[Federal Register Volume 81, Number 156 (Friday, August 12, 2016)]
[Rules and Regulations]
[Pages 53300-53308]
[FR Doc No: 2016-18903]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R09-OAR-2015-0489; FRL-9950-19-Region 9]

Revision to the California State Implementation Plan; San Joaquin
Valley; Demonstration of Creditable Emission Reductions From Economic
Incentive Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: The Environmental Protection Agency (EPA) is finalizing a
limited approval and limited disapproval of a demonstration of
creditable emission reductions submitted by California for approval
into the San Joaquin Valley (SJV) portion of the California State
Implementation Plan (SIP). This SIP submittal demonstrates that certain
state incentive funding programs have achieved specified amounts of
reductions in emissions of nitrogen oxides (NOX) and fine
particulate matter (PM2.5) in the SJV area by 2014. The
effect of this action would be to approve specific amounts of emission
reductions for credit toward an emission reduction commitment in the
California SIP. We are approving these emission reductions under the
Clean Air Act (CAA or the Act).

DATES: This rule is effective on September 30, 2016.

ADDRESSES: The EPA has established docket number EPA-R09-OAR-2015-0489
for this action. Generally, documents in the docket for this action are
available electronically at http://www.regulations.gov or in hard copy
at EPA Region IX, 75 Hawthorne Street, San Francisco, California 94105-
3901. While all documents in the docket are listed at http://www.regulations.gov, some information may be publicly available only at
the hard copy location (e.g., copyrighted material, large maps, multi-
volume reports), and some may not be available in either location
(e.g., confidential business information (CBI)). To inspect the hard
copy materials, please schedule an appointment during normal business
hours with the contact listed in the FOR FURTHER INFORMATION CONTACT
section.

FOR FURTHER INFORMATION CONTACT: Idalia P[eacute]rez, EPA Region IX,
(415) 972 3248<EMAIL_ADDRESS>
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. Statutory and Executive Order Reviews

I. Proposed Action

    On August 24, 2015 (80 FR 51147), the EPA proposed to approve the
``Report on Reductions Achieved from Incentive-based Emission Reduction
Measures in the San Joaquin Valley'' (Emission Reduction Report) and,
based on California's documentation therein of actions taken by
grantees in accordance with the identified incentive program
guidelines, to approve 7.8 tpd of NOX emission reductions
and 0.2 tpd of PM2.5 emission reductions for credit toward
the State's 2014 emission reduction commitments in its 2008 plan to
provide for attainment of the 1997 PM2.5 National Ambient
Air Quality Standards (NAAQS) in the San Joaquin Valley (hereafter
``2008 PM2.5 Plan'').\1\ The California Air Resources Board
(CARB) adopted the Emission Reduction Report on October 24, 2014 and
submitted it to EPA as a revision to the California SIP on November 17,
2014. We proposed to approve the Emission Reduction Report based on a
determination that it satisfied the applicable CAA requirements. Our
proposed action contains more information on the Emission Reduction
Report and our evaluation.
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    \1\ The 2014 emission reduction commitments are codified at 40
CFR 52.220(c)(356)(ii)(B)(2) and 52.220(c)(392)(ii)(A)(2). 76 FR
69896, 69926 (November 9, 2011).
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II. Public Comments and EPA Responses

    The EPA's proposed action provided a 30-day public comment period.
During this period, we received comments from Adenike Adeyeye,
Earthjustice, by email dated and received September 16, 2015. The
comments and our responses are summarized below.
    Comment 1: Earthjustice asserts that the emission reductions
identified in the Emission Reduction Report are not enforceable by the
public and therefore should not be approved into the SIP. According to
Earthjustice, the Carl Moyer program allows air districts to enter into
emission reduction agreements with grant recipients, with CARB added to
contracts as a third party with enforcement rights, but does not enable
the public to enforce these emission reduction agreements entered into
among CARB, the air district, and the grant recipient. Earthjustice
argues that the EPA's enforceability criteria require that citizens
have access to all emissions-related information obtained from
participating sources and be able to file suit against a responsible
entity for violations, and that the Emission Reduction Report does not
meet these criteria.
    Response 1: We agree with the commenter's statement that the public
cannot enforce the agreements entered into among CARB, an air district
and a grant recipient but disagree with the commenter's suggestion that
this renders the Emission Reduction Report inconsistent with the EPA's
enforceability criteria. This Emission Reduction Report was submitted
to demonstrate that that a portion of the emission reductions required
under a previously approved SIP commitment have in fact been achieved--
not to satisfy a future emission reduction requirement--and thus it
does not need to provide a citizen enforcement mechanism.
    As we explained in our proposed rule, where a state relies on a
discretionary economic incentive program (EIP) or other voluntary
measure to satisfy an attainment planning requirement under the CAA
(e.g., to demonstrate that specific amounts of emission reductions will
occur by a future milestone date),

the state must take responsibility for assuring that SIP emission
reduction requirements are met through an enforceable commitment, which
becomes federally enforceable upon approval into the SIP. 80 FR 51147,
51150. Thus, had CARB submitted the Emission Reduction Report to
satisfy a future emission reduction requirement under the CAA, an
enforceable state commitment to assure that the required emission
reductions occur would be necessary to satisfy the Act's enforceability
requirements. The purpose of the Emission Reduction Report, however, is
to demonstrate that a portion of the emission reductions required under
a previously-approved SIP commitment have in fact been achieved, not to
satisfy a future emission reduction requirement. See id. at 51150-
51151. Accordingly, it is not necessary to require the State to submit,
as part of this particular SIP submission, additional commitments to
achieve future emission reductions.
    The EPA evaluated the Emission Reduction Report in accordance with
the Agency's guidance on discretionary EIPs. See 80 FR 51147, 51149-50
(citing, inter alia, U.S. EPA, ``Improving Air Quality with Economic
Incentive Programs,'' January 2001 (hereafter ``2001 EIP Guidance'')).
A discretionary EIP uses market-based strategies to encourage the
reduction of emissions from stationary, area, and/or mobile sources in
an efficient manner. See 2001 EIP Guidance at 3. To qualify for
approval as a discretionary EIP, emission reductions or actions leading
to reductions must be enforceable either by the State or by the EPA,
and the State must be directly responsible for ensuring that program
elements are implemented. See id. at 157-158 (states may use the 2001
EIP Guidance where ``[a]ctions and/or emission reductions by
identifiable sources are enforceable by [the State] and/or by the
EPA'').
    A ``financial mechanism EIP'' is an EIP that indirectly reduces
emissions by increasing costs for high emitting activities--e.g.,
through subsidies targeted at promoting pollution-reducing activities
or products. See 2001 EIP Guidance at 119-122. The EPA has identified
several attributes that may make subsidy financial mechanism EIPs
successful, including: (1) The relevant governmental body possesses
legal authority to provide subsidies; (2) the subsidies address
activities reasonably related to actual emissions or potential
emissions; (3) where projected emission reductions are based on changes
in behavior, methods for verifying that such reductions have taken
place to the degree projected are generally accepted as unbiased and
trustworthy; and (4) if needed, adequate penalty provisions are in
place to ensure that the subsidy is used as expected. See 2001 EIP
Guidance at 27 (``Attributes That Make Subsidy Financial Mechanism EIPs
Successful'').
    As explained further in Response 2 below, the portions of the
Proposition 1B: Goods Movement Emission Reduction Program (Prop 1B
program) and Carl Moyer Memorial Air Quality Standards Attainment
Program (Carl Moyer Program) guidelines discussed in the Emission
Reduction Report are consistent with the EPA's recommendations for
``financial mechanism EIPs'' in the 2001 EIP Guidance. First, CARB and
the District are directly responsible for ensuring that the Prop 1B
program and Carl Moyer Program are implemented in accordance with State
law. See 2010 Prop 1B guidelines at 1-4 (``Overview'') and 2011 Carl
Moyer Program Guidelines at Chapter 1 (``Program Overview''). Second,
the incentive programs discussed in the Emission Reduction Report
address actions reasonably related to actual air pollutant emissions,
e.g., by requiring grant recipients to purchase and operate newer,
cleaner vehicles or equipment in place of older, more-polluting
vehicles or equipment, subject to detailed contract requirements.
Third, the relevant portions of the 2008 and 2010 Prop 1B guidelines
and the 2005, 2008 and 2011 Carl Moyer Program Guidelines establish a
number of methods for verifying that projected emission reductions have
taken place through compliance with the terms and conditions of each
funding contract. Finally, under the applicable guidelines, actions by
grantees that lead to emission reductions are directly enforceable by
the State and/or the District--e.g., CARB and/or the District may
assess fiscal penalties and take certain corrective actions where
contract violations are identified. Consistent with the EPA's
recommendations for ``financial mechanisms EIPs,'' these provisions in
the 2008 and 2010 Prop 1B guidelines and the 2005, 2008 and 2011 Carl
Moyer Program Guidelines are adequate to ensure that program funds are
used as expected--i.e., to reduce emissions from higher-polluting
vehicles and equipment by replacing them with newer, lower-polluting
equipment and vehicles. Based on our more detailed evaluations of 11
randomly selected projects from among those listed in the Emission
Reduction Report, we find that the projects identified in the Emission
Reduction Report were implemented as required under the applicable
program guidelines and achieved the emission reductions projected for
those projects, with the exception of one source category. See Response
2.
    In sum, although an enforceable state commitment would ordinarily
be necessary for a SIP submission that relies on a discretionary EIP to
satisfy CAA enforceability requirements, such a commitment is not
necessary in this case because the Emission Reduction Report was not
submitted to satisfy a future emission reduction requirement and,
instead, demonstrates only that certain Prop 1B program and Carl Moyer
Program incentive projects achieved specified amounts of emission
reductions in the past. The portions of the Prop 1B program and Carl
Moyer Program guidelines that apply to the identified incentive
projects ensure that program funds are used as expected and that the
EPA and citizens have access to all emissions-related information
obtained from participating sources. Based on our review of the
available project records for a subset of the projects identified in
the Emission Reduction Report, we find that the identified projects
achieved the necessary emission reductions, with the exception of one
source category discussed further below. Therefore, it is not necessary
for the Emission Reduction Report to provide a mechanism for citizen
suits against a responsible entity.
    Comment 2: Earthjustice argues that, based on the information
presented in the Emission Reduction Report, citizens cannot even obtain
the information necessary to quantify and verify emission reductions.
For example, Earthjustice states that the total project life for each
stationary and portable farm engine funded through the Carl Moyer
program varies from two years to ten years and that project life
varies, in part, because emission reductions cannot be counted as
surplus after the compliance date for a regulation applicable to that
project. Earthjustice states that CARB is required to ensure that
emission reductions from projects are no longer counted as SIP-
creditable emission reductions after that compliance date but argues
that ``[n]either EPA nor the public has any way of knowing whether or
not these projects were counted during only the years in which they
were surplus because CARB does not provide enough information to
determine a project's compliance date.''
    According to Earthjustice, to determine whether the stationary and
portable farm engine projects were counted only for the years during
which

they could be considered surplus, one would need to know: What type of
engine was used as a replacement; the horsepower of the engine used as
a replacement; tier of the original agricultural engine; and fleetwide
particulate matter (PM) levels.
    Response 2: We disagree with the commenter's claim that citizens
cannot obtain the information necessary to quantify and verify emission
reductions. As we explained in the technical support document
supporting our proposed rule and as explained in further detail below,
the emission reductions identified in the Emission Reduction Report can
be independently verified and the public has access to emissions-
related information due to several requirements in the 2008 and 2010
Prop 1B guidelines and the 2005, 2008 and 2011 Carl Moyer Program
guidelines. See U.S. EPA Region 9, Air Division, ``Technical Support
Document for EPA's Notice of Proposed Rulemaking for the California
State Implementation Plan, Report on Reductions Achieved from
Incentive-Based Emission Reduction Measures in the San Joaquin
Valley,'' August 2015 (``Proposal TSD'') at 7-15. We discuss the
relevant guideline provisions in more detail below.
    First, actions required of grantees under the applicable portions
of the Prop 1B and Carl Moyer Program guidelines are independently
verifiable through (1) pre-project and post-project on-site inspections
(with photographic documentation) that the District and/or CARB must
carry out pursuant to the applicable guidelines, and (2) documents that
each grantee is required to maintain and/or submit to the District in
accordance with detailed contract provisions. See generally 2008 Prop
1B guidelines at Section III.D (``Local Agency Project Implementation
Requirements''), Section IV (``General Equipment Project
Requirements''), and Appendix A, Section C (``Recordkeeping
Requirements'') and Section D (``Annual Reporting Requirements''); 2010
Prop 1B guidelines at Section IV.A (``Project Implementation
Requirements''), Section VI (``General Equipment Project
Requirements''), and Appendix A, Section F (``Recordkeeping
Requirements'') and Section G (``Annual Reporting Requirements''); 2005
Carl Moyer Guidelines, Part I, Chapter 2 (``Administration of the Carl
Moyer Program''); 2008 Carl Moyer Guidelines, Part III (``Program
Administration'') and 2011 Carl Moyer Program Guidelines, Part I,
Chapter 3 (``Program Administration'').
    For example, the 2008 and 2010 Prop 1B guidelines require, among
other things, that (1) all project applications include documentation
of current equipment and activity information (e.g. engine make, model,
horsepower and fuel type, annual vehicle miles of travel (VMT) in
California, and estimated percentage of annual VMT in trade corridors);
(2) that the District conduct a ``pre-inspection'' of each application
deemed eligible for funding, to verify information regarding the
baseline engine, vehicle, or equipment; (3) that the District conduct a
``post-inspection'' of each funded project to record, among other
things, identifiers and specifications for the new engine/equipment
(e.g., Vehicle Identification Numbers (VIN) for new trucks, serial
numbers for new engines), and verification that the new engine/
equipment is operational and consistent with the old/replaced
equipment, where applicable; and (4) that the District's pre-inspection
and post-inspection project files include photographic documentation of
each piece of equipment being inspected, including an engine serial
number, visible distinguishing identification (e.g., a license plate),
and a full view of the equipment. See 2008 Prop 1B guidelines at
Section III.D.8 (``Equipment project pre-inspections'), Section
III.D.14 (``Equipment project post-inspections''), Section IV.D
(``Equipment Project Application Requirements'') and Appendix A,
Section F (``Application Information''); 2010 Prop 1B guidelines at
Section IV.A.10 (``Equipment project pre-inspections''), Section
IV.A.16 (``Equipment project post-inspections''), Section VI.D
(``Equipment Project Application Requirements'') and Appendix A,
Section F (``Application Information''); see also Proposal TSD at 14-
15.
    Similarly, the 2005, 2008 and 2011 Carl Moyer Program Guidelines
require, among other things, that (1) all project applications include
documentation of existing engine usage in previous years (e.g. miles
traveled, hours operated, or fuel consumed per year); (2) that the
District conduct a ``pre-inspection'' of each application deemed
eligible for funding, to verify information regarding the baseline
engine, vehicle, or equipment; (3) that the District conduct a ``post-
inspection'' of each funded project to record, among other things,
information regarding the new engines, vehicles/equipment, and retrofit
devices as needed to provide a basis for emission calculations and to
ensure contract enforceability; and (4) that the District's pre-
inspection and post-project files include photographic documentation of
the engine, vehicle, or equipment information, including a legible
serial number and/or other identifying markings. See 2005 Carl Moyer
Program Guidelines, Part I, Chapter 2 at Section V.D (``Project
Applications''), Section IX.A (``Pre-Inspection''), and Section IX.B
(``Post-Inspection''); 2008 Carl Moyer Program Guidelines, Part III,
Part II at Section 26 (``Minimum Project Application Requirements''),
Section 30 (``Project Pre-Inspections''), and Section 31 (``Post-
Inspection''); 2011 Carl Moyer Program Guidelines, Part I, Chapter 3,
at Section W (``Minimum Project Application Requirements''), Section AA
(``Project Pre-Inspection''), and Section BB (``Project Post-
Inspection''); see also Proposal TSD at 8-9.
    Second, the applicable portions of the 2008 and 2010 Prop 1B
guidelines and the 2005, 2008 and 2011 Carl Moyer Program guidelines
specifically define the required elements of each contract and the
types of actions that constitute violations of such contracts. For
example, under the 2008 and 2010 Prop 1B guidelines, each equipment
project contract must include: (1) A unique ``tracking number''; (2)
the equipment owner's contact information; (3) the original application
submitted by the equipment owner; (4) requirements for the equipment
owner to submit reports to the local agency annually or biennially; (5)
the equipment owner's agreement to allow ongoing evaluations and audits
of equipment and documentation by the District, CARB, or their
designated representative(s); and (6) requirements for the equipment
owner to retain all records pertaining to the program (i.e., invoices,
contracts, and correspondence) for at least two years after the
equipment project ends or three years after final payment, whichever is
later. See 2008 Prop 1B guidelines at Section III.D.10 (``Equipment
project contracts'') and 2010 Prop 1B guidelines at Section IV.A.11
(``Equipment project contracts''); see also Proposal TSD at 14-15.
Additionally, under the same guidelines, the following actions (among
others) are specifically identified as contract violations: (1) Failure
to meet the terms and conditions of an executed equipment project
contract, including equipment operating conditions and geographic
restrictions; (2) failure to allow for an electronic monitoring device
or tampering with an installed device or data; (3) insufficient,
incomplete, or faulty equipment project documentation; and (4) failure
to provide required documentation or reports in a timely manner. See
2008 Prop 1B guidelines at Section IV.G

(``Equipment Project Non-Performance'') and 2010 Prop 1B guidelines at
VI.I (``Equipment Project Non-Performance''); see also Proposal TSD at
14-15.
    Similarly, under the 2005, 2008 and 2011 Carl Moyer Program
Guidelines, each equipment project contract must include: (1) The name
and contact information of the grantee; (2) specified timeframes for
``project completion'' (the date the project post-inspection confirms
that the project has become operational) and ``project implementation''
(the project life used in the project cost-effectiveness calculation);
(3) detailed information on both baseline and new vehicles, equipment,
and/or engines, including documentation adequate to establish
historical annual usage; (4) requirements for the grantee to maintain
the vehicle, equipment and/or engine according to the manufacturer's
specifications for the life of the project; (5) annual reporting
requirements; (6) a provision authorizing the District, CARB, and their
designees to conduct fiscal audits and to inspect the project engine,
vehicle, and/or equipment and associated records during the contract
term, and (7) requirements to maintain and retain project records for
at least two years after contract expiration or three years after final
project payment, whichever is later. See 2005 Carl Moyer Program
Guidelines, Part I, Chapter 2 at Section VIII (``Minimum Contract
Requirements''); 2008 Carl Moyer Program Guidelines, Part III, Part III
at Section 29 (``Minimum Contract Requirements''); and 2011 Carl Moyer
Program Guidelines, Part I, Chapter 3 at Section Z (``Minimum Contract
Requirements''). Additionally, the 2011 Carl Moyer Program Guidelines
explicitly require that each contract ``specify that by executing the
contract, the grantee understands and agrees to operate the vehicle,
equipment, and/or engine according to the terms of the contract'' and
describe the potential repercussions to the grantee for non-compliance
with contract requirements. See 2011 Carl Moyer Program Guidelines,
Part I, Chapter 3 at Section Z.11 (``Repercussions for Non-
Performance'') and Section FF (``Nonperforming Projects''); see also
2005 Carl Moyer Program Guidelines, Part I, Chapter 2 at Section VIII.G
(``Repercussions for Nonperformance''); and 2008 Carl Moyer Program
Guidelines, Part III, Part III at Section 35 (``Nonperforming
Projects''). The 2011 Carl Moyer Program Guidelines also specifically
identify types of actions on the part of the District that CARB may
treat as violations of program requirements--e.g., misuse of Carl Moyer
Program funds and insufficient, incomplete, or inaccurate project
documentation. See 2011 Carl Moyer Program Guidelines at Section U
(``Program Non-Performance'').
    Third, the applicable portions of the Prop 1B guidelines and Carl
Moyer Program guidelines require that all grantees submit specific
types of project records to the District and also require the District
to maintain such records for specified periods of time. Specifically,
as discussed above, under the 2008 Prop 1B guidelines, the 2010 Prop 1B
guidelines, and the 2005, 2008 and 2011 Carl Moyer Program guidelines,
each contract executed by the District must require the grantee to
maintain project records for at least two years after contract
expiration or three years after final project payment, whichever is
later, and to submit annual or biennial reports to the District. See
2008 Prop 1B guidelines at Section III.D.10 (``Equipment project
contracts''), 2010 Prop 1B guidelines at Section IV.A.11 (``Equipment
project contracts''), 2005 Carl Moyer Program Guidelines, Part I,
Chapter 2 at Section VIII (``Minimum Contract Requirements''); 2008
Carl Moyer Program Guidelines, Part III, Part III at Section 29
(``Minimum Contract Requirements''); and 2011 Carl Moyer Program
Guidelines, Part I, Chapter 3 at Section Z (``Minimum Contract
Requirements''); see also Proposal TSD at 8-9 and 14-15. Additionally,
the 2008 Prop 1B guidelines require the District to retain all
``program records'' (e.g., invoices, contracts, and correspondence) for
at least two years after the project ends or three years after final
payment, whichever is later. See 2008 Prop 1B guidelines, Chapter II,
Section D.10.b (``General Program provisions''). The 2010 Prop 1B
guidelines require the District to retain ``program records'' for 35
years after the bond issuance date providing the funds for the grant,
or to send all records to CARB by the end date of the grant agreement.
See 2010 Prop 1B guidelines, Chapter II, Section E.10.b (``General
Program provisions''). Under the Carl Moyer Program Guidelines, the
District must keep each ``project file'' for a minimum of two years
after the end of the contract term or a minimum of three years after
final payment, whichever is later. See 2011 Carl Moyer Program
Guidelines, Chapter 3, Section V (``ARB Audit of Air Districts'') at 3-
25. A ``project file'' generally includes a copy of the application, a
completed pre- and post-inspection form, and the annual reports
submitted by the grantee. See id. at Section X.6, Section AA.4, Section
BB.1.(G), and Section DD.3. These requirements of the Carl Moyer
Program and Prop 1B guidelines ensure that grantees submit, and that
the District maintains, project documents sufficient for the EPA and
the public to verify the emission reductions attributed to these
projects in the Emission Reduction Report.
    To demonstrate how the public can quantify and verify the emission
reductions identified in the Emission Reduction Report, we randomly
selected 0.5% of the projects in Appendix H of the Emission Reduction
Report and requested that CARB provide to us the information necessary
to verify the emission reduction calculations for these projects. From
Appendix H.1, which lists the Carl Moyer projects included in the
Emission Reduction Report, we randomly selected the projects identified
in Table 1.

                                      Table 1--Selection of Carl Moyer Projects From the Emission Reduction Report
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                                                                                Post
       Project No.           Carl Moyer      Source category           Technology           inspection     Project life      2014 NOX       2014 PM2.5
                           Guideline year                                                      date                            (tpy)           (tpy)
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G-0014-A.................            2008  Off-Road Equipment-- Retrofit................        12/28/10               5           0.000           0.018
                                            Construction.
S-1301...................            2005  Off-Road Equipment-- Repower.................        10/16/09               7           2.610           0.092
                                            Mobile                                              08/17/09               7           4.040           0.120
                                            Agricultural.
C-2570...................            2005  Stationary and       Repower.................        01/12/10              10           9.880           0.331
                                            Portable                                            01/12/10               5           7.070           0.129
                                            Agricultural
                                            Engines.

C-14205..................            2011  Stationary and       Repower.................        04/25/14              10           1.570           0.055
                                            Portable
                                            Agricultural
                                            Engines.
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    From Appendix H.2, which lists the Prop 1B Heavy Duty Diesel Truck
Replacement projects included in the Emission Reduction Report, we
randomly selected the projects identified in Table 2.

                    Table 2--Selection of Prop 1B Projects From the Emission Reduction Report
----------------------------------------------------------------------------------------------------------------
                                                                         Post-
       Equipment project ID             Prop 1B      Contract term    inspection       2014 NOX      2014 PM2.5
                                    Guideline year                       date          (lbs/yr)       (lbs/yr)
----------------------------------------------------------------------------------------------------------------
G08GMCT1_03079....................            2010               5        01/02/13    10281.31771<PHONE_NUMBER>
G08GMCT1_00642....................            2010               5        08/21/12     1724.9954     164.035448
G08GMCT1_02930....................            2010               5        07/25/13        0            0
G07GMCT3_01246....................            2008               5        06/01/10     8012.6276     235.703448
G07GMCT3_00301....................            2008               5        09/30/10      394.2153      22.0965876
G07GMCT3_00437....................            2008               5        01/01/11     3756.22742<PHONE_NUMBER>
G07GMCT3_00377....................            2008               5        03/04/11     2909.28645     92.691702
----------------------------------------------------------------------------------------------------------------

    We independently calculated the emission reductions for the
selected projects using additional project information submitted by
CARB at our request and found that the emission reduction calculations
for all of the selected projects were replicable, with the exception of
one project that was erroneously included in the Emission Reduction
Report and accounted for 0 reductions. See U.S. EPA Region 9,
Memorandum to File dated April 26, 2016, ``Sample emission reduction
calculations for selected Carl Moyer and Prop 1B projects,'' Docket No.
EPA-R09-OAR-2015-0489 and references therein. Additionally, at our
request, CARB submitted the project application, grant agreement and
documentation of destruction for one Carl Moyer Program project
(Project Number C-2570, Stationary and Portable Agricultural Engines,
Repower, 2005 Carl Moyer Guidelines) and one Prop 1B Program project
(Equipment Project ID G07GMCT3_01246, Heavy Duty Diesel Truck
Replacement, 2008 Prop 1B Guidelines). See email dated April 19, 2016,
from Sylvia Vanderspek (CARB) to Jeanhee Hong (USEPA Region 9),
including attachments. We evaluated the information contained in these
project records to verify CARB's emission reduction calculations in the
Emission Reduction Report.
    For Carl Moyer project C-2570, the project application contains
information about the existing and new engine (including engine make,
model year, horsepower, and tier), engine function and type (e.g.,
stationary or portable), the project life, the hours of operation, and
percentage of usage in the San Joaquin Valley. See San Joaquin Unified
Valley Air Pollution Control District (SJVUAPCD), Application C-2570,
Heavy-Duty Engine Program Agricultural Pump Engine Component, Diesel
Engine to Electric Motor Repower Option (``Carl Moyer Application C-
2570'') at section 2, section 3 and accompanying table (``For Internal
Use Only'')).\2\ The project agreement, which is the contract between
the grantee and the SJVUAPCD, includes a description of the engines, a
requirement to destroy the existing engine, the duration of the terms
of the agreement, annual reporting requirements, a noncompliance
provision for reporting, and provisions concerning District audits. See
SJVUAPCD, Agreement C-2570, Heavy-Duty Engine Emission Reduction
Incentive Program Funding Agreement (Electric Agricultural Pump Motor
Repower), July 30, 2009 (``Carl Moyer Agreement C-2570'') at section 2,
section 3, section 5, section 6, and section 21. Finally, pre- and
post-inspection monitoring reports for project C-2570 include
photographic evidence of engine information and destruction of the old
engine. See Heavy-Duty Program Monitoring Report, pre-inspection and
post inspection, project number C-2570 (``Carl Moyer Monitoring Reports
C-2570''). Consistent with the requirements of the 2005 Carl Moyer
Program guidelines at Part I, chapter 2, sections V.D, VIII, and IX,
these project records contain all of the information necessary to
verify whether project C-2570 was implemented as required and achieved
the emission reductions calculated for this project.
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    \2\ Personal information has been redacted from each document
for privacy reasons.
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    Similarly, for Prop 1B project G07GMCT3_01246, the project
application contains information about the existing and new engine
(including engine make, model year, gross vehicle weight rating (GVWR),
Vehicle Identification Number (VIN), and horsepower), the annual
vehicle-miles-traveled (VMT) for both the existing and new engine, and
percentage of usage in the San Joaquin Valley. See SJVUAPCD,
Application P-0442,\3\ Proposition 1B: Good Movement Emission Reduction
Program Component, Truck Replacement (``Prop 1B Application
G07GMCT3_01246'') at sections 2-4.\4\ The project agreement, which is
the contract between the grantee and the SJVUAPCD, includes a
description of the existing and new engines, a requirement to destroy
the existing engine, the duration of the terms of the

agreement, annual reporting requirements, nonperformance provisions,
and provisions concerning District audits. See SJVUAPCD, Agreement P-
0442-A, Proposition 1B: Goods Movement Emission Reduction Program
Funding Agreement (Truck Replacement), March 16, 2010 (``Prop 1B
Agreement G07GMCT3_01246'') at sections 2, 3, 5, 6.F, 7, 12, and 23.
Finally, post-inspection monitoring reports for project G07GMCT3_01246
include photographic evidence of engine information and destruction of
the old engine. See Proposition 1B Program Truck Replacement Option,
Exist (Old) Truck Post-Monitoring Inspection, Project Number P-0442-A
(``Prop 1B Monitoring Reports G07GMCT3_01246''). Consistent with the
requirements of the 2008 Prop 1B Guidelines at sections III.D.10,
III.D.14, IV.D and Appendix A, Section F, these project records contain
all of the information necessary to verify whether Project
G07GMCT3_01246 was implemented as required and achieved the emission
reductions calculated for this project.
---------------------------------------------------------------------------

    \3\ These project documents are labeled with the District-only
identification number ``P-0442.'' According to CARB, the Goods
Movement Online Database (GMOD) includes both the District
identifier (P-0442) and the CARB Equipment Project ID
(G07GMCT3_01246). See email dated May 9, 2016, from Austin Hicks
(CARB) to Idalia P[eacute]rez (USEPA Region 9), RE: ``Prop 1B
Application I Numbers'' and Memorandum dated May 2, 2016, from
Idalia P[eacute]rez (USEPA Region 9) to File, RE: ``Call with ARB
regarding questions on Prop 1B documentation.''
    \4\ Personal information has been redacted from each document
for privacy reasons.
---------------------------------------------------------------------------

    Any member of the public can obtain project-related documents
maintained by the State and/or District by submitting a request for
such documents under the California Public Records Act. See Ca. Gov't
Code Sec. Sec.  6250-6276.48. Accordingly, the EPA and citizens can
obtain the information necessary to quantify and verify the emission
reductions identified in the Emission Reduction Report.
    We also disagree with Earthjustice's assertion that there is no way
to verify whether the emission reductions attributed to the projects
identified in the Emission Reduction Report are ``surplus'' to existing
requirements. As an initial matter, we note that both the Carl Moyer
Program guidelines and the Prop 1B guidelines generally require that
funded projects achieve emission reductions not required by any
federal, state or local regulation or other legal mandate. See 2005
Carl Moyer Guidelines, Part I, Section VIII.D; 2008 Carl Moyer
Guidelines, Part III, Section (27)(i); 2011 Carl Moyer Guidelines, Part
1, Chapter 2; 2008 Prop 1B Guidelines, Section III.B.1 at 47; and 2010
Prop 1B Guidelines, Section III.B.1 at 57.
    Earthjustice highlights ``stationary and portable farm engines'' as
a source category for which the project life varies from two to ten
years and claims that there is no way to know whether or not these
projects were counted for only the years in which their emission
reductions were surplus. We assume the commenter intended to refer to
the ``Stationary and Portable Agricultural Engines'' source category
under the Carl Moyer Program. Two of the Carl Moyer projects that we
randomly selected for evaluation (identified in Table 1) are within
this source category (project numbers C-2570 and C-14205). According to
CARB, these two projects were of the equipment type ``Stationary
Agricultural Irrigation Pump.'' See email dated November 12, 2015, from
Sylvia Vanderspek (CARB) to Andrew Steckel (USEPA Region 9). These
engines are subject to CARB's Airborne Toxic Control Measure (ATCM) for
Stationary Compression Ignition (CI) Engines in title 17, sections
93115--93115.15 of the California Code of Regulations (17 CCR
Sec. Sec.  93115--93115.15) (hereafter ``Stationary Engine ATCM'').
Table 7 of the Stationary Engine ATCM provides a summary of
requirements for in-use noncertified stationary diesel-fueled engines
used in agricultural operations and Table 8 of the Stationary Engine
ATCM provides a summary of requirements for certified in-use Tier 1 and
Tier 2 engines used in agricultural operations. See 17 CCR Sec.
93115.8, Table 7 and Table 8.
    The emission reductions attributed to project C-14205 and project
C-2570 engine #1 during the January 1-December 31, 2014 timeframe were
surplus to the requirements of the Stationary Engine ATCM because they
occurred before the earliest ATCM compliance deadline applicable to
these engines, which was December 31, 2014. The emission reductions
attributed to project C-2570 engine #2 during the January 1-December
31, 2014 timeframe, however, were not entirely surplus because that
engine was required to comply with the Stationary Engine ATCM's
NOX and PM2.5 emission limits for in-use
noncertified stationary diesel-fueled engines used in agricultural
operations by December 31, 2010.\5\ See Table 3.
---------------------------------------------------------------------------

    \5\ Because the existing uncertified engine for project C-2570
engine #2 was replaced with an electric unit, this project did
achieve some surplus emission reductions beyond those required by
the Stationary Engine ATCM.

                    Table 3--Stationary Engine ATCM Compliance Deadlines Applicable to Carl Moyer Program Projects C-2570 and C-14205
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Deadline for
                      Equipment                                      Existing engine      compliance with                           Project      Post
    Project No.      identifier       Fuel type        Horsepower     certification      stationary engine        New engine         life     inspection
                                                                                ATCM \6\                                           date
--------------------------------------------------------------------------------------------------------------------------------------------------------
C-2570.............           1  Diesel.............          385  Tier 1 Standard....  Later of 12/31/14    Electric...........          10    01/12/10
                                                                                or 12 years after
                                                                                the date of
                                                                                initial
                                                                                installation.
C-2570.............           2  Diesel.............          420  Uncontrolled         12/31/10...........  Electric...........           5    01/12/10
                                                                    (uncertified).
C-14205............           1  Diesel.............          335  Tier 3 Standard....  N/A................  Electric...........          10    04/25/14
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source: Email dated December 3, 2015 from Austin Hicks (CARB) to Andrew Steckel (USEPA Region 9), RE: ``Additional information request to support final
  action on ARB Incentive Report,'' including attachments.

---------------------------------------------------------------------------

    \6\ See 17 CCR Sec.  93115.8, Table 7 and Table 8.
---------------------------------------------------------------------------

    Given this information, we have assumed conservatively that all
emission reductions attributed to Carl Moyer Program projects in the
``Stationary and Portable Agricultural Engines'' source category in the
Emission Reduction Report are not surplus and, therefore, are not
creditable for SIP purposes at this time. Stationary and portable
agricultural engine projects account for 2.829 tpd of the
NOX emission reductions and 0.066 tpd of the direct
PM2.5 emission reductions identified in the Emission
Reduction Report as shown in Table 4. See Emission Reduction Report,
Appendix H1 at pp. 8-29.

  Table 4--Emission Reductions From Carl Moyer Stationary and Portable
                  Agricultural Engine Repower Projects
------------------------------------------------------------------------
                                                           2014 PM2.5
      Carl Moyer guideline year        2014 NOX  (tpd)        (tpd)
------------------------------------------------------------------------
2005................................             2.675             0.063
2008................................             0.132             0.002
2011................................             0.022             0.001
                                     -----------------------------------
    Total Reductions................             2.829             0.066
------------------------------------------------------------------------
Source: Emission Reduction Report, Appendix H1 at pp. 27-29.

    We are therefore subtracting these amounts from the total amounts
of NOX and direct PM2.5 emission reductions
identified in the Emission Reduction Report (7.8 tpd of NOX
emission reductions and 0.2 tpd direct PM2.5 emission
reductions), and crediting the Emission Reduction Report with only
4.971 tpd of NOX emission reductions and 0.134 tpd of direct
PM2.5 emission reductions toward the State's 2014 emission
reduction commitment in the 2008 PM2.5 Plan.
    Earthjustice argues that in order to determine whether these
projects were counted only for the years during which they could be
considered surplus, one would need to know the type of engine that was
used as a replacement; the horsepower of the engine used as a
replacement; the tier of the original agricultural engine; and
fleetwide particulate matter (``PM'') levels. We agree that information
about the type of engine that was used as a replacement, the horsepower
of the new engine, and the tier of the original agricultural engine is
necessary to determine whether the emission reductions attributed to a
particular Carl Moyer project are surplus. As explained above, project
documents that the District is required to maintain under the Carl
Moyer and Prop 1B program guidelines, which CARB submitted to the EPA
at our request, identify all of this information. With respect to
fleetwide PM levels, we note that this information is not necessary to
determine the ATCM compliance date applicable to a stationary
agricultural engine, because the requirements of the Stationary Engine
ATCM do not vary based on fleetwide PM levels. See generally 17 CCR
Sec. Sec.  93115-93115.15. Carl Moyer projects C-2570 and C-14205 are
stationary agricultural engines subject to the Stationary Engine ATCM.
See email dated November 12, 2015, from Sylvia Vanderspek (CARB) to
Andrew Steckel (USEPA Region 9). Thus, information about fleetwide PM
levels is not necessary to determine whether these projects achieved
surplus emission reductions. We agree with Earthjustice that
information concerning fleetwide PM levels is necessary to determine
certain compliance dates under the ATCM for diesel particulate matter
from portable engines. See 17 CCR Sec.  93116.3. To the extent the
commenter intended to argue that this information is necessary to
determine whether a Carl Moyer project for a portable engine will
achieve emission reductions that are surplus to existing requirements,
we understand that CARB would provide such information upon request
under the California Public Records Act and that the public can,
therefore, verify whether the emission reductions attributed to any
such project are surplus.
    Based on these reviews, we find that the Emission Reduction Report
contains information adequate to enable the EPA and citizens to obtain
emissions-related information necessary to quantify and verify the
emission reductions attributed to the identified Carl Moyer Program and
Prop 1B projects.
    Comment 3: Earthjustice states that incentive programs should not
``be approved into the SIP as a replacement for emission reductions
from regulations without fulfilling the four fundamental integrity
elements'' and urges the EPA to require that emission reductions be
enforceable and quantifiable before approving them into the SIP.
    Response 3: This action does not incorporate any portion of the
Prop 1B program or Carl Moyer Program, or any related guidelines, into
the SIP. To the extent Earthjustice intended to state that the EPA
should not approve emission reductions from the projects identified in
the Emission Reduction Report for credit toward a SIP commitment unless
the applicable incentive programs satisfy the EPA's integrity elements,
we agree. As explained in our proposed rule and further in Responses 1
and 2 above, the portions of the Prop 1B program and Carl Moyer Program
guidelines that apply to the projects identified in the Emission
Reduction Report adequately address the EPA's recommended integrity
elements for discretionary EIPs. Based on our review of project-
specific documentation submitted by CARB at our request, however, we
have found that the emission reductions attributed to one Carl Moyer
Program project within the ``Stationary and Portable Agricultural
Engines'' category were not entirely surplus to existing requirements
and, therefore, are not creditable for SIP purposes at this time, or
until properly adjusted to account for existing regulations. As a
result, we have conservatively assumed that all of the Stationary and
Portable Agricultural Engine Carl Moyer projects identified in the
Emission Reduction Report are not SIP-creditable and subtracted the
emission reductions attributed to these projects from the total amounts
of NOX and direct PM2.5 emission reductions
identified in the Emission Reduction Report. See Response 2. We find
that, with this one exception, the Carl Moyer Program and Prop 1B
projects identified in the Emission Reduction Report have achieved the
NOX and PM2.5 emission reductions attributed to
them in the Emission Reduction Report. We are therefore approving 4.971
tpd of NOX emission reductions and 0.134 tpd of
PM2.5 emission reductions for credit toward the State's 2014
emission reduction commitment in the 2008 PM2.5 Plan.

III. EPA Action

    Under sections 110(k)(3) and 301(a) of the Act, the EPA is
finalizing a limited approval and limited disapproval of the Emission
Reduction Report and crediting the incentive projects identified
therein with 4.971 tpd of NOX reductions and 0.134 tpd of
PM2.5 reductions toward the State's 2014 emission reduction
commitments in the 2008 PM2.5 Plan. We are finalizing a
limited approval of the Emission Reduction Report because it largely
satisfies the applicable CAA requirements. We are simultaneously
finalizing a limited disapproval of the Emission Reduction Report
because the demonstration therein concerning the Carl Moyer Stationary
and Portable Agricultural Engines source category

does not satisfy CAA requirements for SIP credit. Our reasons for
disapproving the submitted demonstration on this basis are explained in
our responses to comments above.
    This limited disapproval does not trigger any sanctions clocks
under CAA section 179(a) because the Emission Reduction Report was not
submitted to address a requirement of part D, title I of the Act or in
response to a finding of substantial inadequacy as described in CAA
section 110(k)(5) (i.e., a ``SIP Call''). The limited disapproval also
does not trigger any obligation on the EPA to promulgate a federal
implementation plan (FIP) because the disapproval does not create any
deficiency in the SIP that must be corrected.

IV. Statutory and Executive Order Reviews

    Additional information about these statutes and Executive Orders
can be found at http://www2.epa.gov/laws-regulations/laws-and-executive-orders.

A. Executive Order 12866: Regulatory Planning and Review and Executive
Order 13563: Improving Regulation and Regulatory Review

    This action is not a significant regulatory action and was
therefore not submitted to the Office of Management and Budget (OMB)
for review.

B. Paperwork Reduction Act (PRA)

    This action does not impose an information collection burden under
the PRA because this action does not impose additional requirements
beyond those imposed by state law.

C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities beyond those
imposed by state law.

D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain any unfunded mandate as described in
UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect
small governments. This action does not impose additional requirements
beyond those imposed by state law. Accordingly, no additional costs to
State, local, or tribal governments, or to the private sector, will
result from this action.

E. Executive Order 13132: Federalism

    This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.

F. Executive Order 13175: Coordination With Indian Tribal Governments

    This action does not have tribal implications, as specified in
Executive Order 13175, because the SIP is not approved to apply on any
Indian reservation land or in any other area where the EPA or an Indian
tribe has demonstrated that a tribe has jurisdiction, and will not
impose substantial direct costs on tribal governments or preempt tribal
law. Thus, Executive Order 13175 does not apply to this action.

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

    The EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that the EPA has reason to believe may disproportionately affect
children, per the definition of ``covered regulatory action'' in
section 2-202 of the Executive Order. This action is not subject to
Executive Order 13045 because it does not impose additional
requirements beyond those imposed by state law.

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

    This action is not subject to Executive Order 13211, because it is
not a significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTAA)

    Section 12(d) of the NTTAA directs the EPA to use voluntary
consensus standards in its regulatory activities unless to do so would
be inconsistent with applicable law or otherwise impractical. The EPA
believes that this action is not subject to the requirements of section
12(d) of the NTTAA because application of those requirements would be
inconsistent with the CAA.

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

    The EPA lacks the discretionary authority to address environmental
justice in this rulemaking.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and the EPA will submit a rule
report to each House of the Congress and to the Comptroller General of
the United States. This action is not a ``major rule'' as defined by 5
U.S.C. 804(2).

L. Petitions for Judicial Review

    Under section 307(b)(1) of the Clean Air Act, petitions for
judicial review of this action must be filed in the United States Court
of Appeals for the appropriate circuit by October 11, 2016. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this rule for the purposes of judicial
review nor does it extend the time within which a petition for judicial
review may be filed, and shall not postpone the effectiveness of such
rule or action. This action may not be challenged later in proceedings
to enforce its requirements (see section 307(b)(2)).

List of Subjects in 40 CFR Part 52

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

    Dated: July 21, 2016.
Alexis Strauss,
Acting Regional Administrator, Region IX.

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

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

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

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

Subpart F--California

0
2. Section 52.220 is amended by adding paragraph (c)(477) to read as
follows:

Sec.  52.220   Identification of plan.

* * * * *
    (c) * * *
    (477) The following plan revision was submitted on November 17,
2014 by the Governor's designee.

    (i) [Reserved]
    (ii) Additional Material.
    (A) California Air Resources Board.
    (1) ``Report on Reductions Achieved from Incentive-based Emission
Reduction Measures in the San Joaquin Valley,'' adopted on October 24,
2014, including appendices F-H.

[FR Doc. 2016-18903 Filed 8-11-16; 8:45 am]
 BILLING CODE 6560-50-P