------------------------------------------------------------

    Finally, we disagree with the commenter's claim that EPA lacks 
authority to collect information relevant to source compliance with the 
contracts issued by the District. Rule 9610 requires the District to 
maintain, with respect to all projects that the District relies upon 
for SIP emission reduction credit, reports submitted by grantees and 
records of all inspections and enforcement actions, among other things. 
See Rule 9610, section 6.1. Upon EPA's approval of a District 
commitment into the SIP, section 114(a) of the Act authorizes EPA to 
require information from ``any person'' who may have information 
necessary for the purpose of determining whether the District has 
violated such a SIP commitment--including all compliance-related 
documentation that the District maintains in accordance with the 
applicable incentive program guidelines. See CAA section 114(a) 
(authorizing the EPA to require submission of information from ``any 
person'' who may have information necessary for the purpose of 
determining whether a SIP requirement has been violated) and section 
302(e) (defining ``person'' to include a State or political subdivision 
thereof). Additionally, both EPA and citizens may obtain compliance-
related records from the District under the California Public Records 
Act. See Rule 9610, section 6.1. Thus, although EPA is not authorized 
to enforce the individual contracts between the District and the 
source, both EPA and citizens may collect information concerning source 
compliance from the District and, in

[[Page 19031]]

some cases directly from participating sources,\17\ to the extent this 
information is necessary for the purpose of determining whether the 
District has violated a SIP commitment.
---------------------------------------------------------------------------

    \17\ For example, under certain Prop 1B program guidelines, each 
grantee must be subject to detailed contract provisions requiring 
the grantee to maintain certain documents for specified periods and/
or submit these documents to the District on a regular basis. See, 
e.g., 2008 Prop 1B guidelines at Section III.D (``Local Agency 
Project Implementation Requirements''), Section IV (``General 
Equipment Project Requirements''), and Appendix A, Section C 
(``Recordkeeping Requirements'') and Section D (``Annual Reporting 
Requirements''); 2010 Prop 1B guidelines at Section IV.A (``Project 
Implementation Requirements''), Section VI (``General Equipment 
Project Requirements''), and Appendix A, Section F (``Recordkeeping 
Requirements'') and Section G (``Annual Reporting Requirements'').
---------------------------------------------------------------------------

    We expect an enforceable commitment that obligates the District to 
comply with adequate monitoring and recordkeeping requirements would 
ensure that emission reductions can be independently verified. In any 
case, EPA will review each submitted SIP commitment on a case-by-case 
basis to determine whether the commitment is legally and practically 
enforceable by EPA and citizens, in accordance with the requirements of 
the Act.
    Comment 3.j: Earthjustice argues that ``[t]o the extent EPA wishes 
to allow credit for unenforceable emission reduction programs, it has a 
policy for doing so''--i.e., ``[t]hese programs can be included with a 
cap on the credit they can receive.'' Alternatively, Earthjustice 
contends, to the extent EPA wishes to treat these programs as 
enforceable SIP commitments, it also has a policy for reviewing and 
approving those, but the analysis of Rule 9610 is not consistent with 
those policies.
    Response 3.j: We disagree with the commenter's suggestions that 
emission reductions from voluntary incentive measures are entirely 
``unenforceable'' under the CAA or subject to a specific ``cap'' on the 
credit allowed in a SIP. As explained above in Response 3.c, EPA has 
consistently stated in longstanding guidance that SIP credit may be 
allowed for a voluntary or other nontraditional measure only where the 
State takes responsibility for assuring that SIP emission reduction 
requirements are met through an enforceable commitment, which EPA and 
citizens may enforce upon EPA's approval of the commitment into the 
SIP. That is, emission reductions achieved by voluntary measures are 
enforceable under the Act where they are accompanied by such an 
enforceable commitment. In addition, the ``cap'' on SIP credit for 
voluntary measures that Earthjustice refers to is not a specific 
regulatory cap but a general policy recommendation. States and EPA may 
justify departing from these caps on a case-by-case basis, subject to 
notice-and-comment rulemaking on a particular SIP. See Response 3.c and 
EPA guidance documents referenced therein.
    In any case, we are not approving any State or District commitments 
in today's action and therefore do not have reason to evaluate this SIP 
submittal in accordance with EPA's policy criteria for approving 
enforceable commitments. As EPA stated in the proposed rule, 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. See 79 FR 28650 
at 28654, 28658. We will apply the relevant criteria for evaluating SIP 
commitments when we take action on a SIP that contains such a 
commitment. Nothing in Rule 9610 supplants the applicable requirements 
of the Act, nor does anything in EPA's approval of Rule 9610 alter the 
requirements of the Act as they apply to SIPs that rely on emission 
reductions achieved through voluntary incentive programs.
    Comment 4: Earthjustice claims that the ``best option for 
proceeding . . . would be to adopt backstop control measures that are 
fully SIP-creditable and use incentive programs to address cost-
effectiveness concerns and incentivize early adoption and turnover.''
    Response 4: We continue to support the use of incentive programs to 
address cost-effectiveness concerns and to incentivize early adoption 
and turnover to cleaner, less-polluting mobile sources, and we 
encourage the commenter to provide these recommendations, together with 
any recommendations it may have concerning ``backstop'' control 
measures, to the State and/or District during their state and local 
rulemaking processes on air quality plans that rely on incentive 
programs for necessary emission reductions.
    Comment 5: Earthjustice claims that ``Rule 9610 is a flawed attempt 
to make programs `SIP creditable' by fiat'' and that this is not 
legitimate under the CAA. Earthjustice also asserts that ``EPA's 
inconsistent analysis of the rule does not help in this effort.'' In 
conclusion, Earthjustice asserts that if the desired goal is to promote 
the adoption of incentive programs, EPA, the State, and the District 
should go back to the drawing board and work with stakeholders to come 
up with a legally viable approach.''
    Response 5: For the reasons provided in Response 1 through Response 
3 above, we disagree with Earthjustice's claims that Rule 9610 is a 
flawed attempt to make programs SIP creditable by fiat and that EPA has 
provided an inconsistent analysis of the rule. As previously explained, 
nothing in Rule 9610 supplants the applicable requirements of the Act, 
and 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. See 
79 FR 28650 at 28654, 28658.
    We agree, however, with Earthjustice's suggestion that EPA, the 
State, the District and interested stakeholders should work together 
toward the development of air quality plans and measures that satisfy 
CAA requirements as applied to discretionary incentive programs and 
other nontraditional emission reduction measures. We look forward to 
the public's continued involvement, both during the State and local 
rulemaking processes through which the District and ARB adopt these 
plans and during the EPA rulemakings through which EPA takes final 
action on these plan submittals under section 110 of the CAA.
    Comment 6: The SJVUAPCD states that incentive funds to reduce 
mobile source emissions have become a critical component of the 
District's clean air strategy in the SJV and expresses appreciation for 
EPA's work with the District and with CARB, NRCS, and other 
stakeholders throughout the development of Rule 9610 and related 
documents. The District states that it supports EPA's proposal to fully 
approve Rule 9610 as a revision to the California SIP.
    Response 6: For the reasons provided in our proposed rule (79 FR 
28650 at 28657) and further explained in Response 3.h, EPA is 
finalizing a limited approval and limited disapproval of Rule 9610. We 
look forward to the District's submittal of a revised rule that 
corrects the deficiencies we have identified in section 6.2 of the rule 
and addresses the recommendations provided in our proposed rule and 
Proposal TSD.
    EPA supports and encourages the continuing efforts by CARB, the 
District, and NRCS to make voluntary economic incentive programs an 
effective part of the SJV's strategy for clean air. We commit to 
continue our work with these agencies to develop reliable methods for 
documenting and verifying the emission reductions achieved through 
these programs and to ensure that future air

[[Page 19032]]

quality plans for the SJV area that rely on economic incentives will 
satisfy the requirements of the Act.

III. Final Action

    Under CAA sections 110(k)(3) and 301(a) of the Act and for the 
reasons set forth above and in our May 19, 2014 proposed rule, EPA is 
finalizing a limited approval and limited disapproval of Rule 9610 as 
submitted June 26, 2013. We are finalizing a limited approval of the 
submitted rule because we continue to believe that the rule improves 
the SIP and is largely consistent with the applicable CAA requirements. 
This action incorporates the submitted rule, including those provisions 
identified as deficient, into the SJV portion of the federally-
enforceable California SIP.
    We are finalizing a limited disapproval of Rule 9610 because 
section 6.2 of the rule incorrectly describes NRCS's statutory 
obligations with respect to disclosure of information concerning the 
EQIP program and creates a potential conflict with the requirements of 
the CAA concerning public availability of emission data. Our reasons 
for disapproving the rule on these bases are explained in the proposed 
rule and further in our responses to comments above.
    This limited disapproval does not trigger any sanctions clocks 
under CAA section 179(a) because Rule 9610 was not submitted to address 
a requirement of part D, title I of the Act or in response to a finding 
of substantial inadequacy as described in CAA section 110(k)(5) (i.e., 
a ``SIP Call''). The limited disapproval does trigger an obligation on 
EPA to promulgate a federal implementation plan (FIP) to correct the 
deficiency, unless the State submits and EPA approves a corrective SIP 
revision within two years of the disapproval (see CAA section 
110(c)(1)(B)). EPA expects the District to revise section 6.2 at its 
earliest opportunity to correct the errors in this provision and to 
ensure that the rule does not preclude disclosure of emission data 
related to the EQIP program.
    Note that the submitted rule has been adopted by the SJVUAPCD, and 
EPA's final limited disapproval does not prevent the local agency from 
enforcing it. The limited disapproval also does not prevent any portion 
of the rule from being incorporated by reference into the federally 
enforceable SIP as discussed in a July 9, 1992 EPA memo found at: 
http://www.epa.gov/nsr/ttnnsr01/gen/pdf/memo-s.pdf.

IV. Incorporation by Reference

    In this rule, EPA is finalizing regulatory text that includes 
incorporation by reference. In accordance with the requirements of 1 
CFR 51.5, EPA is finalizing the incorporation by reference of the 
SJVUPACD rule described in the amendments to 40 CFR 52 set forth below. 
EPA has made, and will continue to make, these documents available 
electronically through www.regulations.gov and in hard copy at the 
appropriate EPA office (see the ADDRESSES section of this preamble for 
more information).

V. Statutory and Executive Order Reviews

A. Executive Order 12866, Regulatory Planning and Review

    The Office of Management and Budget (OMB) has exempted this 
regulatory action from Executive Order 12866, entitled ``Regulatory 
Planning and Review.''

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. 
Burden is defined at 5 CFR 1320.3(b).

C. 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 rule will not have a significant impact on a substantial 
number of small entities because SIP approvals and limited approvals/
limited disapprovals 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 
this limited approval/limited disapproval action 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).

D. Unfunded Mandates Reform Act

    Under sections 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 
costs to State, local, or tribal governments in the aggregate; or to 
the 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 limited approval/limited disapproval 
action promulgated does not include a Federal mandate that may result 
in estimated costs of $100 million or more to either State, local, or 
tribal governments in the aggregate, or to the private sector. This 
Federal action approves 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.

E. Executive Order 13132, Federalism

    Federalism (64 FR 43255, August 10, 1999) revokes and replaces 
Executive Orders 12612 (Federalism) and 12875 (Enhancing the 
Intergovernmental Partnership). Executive Order 13132 requires EPA to 
develop an accountable process to ensure ``meaningful and timely input 
by State and local officials in the development of regulatory policies 
that have federalism implications.'' ``Policies that have federalism 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on the States, on the 
relationship between the national government and the States, or on the 
distribution of power and responsibilities among the various levels of 
government.'' Under Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local

[[Page 19033]]

governments, or EPA consults with State and local officials early in 
the process of developing the proposed regulation. EPA also may not 
issue a regulation that has federalism implications and that preempts 
State law unless the Agency consults with State and local officials 
early in the process of developing the proposed regulation.
    This rule will not have substantial direct effects on the States, 
on the relationship between the national government and the States, or 
on the distribution of power and responsibilities among the various 
levels of government, as specified in Executive Order 13132, because it 
merely approves a State rule implementing a Federal standard, and does 
not alter the relationship or the distribution of power and 
responsibilities established in the Clean Air Act. Thus, the 
requirements of section 6 of the Executive Order do not apply to this 
rule.

F. Executive Order 13175, Coordination With Indian Tribal Governments

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 9, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' This final rule does not have 
tribal implications, as specified in Executive Order 13175. It will not 
have substantial direct effects on tribal governments, on the 
relationship between the Federal government and Indian tribes, or on 
the distribution of power and responsibilities between the Federal 
government and Indian tribes. Thus, Executive Order 13175 does not 
apply to this rule.

G. Executive Order 13045, Protection of Children From Environmental 
Health Risks and Safety Risks

    EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) 
as applying only to those regulatory actions that concern health or 
safety risks, such that the analysis required under section 5-501 of 
the Executive Order has the potential to influence the regulation. This 
rule is not subject to Executive Order 13045, because it approves a 
State rule implementing a Federal standard.

H. Executive Order 13211, Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355, May 22, 2001) because it is not a 
significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act

    Section 12 of the National Technology Transfer and Advancement Act 
(NTTAA) of 1995 requires Federal agencies to evaluate existing 
technical standards when developing a new regulation. To comply with 
NTTAA, EPA must consider and use ``voluntary consensus standards'' 
(VCS) if available and applicable when developing programs and policies 
unless doing so would be inconsistent with applicable law or otherwise 
impractical.
    The EPA believes that VCS are inapplicable to this action. Today's 
action does not require the public to perform activities conducive to 
the use of VCS.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Population

    Executive Order (EO) 12898 (59 FR 7629 (Feb. 16, 1994)) establishes 
federal executive policy on environmental justice. Its main provision 
directs federal agencies, to the greatest extent practicable and 
permitted by law, to make environmental justice part of their mission 
by identifying and addressing, as appropriate, disproportionately high 
and adverse human health or environmental effects of their programs, 
policies, and activities on minority populations and low-income 
populations in the United States.
    EPA lacks the discretionary authority to address environmental 
justice in this rulemaking.

K. Congressional Review Act

    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the 
Small Business Regulatory Enforcement Fairness Act of 1996, generally 
provides that before a rule may take effect, the agency promulgating 
the rule must submit a rule report, which includes a copy of the rule, 
to each House of the Congress and to the Comptroller General of the 
United States. EPA will submit a report containing this rule and other 
required information to the U.S. Senate, the U.S. House of 
Representatives, and the Comptroller General of the United States prior 
to publication of the rule in the Federal Register. A major rule cannot 
take effect until 60 days after it is published in the Federal 
Register. This action is not a ``major rule'' as defined by 5 U.S.C. 
804(2). This rule will be effective on May 11, 2015.

L. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for 
judicial review of this action must be filed in the United States Court 
of Appeals for the appropriate circuit by June 8, 2015. Filing a 
petition for reconsideration by the Administrator of this final rule 
does not affect the finality of this rule for the purposes of judicial 
review nor does it extend the time within which a petition for judicial 
review may be filed, and shall not postpone the effectiveness of such 
rule or action. This action may not be challenged later in proceedings 
to enforce its requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

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

    Dated: February 26, 2015.
Jared Blumenfeld,
Regional Administrator, Region IX.

    Part 52, Chapter I, Title 40 of the Code of Federal Regulations is 
amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

0
1. The authority citation for part 52 continues to read as follows:

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

Subpart F--California

0
2. Section 52.220 is amended by adding paragraph (c)(455) to read as 
follows:


Sec.  52.220  Identification of plan.

* * * * *
    (c) * * *
    (455) New and amended regulations for the following APCDs were 
submitted on June 26, 2013.
    (i) Incorporation by reference.
    (A) San Joaquin Valley Unified Air Pollution Control District.
    (1) Rule 9610, ``State Implementation Plan Credit for Emission 
Reductions Generated through Incentive Programs,'' adopted on June 20, 
2013.

[FR Doc. 2015-07972 Filed 4-8-15; 8:45 am]
 BILLING CODE 6560-50-P


