[Federal Register Volume 88, Number 126 (Monday, July 3, 2023)]
[Rules and Regulations]
[Pages 42621-42640]
[FR Doc No: 2023-13763]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2022-0427; FRL-10165-02-R9]

Air Plan Approval and Limited Approval-Limited Disapproval;
California; Antelope Valley Air Quality Management District; Stationary
Source Permits; New Source Review

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is finalizing an
approval and a limited approval and limited disapproval of revisions to
the Antelope Valley Air Quality Management District (AVAQMD or
``District'') portion of the California State Implementation Plan
(SIP). These revisions concern the District's New Source Review (NSR)
permitting program for new and modified sources of air pollution under
part D of title I of the Clean Air Act (CAA or ``Act''). This action
updates the District's portion of the California SIP with nine revised
rules. Under the authority of the CAA, this action simultaneously
approves local rules that regulate emission sources and directs the
District to correct rule deficiencies.

DATES: This rule is effective August 2, 2023.

ADDRESSES: The EPA has established a docket for this action under
Docket ID No. EPA-R09-OAR-2022-0427. All documents in the docket are
listed on the https://www.regulations.gov website. Although listed in
the index, some information is not publicly available, e.g.,
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Certain other material, such as
copyrighted material, is not placed on the internet and will be
publicly available only in hard copy form.

Publicly available docket materials are available through https://www.regulations.gov, or please contact the person identified in the FOR
FURTHER INFORMATION CONTACT section for additional availability
information. If you need assistance in a language other than English or
if you are a person with a disability who needs a reasonable
accommodation at no cost to you, please contact the person identified
in the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: Shaheerah Kelly, Rules Office (AIR-3-
2), U.S. Environmental Protection Agency, Region IX,<PHONE_NUMBER>,
[email protected].

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

Table of Contents

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

I. Proposed Action

    On January 30, 2023 (88 FR 5826), the EPA proposed approval of
three rules and a limited approval and limited disapproval of six rules
that were submitted for incorporation into the California SIP. Table 1
shows the rules in the California SIP that will be removed or
superseded by this action.

                                 Table 1--SIP Rules To Be Removed or Superseded
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                                                 Amendment or                     EPA action
             Rule                 Rule title     adoption date  Submittal date       date          FR citation
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                                             Regulation II (Permits)
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Rule 206.....................  Posting of            2/21/1976       4/21/1976       11/9/1978  43 FR 52237.
                                Permit to
                                Operate.
Rule 219.....................  Equipment Not          9/4/1981      10/23/1981        7/6/1982  47 FR 29231.
                                Requiring a
                                Written Permit
                                Pursuant to
                                Regulation II.
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                                       Regulation XIII (New Source Review)
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Rule 1301....................  General........       12/7/1995       8/28/1996       12/4/1996  61 FR 64291.
Rule 1302....................  Definitions....       12/7/1995       8/28/1996       12/4/1996  61 FR 64291.
Rule 1303....................  Requirements...       5/10/1996       8/28/1996       12/4/1996  61 FR 64291.
Rule 1304....................  Exemptions.....       6/14/1996       8/28/1996       12/4/1996  61 FR 64291.
Rule 1306....................  Emission              6/14/1996       8/28/1996       12/4/1996  61 FR 64291.
                                Calculations.
Rule 1309....................  Emission              12/7/1995       8/28/1996       12/4/1996  61 FR 64291.
                                Reduction
                                Credits.
Rule 1309.1..................  Priority              12/7/1995       8/28/1996       12/4/1996  61 FR 64291.
                                Reserve.
Rule 1310....................  Analysis and          12/7/1995       8/28/1996       12/4/1996  61 FR 64291.
                                Reporting.
Rule 1311....................  Power Plants...       2/25/1980        4/3/1980       1/21/1981  46 FR 5965.
Rule 1313....................  Permits to            12/7/1995       8/28/1996       12/4/1996  61 FR 64291.
                                Operate.
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    Table 2 shows the rules that the State submitted for inclusion in
the California SIP. The submitted rules listed in Table 2 would replace
the current EPA-approved SIP rules that are listed in Table 1. The rule
subsections contained in 1302(C)(5) and 1302(C)(7)(c) are not submitted
for inclusion in the California SIP because they are requirements for
regulating toxic air contaminants (TAC) and hazardous air pollutants
(HAP) under District Rule 1401, ``New Source Review for Toxic Air
Contaminants.'' \1\
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    \1\ Subsections 1302(C)(5)(d) and 1302(C)(7)(c)(iii) of Rule
1302 specifically state that subsections 1302(C)(5) and
1302(C)(7)(c) are not submitted to the EPA and are not intended to
be included as part of the California SIP.

                                            Table 2--Submitted Rules
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                                                                                Adoption or   Submittal date
                    Rule                                  Rule title              amendment date        \a\
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                                             Regulation II (Permits)
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Rule 219...................................  Equipment not Requiring a Permit...       6/15/2021        8/3/2021
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                                       Regulation XIII (New Source Review)
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Rule 1300..................................  New Source Review General..........       7/20/2021        8/3/2021
Rule 1301..................................  New Source Review Definitions......       7/20/2021        8/3/2021
Rule 1302 (except 1302(C)(5) and             New Source Review Procedure........       7/20/2021        8/3/2021
 1302(C)(7)(c)).
Rule 1303..................................  New Source Review Requirements.....       7/20/2021        8/3/2021
Rule 1304..................................  New Source Review Emissions               7/20/2021        8/3/2021
                                              Calculations.
Rule 1305..................................  New Source Review Emissions Offsets       7/20/2021        8/3/2021
Rule 1306..................................  New Source Review for Electric            7/20/2021        8/3/2021
                                              Energy Generating Facilities.
Rule 1309..................................  Emission Reduction Credit Banking..       7/20/2021        8/3/2021
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\a\ The submittal for Rules 219, 1300, 1301, 1302, 1303, 1304, 1305, 1306, and 1309 was transmitted to the EPA
  via a letter from CARB dated August 3, 2021.

    Table 3 shows the previous versions of Rule 219 and other rules
under Regulation XIII codified in 40 CFR 52.220 prior to July 1, 1997,
that will be superseded by the submitted versions of Rule 219 as
amended on June 15, 2021, and Rules 1300 through 1306 and 1309 as
amended on July 20, 2021, upon the EPA's approval of these rules into
the California SIP. The District was officially formed on July 1, 1997,
as the Antelope Valley APCD (AVAPCD), the agency with jurisdiction over
the Los Angeles County portion of the Mojave Desert Air Basin; the
AVAPCD was changed to the AVAQMD on January 1, 2002. Prior to that
time, the jurisdiction of the Antelope Valley area was, at different
points in time, part of the Los Angeles County Air Pollution Control
District (APCD), the Southern California APCD, and the South Coast
AQMD.

                         Table 3--Codified Rules in 40 CFR 52.220 Prior to July 1, 1997
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                                                                                EPA approval date (FR
                  Rule                         Submittal agency       Submittal date           citation)
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                                             Regulation II (Permits)
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Rule 11 (Exemptions)....................  Los Angeles County APCD...       6/30/1972  9/22/1972 (37 FR 19812).
Rule 219................................  Southern California APCD..       4/21/1976  11/9/1978 (43 FR 52237).
Rule 219................................  Southern California APCD..        8/2/1976  11/9/1978 (43 FR 52237).
Rule 219................................  Los Angeles County APCD...        6/6/1977  11/9/1978 (43 FR 52237).
Rule 219................................  South Coast AQMD..........      10/23/1981  7/6/1982 (47 FR 29231).
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                                       Regulation XIII (New Source Review)
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Rules 1301, 1303, 1304, 1305, 1306,       South Coast AQMD..........        4/3/1980  1/21/1981 (46 FR 5965).
 1307, 1310, 1311, and 1313.
Rules 1302 and 1308.....................  South Coast AQMD..........       8/15/1980  1/21/1981 (46 FR 5965).
Rules 1301, 1302, 1303, 1304, 1305,       Los Angeles County APCD...        9/5/1980  6/9/1982 (47 FR 25013).
 1306, 1307, 1308, 1310, 1311, and 1313.
Rules 1301, 1302, 1309, 1309.1, 1310,     South Coast AQMD..........       8/28/1996  12/4/1996 (61 FR 64291).
 and 1313, adopted on 12/7/1995; Rule
 1303 adopted on 5/10/1996; and Rules
 1304 and 1306 adopted on 6/14/1996.
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    In our proposal, we proposed approval of Rules 219, 1300, and 1306
as authorized under section 110(k)(3) of the Act. As authorized in
sections 110(k)(3) and 301(a) of the Act,\2\ we proposed a limited
approval and limited disapproval of Rules 1301, 1302, 1303, 1304, 1305,
and 1309 because although they fulfill most of the relevant CAA
requirements and strengthen the SIP, they also contain the following
deficiencies, summarized below, that do not fully satisfy the relevant
requirements for preconstruction review and permitting under section
110 and part D of the Act:
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    \2\ If a portion of a plan revision meets all the applicable CAA
requirements, CAA sections 110(k)(3) and 301(a) authorize the EPA to
approve the plan revision in part and disapprove the plan revision
in part.
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    1. Rule 1304(C)(2)(d) allows Simultaneous Emission Reductions
(SERs), which are emission reductions that are proposed to occur in
conjunction with emission increases from a proposed project, to be
calculated using a potential-to-emit (PTE)-to-PTE calculation method
rather than an actuals-to-PTE calculation method for determining (1)
applicability of NNSR or quantity of offsets required for a new Major
Facility or a Major Modification, and (2) the amount of offsets
required at a Major Facility or Modified Facility. These SERs are
inconsistent with 40 CFR 51.165(a)(1)(vi)(E)(1) and 40 CFR
51.165(a)(3)(ii)(J), and, when used as offsets, may not be real
reductions in actual emissions as required by 40 CFR 51.165(a)(3)(i)
and CAA section 173(c)(1). These deficiencies make portions of Rules
1301, 1302, 1303, 1304, and 1305 not fully approvable.
    2. Rule 1304(E)(2), which defines the calculation method for
determining Historical Actual Emissions (HAE), contains a typographical
error making the provision deficient.
    3. Rules 1302(D)(6)(a)(iii), 1304(C)(4)(c), 1309(D)(3)(c), and
1309(E)(6) allow the use of contracts, but neither the District's NSR
rules submitted for approval nor any of the District's other SIP-
approved NSR rules define the term ``contract'' or provide requirements
for how a contract is an enforceable mechanism that may be used in the
same way as an ATC or PTO.
    4. Rule 1305(C)(6) allows interprecursor trading (IPT) between
ozone precursors on a case-by-case basis, which is no longer
permissible.
    5. The District's rules do not contain the de minimis plan
requirements contained in CAA section 182(c)(6) that apply to areas
classified as Severe nonattainment.\3\
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    \3\ CAA Section 182(d), which was added by the Clean Air Act
Amendments of 1990, details plan submission requirements for Severe
nonattainment areas and includes all the provisions under section
182(c) for Serious nonattainment areas.
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    Our proposal also discussed that this action would result in a more
stringent SIP and is consistent with the additional substantive
requirements of CAA sections 110(l) and 193, while not relaxing any
existing provision contained in the SIP; and will not interfere with
any applicable attainment and reasonable further progress requirements;
or any other applicable CAA requirement. We also proposed that our
action would not relax any pre-November 15, 1990 requirement in the
SIP, and therefore changes to the SIP resulting from this proposed
action would ensure greater or equivalent emission reductions of ozone
and its precursors in the District.
    Finally, our proposed action included our proposed determination to
approve, under 40 CFR 51.307, the District's visibility provisions for
sources subject to the District's nonattainment new source review
(NNSR) program. Accordingly, we also proposed to revise 40 CFR
52.281(d) to remove the visibility Federal Implementation Plan

(FIP) at 40 CFR 52.28 as it pertains to California to clarify that the
FIP does not apply to the District.
    The EPA's proposal and technical support document (TSD), which can
be found in the docket for this action, contain more a detailed
discussion of the rule deficiencies as well as a complete analysis of
the District's submitted rules that form the basis for our proposed
action.

II. Public Comments and EPA Responses

    The public comment period on the proposal opened on January 30,
2023, the date of its publication in the Federal Register, and closed
on March 1, 2023. During this period, the EPA received comment letters
submitted by the AVAQMD, City of Lancaster, City of Palmdale, U.S.
Department of Defense, Northrop Grumman Corporation, and Lockheed
Martin Aeronautics Company. These comments are included in the docket
for this action and are accessible at www.regulations.gov. In this
section, we provide a summary of and response to each of these
comments.

A. Comments From AVAQMD

    Comment #1: The District states that portions of the EPA's proposed
action are inopportune. The District states that, despite the EPA's
extensive involvement in the rule development process for both the
District and the Mojave Desert Air Quality Management District
(``MDAQMD''), it took over a year from the time of official submission
for the EPA to formulate and publish the proposed action. The District
states that during this period there was no substantive communication
from the EPA regarding potential additional deficiencies that had not
been identified during the development phase. The District states that
the only communications received from the EPA regarding the District
NSR program after the adoption of the rule amendments were requests for
copies of the SIP approved versions of various SIP rules and
accompanying information, most of which the District had previously
provided to the EPA in the rule development process. The District
states that the EPA could have communicated trivial deficiencies to the
District prior to publishing the proposed action, which would have
allowed the District to provide commitments to amend its rules and that
such a process would have allowed issues to be narrowed to those that
truly require interpretation or judicial review.
    Response to Comment #1: The EPA does not read this comment as
asserting that our proposed action on the submitted rules was legally
or technically deficient; rather, we understand the comment to express
dissatisfaction with the EPA's communication after CARB's submittal of
the revised rules on August 3, 2021.
    The EPA values its relationships with state, local, and tribal air
agencies and strives to maintain open and transparent communications
with them. Prior to our receipt of the District's submittal, the EPA,
the District, and CARB committed significant resources to meeting on a
bi-weekly basis, from approximately March 2020 to June 2021, for
detailed discussions of the NSR program deficiencies we identified in a
letter to the District dated December 19, 2019, which applied to both
the District and to the MDAQMD.\4\ After the conclusion of this process
and following CARB's submission of the District's revised rules, the
EPA identified a few additional issues not identified in our December
19, 2019 letter. EPA staff are available to continue to work with the
District to address questions and concerns with revisions necessary to
correct the deficiencies, with the goal of full approval of revisions
to the District's rules and a fully approved NSR program.
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    \4\ Letter from Lisa Beckham to Brad Poiriez, which the District
identifies in footnote 18 of its comment letter. In March 2020, the
EPA began holding bi-weekly meetings with the CARB and MDAQMD staff
to discuss and resolve issues identified in the letter. In March
2021, we began to focus our efforts on the same issues contained in
the AVAQMD rules, which were nearly identical to the MDAQMD's. We
continued to meet until June 1, 2021.
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    In addition, we understand the District's reference to
``commitments'' to suggest that the EPA could have proposed a
conditional approval under CAA section 110(k)(4) rather than proposing
a limited approval and limited disapproval. As authorized under CAA
sections 110(k)(3) and 301(a), we are taking action to finalize a
limited approval and limited disapproval of the submitted rules that
contain the deficient provisions we identified in our proposed action.
    Comments #2 and #2a: The District states that the EPA's proposed
rulemaking does not fully identify its existing NSR program. The
District states that Table 1 in the proposed action and Table 2-2 in
the accompanying Technical Support Document (TSD) are incomplete
because they fail to mention SIP-approved Rules 201, ``Permit to
Construct,'' 202, ``Temporary Permit to Operate,'' 203, ``Permit to
Operate,'' and 204, ``Permit Conditions.'' The District points out that
Rules 201, 202, 203, and 204 are currently in the SIP, and that they
should have been listed in the proposed action because they are
important for understanding portions of the District's NSR program. The
District then requests the EPA to officially acknowledge that Rules
201, 202, 203, and 204 are part of District's NSR Program. The District
also asserts that Table 2-2 in the TSD is inaccurate.
    Response to Comments #2 and #2a: The purpose of Table 1--Current
SIP Rules in our proposed action is to present the current SIP-approved
versions of the submitted rules that we were proposing to act upon, not
to present all the NSR rules in the SIP. To the extent the title for
Table 1 created confusion, we apologize. We note that TSD Table 2-2:
District's NSR Rules in the Current California SIP includes the four
rules identified in the District's comment regarding Table 1 (Rules
201, 202, 203, and 204). The EPA responds below to the District's
specific comments regarding TSD Table 2-2 in its responses to District
Comments 2b, 2c, and 2d.
    Comment #2b: The District states that Rules 208, 218, 218.1, 221,
and 226 should not be listed in the TSD because they are not part of
the District's NSR program and requests that the EPA revise TSD Table
2-2 to remove those rules that are not directly related to NSR.
    Comment #2c: The District states that Rules 213, 213.1, and 213.2
should not be listed in the TSD because they are not applicable to the
current NSR program. The District states that it would appreciate a
clarification by the EPA, either in Table 2-2 of the TSD or elsewhere,
that Rules 213, 213.1, and 213.2 are not a part of its NSR program
because their terms were superseded by the version of Rule 1301 that
the EPA approved into the SIP in 1983.
    Response to Comments #2b and #2c: EPA's proposed action concerns
only the rules identified in Table 2--Submitted Rules and Table 3--
Rescinded Rules.\5\ TSD Table 2-2 was provided primarily for context
and background. We note that the District does not assert that the
clarifications in its comment letter relate to the submitted rules or
to the rules identified for rescission. We do not believe that the
District's clarifications relate to the EPA's evaluation of
California's requested SIP revisions. Nevertheless, we appreciate the
additional

information in the District's letter, which is included in the docket.
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    \5\ The information in Tables 2 and 3 of the Federal Register
notice for our proposed action is repeated in TSD Table 3-1:
AVAQMD's Submitted Rules and TSD Table 3-2: AVAQMD's Rules Requested
to be Rescinded.
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    Comment #2d: The District states that the TSD does not sufficiently
discuss the SIP history and thus perpetuates inaccuracies and
inconsistencies. The District states that Table 2-2 in the TSD contains
inaccuracies regarding the SIP history of a variety of the listed
rules, especially those found in Regulation II. The District then
provides an historical overview of air quality regulation in its
jurisdiction. The District states that any South Coast Air Quality
Management District (SCAQMD) rule actions submitted and approved as of
October 15, 1982, became SIP rules for the areas outside of the South
Coast Air Basin (the ``non-SCAB portions'') of Los Angeles County on
November 18, 1983. The District states that there are four rules in
Table 2-2 of the TSD that fall into this category (although it lists
six: Rules 202, 206, 207, 213, 213.1, and 213.2). The District states
that these rules were approved into the California SIP for SCAQMD in
1978, and that the amended regulations at 40 CFR 52.220(c) do not
specify SCAQMD. The District also provides a history of the AVAQMD and
amendments and rescissions of rules. The District then requests that
the EPA acknowledge the SIP history detailed in Comment 2d and update
the TSD for AVAQMD NSR with that information.
    Response to Comment #2d: Section 2 of the EPA's TSD provides
information regarding the formation of the AVAPCD, its current
boundaries, air quality and current SIP-approved rules. We provided
this information for context and background as relevant to our review,
approval, and rescission of the identified rules in our rulemaking
action. We appreciate the additional information in the District's
letter, which provides an historical overview of its predecessor
agencies and SIP-approved rules and is included in the docket.
    Although we have noted that TSD Table 2-2 is provided for context
and background, and that our action concerns only the rules identified
in Tables 2 and 3 of the Federal Register notice for our proposed
action, we would like to address the District's comment relating to
Table 2-2 and Rules 202, 206, 207, 213, 213.1, and 213.2 and its
comment that 40 CFR 52.220(c) does not specify SCAQMD. To the extent
that the District is asserting that these rules are not part of the
District's portion of the SIP and should not be reflected in Table 2-2
of the TSD, the EPA disagrees. The EPA's proposed action incorporating
these rules into the SIP states that the rules, which had been adopted
by the Southern California Air Pollution Control District (SoCalAPCD),
applied to the (at the time) newly created SCAQMD.\6\ As the EPA
explained in that proposed action, California split the SoCalAPCD into
four districts after it submitted the SoCalAPCD rules for SIP
inclusion: SCAQMD, Los Angeles County Air Pollution Control District
(APCD), Riverside County APCD, and San Bernardino APCD.\7\ EPA approved
the submittals for Rules 202, 206, 207, 213, 213.1, and 213.2 at 43 FR
52237 (November 9, 1978), although that approval did not apply within
Antelope Valley because the desert portion of Los Angeles County had
already been split from SCAQMD and the approval of SoCalAPCD rules was
to apply only within the new SCAQMD portion of the former SoCalAPCD.\8\
However, the SCAQMD portion of the SIP (with certain exceptions) was
extended to AVAQMD in 1982 when SCAQMD's jurisdiction was extended to
include the Southeast Desert portion of Los Angeles County.\9\
Regarding Rule 202, EPA approved two submittals in the rulemaking at 43
FR 52237: Rule 202(a) and (b), adopted on January 9, 1976, and
submitted to the EPA on April 21, 1976; and Rule 202(c), which was
adopted as an amendment on May 7, 1976, and submitted to the EPA on
August 2, 1976. Thus, Rules 202, 206, 207, 213, 213.1, and 213.2
applied to the SCAQMD following EPA approval at 43 FR 52237, and the
rules were extended to apply in AVAQMD when the SCAQMD's jurisdiction
expanded in 1982. Except for Rule 206, which this rulemaking removes,
the rules remain in the District's portion of the California SIP.
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    \6\ 43 FR 52237 (November 9, 1978). The notice explains that the
rules that CARB submitted for the SoCalAPCD SIP apply to the SCAQMD:
``On April 21, August 2, and November 19, 1976 the State of
California submitted to the Regional Administrator, Region IX,
revisions of the Southern California Air Pollution Control District
. . . regulations. On February 1, 1977 the State split the Southern
California Air Pollution Control District into the South Coast Air
Quality Management District in the western region and three separate
APCDs formed out of the remaining parts of Los Angeles, Riverside,
and San Bernardino counties in the eastern desert areas . . . The
State of California resubmitted rules for these eastern areas on
June 6, 1977, merely to reflect this split . . . South Coast Air
Quality Management District and Los Angeles, Riverside, and San
Bernardino Air Pollution Control Districts (Southeast Desert
Portions) regulation II . . . will provide [the requirements to
obtain a permit].''
    \7\ Id.
    \8\ 43 FR 25684, 25685 (June 14, 1978).
    \9\ 48 FR 52451 (November 18, 1983). The Southeast Desert
portion of Los Angeles County was added to the SCAQMD on July 9,
1982. On October 15, 1982, the SCAQMD adopted the existing rules and
regulations of the SCAQMD for the Southeast Desert Air Basin portion
of Los Angeles County, with the exception of Rules 1102, 1102.1,
461, and Regulation III, and rescinded the existing rules and
regulations of the Los Angeles County APCD, with the exception of
Regulation III.
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    Comment #3: The District states that the TSD does not completely
identify provisions of 40 CFR 52.220(c) that need to be changed. The
District states that Section 3.1 of the TSD attempts to identify
specific codifications contained in 40 CFR 52.220(c) that need to be
changed to properly reflect the condition of the District SIP rules in
relation to NSR. The District states that while the EPA identified a
number of potential changes to 40 CFR 52.220(c) in TSD Table 3-3, the
proposed changes are not complete or comprehensive to update the SIP.
The District references a list of CFR citations in Table C of its
comment letter, which is titled, ``CFR Citations Which May Require
Clarification.'' The District states that the citations presented in
Table C may or may not require additional clarifications to
appropriately identify the applicable SIP for the referenced rules. The
District then requests that the EPA identify all provisions in 40 CFR
52.220(c) and elsewhere that need clarification and list them in an
update to the TSD and in the final rulemaking action.
    Response to Comment #3: The EPA disagrees with the District's
characterization of Section 3.1 of the TSD that ``USEPA attempts to
identify specific codifications contained in 40 CFR 52.220(c) which
need to be changed to properly reflect the condition of the AVAQMD SIP
rules in relation to NSR.'' In fact, Section 3.1 of the TSD explains
our proposal to act on CARB's specific requests to revise the
California SIP in submittals dated October 30, 2001, April 22, 2020,
and August 3, 2021. The EPA did not independently identify parts of the
SIP that needed to be updated; rather, we proposed to take action
according to CARB's requests.\10\
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    \10\ CARB is the governor's designee for submitting official
revisions to the California SIP.
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    We acknowledge the District's request for the EPA to review Table C
of its comment letter (titled, ``CFR Citations Which May Require
Clarification'') and independently ``identify all provisions in 40 CFR
52.220(c) and elsewhere which need clarification.'' This request
appears to be a request to revise the CFR and, hence, the SIP. A public
comment to a proposed rulemaking is not the correct mechanism for
requesting a revision to the SIP; such a request must meet the criteria
for SIP submittals, including public notice and submittal

from CARB to the EPA.\11\ We are available, however, to work with the
District outside of this rulemaking to address these concerns.
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    \11\ See, e.g., 40 CFR part 51, App. V.
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    Comment #4: The District states that the EPA's proposed rulemaking
identifies deficiencies that are present in the current SIP-approved
rules and does not explain why these previously approved provisions are
no longer approvable. The District states that it would appreciate a
more detailed explanation of the underlying provisions of the CAA that
have changed to make the previously approved SIP provisions, which were
adequate for SIP approval in 1996, not approvable now. The District
states that it is not aware of any amendments to the CAA since 1990,
therefore it requests an updated, specific analysis with appropriate
citations, documentation, and rationale for the changes to EPA's
interpretations that render previously approved NSR program provisions
not approvable. The District states that it would appreciate a more
detailed analysis--not mere citations of current regulations--regarding
the specific changes in the EPA regulations and policy that now render
previously approved provisions deficient. The District states that the
TSD associated with the EPA's proposed action does not provide a
sufficient explanation of the EPA's interpretation of the CAA
requirements.
    Response to Comment #4: We disagree with the District's comment
that our proposed action does not provide sufficient explanation or
analysis of the deficiencies identified. The EPA provided its rationale
as to why the submitted revisions to the SIP-approved rules, while
deficient, represent an overall strengthening of the SIP.\12\ The EPA's
citations in our proposed rulemaking and the TSD to specific provisions
in the Act and its implementing regulations in 40 CFR part 51 are the
basis for the EPA's disapproval of certain specified provisions in the
District's revised NSR rules.
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    \12\ 88 FR 5826, 5829; TSD Sections 5-8.
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    As the District notes, the EPA last approved the District's
Regulation XIII into the SIP in 1996. In 2002, the EPA revised its NSR
regulations at 40 CFR 51.165.\13\ These revisions included the addition
of 40 CFR 51.165(a)(3)(ii)(J). As we discussed in our proposed action
and accompanying TSD, the District's submitted rules are inconsistent
with the requirements in 40 CFR 51.165(a)(3)(ii)(J) and are therefore
deficient.\14\ In particular, our proposed action explains that 40 CFR
51.165(a)(3)(ii)(J) requires offsets for each major modification at a
major source in an amount equal to the difference between pre-
modification actual emissions and post-modification PTE.\15\ Our
responses to Comments 6 and 6a provide additional explanation of this
issue. The EPA's interpretation of this provision is reasonable and
consistent with our actions regarding other submittals of NSR rules for
SIP approval.\16\
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    \13\ 67 FR 80185 (December 31, 2002).
    \14\ In our 2002 rulemaking, we added the requirement in 40 CFR
51.165(a)(2)(ii), which states that deviations from federal
definitions and requirements are generally approvable only if a
state specifically demonstrates that the submitted provisions are
more stringent, or at least as stringent, in all respects as the
corresponding federal provisions and definitions. To date, the
District has not made such a demonstration.
    \15\ 88 FR 5826, 5831.
    \16\ See, e.g., 81 FR 50339 (August 1, 2016), in which we
finalized a limited approval/limited disapproval action on the Bay
Area Air Quality Management District's NSR program. The Bay Area Air
Quality Management District subsequently revised and resubmitted its
rules, which the EPA approved in the rulemaking titled: ``Revisions
to California State Implementation Plan; Bay Area Air Quality
Management District; Stationary Sources; New Source Review,'' 83 FR
8822 (March 1, 2018). See also ``Revision of Air Quality
Implementation Plan; California; Sacramento Metropolitan Air Quality
Management District; Stationary Source Permits,'' 78 FR 53270
(August 29, 2013).
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    Comment #5: The District states that neither the proposed
rulemaking nor the TSD specifically discusses the interrelationship
between the main portion of the District's NSR rules in Regulation XIII
and Rule 219. The District states that while this is not generally
identified as a deficiency, historically the EPA has asserted that Rule
219 somehow provides an ``exemption'' from NSR requirements. The
District describes its permitting program as emissions unit-based, and
distinguishes it from the federal regulatory scheme, which the District
describes as facility-based. The District states that the ``net
result'' is that while a specific emissions unit may be exempt from
permitting requirements, it ``will still undergo the NSR process.'' The
District cites Rules 1301 and 1304 to support its position that its NSR
program requires emissions changes to be determined both on an
emissions unit by emissions unit basis and in regard to the facility as
a whole, and it cites to Rule 219(B)(5) to support its position that
Rule 219 requires emissions from exempt equipment to be included in NSR
calculations. The District also states that while Rule 219 only exempts
certain emissions units from obtaining ``paper'' permits, it does not
exempt emissions units or an entire facility containing such units from
other requirements in the District's Rulebook.
    The District states that ``USEPA has expressed concerns in the
past'' that a facility could escape NSR review if it were composed
entirely of exempt equipment and explains that there are several
backstops that prevent facilities that consist solely of equipment that
is potentially exempt under Rule 219 from escaping review, such as
actions undertaken by enforcement personnel and local land use agencies
pursuant to state law. The District requests that the notation
regarding the nature and effect of Rule 219 as part of its NSR program
be corrected or clarified in the EPA's TSD.
    Response to Comment #5: The EPA proposed to fully approve into the
SIP the revised version of Rule 219 as amended on June 15, 2021,
because we have determined that it satisfies all relevant CAA
requirements. We do not interpret the District's comment as an
assertion that our proposed action to fully approve Rule 219 is
incorrect. Section 8 and Attachment 6 of the TSD contain the EPA's
evaluation of Rule 219 with respect to CAA 110(l), and Attachment 1 of
the TSD contains EPA's evaluation with respect to the requirements
under 40 CFR 51.160-164.\17\ In Section 8 of the TSD, we wrote that the
submitted version of Rule 219 ``will result in a more stringent SIP and
will not interfere with any applicable attainment, reasonable further
progress goals, or any other applicable CAA requirement. Therefore, we
can approve the submitted rules into the AVAQMD portion of the
California SIP as proposed in this action under section 110(l) of the
Act.'' \18\ The information the District provided in its comment letter
does not change our proposal to fully approve Rule 219.
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    \17\ Specifically, as we indicated in Attachment 1 of the TSD,
Rule 219 is consistent with 40 CFR 51.160(e), which allows states to
exclude some sources from NSR requirements (i.e., LAER and offsets),
as well as public notice, by not requiring those sources to obtain a
permit. There is a distinction between sources subject to NSR
requirements and sources that are simply part of the District's NSR
program. Even emissions from equipment that is exempt from
permitting requirements must be included when making a major source
determination. Rules 201 and 203 require that essentially all
sources must obtain an authority to construct and a permit to
operate, but Rule 219 specifies which sources do not need to obtain
a permit, and therefore do not need to undergo NSR review, even if
their emissions are included in determining if a source is major.
    \18\ 88 FR 5826; TSD, p. 39.
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    The District's comment alludes to concerns that the EPA has
expressed ``in the past.'' Although the EPA may have expressed concerns
with a previous version of Rule 219, our review of the

submitted version of Rule 219 did not identify any remaining concerns
and found that the rule is approvable.\19\ Therefore, we do not find it
necessary to address the merits of the ``backstops'' involving District
enforcement and state laws that the District asserts would mitigate
such a problem.
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    \19\ As we discussed in section 8 of the TSD and in TSD
Attachment 6, we found that the District's revisions to Rule 219
ensured consistency with CAA requirements, forming the basis for our
proposal to fully approve the revised rule. The EPA expressed the
concerns stated in docket item D.20, ``EPA Email Comments to MDAQMD
re MDAQMD Rule 219,'' (dated 3/28/2019), in reference to the
previous, locally adopted version of MDAQMD Rule 219, which also
applied to AVAQMD Rule 219. The District took adequate action when
it revised the rule in 2021, which is the version EPA proposed to
fully approve.
---------------------------------------------------------------------------

    Comment #6: The District states that the EPA partially
mischaracterizes Rule 1304(C)(2)(d) as a ``potential to emit to new
potential to emit after modification'' calculation. According to the
District, this provision is more correctly characterized as ``current
fully offset allowable emissions'' to ``potential new emissions.'' The
District also asserts that such fully offset allowable emissions are
reflected as ``fully Federally enforceable emissions limitations'' on
the permits for each piece of affected equipment and for the facility
as a whole. The District states that the EPA is objecting to the use of
SERs, which are created as part of an NSR action at a Major Facility
to, in effect, ``self-fund'' the necessary offsetting emissions
reductions by reducing emissions elsewhere in the Major Facility.
    Comment #6a: The District states that the provisions of Rule
1304(C)(2)(d) are a clarified restatement of provisions that are
currently SIP approved and have been in use since at least 1995. It
then provides a historical overview of how the current language in the
submitted Rule 1304(C)(2)(d) is derived from the rule provisions that
the EPA approved in 1996, and that the only way to obtain a ``Federally
enforceable permit condition'' would be via a prior NSR permitting
action.
    The District explains that its primary purpose for the 2021 NSR
amendments was to address EPA's concerns, and that the amendments
further clarified that SERs created from currently existing fully
offset Permit Units at an existing Major Facility can only be used for
changes within the same facility and cannot be banked. The District
states that the ``procedural flow'' found in Rule 1302 and a specific
limitation of Rule 1303(A)(4) ensures that such SERs would not be used
to determine either BACT applicability, Major Facility status, or Major
Modification status, therefore limiting the use of SERs and ensuring
that there is no net increase in the amount of total emissions
allowable from a particular facility that utilizes these provisions.
The District states that its rules contrast with the potential use of
the ``De Minimis'' provisions, which would result in an increase of
allowable emissions of 25 tons per year (tpy) over a rolling five-year
period.
    The District states that it assumes the EPA approved rule language
is similar to that which the EPA now finds deficient pursuant to CAA
section 116, and that it is unclear why the current submission cannot
be approved considering the current SIP-approved language uses broader,
more inclusive language with fewer safeguards. The District therefore
requests that the EPA provide a detailed analysis of why the current
submission cannot be approved as equivalent to or more stringent than
the CAA requirements. In addition, the District requests guidance on
exactly what type and nature of evidence the EPA considers necessary
for approval.
    Response to Comments #6 and #6a: The EPA does not agree with the
District's statements in Comments 6 and 6a. Preliminarily, the EPA
notes that Rule 1303(B) imposes offset obligations for new or modified
facilities that emit or have the potential to emit above specified
thresholds ``as calculated pursuant to Rule 1304.'' \20\ Rule 1304,
``New Source Review Emission Calculations,'' sets forth ``the
procedures and formulas to calculate increases and decreases in
emissions'' to determine applicability of offset obligations and to
calculate SERs, which are ``reductions generated within the same
facility.'' \21\ Rule 1304(B)(1) specifies ``General emission change
calculations,'' and Rule 1304(B)(2) specifies ``Net Emissions Increase
Calculations.'' Notably, Rule 1304(B)(2)(c) provides that the net
emissions increase calculation must subtract SERs ``as calculated and
verified pursuant to Section C below.'' Rule 1304(C) specifies the
calculation of SERs. The EPA proposed to disapprove Rule 1304(C)(2)(d).
This provision applies to modification projects at existing major
sources that involve emissions units that ``have been previously offset
in a documented prior permitting action.'' Thus, Rule 1304(C)(2)(d)
relates to the calculation of a net emissions increase to establish
offset obligations.
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    \20\ Rule 1303(B)(1). See also, EPA TSD, p. 18. Rule 1303(A)
specifies control obligations, i.e., Best Available Control
Technology.
    \21\ Rule 1304(A). In addition, District Rule 1304 sets forth
``procedures and formulas'' to calculate BACT obligations. See,
District Rule 1304(A)(1)(a)(i). See also, EPA TSD, pp. 18-19.
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    The EPA's proposed action explains that Rule 1304(C)(2)(d) is
deficient because, for certain projects, it allows the amount of
required offsets to be calculated using a pre-project baseline using
potential emissions (generally, the emissions allowed by a permit),\22\
whereas the CAA requires a pre-project baseline based on actual
emissions.\23\ As the EPA explained, CAA section 173(c)(1) requires the
SIP to contain provisions to ensure that emission increases from new or
modified major stationary sources are offset by real reductions in
actual emissions. In addition, 40 CFR 51.165(a)(3)(ii)(J) requires
that, for major modifications, the total quantity of increased
emissions that must be offset shall be determined by summing the
difference between the allowable emissions after the modification and
the actual emissions before the modification for each emissions unit.
---------------------------------------------------------------------------

    \22\ Rule 1304(C)(2)(d)(i) states that the PTE for an emissions
unit is specified in a federally enforceable emissions limitation.
Therefore, in the context of this rulemaking action regarding the
District's NSR program, the terms ``allowable'' and ``potential''
seem generally interchangeable.
    \23\ We note that District's comment includes the following
incorrect statement, ``In short, USEPA is objecting to the use of
Simultaneous Emissions Reductions (SERs) which are created as part
and parcel of an NSR action at a Major Facility to in effect `self-
fund' the necessary offsetting emissions reductions by reducing
emissions elsewhere in the Major Facility.'' The deficiency
identified by the EPA is the District's calculation methodology to
determine the quantity of offsets required, which inappropriately
allows for the use of reductions that occurred in the past and are
not necessarily ``simultaneous.''
---------------------------------------------------------------------------

    Rule 1304(C)(2)(d) is not consistent with statutory and regulatory
requirements that the pre-project baseline utilize actual emissions to
calculate offset obligations. Instead, for emissions from units that
have been ``previously offset in a documented prior permitting
action,'' Rule 1304(C)(2)(d) allows the pre-project baseline to use the
unit's potential to emit (the unit's allowable emissions) as reflected
in a permit:

    [Historic Actual Emissions] for a specific Emission Unit(s) may
be equal to the Potential to Emit for that Emission Unit(s), [if]
the particular Emissions Unit have [sic] been previously offset in a
documented prior permitting action so long as: (i) The PTE for the
specific Emissions Unit is specified in a Federally Enforceable
Emissions Limitation; and (ii) The resulting Emissions Change from a
calculation using this provision is a decrease or not an increase in
emissions from the Emissions Unit(s) and (iii) Any excess SERs
generated from a calculation using this provision are not eligible
for banking pursuant to the provision [sic] of District Regulation
XIV.

    The District states that the EPA partially mischaracterizes Rule
1304(C)(2)(d) as allowing the use of the potential-to-potential test
because the provision is more correctly characterized as ``current
fully offset allowable emissions'' to ``potential new emissions.'' It
is true that Rule 1304(C)(2)(d) allows the use of a pre-project
baseline based on currently fully offset allowable emissions, because
it is clear that the rule equates allowable emissions and potential to
emit. However, the District's statements regarding the use of allowable
emissions or potential emissions as the pre-project baseline are not
relevant to the point presented in our proposed action that Rule 1304
is not consistent with federal requirements because it does not require
the use of actual emissions as the pre-project baseline, rather than
allowable emissions.\24\
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    \24\ See, e.g., 40 CFR 51.165(a)(3)(ii)(J) (requiring offsets
for each major modification at a major source in an amount equal to
the difference between pre-modification actual emissions, not
allowable (i.e., potential) emissions).
---------------------------------------------------------------------------

    Allowable emissions are generally set higher than anticipated
actual emissions to allow for normal fluctuations in emissions to occur
without violating the permit conditions. The use of allowable emissions
as the pre-project baseline means that the difference between pre-
project and post-project emissions will be smaller than a calculation
applying the EPA's requirement to use actual emissions as the pre-
project baseline. Therefore, the District's rule, when using this
provision, is likely to under-calculate the quantity of offsets
required.
    The fact that under the District's rule only units that are already
fully offset can use the allowable-to-potential offset quantification
method does not remedy this deficiency, as fully offset units are still
likely to have allowable emission limits above their actual emissions.
Furthermore, the District's assertion that the allowable-to-potential
methodology is only available to generate ``self-funded'' reductions
for use as offsets also fails to remedy this problem, since federal
requirements require actual emissions to be used as the baseline for
offsets calculations in all instances, including those in which a
facility internally generates its own emissions reductions to satisfy
its offset obligations.
    Similarly, the District's statement that its rule does not allow an
increase in allowable emissions is irrelevant. CAA 173(c)(1) and 40 CFR
51.165(a)(3)(ii)(J) require that the quantity of offsets must be based
on allowable increases above actual emissions.
    Regarding the District's statement that ``USEPA is objecting to the
use of Simultaneous Emissions Reductions (SERs) which are created as
part and parcel of an NSR action at a Major Facility to in effect
`self-fund' the necessary offsetting emissions reductions by reducing
emissions elsewhere in the Major Facility,'' the EPA disagrees. This
statement is inaccurate because the EPA did not categorically reject
the District's use of SERs; rather, we identified the District's SERs
calculation methodology as inconsistent with federal requirements.\25\
As has been noted, the EPA identified as a deficiency Rule
1304(C)(2)(d), which provides that the pre-project baseline can be
equal to allowable (i.e., potential to emit, or potential emissions) if
the emissions unit has been ``previously offset in a documented prior
permitting action.'' Thus, the deficiency that the EPA identified is
the District's use of SERs as a means to deviate from the federal
requirement to use actual emissions for the pre-project baseline.
Instead, Rule 1304(C)(2)(d) uses a pre-project baseline using allowable
(i.e., potential) emissions for units with previously offset emissions.
Moreover, the EPA's regulations at 40 CFR 51.165(a)(3)(ii)(J) plainly
apply to each proposed major modification.
---------------------------------------------------------------------------

    \25\ 88 FR 5826, 5830. We identified several District rules as
not fully approvable because they do not assure compliance with
federal regulations for calculation of required offsets, stemming
from cross-references to Rule 1304(C)(2)(d). See, e.g., 1305(C)(2),
1303(B)(1), 1302(C)(3); and various definitions in Rule 1301.
---------------------------------------------------------------------------

    The District also states that SERs created from currently existing
fully offset permit units at an existing major facility can only be
used for changes at the same facility and cannot be banked. The fact
that SERs cannot be bought and sold between facilities does not address
the deficiency identified by the EPA that Rule 1304(C)(2)(d) allows the
calculation of required offsets to use a baseline of allowable (i.e.,
potential) emissions, not the federally required baseline of actual
emissions.\26\
---------------------------------------------------------------------------

    \26\ Arguably, the District allows facilities to ``bank''
emission reductions for their own internal future use, even if the
District prohibits use of banked emission reductions between
facilities.
---------------------------------------------------------------------------

    The District provides no support for its assumption that the EPA
approved similarly deficient provisions to submitted Rule 1304(C)(2)(d)
into the SIP in 1996 under CAA section 116. The EPA's 1996 rulemaking
approved the rules to which the District refers on the basis of CAA
section 110, not section 116.\27\ The District's point that the EPA
approved rules with similar language over a quarter century ago does
not address the EPA's analysis and finding in our current rulemaking
that Rule 1302(C)(2)(d) is inconsistent with CAA 173(c)(1), the
definition of ``net emissions increase'' in 40 CFR
51.165(a)(1)(vi)(E)(1) and with the calculation methodology in 40 CFR
51.165(a)(3)(ii)(J). For the EPA to approve a provision that deviates
from federal requirements, the District must demonstrate how the
provision is more stringent than or at least as stringent as the
corresponding federal requirements.\28\ The District, to date, has not
provided such a demonstration; we address this point further in our
response to the District's Comment 6b. We respond to the District's
comment on the use of SERs for BACT or general applicability purposes
in our response to District Comment 6c.\29\
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    \27\ 61 FR 64291 (December 4, 1996).
    \28\ 40 CFR 51.165(a)(2)(ii).
    \29\ Likewise, we respond to the District's assertion regarding
the De Minimis rule at CAA section 182(c)(6) in our response to the
District's Comments 9b and 10.
---------------------------------------------------------------------------

    Comment #6b: The District argues that the EPA's statement that SERs
[as defined in Rule 1302] used as offsets may not be based on real or
actual emission reductions as required by CAA section 173(c)(1) does
not consider that the actual reduction in emissions have already
occurred as part of a previously offset action and that the use of SERs
derived from such action ensures the allowable emissions from a
particular facility would not increase without additional offsets being
required. The District states that that the EPA also ignores the
overall structure of its NSR program, which is specifically designed to
obtain BACT on more equipment and offsets in more situations than is
required under the CAA.
    The District argues that the EPA's interpretation of the offset
requirement is an issue of fundamental fairness in implementation
because a facility would in effect be required to offset the exact same
amount of allowable emissions each time it needed to upgrade, replace,
or otherwise modify its equipment processes. The District provides a
hypothetical example to demonstrate that a facility that had previously
offset emissions would never have the ability to use those actual
reductions that it previously obtained and purchased under the EPA's
interpretation of offsets requirements. The District also states that
the facility would have to provide extra offsetting emissions
reductions to regain its previously allowed and permitted emissions.

    The District then states that regardless of whether past emissions
reductions are technically ``paper reductions,'' the District and its
predecessor agencies have been using the formulation in the SIP
approved NSR rules in one form or another since at least 1995, although
more likely since the early 1980s. The District states that over that
period of time the number of NAAQS exceedances has declined and so has
the amount of Major Facility and overall stationary source emissions,
despite significant increases in both economic activity and District
population. The District argues that such a decrease would not have
occurred if the NSR program was based on paper reductions.
    The District requests that the EPA discuss why it considers the
taking of previously obtained and purchased allowable emissions limits
without additional compensation to be allowable under the CAA and a
discussion as to whether such an effective taking is Constitutional.
The District states that it would appreciate additional discussion on
why the EPA considers actual decreases in the emissions inventory to be
inadequate to show that the District's NSR program is not based upon
``paper reductions.''
    Response to Comment #6b: The EPA disagrees with the District's
comment. The District first argues that actual emissions reductions
occur ``as part of the previously offset action and that the use of
SERs derived from such action ensures that the allowable emissions from
a particular facility would not increase without additional offsets
being required.'' As we explained in our response to District Comments
6 and 6a, the EPA's regulations at 40 CFR 51.165(a)(3)(ii)(J) apply to
each proposed major modification. The fact that certain past emissions
increases were offset does not justify not requiring offsets for
emissions increases from the new project. In addition, the District's
comment appears to assert that offsets used for a previous permitting
action are available for offsetting increases in actual emissions
associated with future modifications. The Clean Air Act \30\ and EPA's
NSR regulations do not allow facilities to use the same emissions
reductions more than once; after a facility relies upon specific
emissions reductions for an NNSR permit action, the reductions are no
longer surplus and cannot be used again in a future NNSR permit
action.\31\ Also, the District's use of allowable emissions as the
metric for whether there has been an emissions increase is inconsistent
with federal requirements. Typically, allowable emissions limits are
set higher than anticipated actual emissions to allow for normal
variations in a facility's actual emissions without violating the
emissions limit in the permit. While a proposed project may not result
in a change to a facility's allowable emissions limit, it may increase
actual emissions. An increase in actual emissions must be offset, as
required under CAA section 173(c)(1).
---------------------------------------------------------------------------

    \30\ CAA 173(a)(1)(A) and 173(c).
    \31\ 40 CFR 51.165(a)(3)(ii)(G).
---------------------------------------------------------------------------

    The District asserts that ``the overall structure of the AVAQMD NSR
program . . . is specifically designed to obtain BACT on more equipment
as well as offsets in more situations than is required by the [federal]
CAA.'' The District, however, provides no demonstration to support this
claim, nor does it provide any basis on which the EPA could find that
its NSR program ensures equivalency with federal offset
requirements.\32\ Similarly, the references in the District's comment
letter to its Staff Report are not sufficient to demonstrate that its
NSR program offsets emission increases in a manner that is at least as
stringent as federal requirements. For example, Table 4 of the Staff
Report compares BACT and offset requirements, but the Table does not
demonstrate how implementation of the District's NSR program is
imposing an equivalent quantity of offsets.\33\ In addition, the last
row of Table 4 states that offsets are required for significant
modifications at existing major facilities, but it does not address the
difference between the District's program and the federal regulations
in calculating the necessary quantity of offsets for such projects.
---------------------------------------------------------------------------

    \32\ See 40 CFR 51.165(a)(1), 51.165(a)(2)(ii).
    \33\ AVAQMD Staff Report pp. 40-42.
---------------------------------------------------------------------------

    The District provides a hypothetical example referencing a scenario
in its NSR Final Staff Report to explain the difference in the
quantities of offsets required under its program compared to the
federal program. The District's example, however, does not include key
components of the federal program--for example, whether the project
constitutes a major modification under 40 CFR 51.165(a)(1)(v)(A). Under
the federal requirements, after determining that a project is a major
modification, the facility would need to provide offsets for the
difference between the pre-modification actual emissions and the post-
modification potential emissions, as those terms are defined in 40 CFR
51.165. Because the District's hypothetical example only discusses
quantities of allowable emissions, it is not possible to determine the
quantity of emissions offsets the facility would need to provide. As
noted above, however, the District's example reveals the
inconsistencies of its approach and federal NSR requirements: (i)
offsets of past emissions increases do not satisfy the offset
obligations for increases in actual emissions for a new project; and
(ii) reductions used to offset emissions increases in the past cannot
be re-used to offset increases in actual emissions in future permitting
actions.
    A real-world example that illustrates how the District's rules are
less stringent than federal requirements involves a permit application
submitted to the MDAQMD to upgrade three existing natural gas-fired
combustion turbines at a power plant. Although this example occurred in
the MDAQMD, the implicated MDAQMD rules are identical to the District's
and therefore this example is helpful to explain how the District's
rules could result in a less stringent outcome than federal law
requires.\34\ MDAQMD's analysis of the project presents the facility's
actual emissions of NOX in the five-year period from 2016 to
2020 as ranging from 83.6 tpy to 103.9 tpy.\35\ MDAQMD's analysis also
presents the ``pre-modification PTE'' of NOX as 205 tpy.
MDAQMD's analysis states that the ``post-modification PTE'' of
NOX is 204.5 tpy.\36\ Per the EPA's requirements, the
required quantity of offsets for this project would be approximately
131 tpy (204.5 tpy minus the highest actual emissions rate of 103.9
tpy, multiplied by the offset ratio of 1.3 for Severe nonattainment
areas, as required under CAA section 182(d)(2)). MDAQMD, however, only
compared pre- and post-project allowable (i.e., potential) emissions;
therefore, it determined that no offsets were required for the project
because its analysis indicated that the project would result in a 0.55
tpy decrease in emissions.\37\ As the

AVAQMD regulations also provide for comparing only pre- and post-
project allowable (i.e., potential) emissions, they also would lead to
a similar result--that no offsets would be required.
---------------------------------------------------------------------------

    \34\ It is also the EPA's understanding that there is an overlap
in the administration and management of AVAQMD and MDAQMD, which
increases the likelihood that the Districts would share the same
interpretation of identical rule text.
    \35\ MDAQMD, ``Preliminary Determination/Decision--Statement of
Basis for Minor Modification to and Renewal of FOP Number: 104701849
For: High Desert Power Project, LLC.'' December 21, 2022, p. A-52
(PDF p. 72), Table 9.
    \36\ MDAQMD, ``Preliminary Determination/Decision--Statement of
Basis for Minor Modification to and Renewal of FOP Number: 104701849
For: High Desert Power Project, LLC.'' December 21, 2022, p. A-54
(PDF p. 74), Table 14.
    \37\ See also, Letter dated June 16, 2022, from Jon Boyer,
Director, Environmental, Health, and Safety, Middle River Power, to
Lisa Beckham, EPA Region IX, Subject: ``Prevention of Significant
Deterioration (PSD) Applicability Analysis for Turbine Upgrades at
the High Desert Power Project (Revised),'' (``HDPP PSD Analysis'').
The same modification was analyzed under the federal PSD program,
which uses baseline actual emissions to projected actual emissions
methodology for determining applicability of the federal NNSR
program. The submitted PSD analysis shows that the project will
result in an increase in actual emissions. For NO2,
projected actual emissions would be 35.25 tpy greater than baseline
actual emissions. HDPP PSD Analysis, Table 7, p. 8.
---------------------------------------------------------------------------

    The District also asserts that the EPA previously approved the
provision we are now finding to be deficient and that, since 1995, when
this provision came into active use, the number and extent of NAAQS
exceedances has declined. The District also asserts that the decline in
emissions could not have occurred if its NSR program was not achieving
reductions at least equivalent to those that would occur if the
District followed the requirements of the CAA. We do not agree with
this comment. NSR programs primarily regulate construction and
modification of stationary sources, and improvements in air quality can
and do result from regulation of existing stationary sources (e.g.,
RACT, RACM and BACM requirements) as well as from regulation of mobile
sources such as passenger vehicles and trucks, and non-road engines
such as diesel engines used in agriculture and construction. The EPA
also notes that because the District is currently classified as Severe
nonattainment for the 2008 and 2015 ozone NAAQS, the CAA requires the
District to implement rules consistent with the federal nonattainment
NSR requirements at CAA section 173 and 40 CFR 51.165.
    Comment #6c: The District states that the EPA's identification of
Rules 1301(MM), 1301(UU), 1301(RR), 1301(TT), and 1304(B)(2) reflects a
misunderstanding of the overall structure of the District's NSR
regulation. The District states that the EPA assumes that the
District's use of previously offset SERs could potentially allow a new
or modified facility to escape being categorized as a ``Major
Facility'' or a ``Major Modification.''
    The District states that the EPA ignores the existence of Rule
1302, which ``very clearly sets out a flow for analysis in which one
step occurs after another in sequence as indicated in the Final NSR
Staff Report.'' The District explains that the first step in the
sequence is to determine the ``Emissions Change'' under Rule 1302(C)(1)
on both an emissions unit and facility wide basis using Rule
1304(B)(1), noting no SERs are used in that calculation. The District
states that the next steps involve the determination of whether a
particular change is indeed a ``Modification.'' The District states
that the EPA also conveniently ignores the provisions of Rule
1303(A)(4), which excludes the use of SERs in determining emissions
increases for the purpose of applying BACT.
    The District admits that Rule 1304(C)(2)(d) could be interpreted
incorrectly ``without the procedural sequence that Rule 1302 sets
forth.'' The District asserts that these provisions at issue have been
in active use since 1996 with demonstrable results in overall air
quality. The District states that, despite its assertion of the
adequacy of the submitted provisions, it would appreciate guidance from
the EPA regarding methods to clarify that SERs derived from previously
fully offset activities can be used only to reduce the amount of
offsets required and not for any other purpose.
    Response to Comment #6c: The EPA disagrees with the District's
assertions that the EPA's proposed disapproval of Rule 1301's
definitions for ``Major Modification,'' ``Modification (Modified),''
``Net Emissions Increase,'' and ``Significant'' is incorrect. We note
that Rule 1301 defines the terms ``Major Modification'' and
``Modification (Modified)'' using the term ``Net Emissions Increase,''
and, as explained in our proposed action, Rule 1301(UU) defines the
term ``Net Emissions Increase'' as an emission increase calculated per
Rule 1304(B)(2) that exceeds zero.\38\ Rule 1304(B)(2) prescribes the
calculation methodologies for net emissions increases, and provides
that net emissions increases must subtract SERs ``as calculated and
verified pursuant to Section C below.'' \39\ As noted in our proposed
action and in our response to Comments 6 and 6a, Rule 1304(C)(2)(d)
allows permit applicants to calculate a net emissions increase using
allowable (i.e., potential) emissions as the pre-project baseline,
rather than actual emissions, as required by the EPA's regulations.\40\
As we have explained in our response to Comments 6 and 6a, the
District's approach is less stringent than federal requirements because
actual emissions are almost always lower than allowable (i.e.,
potential) emissions. Therefore, an evaluation of a net emissions
increase (which is essentially a comparison of pre-project and post-
project emissions) that uses actual emissions (as required by the EPA's
regulations) will show a higher net emissions increase than a
calculation that uses allowable (i.e., potential) emissions as the pre-
project baseline.
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    \38\ 88 FR 5826, 5830.
    \39\ Rule 1304(B)(2)(c).
    \40\ 40 CFR 51.165(a)(2).
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    We further note that Rule 1303, ``New Source Review Requirements,''
sets forth Best Available Control Technology (BACT) requirements \41\
at subsection (A), and subsections (A)(2) and (A)(3) impose BACT
requirements through the use of the term ``Modification (Modified),''
defined at Rule 1301(RR).\42\ As we explained in our proposed action,
Rule 1301(RR) defines ``Modified'' in terms of whether a project will
``result in a Net Emission Increase [sic].'' \43\ As a result, a
project that does not result in a ``Net Emission Increase'' will not
meet the criteria for ``Modified.'' Therefore, projects can potentially
avoid the applicability of the BACT requirement because Rule 1303 uses
the term ``Modified'' and, indirectly, the term ``Net Emission
Increase,'' to impose this requirement.
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    \41\ The District's definition of Best Available Control
Technology in Rule 1301(K) is consistent with the federal definition
of ``lowest achievable emission rate'' in CAA section 171(3) and 40
CFR 51.165(a)(1)(xiii).
    \42\ Rule 1303(A)(2) and (A)(3) use the term ``Modified Permit
Unit,'' Rule 1301 separately defines the terms ``Modification
(Modified)'' at subsection (RR) and ``Permit Unit'' at subsection
(DDD).
    \43\ 88 FR 5826, 5830.
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    Similarly, Rule 1303(B)(2) imposes offset requirements using the
term ``Major Modification,'' which is defined at Rule 1301(MM). Rule
1301(MM) defines ``Major Modification'' using the term ``Net Emissions
Increase.'' \44\ As a result, a project that does not result in a ``Net
Emissions Increase'' will not meet the criteria for a ``Major
Modification'' and therefore can potentially avoid the applicability of
offset requirements because Rule 1303 uses the term ``Major
Modification'' and, indirectly, the term ``Net Emissions Increase,'' to
impose this obligation.
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    \44\ Rule 1301(MM) refers to a ``Significant Net Emissions
Increase''; Rule 1301 separately defines ``Significant'' at
1301(TTT) and ``Net Emissions Increase'' at 1301(UU).
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    The District states, ``the existence of Rule 1302 . . . very
clearly sets out a flow for analysis in which one step occurs after
another in sequence . . . first you determine `Emissions Change' under
1302(C)(1) on both an emissions unit and facility wide basis using
1304(B)(1) . . . No SERs are used in this calculation.'' The EPA does
not agree with these statements. Rule 1302(C)(1) does not specifically
reference Rule 1304(B)(1)--it references, more generally, Rules 1304
and 1700.\45\ This

point is significant because Rule 1302(C)(1)'s general cross-reference
to Rule 1304 encompasses not just Rule 1304(B)(1), which might be
helpful, but also the deficient provisions of Rule 1304(C)(2)(d),
which, as explained above, calculate SERs using a pre-project baseline
of allowable (i.e., potential) emissions, which results in improper
calculations of net emissions increases.
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    \45\ Rule 1302(C)(1)(a) states: ``The APCO shall analyze the
application to determine the specific pollutants, amount, and change
(if any) in emissions pursuant to the provisions of District Rules
1304 and 1700.''
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    The District, in its comment letter, ``admits that the provisions
as expressed in 1304(C)(2)(d) could, in the abstract and absent the
procedural sequence set forth in 1302, potentially be interpreted
incorrectly.'' The EPA does not agree that Rule 1302 contains a
``procedural sequence.'' We also do not find any such sequence in Rule
1304. Rule 1304 identifies several different types of emissions
calculations but does not specify an analytical framework for their
use.
    The District's comment also repeatedly refers to its Staff Report.
In general, references to non-regulatory sources can be helpful to
explain regulatory text; however, the District's reliance on its Staff
Report in this instance is not sufficient to correct the fact that the
rules fail to ensure proper analysis and implementation of federal
requirements.
    Therefore, Rule 1302's broad cross reference to Rule 1304 is
insufficient to establish a sequence or an ``analysis flow'' such as
that asserted by the District. The ambiguity in the District's rules
means that they do not ensure a proper analysis of emissions changes,
such as, for example, correctly evaluating whether a project will
result in an ``Emissions Change'' before evaluating whether it will
result in a ``Net Emissions Increase.'' Such sequence is essential to
correctly identifying whether a project would result in a net emissions
increase under 40 CFR 51.165(a)(1)(vi), which the District currently
uses as a basis for determining whether a project is a ``Major
Modification.''
    In reviewing SIP submissions, the EPA must ensure that the plain
language of the rule under review is clear and unambiguous. In a
September 23, 1987 memorandum, the ``Potter memo,'' the EPA stated its
criteria regarding the enforceability of SIPs and SIP revisions.\46\
The Potter memo states that SIP rules must be clear in terms of their
applicability, and that ``[v]ague, poorly defined rules must become a
thing of the past.'' \47\ It also states that ``SIP revisions should be
written clearly, with explicit language to implement their intent. The
plain language of all rules . . . should be complete, clear, and
consistent with the intended purpose of the rules.'' \48\ The EPA can
only approve rule language that is clear on its face, and the sequence
the District uses for determining emissions changes and net emissions
increases is not sufficiently clear. The clarification in the Staff
Report cannot supplant vague rule language. The District makes the
statement that it has been using the provisions at issue ``since at
least 1996 with corresponding demonstrable results in improving air
quality.'' Even if air quality improved during this period, the rules
must be clarified to ensure they are interpreted properly. It is
speculative to assume that any air quality improvements occurred as a
result of the way the rules are currently written.
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    \46\ Memorandum dated September 23, 1987, from J. Craig Potter,
Assistant Administrator for Air and Radiation, to EPA Regional
Administrators and Regional Counsels, Regions I-X, ``Review of State
Implementation Plans and Revisions for Enforceability and Legal
Sufficiency.''
    \47\ Id. at 3.
    \48\ Id. at 4.
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    Additionally, the District's comment letter states that ``USEPA
also conveniently ignores the provisions of 1303(A)(4) which excludes
the use of SERs in determining emissions increases for purpose [sic] of
applying BACT.'' Rule 1303(A)(4) includes an appropriately specific
cross-reference to Rule 1304(B)(1), regarding ``General Emissions
Change Calculations.'' Rule 1304(B)(1) provides for proper calculation
of a project's emissions changes. However, the BACT requirement is also
implemented by Rule 1303(A)(2) and (A)(3), which, as described above,
use the term ``Modified,'' which is problematically defined by Rule
1301(RR), specifically because of its cross-reference to the term ``Net
Emissions Increase,'' which is in turn deficient because of its cross
reference to Rule 1304's calculation methodologies, including Rule
1304(C)(2)(d). As we described in our response to the District's
Comment 6b, MDAQMD found that a project in its jurisdiction did not
trigger BACT because there was no net emissions increase and therefore
the facility was not ``Modified'' as defined in Rule 1301(RR). It
appears that the MDAQMD used the identical SERs-related provisions of
MDAQMD Rule 1304(C)(2)(d) to calculate ``Net Emission Increase'' to
conclude that the project was not ``Modified'' and as a result it did
not require BACT.\49\ We note that such a conclusion appears
inconsistent with MDAQMD Rule 1303(A)(4), but apparently resulted from
the ambiguities in Rules 1301, 1302, 1303, and 1304 described above.
Even though the project occurred in the MDAQMD jurisdiction, the
identical rule provisions mean that it is a useful example to explain
the rule deficiencies in AVAQMD. Under both AVAQMD's rules and
MDAQMD's, it is difficult to envision a scenario in which a ``fully
offset'' emissions unit, using the District's terminology, would ever
need to install BACT or obtain offsets as long as the facility does not
increase its allowable emissions. Therefore, we confirm the
determinations in our proposed action that the definitions of ``Net
Emissions Increase'' in Rule 1301(UU) and all related provisions in
Rule 1301(MM), 1301(RR), and 1301(TTT), as well as 1304(B)(2), are
deficient.
---------------------------------------------------------------------------

    \49\ The District's analysis of the application for this project
states: ``The permitting action is classified as an NSR Modification
as defined in Rule 1301(NN). As there are no net emissions increases
associated with NOX, VOC, or PM10, the emissions unit and
the facility are not Modified as defined in Rule 1301 with respect
to those pollutants and current BACT is not triggered.'' (Emphasis
in original.) MDAQMD, ``Preliminary Determination/Decision--
Statement of Basis for Minor Modification to and Renewal of FOP
Number: 104701849 For: High Desert Power Project, LLC.'' December
21, 2022, p. 8. We note that the District makes two logically
inconsistent statements in its analysis of the project: first, that
the project is an NSR Modification under Rule 1301(NN), and second,
that the project is not Modified as defined in Rule 1301(NN).
---------------------------------------------------------------------------

    Comment #6d: With regard to the EPA's finding that ``SERs used to
determine quantity of offsets required are not based on actual
emissions as required in 40 CFR 51.165(a)(3)(ii)(J),'' the District
repeats that its NSR regulation is designed to ensure that the
emissions reductions achieved from each modified emissions unit, and
thus from any facility containing such emissions units, are greater
than those required by the CAA by requiring BACT and offsets in more
cases and on a greater number of emissions units than the CAA requires.
The District states that its NSR program is also designed to meet the
California Clean Air Act requirement mandating that stationary source
control programs developed by a district with moderate or greater ozone
pollution achieve ``no net increase in emissions of nonattainment
pollutants or their precursors from new or modified stationary sources
which emit or have the potential to emit 25 tons per year or more of
nonattainment pollutants or their precursors,'' which ensure that
emissions at a particular

facility remain the same or decrease over time. The District states
that this is in direct contrast to the EPA's ``De Minimis'' provisions,
which could result in up to a 25 tpy increase in pollutants from each
Major Facility over every rolling five-year period. The District states
that it has provided clear and convincing evidence in its Staff Report
and elsewhere that its NSR program requires BACT and offsets in a
number of situations where the CAA would not require them, resulting in
a more stringent set of requirements overall. The District then
requests specific, detailed guidance regarding what type and nature of
additional evidence, if any, the EPA would consider appropriate to show
equivalent stringency to the CAA requirements.
    Response to Comment #6d: The EPA disagrees with the District's
comment. First, as we explained in our response to the District's
Comment 6b, the District provides no demonstration to support its claim
that its program is more stringent than required by the federal NSR
regulations, nor does it provide any basis on which the EPA could find
that its NSR program ensures equivalency with federal offset
requirements. Similarly, the references in the District's comment
letter to its Staff Report are not sufficient to demonstrate that its
NSR program offsets emissions increases in a manner that is at least
equivalent to federal requirements. As to the District's assertion that
its NSR rules are designed to meet the California Clean Air Act ``no
net increase'' requirement: even if the District's program satisfies
the California Clean Air Act, it must also satisfy federal air
pollution control requirements under the federal CAA and its
implementing regulations; satisfaction of state law requirements does
not justify noncompliance with federal requirements. We provide
additional explanation on the California ``no net increase''
requirement and federal offsetting requirements in our response to
District comments 9b and 10. Also, as we described in our response to
the District's Comment 6b, MDAQMD's determination that the project did
not require offsets despite a projected actual emissions increase of 35
tpy NOX under the PSD program, supports our finding that the
District's program, which implements the same offsetting rules as
MDAQMD, is less stringent than the federal requirements. We respond to
the District's assertion regarding the De Minimis provisions at CAA
section 182(c)(6) in our response to the District's Comment 9b.
    Comment #7: Regarding the District's use of the word ``proceed'' in
the definition of ``Historic Actual Emissions,'' which the EPA
identified as a deficiency, the District agrees that the deficiency is
probably an overlooked typographical error, but that it has been in the
rule for several iterations, dating back to 1996. The District states
that it could have provided to the EPA a commitment to correct this
deficiency prior to the publication of the EPA's action if the EPA had
provided prior notification of the issue. The District states that it
would appreciate specific guidance from the EPA regarding whether a
commitment to modify the deficient provision would be appropriate at
this time.
    Response to Comment #7: The District does not appear to disagree
with the EPA's proposed determination that this issue is a deficiency;
rather, the District appears to take issue with the manner in which the
EPA provided notification of it. The EPA appreciates the coordination
and cooperation demonstrated over the period of joint work by our
agencies to improve the District's NSR rules. We remain available to
discuss revisions necessary to address the deficiencies with the goal
to full approval of revisions to the District's rules and a fully
approved NSR program. The District may address this deficiency, along
with all other identified deficiencies, in its next revised SIP
submittal of its NSR program rules.
    Comment #8: The District comments that the EPA failed to
sufficiently communicate a deficiency identified in our proposed
action, specifically, that Rules 1302 and 1304 allow for the
interchangeable use of the terms ``contract'' and ``permit.'' The
District states that, had the EPA communicated this deficiency, the
District could have provided assurances to the EPA to remove the
deficiency. The District states that it can and will be able to provide
a commitment to modify the deficient provisions in a subsequent local
action, but it requests specific guidance from the EPA on whether it is
appropriate to provide the EPA a commitment to modify at this time.
    Response to Comment #8: We do not interpret the District's comment
to assert a legal or technical basis that our proposed action to
disapprove this rule is incorrect. The District states that the term
``contract'' was most likely inadvertently retained and that it can
commit to modify the specific provisions to address the issue. We
appreciate the District's willingness to address this deficiency. It is
not necessary for the District to provide additional commitments.
Following this final action, the EPA remains available to discuss
necessary revisions, with the goal of full approval of revisions to the
District's rules and a fully approved NSR program.
    Comment #9a (``Interprecursor Trading''): This comment concerns the
use of interprecursor trading, which is provided for in Rule
1305(C)(6). The District first states that the EPA is concerned that a
court decision and subsequent change to 40 CFR 51.165(a)(11) make
interprecursor trading impermissible. The District notes that it
revised Regulation XIII (including Rule 1305) after the court decision
but before the EPA revised 40 CFR 51.165(a)(11). The District states
that it is unclear whether the revision to 40 CFR 51.165(a)(11) has
been challenged and observes that the EPA could have chosen to revise
the provision differently. The District states that the EPA did not
provide any indication in the TSD on the current status of this
particular regulatory provision other than a citation. The District
references a footnote as providing sufficient warning and requiring
compliance with the applicable provisions to ensure that interprecursor
trading among ozone precursors does not occur in a subsequent NSR
action. The District states that prompt communication on the EPA's part
would have obliviated [sic] the need for this comment as the District
could have committed to clarifying the deficient provision in a
subsequent rulemaking. The District then requests specific guidance
from the EPA regarding whether the provision of a commitment of modify
the deficient provision would be appropriate at this time.
    Response to Comment #9a (``Interprecursor Trading''): To the extent
the District's comment might be read as asserting that the EPA's
proposed limited approval/limited disapproval of Rule 1305 is
incorrect, the EPA does not agree. As the District acknowledges in its
comment, on January 29, 2021, the D.C. Circuit Court of Appeals issued
a decision in Sierra Club v. USEPA, that vacated an EPA regulation that
allowed the use of reductions of an ozone precursor to offset increases
in a different ozone precursor, i.e., ``interprecursor trading.'' \50\
On July 19, 2021, the EPA removed the ozone interprecursor trading
provisions in 40 CFR 51.165(a)(11).\51\
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    \50\ See, Sierra Club v. EPA, 21 F.4th 815, 819-823 (D.C. Cir.
2021).
    \51\ 86 FR 37918 (July 19, 2021).
---------------------------------------------------------------------------

    Rule 1305(C)(6) allows for the use of interprecursor trading. This
fact is not

changed by a footnote in the rule that acknowledges the January 2021
court decision without clearly prohibiting the use of interprecursor
trading to satisfy offset obligations.\52\ To the extent the District
is suggesting that the timing of the EPA's revisions to 40 CFR
51.165(a)(11) or the possibility of subsequent legal challenges to
those revisions somehow affects the EPA's conclusion that Rule
1305(C)(6) is not consistent with federal law, we disagree. Therefore,
the EPA's proposed limited approval/limited disapproval of Rule 1305 is
appropriate. Following this final action, the EPA remains available to
discuss necessary revisions, with the goal of full approval of
revisions to the District's rules and a fully approved NSR program.
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    \52\ The footnote attached to Rule 1305 states: ``Use of this
section subject to the ruling in Sierra Club v. USEAP [sic] 985 F.3d
1055 (D.C. Cir, 2021) and subsequent guidance by USEPA.''
---------------------------------------------------------------------------

    Comment #9b (``De Minimis Rule''): The District summarizes the
EPA's proposed action as asserting that CAA section 182(c)(6)
``mandates the inclusion of a so called `De Minimis' provision'' and
also as appearing to assert that CAA 182(c)(6) overrides the District's
ability to implement rules that are more stringent than the
requirements of the CAA pursuant to CAA section 116. The District
states that the SIP-approved version of its NSR program does not
contain a ``De Minimis'' provision primarily due to the requirement in
the California Health and Safety Code section 40918(a) of ``no net
increase in emissions of nonattainment pollutants and their
precursors.'' The District asserts that the EPA did not bring up this
issue during the rule development period. The District states that the
inclusion of the ``de minimis'' provision, as required under CAA
section 182, would allow major facilities to increase their actual
emissions without providing offsets, increasing NOX and VOC
emissions by as much as 100 tons per year, as it results in ``a
complete exemption from Offsets and BACT requirements.'' It then
asserts that incorporating the De Minimis provision would weaken its
NSR program, which would violate CAA section 110(l), California Health
and Safety Code section 40918(a)(1), and the Protect California Air Act
of 2003, which it states, ``prohibits local air districts from amending
or revising its New Source Review rules to be less stringent than those
in effect on 12/30/2002.'' The District also states that, despite its
assertion of the adequacy of the current submissions, it requests
specific guidance regarding the type and nature of evidence the EPA
would consider appropriate to show greater stringency of the District's
NSR program than that provided by the ``de minimis'' provision.
    Response to Comment #9b (``De Minimis Rule''): The EPA does not
agree with the comment. CAA section 182(c)(6) (``the De Minimis Rule'')
specifies a mandatory requirement for state NSR programs in
nonattainment areas classified as Serious and above. It requires such
areas to evaluate whether a particular physical change or change in the
method of operation is a major modification by considering net
emissions increases from that change and all other net emissions
increases during the preceding five calendar years. If the total of all
such emission increases is greater than 25 tons, the particular change
is subject to the area's SIP-approved NNSR program.\53\
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    \53\ The CAA section 182(c)(6) ``De Minimis Rule'' provides:
``The new source review provisions under this part shall ensure that
increased emissions of volatile organic compounds resulting from any
physical change in, or change in the method of operation of, a
stationary source located in the area shall not be considered de
minimis for purposes of determining the applicability of the permit
requirements established by this chapter unless the increase in net
emissions of such air pollutant from such source does not exceed 25
tons when aggregated with all other net increases in emissions from
the source over any period of 5 consecutive calendar years which
includes the calendar year in which such increase occurred.''
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    The District does not dispute the EPA's determination that the
District's NSR program does not include provisions specified in CAA
section 182(c)(6).\54\ Instead, the District asserts that the inclusion
of language to satisfy the De Minimis Rule provision would result in
emissions increases at major facilities, possibly totaling as much as
100 tons each of NOX and VOC over a five-year period without
requiring offsets. This assertion, however, reflects the District's
misinterpretation of CAA 182(c)(6). CAA section 182(c)(6) requires NNSR
programs in nonattainment areas to require facilities to aggregate
project emissions over a rolling five-year period to ensure adequate
regulatory review of NSR requirements such as those for control
technologies and offsets. Contrary to the District's assertions, CAA
section 182(c)(6) does not allow facilities to increase actual
emissions by 25 tons without offsetting them.
---------------------------------------------------------------------------

    \54\ The District also concedes that it revised Rule 1303 to
remove a provision that previously provided such assurance.
---------------------------------------------------------------------------

    Furthermore, the District does not explain how the De Minimis Rule
conflicts with either the ``no net increase'' requirement in California
Health and Safety Code section 40918(a) or the Protect California Air
Act of 2003. The District's comment does not change the EPA's
understanding that the De Minimis Rule operates independently of these
requirements, and therefore the District's implementation of it would
not weaken the District's current NNSR program. As the District's rules
are currently written, BACT requirements apply when an emission unit
has an emission increase or PTE of greater than 4.56 tpy (25 lb/day)
(Rule 1303(A)(1) and (2)), or when the emission increase or PTE of all
emission units exceed 25 tpy (Rule 1303(A)(3)). For example, a new
facility with five emission units, each with a PTE of 4 tpy, would not
be subject to BACT requirements under state or federal NSR
requirements. However, if during the next 5 years, the source proposed
to add three additional emission units, each with a PTE of 4 tpy, BACT
would still not be triggered under the current rule, since the state
4.56 tpy emission unit and the federal 25 tpy project thresholds have
not been exceeded. However, under the ``De Minimis'' requirements, the
new project would be considered a major modification, with an
aggregated emission increase of 32 tpy, and therefore, trigger both
BACT and offset requirements for the current project. This is because
the aggregated emissions from the two projects occuring within a 5-year
time frame exceed the 25 tpy De Minimis Rule threshold. The District's
rules fail to ensure that such a scenario is not treated as de minimis,
as CAA section 182(c)(6) requires. The federal De Minimis Rule prevents
a series of smaller projects, with emissions equivalent to the major
modification threshold, from avoiding the major modification
requirements of BACT and offsets. California law does not ensure
conformity with the De Minimis Rule; therefore, the District's NSR
program must include provisions to ensure compliance with it. The
District's assertion that the De Minimis rule would result in a
complete exemption from offsets and BACT requirements is not correct--
implementation of the requirements of the De Minimis Rule would ensure
that more projects are subject to NNSR requirements, and, in turn,
procure offsets and install BACT, consistent with federal law.
    The District asserts that its submitted rules would be more
stringent than implementing the De Minimis Rule and other aspects of
EPA's NNSR requirements and seeks guidance from the EPA on how to make
this demonstration. In general, to make a demonstration that a program
is at least as stringent as federal NNSR program

requirements, the District would need to demonstrate that the
requirements of its rule would trigger LAER and offsets requirements in
all cases that would trigger these same requirements pursuant to the
provisions of CAA section 182(c)(6). The EPA does not believe such a
demonstration is possible, given the variety of project scenarios,
which, depending on the facts (timing and emission rates from
individual and groups of emissions units), would show that each set of
rules is more and less stringent than the other in some cases. As we
discussed in our response to District Comments 6-6d, the District's
rules are flawed in that they allow for improper calculation of net
emissions increases, which affects the implementation of NSR
requirements. Our responses to Comments 6-6d also describe the MDAQMD's
analysis of a permit application for a project involving a power plant
and its determination that the project was not a modification because
it would result in an emissions decrease, even though the project would
increase actual emissions. The same situation could occur in the
District because the District rules implicated by the permit
application are identical to the MDAQMD's. We do not agree that the
District's approach of not considering this project or other similar
projects to be a modification constitutes a more stringent program.
    As to the District's statement regarding the EPA not raising this
issue earlier, the EPA appreciates the coordination and cooperation
demonstrated over the period of joint work by our agencies to improve
the rules. We remain available to discuss revisions necessary to
address the deficiencies with the goal of full approval of revisions to
the District's rules and a fully approved NSR program.
    Comment #10: The District states that the De Minimis Rule ``would
have a profound negative effect on air quality'' because not only would
facilities be able to increase allowable emissions by up to 25 tons per
rolling 5-year period, but the rule would also cause other detrimental
practices such as ``emissions spiking'' and delayed equipment upgrades.
    Response to Comment #10: The District's hypothetical assertions
that CAA 182(c)(6) would encourage ``emissions spiking'' to
artificially increase actual emissions prior to making a modification
are unsupported. As a practical matter, a source operating for two
years above its actual needed operations to get as close as possible to
its allowable emissions would likely incur significant costs in the
process to unnecessarily operate the equipment. We do not see this
scenario as providing a realistic incentive; in fact, implementation of
CAA section 182(c)(6) would create no greater incentive for a source to
increase its actual emissions prior to making a change that may require
the source to undergo NNSR than the limited incentive that exists under
the District's current rules. Similarly, the District's hypothetical
assertion that the De Minimis Rule would discourage facilities from
upgrading equipment is outside the scope of our proposed action, which
is to ensure the District's NSR rules comply with federal NNSR program
requirements regarding the calculation of emission reductions and the
quantity of offsets required for significant emission increases.\55\
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    \55\ We also note that the District's current NSR program fails
to adequately address increases in actual emissions that might
result from delayed equipment upgrades because the rules allowing
net emissions increases to be evaluated using a baseline of pre-
project allowable emissions rather than actual emissions. See EPA
responses to Comments 6-6d above.
---------------------------------------------------------------------------

    The District also requests that the EPA ``provide clear and
convincing evidence that the implementation of USEPA's suggested
corrections would indeed produce a benefit to air quality in the
region.'' The objective of the EPA review of the District's submitted
rules is to ensure conformity with federal requirements. Our proposed
action describes the statutory and regulatory requirements that the
District's NSR rules must satisfy for EPA approval.\56\ Where the
District disagrees with the EPA's finding of deficiency, it has not
provided a quantitative or legal demonstration that its rule provisions
are more stringent, or at least as stringent, as the federal
requirements.
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    \56\ See 88 FR 5826, 5829-30; TSD p. 21-25.
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    Comment #11: The District states that the EPA's proposed limited
disapproval of all rules that cite Rule 1304(C)(2) is overbroad. The
District states that the EPA has indicated that it is proposing to
disapprove Rules 1301, 1302, 1303, 1304, and 1305 primarily due to the
cross-references in these rules to provisions in Rule 1304(C)(2). The
District states that such an action would disapprove the use of any
internal offsetting for any facility--not just Major Facilities--
regardless of the calculation used to determine SERs. The District
states that such a disapproval might result in an increase of Emission
Reductions Credits being banked and then immediately used, under
District Regulation XIV, ``Emission Reduction Credit Banking,'' but
asserts that it is more probable that it would result in an immediate
cessation of all modifications to existing facilities within the
District. Therefore, the District states this action is overbroad, as
simply disapproving the use of the provisions in Rule 1304(C)(2)(d)
would be enough to alleviate the EPA's stated concerns and allow the
remainder of the NSR program to be approved in a manner and to the
extent that it could be included to satisfy the 70 ppb ozone NAAQS
requirements. The District requests that the EPA provide further
justification on why a more limited disapproval of the provisions
contained in Rule 1304(C)(2)(d) would be insufficient to address the
EPA's major alleged deficiencies, as set forth in the EPA's proposed
action.
    Response to Comment #11: As we stated in our proposed action, the
deficiencies pertaining to offsets in the District's NSR program make
portions of Rules 1301, 1302, 1303, 1304, and 1305 not fully approvable
because the District's NSR program is not consistent with CAA section
182(c)(6). Our basis for that finding is also explained in our
responses to Comments 9 and 10 above. In addition, the EPA's TSD
provides additional information regarding the deficiencies in these
rules, largely as a result of cross references to Rule 1304(C)(2)(d),
which allows SERs to be calculated using a baseline of allowable
emissions, not actual emissions. This deficiency affects the
calculation of net emissions increases in Rule 1304(B)(2). Therefore,
the use of the term ``net emissions increase'' or cross-references to
Rule 1304 affect the approvability of Rules 1301, 1302, 1303, and 1305.
Please see Table 4 of our TSD for additional information.
    The EPA's action to finalize a limited approval and limited
disapproval of Rules 1301, 1302, 1303, 1304, and 1305 into the SIP
means that the rules, as currently submitted, will be incorporated into
the SIP, but they must be revised and resubmitted to the EPA to avoid
sanctions and FIP consequences. As we stated in our proposed action, we
proposed limited approval and limited disapproval of these rules
because although they fulfill most of the relevant CAA requirements and
strengthen the SIP, they also contain certain deficiencies. Our final
action incorporates into the SIP the submitted rules listed in Table 2
for which we are fully approving or finalizing a limited approval/
limited disapproval, including those provisions we identified as
deficient.
    Comment #12: The District states that the issues with its NSR
program are substantially similar to those the EPA raised in the NPRM
for the MDAQMD's

NSR program.\57\ The District requests that the EPA not finalize this
action until the MDAQMD's issues are resolved, because any resolution
of the issues for the MDAQMD would presumably be similarly applied to
the District's program. The District states that if such a delay is not
possible, it requests that the EPA not object to the consolidation of a
challenge to this action in any future potential litigation involving
the MDAQMD's issues.
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    \57\ 87 FR 72434 (November 25, 2022).
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    Response to Comment #12: The EPA believes it will be efficient to
work with AVAQMD and MDAQMD simultaneously to resolve the identified
deficiencies for both NSR programs. The District's comment regarding
future potential litigation is outside the scope of this rulemaking and
no response is required.

B. Comments From the Cities of Lancaster and Palmdale

    The Cities of Lancaster and Palmdale state that they ``adopt[ ] and
join[ ] in the comment letter submitted by the Antelope Valley Air
Quality Management District (AVAQMD)'' and that they ``would like to
reiterate [the District's] comments in their entirety.'' The EPA's
responses to the District's comments are provided in section II.A. of
this document.

C. Comments From Northrop Grumman Corporation (``Northrop Grumman''),
Lockheed Martin Aeronautics Company--Palmdale (``Lockheed Martin
Aero''), and the United States Department of Defense (``DoD'')

    Northrop Grumman and Lockheed Martin Aero Comment #1: Both
commenters state that the proposed rulemaking identifies alleged
deficiencies that are currently approved into the SIP without
explanation for why previously approved provisions are now
inappropriate. The commenters state that the CAA has not been amended
since 1990 and that they have not identified any federal regulatory
changes or EPA guidance that provide a basis for determining that the
current rules are deficient. The commenters state that they would
appreciate an analysis and rationale for the changes to the EPA's
interpretations that render the previously approved NSR program
provisions now unacceptable.
    Response to Northrop Grumman and Lockheed Martin Aero Comment #1:
As the EPA stated in our response to the District's Comment #4, the
EPA's proposed action and TSD provide citations to the specific
provisions in the Act and its implementing regulations that are the
basis for the EPA's disapproval of certain specified provisions in the
District's revised NSR rules. 40 CFR 51.165(a)(3)(ii)(J) requires
offsets for each major modification at a major source in an amount
equal to the difference between pre-modification actual emissions and
post-modification PTE.\58\ The EPA interprets the language in the
regulation referring to ``the modification'' to mean each major
modification that is undertaken at a major source, with emphasis on the
word ``each.'' The EPA's interpretation of this provision is consistent
with our approval of other NSR SIP rules in the past.\59\ Since
approving rules from the District's Regulation XIII into the SIP in
1996, the EPA has revised the implementing regulations at 40 CFR 51.165
to clarify the Act's requirements several times. The 2002 revisions to
40 CFR 51.165 added 40 CFR 51.165(a)(3)(ii)(J).\60\ As we discussed in
this document and in our proposed action and accompanying TSD, the
District's submitted rules do not adequately address the requirements
in 40 CFR 51.165(a)(3)(ii)(J).\61\
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    \58\ See, e.g., EPA, ``Technical Support Document for the
Prevention of Significant Deterioration and Nonattainment Area New
Source Review Regulations,'' 67 FR 80185 (December 31, 2002), p. I-
6-11 (``With regard to the amount of emissions increase that must be
offset, consistent with our proposal, the new rules provide once a
physical or operational change is determined to be a major
modification (based on the `actual-to-projected-actual'
applicability test) the current definition of `actual emissions'
would continue to be used for other NSR purposes, including ambient
impact analyses. Based on this position, the new rules for
nonattainment NSR provide that the total tonnage of increased
emissions, in tons per year, resulting from a major modification
must be determined by summing the difference between the allowable
emissions after the modification and the `actual emissions' (as
defined by the current rules) before the modification for each
emissions unit affected by the modification. [Sec.  See
51.165(a)(3)(ii)(J)]''). See also 81 FR 50339, 50340 (August 1,
2016) (``40 CFR 51.165(a)(3)(ii)(J) directs SIPs to include rules to
ensure that the total tonnage of increased emissions, in tons per
year, resulting from a major modification that must be offset in
accordance with section 173 of the Act shall be determined by
summing the difference between the allowable emissions after the
modification and the actual emissions before the modification. This
provision requires providing offsets for each major modification at
a major source in an amount equal to the difference between pre-
modification actual emissions and post-modification PTE.'')
    \59\ See, e.g., ``Revisions to California State Implementation
Plan; Bay Area Air Quality Management District; Stationary Sources;
New Source Review;'' 83 FR 8822 (March 1, 2018); see also ``Revision
of Air Quality Implementation Plan; California; Sacramento
Metropolitan Air Quality Management District; Stationary Source
Permits;'' 78 FR 53270 (August 29, 2013).
    \60\ 67 FR 80185 (December 31, 2002).
    \61\ In our 2002 rulemaking, we also added the requirement in 40
CFR 51.165(a)(2)(ii) that deviations from federal definitions and
requirements are generally approvable only if a state specifically
demonstrates that the submitted provisions are more stringent, or at
least as stringent, in all respects as the corresponding federal
provisions and definitions. To date, the District has not made such
a demonstration.
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    Northrop Grumman and Lockheed Martin Aero Comment #2, and DoD
Comment: Northrop Grumman and Lockheed Martin Aero state that the EPA
would require the use of HAE or actual emissions even where a
particular Emissions Unit has already been offset in a past NSR
permitting action. The commenters take issue with the argument that
taking credit for these previously offset sources does not represent
``real reductions.'' The commenters state that their facility emission
limits, as well as individual permit limits, were created as a result
of facility shutdowns (the Ford Motor Company plant in Pico Rivera and
the Lockheed Martin Burbank facility). Both commenters state that at
the time of the Ford and Lockheed shutdowns, their facilities were
under the jurisdiction of SCAQMD, therefore ERCs were calculated
pursuant to SCAQMD Rule 1306(e)(2), based on ``actual emissions that
occurred each year during the two-year period immediately preceding the
date of permit application, or other appropriate period determined by
the Executive Officer or designee to be representative of the source's
cyclical operation, and consistent with federal requirements,'' and
included all adjustments or discounts required as well as payment of
any remaining NSR balances. Both commenters assert that these were not
``paper reductions'' but were instead real emissions reductions, and to
now determine those reductions as ``paper'' reductions is without
merit.
    Similarly, the DoD believes that emissions that are previously
offset through an approved New Source Review regulation represent
actual emission reductions as required by CAA section 173(c)(1), and as
such, can be used for calculating emission reductions pursuant to
1304(C)(2)(d). Fully offset emissions are not ``paper reductions'';
they represent actual reduction in emissions, banked and used following
approved regulatory procedures. DoD argues that the removal of this
provision would create a discriminatory situation in which a facility
that has previously provided offsets for emission sources or processes
is not differentiated from one that has received a permit without
providing offsets. DoD requests that the EPA reconsider this change so
that facilities have the incentive and flexibility to modify and
replace older emission sources to improve the air quality and achieve
military mission requirements.

    Response to Northrop Grumman and Lockheed Martin Aero Comment #2
and DoD Comment: The EPA disagrees with the comments, although we have
no argument with the commenters as to whether the reductions were real
at the time the offsets were originally used to permit the emissions
units. Instead, the intent of our statement was to clarify that because
such emissions reductions were previously used as offsets to create the
permitted allowable emissions, they are not real reductions for a
current project. 40 CFR 51.165(a)(3)(i)(A) establishes the federal
requirements for SIP rules concerning offsets. This provision states
that the baseline for determining credit for emissions reductions shall
be the actual emissions of the source from which the credits are
obtained, where the attainment plan is based on the actual emissions of
sources within the nonattainment area. The District's attainment plan
is based on actual emissions from permitted sources, thus triggering
the requirements of this provision.\62\ Thus, an emission unit's actual
emissions must be used as the baseline for calculating emission
reductions from an existing emission unit, regardless of whether it was
previously offset or not. Allowing credit for a reduction in previously
offset PTE is not creditable, because that portion of the reduction has
already been credited in the attainment plan demonstration.
Furthermore, 40 CFR 51.165(a)(3)(ii)(G) explicitly prohibits facilities
from using the same emissions reductions more than once. If a facility
relies upon emissions reductions for a prior NNSR permit action, those
emissions reductions are not eligible for use again in a future NNSR
permit action.
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    \62\ AVAQMD, ``Federal 70 ppb Ozone Attainment Plan (Western
Mojave Desert Nonattainment Area),'' for adoption on January 17,
2023, p. 24 (``The stationary source inventory is composed of point
sources and area-wide sources . . . The inventory reflects actual
emissions from industrial point sources reported to the Districts by
the facility operators through calendar year 2018.'' (emphasis
added)). See also, AVAQMD, ``Federal 75 ppb Ozone Attainment Plan
(Western Mojave Desert Nonattainment Area),'' March 21, 2017, p. 7
(``This document includes a comprehensive, accurate and current
inventory of actual emissions . . . .'').
---------------------------------------------------------------------------

    The commenters assert that reductions previously used to offset a
project may be used to offset emissions increases occurring in the
present day. These assertions are problematic--reductions used for
offsets must be ``surplus'' to reductions that were already required by
federal law (e.g., by other SIP-approved regulations such as CAA
section 182(b)(2) Reasonably Available Control Technology (RACT)
requirements and NSR permits). Because the offsets provided for the
existing equipment were already ``relied'' upon to issue an NSR permit,
they cannot be used again to issue another NSR permit. The commenters
reference ERCs awarded to them by SCAQMD; since AVAQMD was formed in
1997, reductions that were credited by SCAQMD must have occurred at
least 20 years in the past.\63\ We note here that in our proposed
action, we did not identify the prohibition of reliance on previously-
used offsets as a deficiency in the District's rules, but the issue
relates to the same deficient provision that we identified: Rule
1304(C)(2)(d). We determined that it is appropriate to include an
explanation of the requirements stated in 40 CFR 51.165(a)(3)(i)(A) and
40 CFR 51.165(a)(3)(ii)(G) to fully respond to the commenters.
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    \63\ We note that the shutdowns of the facilities referenced in
the comments appear to have occurred in the 1980's or early 1990s.
See, e.g., EPA, ``Reuse and the Benefit to Community: San Fernando
Valley (Area 1) Superfund Site: Burbank,'' October 2018, p. 1 (``The
closure of the Lockheed Martin facility in 1991 presented a
redevelopment opportunity, while the groundwater cleanup presented a
challenge in a water-scarce region.''), available at: https://semspub.epa.gov/work/HQ/100002333.pdf; see also, The New York Times,
``Northrop to Buy Vacant Ford Plant,'' February 5, 1982 (``Ford
discontinued assembly operations at the plant in January, 1980.''),
available at: https://www.nytimes.com/1982/02/05/business/northrop-to-buy-vacant-ford-plant.html.
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    The requirements stated in 40 CFR 51.165(a)(3)(i)(A) and 40 CFR
51.165(a)(3)(ii)(G) are consistent with the statutory provisions stated
in CAA section 173(c)(1), which the DoD asserts is satisfied when
previously offset emissions are treated as actual emission reductions
for a current project, a statement with which we disagree. The CAA and
its implementing regulations require a pre-construction analysis of
each project at a major source to determine whether the project will
result in a significant emissions increase and a significant net
emissions increase, and if so, the quantity of reductions necessary to
offset the significant emissions increase. CAA section 173(c)(1)
requires NSR SIPs to offset the ``total tonnage of increased emissions
of the air pollutant from the new or modified source by an equal or
greater reduction, as applicable, in the actual emissions of such air
pollutant,'' and that ``[s]uch emission reductions shall be, by the
time a new or modified source commences operation, in effect and
enforceable . . . .'' As we explained above, because the District's
attainment plan is based on actual emissions from permitted sources, an
emission unit's actual emissions must be used as the baseline for
calculating emission reductions from an existing emission unit,
regardless of whether it was previously offset or not.
    In terms of calculating offset quantities, 40 CFR
51.165(a)(3)(ii)(J) is plainly stated as a discrete requirement
applicable to each proposed major modification. This provision requires
offsets for each major modification at a major source in an amount
equal to the difference between pre-modification actual emissions and
post-modification potential to emit, which is generally equivalent to
allowable emissions. The EPA interprets the language in the regulation
referring to ``the modification'' to mean each major modification that
a facility undertakes at a major source. The EPA's interpretation of
this provision is consistent with our approval of other NSR SIP
rules.64 65
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    \64\ See, e.g., ``Revisions to California State Implementation
Plan; Bay Area Air Quality Management District; Stationary Sources;
New Source Review,'' 83 FR 8822 (March 1, 2018); see also ``Revision
of Air Quality Implementation Plan; California; Sacramento
Metropolitan Air Quality Management District; Stationary Source
Permits,'' 78 FR 53270 (August 29, 2013).
    \65\ In response to the DoD's assertion that the federal
requirements ``would create a discriminatory situation,'' we
maintain that the permit application process should be sufficient to
enable the District to determine the quantity and status of offset
credits and reductions; diligent implementation of the federal
requirements will avoid confusion and unfair outcomes. Removal of
the use of a PTE-to-PTE test would align the District's NNSR program
with the same federal NNSR program that is applicable in all other
areas. We do not see this as discriminatory.
---------------------------------------------------------------------------

    Northrop Grumman and Lockheed Martin Aero Comment 3: Northrop
Grumman and Lockheed Martin Aero state that the AVAQMD's NSR rules
assure that increased emissions are offset by enforceable reductions in
actual emissions. The commenters state that the CAA and its
implementing regulations require that emission increases from new and
modified sources in nonattainment areas are offset by emissions
reductions that:

    (1) Are ``in effect and enforceable'' (CAA section 173(c))
(emphasis in original comment);
    (2) are ``creditable to the extent that the old level of actual
emissions . . . exceeds the new level of actual emissions'' (40 CFR
51.165(a)(1)(vi)(E)(1)) (emphasis in original comment); and
    (3) amount to the sum of ``the difference between allowable
emissions after the modification . . . and the actual emissions
before the modification'' (40 CFR(a)(3)(ii)(J)) (emphasis in
original comment).

    The commenters state that despite the EPA's reservations about the
District's use of a PTE baseline for calculating SERs for previously
offset sources, the District's rules do just as the CAA requires. The
commenters argue that the

District's SER calculations are in fact what turn temporary and
unenforceable reductions into actual, permanent, and enforceable
reductions, which may be properly credited as offsets or against
emission increases when measuring a net emissions increase.
    Response to Northrop Grumman and Lockheed Martin Aero Comment #3:
The EPA disagrees with the comments. As the commenters state, 40 CFR
51.165(a)(1)(vi)(E)(1) specifies that emission reductions are
creditable as offsets to the extent that the old level of actual
emissions . . . exceeds the new level of actual emissions.'' This
provision clearly indicates that the baseline for calculating an
emissions reduction is the current actual level of emissions, not the
allowable emissions, as suggested by the commentor. As we explained in
our proposed action, the District's program is deficient because it