1 Date: 17 March 2004 To: Chris Miller, EPA From: Maureen Kaplan and Ian Cadillac, ERG Subject: Observations on Engle et alia, " The Economic Impact of Proposed Effluent Treatment Options for Production of Trout Oncorhynchus mykiss in Flow through Tanks"

Engle et alia is an alternative economic assessment of the impacts of incremental pollution control costs on flow through facilities in North Carolina and Idaho. The authors appear to have three different types of analysis:

# Enterprise budgets ( 3 sites)

S North Carolina   68,182 kg S Idaho   90,909 kg; and S Idaho   1,136,363 kg # Monte Carlo analysis, and # Credit and borrowing analysis First, we examined the data sets that form the basis of the analysis and found some discrepancies regarding the number of facilities ( Section 1). We found other inconsistencies throughout the paper and mention them where they might lead to different inferences from the study.

Second, we investigate whether the data sets Engle et alia analyzed reflect the population that is within the scope of the rule ( Section 2). They do not. They contain a substantial portion of observations that are not within the scope of the rule, that is, they have less than 100,000 lb/ yr production.

Third, we review the costs used in the impact analysis ( Section 3). Even if the EPA and Engle et alia methodologies and data sets are comparable, the estimated impacts will certainly differ if the pollution control costs differ. Tetra Tech has the lead on developing costs for EPA and are most suited to review and respond on this section. However, we find:

# an unreasonable assumption that none of the facilities have primary settling # extremely high annual costs for land for solids disposal These two factors drive the results of the economic analyses. 2 The methodological discussion presented in Engle et alia steps from one type of analysis to another without clear breaks. Our review of the enterprise budgets, Monte Carlo analysis, and credit/ borrowing analysis is given in Sections 4 through 6, respectively. In doing so, we may have forced an inaccurate organization onto the discussion.

1. How Many Observations Are in the Data Set?

The author presents conflicting information. The introduction mentions that 21 of the 57 commercial trout farms in North Carolina in 2002 were in Transylvania County ( p. 2). Under " Materials and Methods," the authors state that survey data were collected from 13 of the 21 farms in Transylvania Country, NC for a response rate of 13/ 21 or 62 percent ( p. 5). However, in the " Results and Discussion" section, the authors mention an 81 percent response rate ( p. 9). This implies 17 ( 0.81 x 21 = 17.01) observations in the North Carolina data set. For the rest of this memorandum, we assume the first statement is the more accurate ( 13 farms) because it provides counts.

The authors state that they collected production and financial information from eight ( 8) trout farms in Idaho by interviewing the farm owner or manager ( p. 6).

2. The Engle et alia Data Sets and the EPA " In scope" Community We compared the data sets used by Engle et alia to the EPA in scope population ( i. e., > 100,000 lb/ yr). EPA chose the 100,000 lb/ yr threshold to mitigate impacts on smaller facilities. If there is a basic difference between the populations studied, the results will not be comparable. Table 1 provides an alternative representation of one variable   farm size   from Engle et alia, Table 2. We assume there are 13 observations in North Carolina and eight in Idaho. When a population has an even number of observations, the median is conventionally calculated as the arithmetic average of the middle two observations.

For North Carolina, the smallest farm in the survey produces 1,000 kg/ yr. This farm is so small that it does not qualify to be a CAAP, never mind being within the scope of the rule. By the median value, we have a farm that is large enough to be within the scope of the rule. At a minimum, one of 13 or 7.7 percent of the NC farms are out of scope of the rule. At most, six of 13 or nearly half the sample might be outside the scope of the rule. EPA decided to set the threshold at 100,000 lb/ yr because of the potential impacts on the smaller facilities. When the scope of the rule was shifted from 20,000 lb/ yr to 100,000 lb/ yr, all but two ( unweighted) facilities that reported unpaid labor and management dropped out of scope ( Cadillac and Kaplan 2004).

The Idaho data set has eight observations. The smallest farm produces 27,000 kg/ yr so, although it is a CAAP, it is not within the scope of the rule. The median value is reported as 1.2 million kg/ yr and the maximum value is reported as 1.1 million kg/ yr [ sic]. The average of observation # 4 and observation # 5 is 1.2 million kg/ yr, so the most likely situation is that both observations are close to 1.2 million kg/ yr. So at least one and possibly three observations are outside the scope of the rule ( i. e., between 12.5 and 37.5 percent of the population). This also implies that the medium sized Idaho enterprise budget is based on, at most, three observations and at least one of those is outside the scope of the rule. 3 In sum, the data sets used in the Engle et alia analysis contain a substantial portion of observations that are outside the scope of the rule. As we discuss later in this memorandum, the inclusions of these outof scope facilities colors the results of the Monte Carlo sensitivity analysis and the treatment of unpaid labor. With a basic difference in the populations being studied, it is not surprising that the findings will also differ. EPA had reasons to choose a 100,000 lb/ yr threshold.

Table 1 Farm Sizes in Engle et alia, 2004 Farm Size ( kg)

Observation North Carolina Idaho 1 1,000 27,000 2 3 4 1,200,000 5 6 7 66,000 8 1,136,364 9 10 11 12 13 204,500 Source: Engle, et alia, Table 2.

3. Pollution Control Costs The second factor driving the impact results presented in Engle et alia are the costs which are substantially higher than those estimated by Tetra Tech. Engle et alia present pollution control costs in Table 5 in their report. The title lists these as annual costs with capital costs charged as annual depreciation ( p. 11). The major features are:

# All sites are assumed to have no treatment in place.

# Annual costs for land for field application drive the impact results. 1In one case, total labor time is given in units of $/ yr when the other labor entries are specified as h/ yr.

4 # Depreciation period and schedule are not specified. This overestimates the impact of capital costs on net returns.

# Labor costs ($/ yr) are not specified. 1 The number of hours is provided but not the rate, so we cannot calculate labor costs.

# Compliance monitoring has an entry for " other costs," generally $ 4,008. This wouldn't be of concern except weekly monitoring costs ( which we interpret as total monitoring costs) is listed as $ 5298. So the unspecified " other" costs appear to be 76 percent of total costs.

Each point is discussed in more detail in the paragraphs below.

The assumption that all sites have no treatment in place implies that all sites incur costs for primary settling. This overstates costs for facilities that already have primary treatment   which is all the in scope facilities. In contrast, EPA includes costs for primary treatment where there is none at a site and does not include primary treatment costs where it already exists. EPA's cost estimates, then, are more accurate. The Engle et alia costs are overstated.

In Engle et alia, Table 5, Primary settling, costs for offline settling pond ( either with a front end loader or a vacuum tank) contains a line item for land for field application of the collected solids. These are listed as annual costs and are so large that they drive the impacts analysis. Table 2 lists the total revenues, net revenues, and annual land application costs for the three farms. Given that the NC farm has a total estimated revenue of $ 165,000, it is not surprising that an annual land cost of $ 150,000 renders the facility unprofitable. Given that the ID medium farm clears less than $ 6,000 per year, it is understandable that a $ 22,000 annual cost for solids disposal will render the facility unprofitable.

Table 2 Comparison of Total Revenues, Net Revenues, and Land Application Costs Enterprises Parameter NC Medium ID Medium ID Large Total Revenues1 $ 165,000 $ 160,000 $ 2,000,000 Net Revenues/ Returns1 $ 8,644 $ 5,647 $ 284,281 Annual land costs for field application of solids2 $ 150,000 $ 22,000 $ 275,000 1 Engle et alia, Table 3. 2 Engle et alia, Table 5. 5 Engle et alia presents capital costs as depreciation, however, the authors do not specify the depreciation method used ( e. g., MACRS or straight line) or the number of years over which depreciation is taken. We specify that we use MACRS with a half year convention and a 10 year recovery period. But we use it only to calculate the tax shield in any year, not the cost to the owner. We first calculate the present value of all costs over the period and then calculate a constant annual payment corresponding to the present value. For example, the depreciation rate for Year 1 with a mid year convention and a 10 year recovery period is 10 percent. If the equipment is assumed to be put in place at the beginning of the year, the depreciation rate is 20 percent. If the equipment is assumed to be put in place at the beginning of the year and the recovery period is 7 years, the depreciation rate is 28.6 percent. So we do not know how much of the capital cost the authors are assigning to the first year revenues.

4. Enterprise Budgets Engle et alia Table 3 presents the enterprise budgets for trout production in North Carolina and Idaho, presumably based on information from the survey. For comparison with the EPA analysis, we note what Engle et alia call " net returns" is what we would call " net income," that is, depreciation is included as a cost. The economic analysis in the paper is performed on a net income, not cash flow, basis.

The EPA economic analysis accounts for taxes paid on taxable income. The enterprise budgets have a line item labeled " licenses/ taxes" but this appears as a fixed cost and thus cannot refer to income taxes. So the EPA analysis, although done on a cash flow basis, includes a cost that the Engle, et alia study does not.

4.1 Unpaid Labor and Management We had difficulties identifying how and how often the authors had to value unpaid labor and management. In Engle et alia Table 2, labor and management are given units of hours, yet an unattached note C says that labor costs include both paid and unpaid ( family) labor. Elsewhere in the paper, the authors state that "... when a dollar is assigned to the number of hours worked by the family members, net returns from the enterprise are near the breakeven point." ( p. 11).

Nowhere do the authors specify how they estimated the value of unpaid labor. Kaplan, 2001 noted the analyst's unintentional influence on the profitability shown in an enterprise budget. With returns near the breakeven point, very little is needed to shift an operation from profitable to unprofitable.

The authors do not mention how many observations needed to be adjusted for unpaid labor and management. The sample includes farms with production as small as 1,000 kg in North Carolina and 27,000 kg in Idaho. Small farms, such as these, are likely to have unpaid labor and/ or management. As mentioned in the previous section, EPA removed most of the observations reporting unpaid labor and/ or management from the scope of the rule when it set the threshold at 100,000 lb/ yr ( Cadillac and Kaplan, 2004). 2Because the costs for primary treatment/ settling basins/ quiescent zones are part of the first option considered and all subsequent options are considered as incremental to the costs of the first option, no option can pass if the first option fails. So the assumption of all sites needing primary treatment in the first option results in all sites failing all options.

6 4.2 Results The results of the enterprise analysis are presented in Engle et alia Table 6. The net returns for the three farms match those provided in Engle et alia Table 3. Given the magnitude of the costs, particularly land for solids disposal, it is not surprising that the medium NC and ID farms are unprofitable with the first option. Even with the high solids disposal costs, the large ID farm remains profitable through all the options. Having not closed the facility, the authors raise the low rate of return as insufficiently attractive to investors. This observation neglects the fact that by using depreciation, the first year would look worst financially and that subsequent years would look better.

The bottom half of Engle et alia Table 6 reports the findings for " High Cost Scenarios." A sentence on page 7 mentions that the authors developed additional scenarios to reflect farm businesses with land financing costs. They do not mention the size, period, or interest rate assumed for these land financing costs. The only way to estimate the magnitude of this effect is to take the difference between the net returns for the baseline scenario in the " low cost" and " high cost" sections.

The authors also developed " high" cost scenarios which are worst case situations where an owner must destroy existing tanks in order to build quiescent zones and/ or offline settling ponds. It appears that owners are therefore assumed to: ( 1) have no primary settling areas prior to the rule, ( 2) incur a cost for land for a primary settling area [ see Table 5], and ( 3) reduced production in proportion to the number of tanks destroyed. Small wonder that all projects fail all Options. 2 The EPA survey found no commercial facilities within the scope of the rule that fall into these categories.

5. Monte Carlo Analysis 5.1 Methodology The authors examined the variability of the enterprise budget results by Monte Carlo analysis. The authors specify they assumed triangular distributions for the parameters in the sensitivity analysis, however, they did not specify exactly which parameters were in the analysis. Our two difficulties with the sensitivity analysis are:

# Whether they generated the probability distributions properly.

# A substantial portion of the enterprise descriptions generated for the sensitivity analysis represent farms outside the scope of the regulation.

As mentioned by the authors, triangular distributions are characterized by minimum, maximum, and most likely values ( p. 8). Triangular distributions are frequently used when those three pieces of information ( max, min, and most likely) are all that is known about the variable. The " most likely" value should refer to the " mode." A mode is the most frequently occurring value in a set of observations. The 3It would be difficult to envision using the same distributions to generate descriptions for two different sized facilities.

7 authors, however, report median values when describing the parameters listed in Engle, et alia, Table 2. The median is a number that has the property of having the same number of scores with smaller values as there are with larger values. If a population has an odd number of observations and the population is sorted into rank order, the median is the value of the middle observation. The mode and median, then, are not necessarily the same. We have not examined in depth the effect of using the median instead of the mode when generating random samples based on a triangular distribution.

In Section 2, we showed that at least 7.7 percent and possibly as much as 46 percent of the observations on which the triangular distributions for the NC farm are based on facilities outside the scope of the analysis. Presumably, the authors split the eight ID assumptions into two groups and then used the minimum, median, and mean values for the distributions for the two Idaho facilities. 3 This means that descriptions of the medium Idaho facility are based on, at most, three observations of which at least one is out of scope. The values for the large Idaho facility might be fine if the authors specified what was used as the lower bound. Since the median and upper bound values are the same ( 1.2 million kg/ yr), there may be very little variation in facility size.

5.2 Results The results of the Monte Carlo analysis are given in Engle et alia Table 6. Because of the option costs ( see Section 3), the results are not unexpected. The baseline results, however, provide an interesting comparison to our baseline closure analysis. According to the Monte Carlo analysis, prior to incurring additional costs:

# Less than half the NC farms are profitable # Only two percent of the medium ID farms are profitable # 84 percent of the large ID farms are profitable.

In contrast, when the EPA analysis is done on a net income basis, 60 percent of the in scope facilities that incur costs ( 39 of 66 facilities) are profitable in the EPA analysis. Thus, AETF should have no difficulties with the result of the baseline closure analysis.

In Section 4.1, we mention that the medium NC and ID farms are on the knife edge of profitability. This consistent with the results of the baseline Monte Carlo analysis. Normal variation in the parameters is sufficient to push 98 percent of the medium ID farms and 64 percent of the NC farms into unprofitability before the addition of incremental pollution control costs. Between the marginality of the baseline enterprise descriptions and the magnitude of the costs, the large impacts are an expected result.

The large ID farm remains profitable under the low cost scenario. However, the high cost scenario seems to involve nearly $ 500,000 in annual costs ( i. e., the change from a net return of $ 271,688 in the baseline to $ 250,000 or so after the options). Half of the cost might be the land disposal costs. We suspect the rest of the large cost is due primarily to the assumption that the farm has to destroy existing tanks ( and associated production) in order to put in primary settling. Again, Tetra Tech needs to review the 4 Presumably, the model prevents the owner from switching more production to recreational fish. Othwerwise, the higher value harvest would alleviate the borrowing constraint. Engle et alia notes that operating loans are frequently set as a percentage of crop value ( p. 14).

8 appropriateness of the absence of primary settling, the unavailability of land, and the need to tear down productive assets for the settling basin.

6. Credit and Borrowing Analysis The three enterprise budgets were used to develop " mixed integer programming models." An inconsistency is that the authors state the need to consider sunk costs in an economic impact analysis ( p. 20), the mixed integer programming models do not even include fixed costs, never mind sunk costs. Another inconsistency is that a cap on investment borrowing was set at $ 90,000 but this cap was not used in the base scenario.

6.1 Operating Loans Table 7 appears to be the result of an analysis of the effects of constraining borrowing capacity on operating loans. This analysis does not include any consideration of incremental pollution control costs. The results are intuitive. As the owner is permitted to borrow less and less money to operate, the model takes more and more tanks out of operation. The reductions take place in the food fish tanks because the recreational fish are likely to have a higher profit margin. 4 The analysis show how reductions in operating loans lead to reductions in the amount of fish raised with those costs, but analysis does not address pollution control costs in any way.

The authors re examine the situation where a farm is required to take tanks out of production in order to install a quiescent zone or settling pond. This leads to less fish production which leads to lower crop values which leads to lower operating loans which leads to less fish production, and so forth. This downward spiral, however, rest on the assumption that all sites need to install primary settling and that tanks will need to be taken out of operation to do so. EPA, however, found no commercial in scope facilities that would need to do this to comply with the rule.

6.2 Capital or Investment Loans The analysis examines land costs and the price to which land costs would have to drop in order to expand production ( Table 8). While an informative academic enterprise, the analysis does not relate to the effect of effluent guidelines.

The analysis then changes to examining the " full costs of quiescent zones and offline settling basins." ( p. 16). First, the authors do not state what they consider to be the full costs of primary settling; Engle et al Table 5 presents only depreciated costs, not total costs. The scenario examined in the investment loan sensitivity analysis starts with an investment cap of $ 90,000. Given that total land or capital costs are not specified in the cost table, we can't say whether or not this cap is exceeded by 9 definition. Given the annual land cost for solids disposal exceed the $ 90,000 cap for the NC facility, if this is considered a land cost then, by definition, all options are infeasible. The results shown in Tables 9 and 10 depend completely on the cost of the primary settling structure; an aggregate capital cost which they do not list and which represents treatment that is already in place for all the commercial in scope facilities in the EPA survey.

The results for the Idaho farms are presented in Engle et alia Figure 1. The measure used is still net returns above variable costs. As expected, the medium Idaho farm showed impacts ( although still positive) while the large farm remained profitable.

7. Paper's Conclusions and Rebuttals The authors see impacts on the medium NC and Idaho farms. Their sample, however, includes a substantial portion of observations that are not within the scope of the rule. EPA also saw potential impacts on small (< 100,000 lb/ yr) facilities and set the threshold to remove them from the scope of the rule. The higher cost scenarios are worst case scenarios and so seeing impacts is not surprising.

The authors state that the risk analysis showed very low probabilities of generating positive net returns after imposing treatment options. What they don't say is that the medium farms in NC and ID show low probabilities of generating positive net returns before imposing treatment options as well.

The credit analysis either examines academic cases with no consideration of effluent treatment costs or examines the effects of massive costs that are highly unlikely to occur. All in scope facilities in the EPA survey had primary settling features in place prior to the rulemaking.

Sunk costs are first mentioned in the conclusions section. Presumably the authors include sunk costs in their analysis by the inclusion of depreciation as a cost but depreciation ( as calculated for tax purposes) can overstate the replacement cost particularly in the initial years of an accelerated cost recovery schedule. The authors are inconsistent when they explain that some farms which already adopted some of the treatment options proposed by EPA might have done so because " sunk costs on older farms were not generating cash expenses." Depreciation is not a cash expense. If these farms were able to install some of the treatment options because they examined cash flow rather than net income, why shouldn't the analysis be performed on a cash flow basis?

First, the Engle et alia analysis assumes that a facility would expand its production to cover the additional fixed costs and, thus, maintain the same level of profitability. Second, the high land prices in the analysis coupled with limits on borrowing capacity prevent the potential expansion. The third step in the analysis assumes the facility would cannibalize productive tanks for the land. In contrast, EPA found that all in scope facilities had primary treatment in place and would not need to incur the costs for installing that component. Engle et alia note that some of the farms in their data set had installed some of the EPA treatment components. EPA also did not identify the need for the massive annual land costs for solids disposal that are included in the Engle et alia study. The EPA analysis examines the change in profitability due to the costs of incremental pollution control all other things being equal. The EPA analysis examines the hit the facility would take, not what expansion is needed to keep it at the same level of profitability. Without the massive land costs, the EPA analysis has no need for a facility to cannibalize itself as a result of the rule. 10 After that, the argument falls to pollution control being a non productive asset; an argument made with every effluent guideline. The imposition of pollution controls is to address the market failure that exempts CAAPs from internalizing the social costs of pollution.

8. References Cadillac and Kaplan. 2004. Ian Cadillac and Maureen Kaplan, ERG. Concentrated Aquatic Animal Production Industry: Unpaid Labor. Memorandum to Chris Miller, EPA. 27 January.

Engle et alia. 2004. Carole R. Engle, Steeve [ sic] Pomerleau, Fary Fornshell, Jeffery M. Hinshaw, Debra Sloan, and Skip Thompson. The Economic Impact of Proposed Effluent Treatment Options for Production of Trout Onchorhynchus mykiss in Flow through Tanks. Submitted to USDA. March 2004.

Kaplan. 2001. Maureen F. Kaplan. Lessons Learned from Sensitivity Analysis and Enterprise Budgets. Memorandum to the Aquatic Animal Production Industry Project File. 31 December. Water Docket OW 2002 0026 DCN 20153.


[Federal Register Volume 76, Number 141 (Friday, July 22, 2011)]
[Rules and Regulations]
[Pages 43918-43923]
[FR Doc No: 2011-18419]

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[EPA-R08-OAR-2010-0298; FRL-9440-6]

Approval and Promulgation of State Implementation Plan Revisions;
Infrastructure Requirements for the 1997 8-Hour Ozone National Ambient
Air Quality Standard; Montana

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: EPA is partially approving and partially disapproving the
State Implementation Plan (SIP) submission from the State of Montana to
demonstrate that the SIP meets the requirements of Sections 110(a)(1)
and (2) of the Clean Air Act (CAA) for the National Ambient Air Quality
Standards (NAAQS) promulgated for ozone on July 18, 1997. Section
110(a)(1) of the CAA requires that each state, after a new or revised
NAAQS is promulgated, review their SIPs to ensure that they meet the
requirements of the ``infrastructure elements'' of section 110(a)(2).
The State of Montana submitted two certifications, dated November 28,
2007 and December 22, 2009, that its SIP met these requirements for the
1997 ozone NAAQS. The November 28, 2007 certification was determined to
be complete on March 27, 2008 (73 FR 16205).

DATES: Effective Date: This final rule is effective August 22, 2011.

ADDRESSES: EPA has established a docket for this action under Docket ID
No. EPA-R08-OAR-2010-0298. All documents in the docket are listed on
the http://www.regulations.gov Web site. 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 either
electronically through http://www.regulations.gov or in hard copy at
the Air Program, Environmental Protection Agency (EPA), Region 8, 1595
Wynkoop Street, Denver, Colorado 80202-1129. EPA requests that if at
all possible, you contact the individual listed in the FOR FURTHER
INFORMATION CONTACT section to view the hard copy of the docket. You
may view the hard copy of the docket Monday through Friday, 8 a.m. to 4
p.m., excluding Federal holidays.

FOR FURTHER INFORMATION CONTACT: Kathy Dolan, Air Program, U.S.
Environmental Protection Agency (EPA), Region 8, Mail Code 8P-AR, 1595
Wynkoop Street, Denver, Colorado 80202-1129.<PHONE_NUMBER>,
<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

Definitions

    For the purpose of this document, we are giving meaning to certain
words or initials as follows:
    (i) The words or initials Act or CAA mean or refer to the Clean Air
Act, unless the context indicates otherwise.
    (ii) The words EPA, we, us or our mean or refer to the United
States Environmental Protection Agency.
    (iii) The initials SIP mean or refer to State Implementation Plan.

Table of Contents

I. Background
II. Response to Comments
III. Final Action
IV. Statutory and Executive Order Reviews

I. Background

    On July 18, 1997, EPA promulgated new NAAQS for ozone based on 8-
hour average concentrations. The 8-hour averaging period replaced the
previous 1-hour averaging period, and the level of the NAAQS was
changed from 0.12 parts per million (ppm) to 0.08 ppm (62 FR 38856). By
statute, SIPs meeting the requirements of sections 110(a)(1) and (2)
are to be submitted by states within three years after promulgation of
a new or revised standard. Section 110(a)(2) provides basic
requirements for SIPs, including emissions inventories, monitoring, and
modeling, to assure attainment and maintenance of the standards. These
requirements are set out in several ``infrastructure elements,'' listed
in section 110(a)(2).
    Section 110(a) imposes the obligation upon states to make a SIP
submission to EPA for a new or revised NAAQS, and the contents of that
submission may vary depending upon the facts and circumstances. In
particular, the data and analytical tools available at the time a state
develops and submits its SIP for a new or revised NAAQS affects the
content of the submission. The contents of such SIP submissions may
also vary depending upon what provisions a state's existing SIP already
contains. In the case of the 1997 ozone NAAQS, states typically have
met the basic program elements required in section 110(a)(2) through
earlier SIP submissions in connection with previous NAAQS. In a
guidance issued on October 2, 2007, EPA noted that, to the extent an
existing SIP already meets the section 110(a)(2) requirements, states
need only to certify that fact via a letter to EPA.\1\
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    \1\ Memorandum from William T. Harnett, Director, Air Quality
Policy Division, ``Guidance on SIP Elements Required Under Sections
110(a)(1) and (2) for the 1997 8-hour Ozone and PM2.5
National Ambient Air Quality Standards'' (Oct. 2, 2007).
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    On March 27, 2008, EPA published a final rule entitled,
``Completeness Findings for Section 110(a) State Implementation Plans
for the 8-hour Ozone NAAQS'' (73 FR 16205). In the rule, EPA made a
finding for each state that it had submitted or had failed to submit a
complete SIP that provided the basic program elements of section
110(a)(2) necessary to implement the 1997 8-hour ozone NAAQS. In
particular, EPA found that Montana had submitted a complete SIP
(``Infrastructure SIP'') to meet these requirements.
    On May 19, 2011, EPA published a notice of proposed rulemaking
(NPR) for the State of Montana (76 FR 28934) to

act on the State's Infrastructure SIP for the 1997 ozone NAAQS.
Specifically, in the NPR EPA proposed approval of Montana's SIP as
meeting the requirements of section 110(a)(2) elements (A), (B),
(D)(ii), (E), (F), (G), (H), (K), (L) and (M) with respect to the 1997
ozone NAAQS. EPA proposed to disapprove 110(a)(2) elements (C) and (J)
on the basis that Montana's SIP-approved Prevention of Significant
Deterioration (PSD) program does not properly regulate nitrogen oxides
as an ozone precursor. EPA did not propose action on elements (D)(i),
(I), and the visibility protection requirement of element (J).\2\ EPA
received a comment on section 110(a)(2)(E)(ii), and EPA is not
finalizing today its proposed approval for this sub-element in order to
fully respond to that comment.
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    \2\ See the NPR (76 FR 28934) for further explanation regarding
the omission of elements 110(a)(2)(D)(i) and 110(a)(2)(I) from the
proposal.
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Scope of Infrastructure SIPs

    EPA is currently acting upon SIPs that address the infrastructure
requirements of CAA section 110(a)(1) and (2) for ozone and
PM2.5 NAAQS for various states across the country.
Commenters on EPA's recent proposals for some states raised concerns
about EPA statements that it was not addressing certain substantive
issues in the context of acting on the infrastructure SIP
submissions.\3\ The commenters specifically raised concerns involving
provisions in existing SIPs and with EPA's statements that it would
address two issues separately and not as part of actions on the
infrastructure SIP submissions: (i) Existing provisions related to
excess emissions during periods of start-up, shutdown, or malfunction
at sources, that may be contrary to the CAA and EPA's policies
addressing such excess emissions (``SSM''); and (ii) existing
provisions related to ``director's variance'' or ``director's
discretion'' that purport to permit revisions to SIP approved emissions
limits with limited public process or without requiring further
approval by EPA, that may be contrary to the CAA (``director's
discretion''). EPA notes that there are two other substantive issues
for which EPA likewise stated that it would address the issues
separately: (i) Existing provisions for minor source new source review
programs that may be inconsistent with the requirements of the CAA and
EPA's regulations that pertain to such programs (``minor source new
source review (NSR)''); and (ii) existing provisions for PSD programs
that may be inconsistent with current requirements of EPA's ``Final NSR
Improvement Rule,'' 67 FR 80,186 (December 31, 2002), as amended by 72
FR 32,526 (June 13, 2007) (``NSR Reform''). In light of the comments,
EPA now believes that its statements in various proposed actions on
infrastructure SIPs with respect to these four individual issues should
be explained in greater depth with respect to these issues.
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    \3\ See, Comments of Midwest Environmental Defense Center, dated
May 31, 2011. Docket  EPA-R05-OAR-2007-1179 (adverse
comments on proposals for three states in Region 5). EPA notes that
these public comments on another proposal are not relevant to this
rulemaking and do not have to be directly addressed in this
rulemaking. EPA will respond to these comments in the appropriate
rulemaking action to which they apply.
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    EPA intended the statements in the proposals concerning these four
issues merely to be informational, and to provide general notice of the
potential existence of provisions within the existing SIPs of some
states that might require future corrective action. EPA did not want
states, regulated entities, or members of the public to be under the
misconception that the Agency's approval of the infrastructure SIP
submission of a given state should be interpreted as a reapproval of
certain types of provisions that might exist buried in the larger
existing SIP for such state. Thus, for example, EPA explicitly noted
that the Agency believes that some states may have existing SIP
approved SSM provisions that are contrary to the CAA and EPA policy,
but that ``in this rulemaking, EPA is not proposing to approve or
disapprove any existing state provisions with regard to excess
emissions during SSM of operations at facilities.'' EPA further
explained, for informational purposes, that ``EPA plans to address such
State regulations in the future.'' EPA made similar statements, for
similar reasons, with respect to the director's discretion, minor
source NSR, and NSR Reform issues. EPA's objective was to make clear
that approval of an infrastructure SIP for these ozone and
PM2.5 NAAQS should not be construed as explicit or implicit
reapproval of any existing provisions that relate to these four
substantive issues.
    Unfortunately, the commenters and others evidently interpreted
these statements to mean that EPA considered action upon the SSM
provisions and the other three substantive issues to be integral parts
of acting on an infrastructure SIP submission, and therefore that EPA
was merely postponing taking final action on the issue in the context
of the infrastructure SIPs. This was not EPA's intention. To the
contrary, EPA only meant to convey its awareness of the potential for
certain types of deficiencies in existing SIPs, and to prevent any
misunderstanding that it was reapproving any such existing provisions.
EPA's intention was to convey its position that the statute does not
require that infrastructure SIPs address these specific substantive
issues in existing SIPs and that these issues may be dealt with
separately, outside the context of acting on the infrastructure SIP
submission of a state. To be clear, EPA did not mean to imply that it
was not taking a full final agency action on the infrastructure SIP
submission with respect to any substantive issue that EPA considers to
be a required part of acting on such submissions under section 110(k)
or under section 110(c). Given the confusion evidently resulting from
EPA's statements, however, we want to explain more fully the Agency's
reasons for concluding that these four potential substantive issues in
existing SIPs may be addressed separately.
    The requirement for the SIP submissions at issue arises out of CAA
section 110(a)(1). That provision requires that states must make a SIP
submission ``within 3 years (or such shorter period as the
Administrator may prescribe) after the promulgation of a national
primary ambient air quality standard (or any revision thereof)'' and
that these SIPS are to provide for the ``implementation, maintenance,
and enforcement'' of such NAAQS. Section 110(a)(2) includes a list of
specific elements that ``[e]ach such plan'' submission must meet. EPA
has historically referred to these particular submissions that states
must make after the promulgation of a new or revised NAAQS as
``infrastructure SIPs.'' This specific term does not appear in the
statute, but EPA uses the term to distinguish this particular type of
SIP submission designed to address basic structural requirements of a
SIP from other types of SIP submissions designed to address other
different requirements, such as ``nonattainment SIP'' submissions
required to address the nonattainment planning requirements of part D,
``regional haze SIP'' submissions required to address the visibility
protection requirements of CAA section 169A, NSR permitting program
submissions required to address the requirements of part D, and a host
of other specific types of SIP submissions that address other specific
matters.
    Although section 110(a)(1) addresses the timing and general
requirements for these infrastructure SIPs, and section 110(a)(2)
provides more details concerning the required contents of these
infrastructure SIPs, EPA believes that many of the specific statutory

provisions are facially ambiguous. In particular, the list of required
elements provided in section 110(a)(2) contains a wide variety of
disparate provisions, some of which pertain to required legal
authority, some of which pertain to required substantive provisions,
and some of which pertain to requirements for both authority and
substantive provisions.\4\ Some of the elements of section 110(a)(2)
are relatively straightforward, but others clearly require
interpretation by EPA through rulemaking, or recommendations through
guidance, in order to give specific meaning for a particular NAAQS.\5\
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    \4\ For example, section 110(a)(2)(E) provides that states must
provide assurances that they have adequate legal authority under
state and local law to carry out the SIP; section 110(a)(2)(C)
provides that states must have a substantive program to address
certain sources as required by part C of the CAA; section
110(a)(2)(G) provides that states must have both legal authority to
address emergencies and substantive contingency plans in the event
of such an emergency.
    \5\ For example, section 110(a)(2)(D)(i) requires EPA to be sure
that each SIP contains adequate provisions to prevent significant
contribution to nonattainment of the NAAQS in other states. This
provision contains numerous terms that require substantial
rulemaking by EPA in order to determine such basic points as what
constitutes significant contribution. See, e.g., ``Rule To Reduce
Interstate Transport of Fine Particulate Matter and Ozone (Clean Air
Interstate Rule); Revisions to Acid Rain Program; Revisions to the
NOx SIP Call; Final Rule,'' 70 FR 25,162 (May 12, 2005) (defining,
among other things, the phrase ``contribute significantly to
nonattainment'').
---------------------------------------------------------------------------

    Notwithstanding that section 110(a)(2) states that ``each'' SIP
submission must meet the list of requirements therein, EPA has long
noted that this literal reading of the statute is internally
inconsistent, insofar as section 110(a)(2)(I) pertains to nonattainment
SIP requirements that could not be met on the schedule provided for
these SIP submissions in section 110(a)(1).\6\ This illustrates that
EPA must determine which provisions of section 110(a)(2) may be
applicable for a given infrastructure SIP submission. Similarly, EPA
has previously decided that it could take action on different parts of
the larger, general ``infrastructure SIP'' for a given NAAQS without
concurrent action on all subsections, such as section 110(a)(2)(D)(i),
because the Agency bifurcated the action on these latter ``interstate
transport'' provisions within section 110(a)(2) and worked with states
to address each of the four prongs of section 110(a)(2)(D)(i) with
substantive administrative actions proceeding on different tracks with
different schedules.\7\ This illustrates that EPA may conclude that
subdividing the applicable requirements of section 110(a)(2) into
separate SIP actions may sometimes be appropriate for a given NAAQS
where a specific substantive action is necessitated, beyond a mere
submission addressing basic structural aspects of the SIP. Finally, EPA
notes that not every element of section 110(a)(2) would be relevant, or
as relevant, or relevant in the same way, for each new or revised NAAQS
and the attendant infrastructure SIP submission for that NAAQS. For
example, the monitoring requirements that might be necessary for
purposes of section 110(a)(2)(B) for one NAAQS could be very different
than what might be necessary for a different pollutant. Thus, the
content of an infrastructure SIP submission to meet this element from a
state might be very different for an entirely new NAAQS, versus a minor
revision to an existing NAAQS.\8\
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    \6\ See, e.g., Id., 70 FR 25-162, at 63-65 (May 12, 2005)
(explaining relationship between timing requirement of section
110(a)(2)(D) versus section 110(a)(2)(I)).
    \7\ EPA issued separate guidance to states with respect to SIP
submissions to meet section 110(a)(2)(D)(i) for the 1997 ozone and
1997 PM2.5 NAAQS. See, ``Guidance for State
Implementation Plan (SIP) Submissions to Meet-Current Outstanding
Obligations Under Section 110(a)(2)(D)(i) for the 8-Hour Ozone and
PM2.5 National Ambient Air Quality Standards,'' from
William T. Harnett, Director, Air Quality Policy Division OAQPS, to
Regional Air Division Director, Regions I-X, dated August 15, 2006.
    \8\ For example, implementation of the 1997 PM2.5
NAAQS required the deployment of a system of new monitors to measure
ambient levels of that new indicator species for the new NAAQS.
---------------------------------------------------------------------------

    Similarly, EPA notes that other types of SIP submissions required
under the statute also must meet the requirements of section 110(a)(2),
and this also demonstrates the need to identify the applicable elements
for other SIP submissions. For example, nonattainment SIPs required by
part D likewise have to meet the relevant subsections of section
110(a)(2) such as section 110(a)(2)(A) or (E). By contrast, it is clear
that nonattainment SIPs would not need to meet the portion of section
110(a)(2)(C) that pertains to part C, i.e., the PSD requirement
applicable in attainment areas. Nonattainment SIPs required by part D
also would not need to address the requirements of section 110(a)(2)(G)
with respect to emergency episodes, as such requirements would not be
limited to nonattainment areas. As this example illustrates, each type
of SIP submission may implicate some subsections of section 110(a)(2)
and not others.
    Given the potential for ambiguity of the statutory language of
section 110(a)(1) and (2), EPA believes that it is appropriate for EPA
to interpret that language in the context of acting on the
infrastructure SIPs for a given NAAQS. Because of the inherent
ambiguity of the list of requirements in section 110(a)(2), EPA has
adopted an approach in which it reviews infrastructure SIPs against
this list of elements ``as applicable.'' In other words, EPA assumes
that Congress could not have intended that each and every SIP
submission, regardless of the purpose of the submission or the NAAQS in
question, would meet each of the requirements, or meet each of them in
the same way. EPA elected to use guidance to make recommendations for
infrastructure SIPs for these NAAQS.
    On October 2, 2007, EPA issued guidance making recommendations for
the infrastructure SIP submissions for both the 1997 8-hour ozone NAAQS
and the 1997 PM2.5 NAAQS.\9\ Within this guidance document,
EPA described the duty of states to make these submissions to meet what
the Agency characterized as the ``infrastructure'' elements for SIPs,
which it further described as the ``basic SIP requirements, including
emissions inventories, monitoring, and modeling to assure attainment
and maintenance of the standards.'' \10\ As further identification of
these basic structural SIP requirements, ``attachment A'' to the
guidance document included a short description of the various elements
of section 110(a)(2) and additional information about the types of
issues that EPA considered germane in the context of such
infrastructure SIPs. EPA emphasized that the description of the basic
requirements listed on attachment A was not intended ``to constitute an
interpretation of'' the requirements, and was merely a ``brief
description of the required elements.'' \11\ EPA also stated its belief
that with one exception, these requirements were ``relatively self-
explanatory, and past experience with SIPs for other NAAQS should
enable States to meet these requirements with assistance from EPA
Regions.'' \12\ For the

one exception to that general assumption, however, i.e., how states
should proceed with respect to the requirements of section 110(a)(2)(G)
for the 1997 PM2.5 NAAQS, EPA gave much more specific
recommendations. But for other infrastructure SIP submittals, and for
certain elements of the submittals for the 1997 PM2.5 NAAQS,
EPA assumed that each state would work with its corresponding EPA
regional office to refine the scope of a state's submittal based on an
assessment of how the requirements of section 110(a)(2) should
reasonably apply to the basic structure of the SIP for the NAAQS in
question.
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    \9\ See, ``Guidance on SIP Elements Required Under Section
110(a)(1) and (2) for the 1997 8-hour Ozone and PM2.5
National Ambient Air Quality Standards,'' from William T. Harnett,
Director, Air Quality Policy Division, to Air Division Directors,
Regions I--X, dated October 2, 2007 (the ``2007 Guidance''). EPA
issued comparable guidance for the 2006 PM2.5 NAAQS
entitled ``Guidance on SIP Elements Required Under Sections
110(a)(1) and (2) for the 2006 24-Hour Fine Particle
(PM2.5) National Ambient Air Quality Standards (NAAQS),''
from William T, Harnett, Director, Air Quality Policy Division, to
Regional Air Division Directors, Regions I--X, dated September 25,
2009 (the ``2009 Guidance'').
    \10\ Id., at page 2.
    \11\ Id., at attachment A, page 1.
    \12\ Id., at page 4. In retrospect, the concerns raised by
commenters with respect to EPA's approach to some substantive issues
indicates that the statute is not so ``self-explanatory,'' and
indeed is sufficiently ambiguous that EPA needs to interpret it in
order to explain why these substantive issues do not need to be
addressed in the context of infrastructure SIPs and may be addressed
at other times and by other means.
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    Significantly, the 2007 Guidance did not explicitly refer to the
SSM, director's discretion, minor source NSR, or NSR Reform issues as
among specific substantive issues EPA expected states to address in the
context of the infrastructure SIPs, nor did EPA give any more specific
recommendations with respect to how states might address such issues
even if they elected to do so. The SSM and director's discretion issues
implicate section 110(a)(2)(A), and the minor source NSR and NSR Reform
issues implicate section 110(a)(2)(C). In the 2007 Guidance, however,
EPA did not indicate to states that it intended to interpret these
provisions as requiring a substantive submission to address these
specific issues in the context of the infrastructure SIPs for these
NAAQS. Instead, EPA's 2007 Guidance merely indicated its belief that
the states should make submissions in which they established that they
have the basic SIP structure necessary to implement, maintain, and
enforce the NAAQS. EPA believes that states can establish that they
have the basic SIP structure, notwithstanding that there may be
potential deficiencies within the existing SIP. Thus, EPA's proposals
mentioned these issues not because the Agency considers them issues
that must be addressed in the context of an infrastructure SIP as
required by section 110(a)(1) and (2), but rather because EPA wanted to
be clear that it considers these potential existing SIP problems as
separate from the pending infrastructure SIP actions.
    EPA believes that this approach to the infrastructure SIP
requirement is reasonable, because it would not be feasible to read
section 110(a)(1) and (2) to require a top to bottom, stem to stern,
review of each and every provision of an existing SIP merely for
purposes of assuring that the state in question has the basic
structural elements for a functioning SIP for a new or revised NAAQS.
Because SIPs have grown by accretion over the decades as statutory and
regulatory requirements under the CAA have evolved, they may include
some outmoded provisions and historical artifacts that, while not fully
up to date, nevertheless may not pose a significant problem for the
purposes of ``implementation, maintenance, and enforcement'' of a new
or revised NAAQS when EPA considers the overall effectiveness of the
SIP. To the contrary, EPA believes that a better approach is for EPA to
determine which specific SIP elements from section 110(a)(2) are
applicable to an infrastructure SIP for a given NAAQS, and to focus
attention on those elements that are most likely to need a specific SIP
revision in light of the new or revised NAAQS. Thus, for example, EPA's
2007 Guidance specifically directed states to focus on the requirements
of section 110(a)(2)(G) for the 1997 PM2.5 NAAQS because of
the absence of underlying EPA regulations for emergency episodes for
this NAAQS and an anticipated absence of relevant provisions in
existing SIPs.
    Finally, EPA believes that its approach is a reasonable reading of
section 110(a)(1) and (2) because the statute provides other avenues
and mechanisms to address specific substantive deficiencies in existing
SIPs. These other statutory tools allow the Agency to take appropriate
tailored action, depending upon the nature and severity of the alleged
SIP deficiency. Section 110(k)(5) authorizes EPA to issue a ``SIP
call'' whenever the Agency determines that a SIP is substantially
inadequate to attain or maintain the NAAQS, to mitigate interstate
transport, or otherwise to comply with the CAA.\13\ Section 110(k)(6)
authorizes EPA to correct errors in past actions, such as past
approvals of SIP submissions.\14\ Significantly, EPA's determination
that an action on the infrastructure SIP is not the appropriate time
and place to address all potential existing SIP problems does not
preclude the Agency's subsequent reliance on provisions in section
110(a)(2) as part of the basis for action at a later time. For example,
although it may not be appropriate to require a state to eliminate all
existing inappropriate director's discretion provisions in the course
of acting on the infrastructure SIP, EPA believes that section
110(a)(2)(A) may be among the statutory bases that the Agency cites in
the course of addressing the issue in a subsequent action.\15\
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    \13\ EPA has recently issued a SIP call to rectify a specific
SIP deficiency related to the SSM issue. See, ``Finding of
Substantial Inadequacy of Implementation Plan; Call for Utah State
Implementation Plan Revision,'' 74 FR 21,639 (April 18, 2011).
    \14\ EPA has recently utilized this authority to correct errors
in past actions on SIP submissions related to PSD programs. See,
``Limitation of Approval of Prevention of Significant Deterioration
Provisions Concerning Greenhouse Gas Emitting-Sources in State
Implementation Plans; Final Rule,'' 75 FR 82,536 (Dec. 30, 2010).
EPA has previously used its authority under CAA 110(k)(6) to remove
numerous other SIP provisions that the Agency determined it had
approved in error. See, e.g., 61 FR 38,664 (July 25, 1996) and 62 FR
34,641 (June 27, 1997) (corrections to American Samoa, Arizona,
California, Hawaii, and Nevada SIPs); 69 FR 67,062 (November 16,
2004) (corrections to California SIP); and 74 FR 57,051 (November 3,
2009) (corrections to Arizona and Nevada SIPs).
    \15\ EPA has recently disapproved a SIP submission from Colorado
on the grounds that it would have included a director's discretion
provision inconsistent with CAA requirements, including section
110(a)(2)(A). See, e.g., 75 FR 42,342 at 42,344 (July 21,2010)
(proposed disapproval of director's discretion provisions); 76 FR
4,540 (Jan. 26, 2011) (final disapproval of such provisions).
---------------------------------------------------------------------------

II. Response to Comments

    EPA received one letter on June 20, 2011 containing comments from
WildEarth Guardians (WG), an environmental organization. The
significant comments made in WG's June 20, 2011 letter and EPA's
responses to those comments are given below.
    Comment No. 1: The commenter states that Montana's SIP fails to
meet the PSD requirements of section 110(a)(2)(J) due to a lack of
ozone impact analysis for new or modified major sources. The commenter
alleges a number of specific inadequacies, which EPA discusses
separately below.
    Comment 1.a: The commenter states that the SIP does not require the
State PSD permitting authority to ensure that a new or modified source
does not cause or contribute to violations of the ozone NAAQS prior to
issuance. The commenter cites section 165(a)(3) of the Act and quotes
the language of 40 CFR 51.166(k)(1). The commenter later states that
nothing in the SIP explicitly requires that ozone impacts be addressed.
    EPA Response: EPA disagrees with this comment. ARM 17.8.820, part
of the Montana SIP, specifically requires PSD permit applicants to
perform a source impact analysis. The language of section ARM 17.8.820
mirrors the language in 40 CFR 51.166(k)(1) quoted by the commenter. In
addition, there is nothing in this section or any other section of the
SIP that exempts sources from carrying out the source impact analysis
for the 1997 ozone NAAQS. Nor does the commenter cite any provision in
the SIP that creates such an exemption. The

commenter is therefore in error in stating that the Montana SIP does
not require the source impact analysis set out in 40 CFR 51.166(k)(1).
Furthermore, ARM 17.8.820 requires the owner or operator of the
proposed source or modification to demonstrate that the construction or
modification of the source will not cause or contribute to a violation
of any NAAQS. Such language includes the 1997 ozone NAAQS; thus the
commenter is also in error in stating that the SIP does not
specifically require ozone impacts to be addressed.
    Comment 1.b: The commenter states that the SIP does not identify
any significant impact levels for ozone.
    EPA Response: EPA disagrees with the thrust of this comment. EPA
has not identified significant impact levels (SILs) for ozone.\16\ The
comment, therefore, does not provide any basis for EPA to change its
proposed approval of the Montana infrastructure SIP for section
110(a)(2)(C) or (J) for the 1997 ozone NAAQS.
---------------------------------------------------------------------------

    \16\ For an explanation and discussion of SILs, in the context
of PM2.5, see 75 FR 64864 (Oct. 20, 2010).
---------------------------------------------------------------------------

    Comment 1.c: The commenter states, citing ARM 17.8.818(7)(a)(v),
that the SIP indicates ``an ozone analysis may only be required if VOC
emissions exceed 100 tons/year.'' The commenter alleges that there is
no support for a 100 tpy significant emission rate and that the
provision seems at odds with the Act.
    EPA Response: EPA disagrees with this comment. First, the commenter
misunderstands the scope and application of the cited provision. ARM
17.8.818(7)(a), which mirrors the provision at 40 CFR 51.166(i)(5),
provides only for exemptions from the monitoring requirements in ARM
17.8.822 based on concentration thresholds. These thresholds are known
as significant monitoring concentrations (SMCs) and are unrelated to
the significant emission rates (SERs) in 40 CFR 51.166(b)(23)(i).
Furthermore, sources below the SMCs in ARM 17.8.818(7)(a) (and the
parallel provision at 40 CFR 51.166(i)(5)) are not exempt from the
source impact analysis discussed in the response to comment 2.a above.
The commenter is therefore in error in stating that an ozone analysis
would not be required for sources emitting less than 100 tpy of VOCs.
Finally, the exemption in 17.8.818(7)(a)(v) is specifically provided
for in 40 CFR 51.166(i)(5).
    Comment 1.d: The commenter states that ARM 17.8.822(7) ``explicitly
allows the owner or operator of a proposed major source or major
modification to forego a pre-construction ozone analysis altogether,''
instead allowing the Montana Department of Environmental Quality (DEQ)
to ``provide post-approval monitoring data for ozone.''
    EPA Response: EPA disagrees with this comment. First, EPA notes
that section 17.8.822(7), which parallels the provision in 40 CFR
51.166(m)(1)(v), applies only if a proposed major stationary source or
major modification of volatile organic compounds (VOCs) meets the
requirements of subchapter 9, Montana's nonattainment NSR program,
including, in particular, the requirement to satisfy the lowest
achievable emissions rate (LAER) for VOCs. Second, the commenter
appears to misunderstand the scope of this provision. The provision
does not exempt sources subject to PSD from the requirement to perform
the source impact analysis in ARM 17.8.820 (discussed in the response
to comment 1.a above); instead it allows sources that meet certain
requirements, including employing LAER for VOCs, to use post-
construction monitoring to replace the pre-application air quality
analysis requirements of section 17.8.822.
    Comment 1.e: The commenter states that the Montana SIP does not
meet the requirements of 40 CFR 51.166(l) regarding the use of air
quality models.
    EPA Response: EPA disagrees with this comment. ARM 17.8.821, part
of Montana's SIP-approved PSD program, mirrors the language of 40 CFR
51.166(l).
    Comment No. 2: The commenter states that Montana's permitting fees
for its Title V program are ``inadequate to ensure the reasonable costs
of reviewing and acting upon permit applications and the reasonable
costs of implementing and enforcing the terms and conditions of permits
are covered.'' The commenter attributes Montana's lack of adequate
resources to the State charging Title V permit applicants ``below the
minimum requirements under Title V.'' The commenter discusses the fees
charged by the State and cites an EPA memorandum discussing the
presumptive minimum fee for part 70 (title V) programs. The commenter
argues that there is no indication that the fees charged by the State,
in aggregate, meet the presumptive minimum fee.
    EPA Response: EPA disagrees with this comment. As stated in the
text of the section, 110(a)(2)(L) is no longer applicable to Title V
operating permit programs after approval of such programs. As noted in
the NPR, the Administrator's final approval of Montana's Title V
operating permit program, including the Title V fee program, became
effective on June 13, 2000 (65 FR 37049). Therefore, EPA concludes that
the Montana infrastructure SIP for the 1997 ozone NAAQS meets the
requirements of section 110(a)(2)(L) with respect to the Title V
program.

III. Final Action

    In this action, EPA is approving the following section 110(a)(2)
infrastructure elements for Montana for the 1997 ozone NAAQS: (A), (B),
(D)(ii), (E)(i), (E)(iii), (F), (G), (H), (K), (L), and (M). EPA is
taking no action today on section 110(a)(2)(E)(ii). EPA will address
this sub-element in a later action.
    In this action, EPA is disapproving section 110(a)(2)
infrastructure elements (C) and (J) for the 1997 ozone NAAQS. EPA
proposed to disapprove these elements in its 5/19/11 NPR.

IV. Statutory and Executive Order Reviews

    Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
Federal regulations (42 USC 7410(k), 40 CFR 52.02(a)). Thus, in
reviewing SIP submissions, EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
action merely approves some state law as meeting Federal requirements
and disapproves other state law because it does not meet Federal
requirements; this action does not impose additional requirements
beyond those imposed by state law. For that reason, this action:
     Is not a ``significant regulatory action'' subject to
review by the Office of Management and Budget under Executive Order
12866 (58 FR 51735, October 4, 1993);
     Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 USC 3501 et seq.);
     Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C 601 et seq.);
     Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
     Does not have Federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999); is not an
economically significant regulatory action based on health or safety
risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

     Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001);
     Is not subject to requirements of section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 USC 272
note) because application of those requirements would be inconsistent
with the CAA; and,
     Does not provide EPA with the discretionary authority to
address, as appropriate, disproportionate human health or environmental
effects, using practicable and legally permissible methods, under
Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have Tribal implications as specified
by Executive Order 13175 (65 FR 67249, November 9, 2000), because the
SIP is not approved to apply in Indian country located in the State,
and EPA notes that it will not impose substantial direct costs on
Tribal governments or preempt Tribal law.
    The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the
Small Business Regulatory Enforcement Fairness Act of 1996, generally
provides that before a rule may take effect, the agency promulgating
the rule must submit a rule report, which includes a copy of the rule,
to each House of the Congress and to the Comptroller General of the
United States. EPA will submit a report containing this action and
other required information to the U.S. Senate, the U.S. House of
Representatives, and the Comptroller General of the United States prior
to publication of the rule in the Federal Register. A major rule cannot
take effect until 60 days after it is published in the Federal
Register. This action is not a ``major rule'' as defined by 5 U.S.C.
804(2).
    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 September 20, 2011. Filing a
petition for reconsideration by the Administrator of this final rule
does not affect the finality of this action 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, Carbon monoxide,
Incorporation by reference, Intergovernmental relations, Lead, Nitrogen
dioxide, Ozone, Particulate matter, Reporting and recordkeeping
requirements, Sulfur oxides, Volatile organic compounds.

    Dated: June 30, 2011.
James B. Martin,
Regional Administrator, Region 8.

    40 CFR part 52 is amended as follows:

PART 52--[AMENDED]

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

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

Subpart BB--Montana

0
2. Section 52.1394 is added to read as follows:

Sec.  52.1394  Section 110(a)(2) infrastructure requirements.

    On December 22, 2009, David L. Klemp, Bureau Chief, Air Resources
Management Bureau, of the Montana Department of Environmental Quality
submitted a certification letter which provides the State of Montana's
SIP provisions which meet the requirements of CAA Section 110(a)(1) and
(2) relevant to the 1997 Ozone NAAQS.

[FR Doc. 2011-18419 Filed 7-21-11; 8:45 am]
BILLING CODE 6560-50-P


[Federal Register Volume 77, Number 8 (Thursday, January 12, 2012)]
[Notices]
[Pages 1973-1975]
[FR Doc No: 2012-454]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

Petition for Exemption From the Vehicle Theft Prevention
Standard; Fuji Heavy Industries U.S.A., Inc.

AGENCY: National Highway Traffic Safety Administration (NHTSA),
Department of Transportation (DOT).

ACTION: Grant of petition for exemption.

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SUMMARY: This document grants in full the Fuji Heavy Industries U.S.A.,
Inc.'s (FUSA's) petition for exemption of the Subaru [confidential]
vehicle line in

accordance with 49 CFR part 543, Exemption from the Theft Prevention
Standard. This petition is granted because the agency has determined
that the antitheft device to be placed on the line as standard
equipment is likely to be as effective in reducing and deterring motor
vehicle theft as compliance with the parts-marking requirements of the
Theft Prevention Standard 49 CFR part 541, Federal Motor Vehicle Theft
Prevention Standard. FUSA requested confidential treatment for specific
information in its petition. The agency will address FUSA's request for
confidential treatment by separate letter.

DATES: The exemption granted by this notice is effective beginning with
the 2013 model year (MY).

FOR FURTHER INFORMATION CONTACT: Ms. Carlita Ballard, Office of
International Policy, Fuel Economy and Consumer Standards, NHTSA, W43-
439, 1200 New Jersey Avenue SE., Washington, DC 20590. Ms. Ballard's
phone number is<PHONE_NUMBER>. Her fax number is<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: In a petition dated October 25, 2011, FUSA
requested an exemption from the parts-marking requirements of the theft
prevention standard (49 CFR part 541) for the Subaru [confidential]
vehicle line, beginning with the 2013 MY. The petition has been filed
pursuant to 49 CFR part 543, Exemption from Vehicle Theft Prevention
Standard, based on the installation of an antitheft device as standard
equipment for an entire vehicle line.
    Under Sec.  543.5(a), a manufacturer may petition NHTSA to grant
exemptions for one vehicle line per model year. In its petition, FUSA
provided a detailed description and diagram of the identity, design and
location of the components of the antitheft device for the Subaru
[confidential] vehicle line. FUSA stated that all Subaru [confidential]
vehicles will be equipped with a passive, transponder-based electronic
immobilizer device as standard equipment. FUSA stated that the
antitheft device and the immobilization features are constructed and
designed within the vehicle's Controller Area Network electrical
architecture. Major components of the antitheft device will include a
transponder, a passive immobilizer system, a key ring antenna, engine
control unit and a meter engine control unit. FUSA stated that system
immobilization is automatically activated when the key is removed from
the vehicle's ignition switch, or after 30 seconds if the ignition is
simply moved to the off position and the key is not removed. The device
will also include a visible and audible alarm, and panic mode feature.
The alarm system will monitor door status and key identification.
Unauthorized opening of a door will activate the alarm system causing
sounding of the horn and flashing of the hazard lamps. FUSA's
submission is considered a complete petition as required by 49 CFR
543.7 in that it meets the general requirements contained in 543.5 and
the specific content requirements of 543.6.
    In addressing the specific content requirements of 543.6, FUSA
provided information on the reliability and durability of its proposed
device. To ensure reliability and durability of the device, FUSA
conducted tests based on its own specified standards and provided a
list of information of the tests it conducted. FUSA believes that its
device is reliable and durable because the device complied with its own
specific requirements for each test. Additionally, FUSA stated that
since the immobilization features are designed and constructed within
the vehicle's overall Controller Area Network Electrical Architecture,
the antitheft device cannot be separated and controlled independently
from this network.
    FUSA stated that it believes that historically, NHTSA has seen a
decreasing theft rate trend when electronic immobilization has been
added to alarm systems. FUSA stated that it presently has immobilizer
devices on all of its product lines (Forester, Tribeca, Impreza, Legacy
and Outback models) and it believes the data show immobilization has
had a demonstrable effect in lowering its theft rates. Review of the
theft rates published by the agency for Subaru vehicles from model
years (MYs) 2007-2009 revealed that while there is some variation, the
theft rates for Subaru vehicles have on average remained below the
median theft rate of 3.5826. Specifically, the agency's theft rate data
for the Subaru Tribeca, Forester, Impreza, Legacy and Outback vehicle
lines using an average of 3 MYs' data is 0.4396, 0.5677, 0.9135, 0.7681
and 0.4394 respectively.
    FUSA also provided a comparative table showing how its device is
similar to other manufacturers' devices that have already been granted
an exemption by NHTSA. In its comparison, FUSA makes note of Federal
Notices published by NHTSA in which manufacturers have stated that they
have seen reductions in theft due to the immobilization systems being
used. Specifically, FUSA notes claims by Ford Motor Company that its
1997 Mustangs with immobilizers saw a 70% reduction in theft compared
to its 1995 Mustangs without immobilizers. FUSA also noted its reliance
on theft rates published by the agency which showed that theft rates
were lower for Jeep Grand Cherokee immobilizer equipped vehicles (model
year 1999 through 2003) compared to older parts-marked Jeep Grand
Cherokee vehicles (model year 1995 and 1998). FUSA stated that it
believes that these comparisons show that its device is no less
effective than those installed on lines for which the agency has
already granted full exemption from the parts-marking requirements.
    The agency agrees that the device is substantially similar to
devices in other vehicle lines for which the agency has already granted
exemptions. Based on the evidence submitted by FUSA, the agency
believes that the antitheft device for the Subaru [confidential]
vehicle line is likely to be as effective in reducing and deterring
motor vehicle theft as compliance with the parts-marking requirements
of the Theft Prevention Standard (49 CFR part 541).
    Pursuant to 49 U.S.C. 33106 and 49 CFR 543.7(b), the agency grants
a petition for an exemption from the parts-marking requirements of part
541 either in whole or in part if it determines that based upon
substantial evidence, the standard equipment antitheft device is likely
to be as effective in reducing and deterring motor vehicle theft as
compliance with the parts-marking requirements of part 541. The agency
finds that FUSA has provided adequate reasons for its belief that the
antitheft device will reduce and deter theft. This conclusion is based
on the information FUSA provided about its device.
    The agency concludes that the device will provide the five types of
performance listed in Sec.  543.6(a)(3): promoting activation;
attracting attention to the efforts of unauthorized persons to enter or
operate a vehicle by means other than a key; preventing defeat or
circumvention of the device by unauthorized persons; preventing
operation of the vehicle by unauthorized entrants; and ensuring the
reliability and durability of the device.
    For the foregoing reasons, the agency hereby grants in full FUSA's
petition for exemption for the vehicle line from the parts-marking
requirements of 49 CFR part 541. The agency notes that 49 CFR part 541,
appendix A-1, identifies those lines that are exempted from the Theft
Prevention Standard for a given model year. 49 CFR 543.7(f) contains
publication requirements incident to the disposition of all Part 543
petitions. Advanced listing, including the release

of future product nameplates, the beginning model year for which the
petition is granted and a general description of the antitheft device
is necessary in order to notify law enforcement agencies of new vehicle
lines exempted from the parts-marking requirements of the Theft
Prevention Standard.
    If FUSA decides not to use the exemption for this line, it must
formally notify the agency, and thereafter, the line must be fully
marked as required by 49 CFR 541.5 and 541.6 (marking of major
component parts and replacement parts).
    NHTSA notes that if FUSA wishes in the future to modify the device
on which this exemption is based, the company may have to submit a
petition to modify the exemption.
    Part 543.7(d) states that a Part 543 exemption applies only to
vehicles that belong to a line exempted under this part and equipped
with the anti-theft device on which the line's exemption is based.
Further, Sec.  543.9(c)(2) provides for the submission of petitions
``to modify an exemption to permit the use of an antitheft device
similar to but differing from the one specified in that exemption.''
    The agency wishes to minimize the administrative burden that Part
543.9(c)(2) could place on exempted vehicle manufacturers and itself.
The agency did not intend Part 543 to require the submission of a
modification petition for every change to the components or design of
an antitheft device. The significance of many such changes could be de
minimis. Therefore, NHTSA suggests that if the manufacturer
contemplates making any changes the effects of which might be
characterized as de minimis, it should consult the agency before
preparing and submitting a petition to modify.

    Authority:  49 U.S.C. 33106; delegation of authority at 49 CFR
1.50.

    Issued on: January 6, 2012.
Christopher J. Bonanti,
Associate Administrator for Rulemaking.
[FR Doc. 2012-454 Filed 1-11-12; 8:45 am]
BILLING CODE 4910-59-P


[Federal Register Volume 78, Number 145 (Monday, July 29, 2013)]
[Notices]
[Pages 45600-45602]
[FR Doc No: 2013-18050]

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

[Docket No. NHTSA-2008-0176; Notice 2]

Adrian Steel Company, Grant of Petition for Decision of
Inconsequential Noncompliance

AGENCY: National Highway Traffic Safety Administration, DOT.

ACTION: Notice of petition grant.

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

SUMMARY: Adrian Steel Company (Adrian), on behalf of Commercial Truck
and Van Equipment, Inc. (CTV), determined that certain Model Year 2006-
2008 incomplete vehicles that CTV completed as trucks did not fully
comply with paragraphs S4.3(a), S4.3(c) and S4.3(d) of 49 CFR 571.110,
Federal Motor Vehicle Safety Standard (FMVSS) No. 110, Tire Selection
and Rims for Motor Vehicles with a GVWR of 4,536 Kilograms (10,000
pounds) or Less. Adrian has filed an appropriate report dated June 10,
2008 pursuant to 49 CFR Part 573, Defect and Noncompliance
Responsibility and Reports.
    Pursuant to 49 U.S.C. 30118(d) and 30120(h), and 49 CFR Part 556,
on June 10, 2008, Adrian submitted a petition for an exemption from the
notification and remedy requirements of 49 U.S.C. 30118 and 30120 on
the basis that this noncompliance is inconsequential to motor vehicle
safety. NHTSA published a notice of receipt of the petition, with a 30-
day public comment period, on December 10, 2008, in the Federal
Register, 73 FR 75171. In response to the petition, NHTSA did not
receive any comments. To view the petition and all supporting
documents, log onto the Federal Docket Management System (FDMS) Web
site at: http://www.regulations.gov/. Then follow the online search
instructions to locate docket number ``NHTSA-2008-0176.''

FOR FURTHER INFORMATION CONTACT: For further information on this
decision, contact Mr. Harry Thompson, Office of Vehicle Safety
Compliance, the National Highway Traffic Safety Administration (NHTSA),
telephone<PHONE_NUMBER>, facsimile<PHONE_NUMBER>.
    Relevant Requirements of FMVSS No. 110: Among other things, FMVSS
No. 110 requires certain information to be specified on the tire and
loading

information placard. The required information includes the vehicle
capacity weight expressed as ``The combined weight of occupants and
cargo should never exceed XXX kilograms or XXX pounds'', the vehicle
manufacturer's recommended cold tire inflation pressure for front,
rear, and spare tires, and the tire size designation, including spare
tires.
    Vehicles Involved: Affected are approximately 7,761 Model Years
2006-2008 General Motors Chevrolet Cargo Uplander GMT201 platform
incomplete vehicles that CTV, as the final stage manufacturer,
completed as trucks. CTV completed these vehicles during the period
September 1, 2005 through June 4, 2008.
    Summary of Adrian's Petition: Adrian explained that several
noncompliances with FMVSS No. 110 exist due to errors and omissions on
the tire and loading information placard that it affixed to the
vehicles. Adrian identified the noncompliances as follows:
    1. Paragraph S4.3(a) requires that the vehicle capacity weight be
stated on the vehicle tire and loading information placard in Metric
and English units. The Metric value (646 kg) is correct but the English
conversion value (5,797 lb) is not correct.
    2. Paragraph S4.3(c) requires that the recommended tire inflation
pressures be stated on the vehicle tire and loading information placard
for the original tires including the spare tire, and, by the example in
FMVSS No. 110 (Figure 1), be stated in both Metric (KPA) and English
(PSI) units. The inflation pressures on the vehicle tire and loading
information placard appear to be the English value only with no units
identified, and no inflation pressure is provided for the spare tire.
    3. Paragraph S4.3(d) requires that the original tire sizes
(including the spare) be stated on the vehicle tire and loading
information placard. The information in the tire size column is rim
size information, rather than the tire size. NHTSA notes that no tire
size information is provided for the spare tire.
    Furthermore, 49 CFR Part 567, Certification requires that the
vehicle type classification (e.g., truck, multipurpose passenger
vehicle, bus, trailer) be specified on the vehicle certification label.
The certification labels specify a vehicle type classification of
``Van'' which is not a classification type recognized by the agency.
    Summary of why Adrian Steel believes that the identified
noncompliances are inconsequential to motor vehicle safety:
    Adrian Steel believes that the tire and loading information placard
is duplicated by the vehicle certification label (required by 49 CFR
Part 567) because it also provides the appropriate information for an
owner to understand tire inflation pressures, tire size and load
ratings. Specifically:
    1. 49 CFR 571.110, paragraph S4.3(a) requires that the vehicle
capacity weight be stated on the tire and loading information placard
in Metric and English units. Although the English units had been
converted incorrectly (listed at 5797 lbs.), the Metric measure, 646
kg, was correct on the tire and loading information placard. Also, the
vehicle certification label correctly identifies the GVWR so that the
safe gross vehicle weight rating is clearly identified. Furthermore,
Adrian sent 8076 postcards to the owners of affected vehicles, based on
addresses provided by R.L. Polk. The postcards stated that the vehicle
capacity weight in English units was 1,425 pounds rather than 5,797
pounds as stated on the placard. Only 26 postcards were returned as
undeliverable.
    2. 49 CFR 571.110, paragraph S4.3(c) requires that the recommended
tire inflation pressures be stated on the tire and loading information
placard for the original tires, in both Metric and English units. The
inflation pressure of ``35'' was identified on the tire and loading
information placard but the unit of measure was not included; however,
it is included on the vehicle certification label, which is mounted on
the vehicle's B pillar adjacent to the tire and loading information
placard. Since the tire inflation pressure is clearly identified on the
vehicle certification label, the information is available to the owner.
    3. 49 CFR 571.110, paragraph S4.3(d) requires that the original
tire sizes be stated on the tire and loading information placard.
Adrian placed the rim size on the tire and loading information placard,
rather than the tire size. However, the tire size is clearly identified
on the vehicle certification label along with the rim size. In
addition, it would be impossible to mount a tire on the vehicle using
the rim numbers as a tire size.
    4. The vehicle certification label which is mounted on the vehicle
next to the tire and loading information placard contained the correct
English and Metric information for tire size, tire pressure, and GVWR
but had a vehicle type identified as ``van'' rather than ``truck''.
While this classification ``van'' is not recognized by the agency,
Adrian believes that this is inconsequential to motor vehicle safety.
    Adrian stated that its Customer Care Center has never received a
call or communication of any type with regard to the tire and loading
information placard or the vehicle certification label.
    Adrian first became aware of the noncompliance when it was
contacted by NHTSA in response to a vehicle inspection conducted by
NHTSA.
    Adrian also informed NHTSA that it has corrected the problem that
caused these errors so that they will not be repeated in future
production.
    In summation, Adrian states that it believes that the described
noncompliances of certain Model Year 2006-2008 incomplete vehicles that
CTV completed as trucks are inconsequential to motor vehicle safety,
and that its petition to exempt it from providing notification of the
noncompliances as required by 49 U.S.C. 30118, and remedying the
noncompliances as required by 49 U.S.C. 30120, should be granted.
    NHTSA's Consideration of Adrian's Inconsequentiality Petition:
    General Principles: Federal motor vehicle safety standards are
adopted only after the agency has determined, following notice and
comment, that the standards are objective and practicable and ``meet
the need for motor vehicle safety.'' See 49 U.S.C. 30111(a). Thus,
there is a general presumption that the failure of a motor vehicle or
item of motor vehicle equipment to comply with a FMVSS increases the
risk to motor vehicle safety beyond the level deemed appropriate by
NHTSA through the rulemaking process. To protect the public from such
risks, manufacturers whose products fail to comply with a FMVSS are
normally required to conduct a safety recall under which they must
notify owners, purchasers, and dealers of the noncompliance and provide
a remedy without charge. 49 U.S.C. 30118-30120.
    However, Congress has recognized that, under some limited
circumstances, a noncompliance could be ``inconsequential'' to motor
vehicle safety. ``Inconsequential'' is not defined either in the
statute or in NHTSA's regulations. Rather, the agency determines
whether a particular non-compliance is inconsequential to motor vehicle
safety based on the specific facts before it. The key issue in
determining inconsequentiality is whether the noncompliance in question
is likely to increase the safety risk to individuals of accidents or to
individual occupants who experience the type of injurious event against
which the standard was designed to protect. See General Motors Corp.;
Ruling on Petition for Determination of Inconsequential

Noncompliance, 69 FR 19897 (Apr. 14, 2004).
    The intent of FMVSS No. 110 is to ensure that vehicles are equipped
with tires that are properly inflated to handle maximum vehicle loads
and relevant information to prevent overloading. The display of correct
information required by paragraphs S4.3(a), S4.3(c) and S4.3(d) of
FMVSS No. 110 provides important information to assist owners and
operators in determining safe vehicle loading limits, tire and rim
combinations and tire inflation pressures. As discussed below, the
missing or incorrect information on the tire and loading placard is
available on the adjacent certification label and from the sidewall of
the spare tire provided with these vehicles. In addition, as noted
above, the noncompliant vehicles are trucks manufactured by CVT based
on 2006-2008 Chevrolet Uplander incomplete vehicles. They have a driver
and a right hand passenger seat and are used for transporting cargo.
The commercial operators of these vehicles are unlikely to be confused
by the missing or incorrect information on the vehicle placard.
Furthermore, NHTSA has not received any consumer complaints or field
reports regarding the subject labels or associated loading issues.
    The vehicle capacity weight (S4.3(a)) is directly related to how a
motorist might load a vehicle. Vehicle capacity weight is ``the rated
cargo and luggage load plus 68 kilograms [150 lbs.] times the vehicle's
designated seating capacity.'' 49 CFR 571.110 S3. The metric value for
the vehicle capacity weight is correctly specified on the vehicle
placard as 646 kg, which equals 1,421 lbs. However, the vehicle
capacity weight value stated in pounds as 5,797 lbs. is incorrect, and
is much higher than the actual vehicle capacity weight. It is almost
the same as the vehicle's gross vehicle weight rating (GVWR) of 5,842
lb., which is correctly identified on the certification label.
Accordingly, the English unit vehicle capacity weight value is clearly
in error. In the overall context, the agency believes the GVWR value
provides sufficient information to the commercial operator such that
the vehicles will not be inadvertently overloaded. The subject vehicles
are manufactured for commercial use and the agency believes that
commercial vehicle operators have a better understanding than non-
commercial operators that the certified GVWR values are ratings not to
be exceeded. Thus, if the commercial vehicle operator follows the
metric vehicle capacity weight value and loads 646 kg of weight into
the vehicle the GVWR of the vehicle will not be exceeded. Furthermore,
if the operator utilizes the English units value and begins to load
5,797 pounds of cargo into the vehicle, the GVWR value of 5,842 pounds
will be reached after approximately 1,500 pounds of cargo are loaded
into the vehicle. This value is calculated based on NHTSA's test
vehicle, by subtracting the unloaded vehicle weight 4,039 pounds and
300 pounds for two occupants from the vehicle's GVWR 5,842 pounds
equals 1,503 pounds. The operator will understand not to exceed the
vehicle's GVWR. In view of the GVWR, the stated vehicle capacity weight
in pounds is way beyond a plausible number and is unlikely to be given
serious consideration. Since the correct vehicle capacity weight value
is provided in metric units on the tire and loading information
placard, the adjacent certification label specifies the vehicle's
correct GVWR, and these vehicles are meant to be owned and operated by
commercial entities, the agency believes it is unlikely the erroneous
English unit vehicle capacity weight conversion value stated on the
vehicle placard will increase the safety risk to the commercial
operators of these vehicles.
    Recommended tire inflation pressure (S4.3(c)) must be stated on the
tire and loading information placard for the original tires, in both
metric and English units. The inflation pressure of ``35'' was
identified on the tire and loading information placard but the unit of
measure was not included. However, the correct pressures both in metric
and English units are included on the vehicle certification label,
which is mounted on the vehicle's B pillar adjacent to the tire and
loading information placard. The agency agrees that since the tire
inflation pressure is clearly identified on the vehicle certification
label directly adjacent to the tire loading and information placard the
inadvertent exclusion of the inflation pressure units on the placard
will not likely cause an increased safety risk to individuals.
    Tire size designation (S4.3(d)) for the tires installed as original
equipment on both the front and rear axles is required to be stated on
the tire and loading information placard. Adrian inadvertently placed
the rim size on the tire and loading information placard, rather than
the tire size. Nevertheless, both the correct tire size and
corresponding rim size are clearly identified on the adjacent vehicle
certification label. Thus, both tire size and rim size are available to
the vehicle operator and it would be unlikely for this error to cause
an increased safety risk to individuals.
    Adrian did not include spare tire size or inflation pressure
information required by S4.3(c) and (d)) on the vehicle tire and
loading information placard. FMVSS No. 110 requires that the spare tire
included as original equipment be specified on the placard, or if no
spare tire is provided the label should specify ``None.'' NHTSA's test
vehicle was equipped with a spare tire size T135/70R16, but the affixed
placard spare tire entry was left blank. In the agency's judgment, this
noncompliance will not cause an increased safety risk to individuals.
In the event of a flat tire the operator will have a spare tire that is
labeled with the proper inflation pressure and has a sufficient load
rating for the vehicle's front and rear Gross Axle Weight Ratings.
    The erroneous listing of the vehicle type as ``van'' on the
certification label required by 49 CFR Part 567 Certification is
considered a violation of 49 U.S.C. 30115, Certification, which
standing alone and without more does not require notification or
remedy. Consequently, that portion of Adrian's inconsequentiality
petition is moot.
    Decision: In consideration of the foregoing, NHTSA has decided that
the petitioner has met its burden of persuasion that the noncompliances
described in its petition are inconsequential to motor vehicle safety.
Accordingly, Adrian's petition is hereby granted, and the petitioner is
not required to notify owners, purchasers and dealers pursuant to 49
U.S.C. 30118 and provide a remedy in accordance with 49 U.S.C. 30120.

    Authority: 49 U.S.C. 30118, 30120: delegations of authority at
CFR 1.95 and 501.8.

    Issued on July 23, 2013.
Claude H. Harris,
Director, Office of Vehicle Safety Compliance.
[FR Doc. 2013-18050 Filed 7-26-13; 8:45 am]
BILLING CODE 4910-59-P