[Federal Register Volume 78, Number 73 (Tuesday, April 16, 2013)]
[Notices]
[Pages 22588-22590]
[FR Doc No: 2013-08866]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-69361; File No. S7-24-89]

Joint Industry Plan; Notice of Filing and Immediate Effectiveness
of Amendment No. 28 to the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation and Dissemination of Quotation
and Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privileges Basis Submitted by the BATS
Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options Exchange,
Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX
Exchange, Inc., Financial Industry Regulatory Authority, Inc.,
International Securities Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ OMX
PHLX LLC, Nasdaq Stock Market LLC, National Stock Exchange, Inc., New
York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.

 April 10, 2013.
    Pursuant to Section 11A of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 608 thereunder,\2\ notice is hereby given that
on March 27, 2013, the operating committee (``Operating Committee'' or
``Committee'') \3\ of the Joint Self-Regulatory Organization Plan
Governing the Collection, Consolidation, and Dissemination of Quotation
and Transaction Information for Nasdaq-Listed Securities Traded on
Exchanges on an Unlisted Trading Privilege Basis (``Nasdaq/UTP Plan''
or ``Plan'') filed with the Securities and Exchange Commission
(``Commission'') an amendment to the Plan.\4\ This amendment represents
Amendment No. 28 (``Amendment'') to the Plan and proposes to increase
the interrogation device fee, to establish a redistribution fee and to
establish a ``net reporting'' option. Pursuant to Rule 608(b)(3)(i)
under the Act, the Participants designated the Amendment as
establishing or changing a fee or other charge collected on behalf of
all of the Participants in connection with access to, or use of, the
facilities contemplated by the Amendment. As a result, the Amendment
has been put into effect upon filing with the Commission. At any time
within 60 days of the filing of the Amendment, the Commission may
summarily abrogate the Amendment and require that the Amendment be
refiled in accordance with paragraph (a)(1) of Rule 608 and reviewed in
accordance with paragraph (b)(2) of Rule 608, if it appears to the
Commission that such action is necessary or appropriate in the public
interest, for the protection of investors, or the maintenance of fair
and orderly markets, to remove impediments to, and perfect the
mechanisms of, a national market system or otherwise in furtherance of
the purposes of the Act. The Commission is publishing this notice to
solicit comments from interested persons.
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    \1\ 15 U.S.C. 78k-1.
    \2\ 17 CFR 242.608.
    \3\ The Plan Participants (collectively, ``Participants'') are
the: BATS Exchange, Inc.; BATS Y-Exchange, Inc.; Chicago Board
Options Exchange, Incorporated; Chicago Stock Exchange, Inc.; EDGA
Exchange, Inc.; EDGX Exchange, Inc.; Financial Industry Regulatory
Authority, Inc.; International Securities Exchange LLC; NASDAQ OMX
BX, Inc.; NASDAQ OMX PHLX LLC; Nasdaq Stock Market LLC; National
Stock Exchange, Inc.; New York Stock Exchange LLC; NYSE MKT LLC; and
NYSE Arca, Inc.
    \4\ The Plan governs the collection, processing, and
dissemination on a consolidated basis of quotation information and
transaction reports in Eligible Securities for each of its
Participants. This consolidated information informs investors of the
current quotation and recent trade prices of Nasdaq securities. It
enables investors to ascertain from one data source the current
prices in all the markets trading Nasdaq securities. The Plan serves
as the required transaction reporting plan for its Participants,
which is a prerequisite for their trading Eligible Securities. See
Securities Exchange Act Release No. 55647 (April 19, 2007), 72 FR
20891 (April 26, 2007).
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I. Rule 608(a)

A. Purpose of the Amendments

    The Amendment proposes to increase the interrogation device fee, to
establish a redistribution fee and to establish a ``net reporting''
option.
1. Interrogation Device Fee
    The charge for each interrogation device receiving UTP Level 1
Service is currently $20.00 per month. The Participants propose to
increase this to $25.00 per month. For that fee, the data recipient
will continue to receive inside bid/ask quotations calculated for
Nasdaq-listed securities, last sale information on Nasdaq-listed
securities, and FINRA OTC Data (collectively, the ``UTP Level 1 Service
Market Data''), as it does today.
    The $20 interrogation device fee has remained in place since 1997.
Thus, the increase amounts to less than a two percent increase per year
over a 16 year period. During that period, the amount of market data
and the categories of information distributed through the UTP Level 1
Service have grown dramatically. The Processor under the Plan has made
hundreds of modifications to the UTP Trade Data Feed and the UTP
Quotation Data Feed (``UQDF'') over the past fifteen years to keep up
with changes in market structure, regulatory requirements and trading
needs. These modifications have added such things as new messages, new
fields, and new values within designated fields to the UTP Level 1
Service. They have caused the UTP Level 1 Service to support such
industry developments as Regulation NMS, decimalization, limit up/limit
down, and many other changes. The growth in prices and quotes
distributed over the UTP Level 1 Service has also been dramatic. For
instance, from February 2005 to February 2013, the UTP UQDF 5-second
peak message rate has increased by a multiple of 15 from 3,789 messages
per second to 57,685 messages per second. Over that period, the daily
peak rate has increased more than 3-fold to 136,500,547 messages.
    In addition, the increase places the level of the fee on a level
more commensurate with device charges under other national market
system plans. For instance, the Network A Participants under the CTA
and CQ Plans recently revised their device fees to establish a four-
tier structure, with monthly fees ranging from $50 to $20, depending on
the number of devices that a data recipient reports.\5\ The Network B
Participants under the CTA and CQ Plans recently revised their monthly
device fee to $24 per device.\6\ Under the OPRA Plan, the device fee is
currently $26 per month, and will rise to $27 per month on January 1,
2014.
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    \5\ See Securities Exchange Act Release No. 69157 (March 18,
2013), 78 FR 17946 (March 25, 2013) (SR-CTA/CQ-2013-01) (``CTA
Release'').
    \6\ Id.
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    The Participants note that the number of devices reported under the
Nasdaq/UTP Plan has declined significantly in recent years, which has
led to a decline in revenues generated under the Plans. (The
Consolidated Data Quarterly Operating Metric Reports show that the
Nasdaq/UTP Plan device population has decreased approximately 10
percent from the fourth quarter of 2010 to the fourth quarter of 2012.
Those reports can be found at http://www.utpplan.com.)
    As described below, the revenue increases that the higher device
fee would generate are mitigated in part by the ``net reporting''
option that the Participants are proposing to establish.
2. Redistribution Charge
    The Participants propose to establish a new monthly charge of
$1,000 for the redistribution of the UTP Level 1 Service Market Data.
This will not necessitate any additional reporting obligations. The
redistribution charges

would apply to any entity that makes last sale information or quotation
information available to any other entity or to any person other than
its own employees, irrespective of the means of transmission or access.
That is, all firms that redistribute any of the UTP Level 1 Service
Market Data outside of their organization would be required to pay the
redistribution fee. The fee would not apply to a firm whose receipt,
use and distribution of market data is limited to its own employees in
a controlled environment.
    The proposed redistribution charge better harmonizes fees under the
Nasdaq/UTP Plan with fees under the CTA, CQ and OPRA Plans. In the CTA
Release, the CTA and CQ Plan Participants adopted redistribution
charges of $1000 for the redistribution of Network A data and $1000 for
the distribution of Network B data. The OPRA Plan imposes a
redistribution charge of $1500 per month on every vendor that
redistributes OPRA data to any person (or $650 for an internet-only
service). Redistribution fees are also common for exchange proprietary
data products.
    The Participants note that vendors base their business models on
procuring data from exchanges and turning around and redistributing
that data to their subscribers. The costs that market data vendors
incur for acquiring their inventory (e.g., UTP Level 1 Service Market
Data) is very low, sometimes amounting only to their payment of access
fees. The proposed redistribution charges would require them to
contribute somewhat more, relative to the end-user community.
3. Net Reporting Program
    The Participants propose to adopt a net reporting option for the
professional subscriber interrogation device charge (the ``Net
Reporting Program''). If a firm complies with the requirements for the
Net Reporting Program, this option permits the firm to report only a
single interrogation device in cases where the firm provides market
data to an employee on multiple internally-controlled, fee-liable
interrogation devices. That is, only a single interrogation device fee
would apply in respect of that firm's provision of market data to that
person, even though he or she receives data on multiple devices. The
Participants propose to make the Net Reporting Program available solely
for internal interrogation devices in respect of which the firm
controls access to market data and not for external interrogation
devices or internal interrogation devices for which a vendor (and not
the firm) controls access to market data.
    This program better harmonizes the Nasdaq/UTP Plan with the CTA and
CQ Plans. Those Plans offer the ``Multiple Instance, Single User''
(``MISU'') program. MISU is similar to the Net Reporting Program except
in one key respect. Vendors under the Nasdaq/UTP Plan bill their
customers on behalf of the Plan Participants. Under the CTA and CQ
Plans, the Network A and Network B administrators bill end users
directly. Due to the Nasdaq/UTP Plan's indirect billing model, the
Participants propose to make the Net Reporting Program available solely
to internal interrogation devices. That is, the program will only be
available for devices that its employees use and in respect of which
the firm controls access to market data.
    The Participants will make the Net Reporting Program available only
to firms that meet the program's requirements and that Nasdaq, the
Nasdaq/UTP Plan's administrator, has approved to participate in
advance. To qualify, a firm must demonstrate to Nasdaq that it has
adequate internal controls for entitling and monitoring its employees'
data usage and for reporting that usage to Nasdaq.

B. Governing or Constituent Documents

    Not applicable.

C. Implementation of Amendment

    All of the Participants have manifested their approval of the
proposed Amendment by means of their execution of the Amendment. The
Participants propose to implement the rate changes as of April 1, 2013.
They have already given notice to data recipients of their intention to
make the changes effective as of that date.
    The Participants understand that April 1, 2013, is the date on
which the fee changes that the CTA and CQ Plan Participants set forth
in the CTA Release will become effective. The Participants seek to
harmonize the timing of the changes set forth in Amendment No. 28 with
those of the CTA and CQ Plan Participants.

D. Development and Implementation Phases

    Not applicable.

E. Analysis of Impact on Competition

    The proposed Amendment does not impose any burden on competition
that is not necessary or appropriate in furtherance of the purposes of
the Exchange Act. They will cause the fee structure under the Nasdaq/
UTP Plan to more closely resemble the fee structures under the CTA, CQ
and OPRA Plans.
    The Participants cannot say with certainty the impact of the Net
Reporting Program. Based on feedback from the firms most likely to take
advantage of the program, they estimate that the program will result in
approximately a 15 percent reduction in reported devices. With this
reduction in reported devices in mind, they estimate that the increase
in the interrogation device fee will increase Nasdaq/UTP revenues by
approximately $420,000 per month and that the redistribution fee will
increase revenues by approximately $235,000 per month. These estimates
do not take into account an anticipated continuation of the decline in
the number of reported professional subscriber interrogation devices,
including a decline due to the attrition that may result from the
increased interrogation device rate and the new redistribution fee.
    The increase in the interrogation device fee would fall upon
broker-dealer firms and other consumers of UTP Level 1 Service. Some of
those firms will benefit from the Net Reporting Program. All of those
firms have benefitted from 16 years without a price increase.
    The new redistribution fee would fall upon market data
redistributors, many of whom currently contribute little or nothing to
the operation of the securities markets in exchange for their inventory
(i.e., the market data they redistribute to their customers).
    In the Participants' view, the proposed fee changes would allow
data redistributors and data users to contribute an appropriate amount
for their receipt and use of market data under the Nasdaq/UTP Plan.
They would provide for an equitable allocation of dues, fees, and other
charges among broker-dealers, vendors, end users and others receiving
and using market data made available under the Nasdaq/UTP Plan.

F. Written Understanding or Agreements Relating to Interpretation of,
or Participation in, Plan

    The Participants have no written understandings or agreements
relating to interpretation of the Plan as a result of the Amendment.

G. Approval by Sponsors in Accordance With Plan

    Each of the Plan's Participants has approved the changes and has
executed a written amendment to the Plan.

H. Description of Operation of Facility Contemplated by the Proposed
Amendment

    Not applicable.

I. Terms and Conditions of Access

    See Item I(A) above.

J. Method of Determination and Imposition, and Amount of, Fees and
Charges

    The Participants took a number of factors into account in arriving
at the proposed fee changes. The proposed changes promote consistency
in price structures among the national market system plans, as well as
consistency with the preponderance of other market data providers. This
would make market data fees easier to administer. It would enable data
recipients to compare their charges under the respective national
market system plans more easily. It also would make for a more
straightforward and streamlined administrative process for both the
network administrator and market data users.
    In addition, the Net Reporting Program responds to suggestions of
members of the industry that the program would provide for an equitable
allocation of dues, fees, and other charges among vendors, who
redistribute the Plan's market data, and the firms that consume the
data. Similarly, the Participants believe that the redistribution fee
would equitably allocate fees to redistributors, many of whom currently
pay little in the way of market data fees. The increase in the
interrogation device fee follows 16 years of no change in the rate and
sets the fee at a level that is commensurate with its counterparts
under the other national market system plans.
    The Participants would apply the interrogation device fee, the
redistribution fee and the Net Reporting Program uniformly to all firms
qualifying for the Program (including members of the Participant
markets and non-members) and do not believe that any of the proposed
changes introduce terms that are unreasonably discriminatory.

K. Method and Frequency of Processor Evaluation

    Not applicable.

L. Dispute Resolution

    Not applicable.

II. Rule 601(a)

A. Equity Securities for Which Transaction Reports Shall Be Required by
the Plan

    Not applicable.

B. Reporting Requirements

    The Net Reporting Program will require a program participant to
report on a monthly basis, just as it does today. The only difference
is that the firm would be able to report only a single interrogation
device in cases where the firm provides market data to an employee on
multiple internally-controlled, fee-liable interrogation devices.

C. Manner of Collecting, Processing, Sequencing, Making Available and
Disseminating Last Sale Information

    Not applicable.

D. Manner of Consolidation

    Not applicable.

E. Standards and Methods Ensuring Promptness, Accuracy and Completeness
of Transaction Reports

    Not applicable.

F. Rules and Procedures Addressed to Fraudulent or Manipulative
Dissemination

    Not applicable.

G. Terms of Access to Transaction Reports

    Not applicable.

H. Identification of Marketplace of Execution

    Not applicable.

III. Solicitation of Comments

    The Commission seeks general comments on Amendment No. 28.
Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposal is
consistent with the Act. Comments may be submitted by any of the
following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number S7-24-89 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number S7-24-89. This file number
should be included on the subject line if email is used. To help the
Commission process and review your comments more efficiently, please
use only one method. The Commission will post all comments on the
Commission's Web site (http://www.sec.gov/rules/sro.shtml). Copies of
the submission, all written statements with respect to the proposed
Plan Amendment that are filed with the Commission, and all written
communications relating to the proposed Plan Amendment between the
Commission and any person, other than those that may be withheld from
the public in accordance with the provisions of 5 U.S.C. 552, will be
available for Web site viewing and printing in the Commission's Public
Reference Room on official business days between the hours of 10:00
a.m. and 3:00 p.m. Copies of the filing also will be available for Web
site viewing and printing at the Office of the Secretary of the
Committee, currently located at the CBOE, 400 S. LaSalle Street,
Chicago, IL 60605. All comments received will be posted without change;
the Commission does not edit personal identifying information from
submissions. You should submit only information that you wish to make
available publicly. All submissions should refer to File Number S7-24-
89 and should be submitted on or before May 7, 2013.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\7\
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    \7\ 17 CFR 200.30-3(a)(27).
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Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2013-08866 Filed 4-15-13; 8:45 am]
BILLING CODE 8011-01-P


periods of time the emission limit does not apply. This provision
appears to provide for an automatic exemption from the emission
limitations that would otherwise apply to visible emission standards
for outdoor wood boilers and outdoor pellet boilers in the Maine SIP
and is substantially inadequate to comply with CAA requirements under
sections 110(a)(2)(A), 110(a)(2)(C), and 302(k).

C. North Carolina

15A NCAC 02D .1423(g)
    Separately from the reinstatement of the 2015 SIP Call discussed in
the previous section, the EPA is also proposing in this document to
make a finding of substantial inadequacy and issue a SIP Call to North
Carolina for provision 15A NCAC 02D .1423(g) on the basis that it
contains an impermissible automatic exemption.
    As explained earlier in this document, EPA's position is that the
best reading of the CAA is that it does not allow for exemptions from
otherwise applicable SIP emission limitations, whether automatic or
through the exercise of a state official's discretion. In accordance
with the requirements of CAA section 110(a)(2)(A), emission limitations
that appear in SIPs must be continuous, in accordance with the
definition of ``emission limitations'' in CAA section 302(k). Thus, any
excess emissions above the level of the applicable emission limitation
must be considered violations, whether or not the state elects to
exercise its enforcement discretion. SIP provisions that create
exemptions such that the excess emissions during startup, shutdown, or
malfunctions are not violations are inconsistent with the fundamental
requirements of the CAA with respect to emission limitations in SIPs.
    The provision 15A NCAC 02D .1423(g), which applies to large
internal combustion engines, states, ``The emission standards of this
Rule shall not apply to the following periods of operation: (1) start-
up and shut-down periods and periods of malfunction, not to exceed 36
consecutive hours; (2) regularly scheduled maintenance activities.''
\56\ The EPA is proposing to find the inclusion of these exemptions
renders the provision impermissible under the CAA requirement that some
emission limit must apply at all times. There are no other provisions
in the NC SIP that could act as an appropriate alternative emission
limit to fill the periods of time the emission limit does not apply, as
is discussed in more detail above. The provision 15A NCAC 02D .1423(g)
appears to provide for an impermissible automatic exemption and is
substantially inadequate to comply with CAA requirements under sections
110(a)(2)(A), 110(a)(2)(C), and 302(k).
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    \56\ The EPA notes that ``emission standard'' and ``emission
limitation'' have the same definition under section 302(k) of the
CAA, and EPA considers the terms interchangeable.
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Mecklenburg County, NC: Mecklenburg County Air Pollution Control
Ordinance (MCAPCO) Rule 2.0535(c)
    The EPA is proposing in this document to make a finding of
substantial inadequacy and issue a SIP call to North Carolina for local
provision MACAPCO Rule 2.0535(c) on the basis

that it contains an impermissible director's discretion provision. As
explained earlier in this document, EPA's position is that the best
reading of the CAA is that it does not allow for exemptions through the
exercise of a state official's discretion. In accordance with the
requirements of CAA section 110(a)(2)(A), emission limitations that
appear in SIPs must be continuous, in accordance with the definition of
``emission limitations'' in CAA section 302(k). Thus, any excess
emissions above the level of the applicable emission limitation must be
considered violations, whether or not the state elects to exercise its
enforcement discretion. SIP provisions that create exemptions such that
the excess emissions during startup, shutdown, or malfunctions are not
violations are inconsistent with the fundamental requirements of the
CAA with respect to emission limitations in SIPs. In addition,
director's discretion provisions functionally could allow de facto
revisions of the approved emission limitations required by the SIP,
without complying with the process for SIP revisions required by the
CAA.
    The local provision, which applies to excess emissions reporting
and malfunctions, states ``Any excess emissions that do not occur
during start-up or shut-down are considered a violation of the
appropriate Regulation unless the owner or operator of the source of
excess emissions demonstrates to the Director, that the excess
emissions are the result of a malfunction.'' The provision relies on
the same unbounded director's discretion language found in 15A NCAC 02D
.0535(c), including the list of factors to be considered by the
director, and is inadequate for the same reasons. As explained in EPA's
February 22, 2013, SIP call proposal on the state's rule, and
reiterated in part earlier in this document, this director's discretion
provision authorizes exemptions from otherwise applicable emission
limitations, in violation of EPA's SSM Policy that emission limits
apply at all times. In addition, this provision makes the state
official the unilateral arbiter of whether the excess emissions in a
given event constitute a violation, which could preclude enforcement by
the EPA or the public who might disagree about whether enforcement
action is warranted. There are no other provisions in the NC SIP that
could act as an appropriate alternative emission limit to fill the
periods of time the emission limit does not apply, as is discussed in
more detail above. The EPA is proposing to find that the provision
MCAPCO Rule 2.0434(c) appears to provide for of an unbounded director's
discretion exemption and is thus substantially inadequate to meet CAA
requirements in sections 110(a)(2)(A), 110(a)(2)(C), and 302(k).
Buncombe County, NC: Western North Carolina Regional Air Quality Agency
Air Quality Code (WNCRAQ Air Quality Code) Section 1-137(c)
    The EPA is also proposing in this document to make a finding of
substantial inadequacy and issue a SIP Call to North Carolina for local
provision WNCRAQ Air Quality Code section 1-137(c) on the basis that it
contains an impermissible director's discretion exemption. As explained
earlier in this document, EPA's position is that the best reading of
the CAA is that it does not allow for exemptions through the exercise
of a state official's discretion. In accordance with the requirements
of CAA section 110(a)(2)(A), emission limitations that appear in SIPs
must be continuous, in accordance with the definition of ``emission
limitations'' in CAA section 302(k). Thus, any excess emissions above
the level of the applicable emission limitation must be considered
violations, whether or not the state elects to exercise its enforcement
discretion. SIP provisions that create exemptions such that the excess
emissions during startup, shutdown, or malfunctions are not violations
are inconsistent with the fundamental requirements of the CAA with
respect to emission limitations in SIPs. In addition, director's
discretion provisions functionally could allow de facto revisions of
the approved emission limitations required by the SIP, without
complying with the process for SIP revisions required by the CAA.
    The local provision, which applies to excess emissions reporting
and malfunctions, states ``Any excess emissions that do not occur
during start-up or shut-down are considered a violation of the
appropriate Regulation unless the owner or operator of the source of
excess emissions demonstrates to the Director, that the excess
emissions are the result of a malfunction.'' The provision relies on
the same unbounded director's discretion language found in MCAPCO Rule
2.0535(c) and 15A NCAC 02D .0535(c), including the list of factors to
be considered by the director, and is inadequate for the same reasons.
This director's discretion provision authorizes exemptions from
otherwise applicable emission limitations, in violation of EPA's SSM
Policy that emission limits apply at all times. There are no other
provisions in the NC SIP that could act as an appropriate alternative
emission limit to fill the periods of time the emission limit does not
apply, as is discussed in more detail above. In addition, this
provision makes the state official the unilateral arbiter of whether
the excess emissions in a given event constitute a violation, which
could preclude enforcement by the EPA or the public who might disagree
about whether enforcement action is warranted. The EPA is proposing to
find provision WNCRAQ Air Quality Code section 1-137(c) appears to
provide for an unbounded director's discretion exemption and is thus
substantially inadequate to meet CAA requirements 110(a)(2)(A),
110(a)(2)(C), and 302(k).

D. Tennessee

Shelby County, Tennessee: Shelby County Air Code 3-17 (City of Memphis
Code 16-83)
    The EPA is proposing in this document to make a finding of
substantial inadequacy and issue a SIP Call to Tennessee for local
provisions Shelby County Air Code 3-17 (City of Memphis Code 16-83)
\57\ on the basis that they contain impermissible unbounded director's
discretion exemptions.
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    \57\ This Shelby County portion of the Tennessee SIP consists of
the Shelby County Air Code developed by the Shelby County Health
Department's Pollution Control Section and the mirrored regulations
for included municipalities and the City of Memphis. EPA selected
the City of Memphis Air Code to represent the SIP compilation in the
past. Shelby County Air Code section 3-17 corresponds to City of
Memphis Code section 16-83. The Shelby County LIP also includes the
Town of Arlington, City of Millington, Town of Collierville, City of
Bartlett, City of Germantown, and the City of Lakeland.
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    As explained earlier in this document, EPA's position is that the
best reading of the CAA is that it does not allow for exemptions from
otherwise applicable SIP emission limitations, whether automatic or
through the exercise of a state official's discretion. In accordance
with the requirements of CAA section 110(a)(2)(A), emission limitations
that appear in SIPs must be continuous, in accordance with the
definition of ``emission limitations'' in CAA section 302(k). Thus, any
excess emissions above the level of the applicable emission limitation
must be considered violations, whether or not the state elects to
exercise its enforcement discretion. SIP provisions that create
exemptions such that the excess emissions during startup, shutdown, or
malfunctions are not violations are inconsistent with the fundamental
requirements of the CAA with respect to emission limitations in SIPs.

    Shelby County Air Code 3-17 (City of Memphis Code 16-83), which
incorporates by reference Chapter 1200-3-5 of the Tennessee Air
Pollution Control Regulations, applies to visible emissions from
stationary sources. Tennessee Compilation of Rules and Regulations
(Tenn. Comp. R. & Regs) 1200-3-5-.02(1), which was SIP-called in 2015,
states, ``Consistent with the requirements of Chapter 1200-3-20, due
allowance may be made for visible emissions in excess of that permitted
in this chapter which are necessary or unavoidable due to routine
startup and shutdown conditions.'' As explained in EPA's February 22,
2013, SIP call proposal, this provision creates an unbounded director's
discretion provision because it allows a state official to excuse
excess visible emissions after giving ``due allowance'' to the fact
that they were emitted during startup or shutdown events.\58\ More
importantly, the provision purports to authorize the local official to
create exemptions from applicable SIP emission limitations when such
exemptions are impermissible in the first instance. There are no other
provisions in the TN SIP that could act as an appropriate alternative
emission limit to fill the periods of time the emission limit does not
apply.
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    \58\ Tenn. Comp. R. & Regs 1200-3-5-.02(1) refers to Chapter
1200-3-20 as prescribing the requirements for considering whether
violations can receive ``due allowance.'' As SIP-called, 1200-3-
20-.07(1) requires data to be reported ``to assist the Technical
Secretary in deciding whether to excuse or proceed upon'' violations
of applicable SIP emission limitations. Therefore, the due allowance
at 1200-3-5-.02(1) can be interpreted to mean the discretion of the
Technical Secretary to excuse violations during periods of SSM. The
EPA SIP called the Shelby County incorporation by reference of
Chapter 1200-3-20 in the 2015 SSM SIP Action, and Shelby County
submitted a SIP revision addressing that SIP call through the State
on March 1, 2022.
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    As such, the EPA is proposing to find Shelby County Air Code 3-17
(City of Memphis Code 16-83), which appears to provide for director's
discretion exemptions from the emission limitations that would
otherwise apply to visible emission standards from stationary sources
in the TN SIP, is substantially inadequate to meet CAA requirements
sections 110(a)(2)(A), 110(a)(2)(C), and 302(k) as interpreted in EPA's
SSM Policy.

E. Wisconsin

Wis. Admin. Code NR 431.05(1)-(2) and NR 436.03(2)
    The EPA is proposing in this document to make a finding of
substantial inadequacy and issue a SIP call to the state of Wisconsin
for Wis. Admin. Code provisions NR 431.05(1)-(2) and NR 436.03(2) on
the basis that these provisions contain impermissible automatic and
director's discretion exemptions.
    As explained earlier in this document, EPA's position is that the
best reading of the CAA is that it does not allow for exemptions from
otherwise applicable SIP emission limitations, whether automatic or
through the exercise of a state official's discretion. In accordance
with the requirements of CAA section 110(a)(2)(A), emission limitations
that appear in SIPs must be continuous, in accordance with the
definition of ``emission limitations'' in CAA section 302(k). Thus, any
excess emissions above the level of the applicable emission limitation
must be considered violations, whether or not the state elects to
exercise its enforcement discretion. SIP provisions that create
exemptions such that the excess emissions during startup, shutdown, or
malfunctions are not violations are inconsistent with the fundamental
requirements of the CAA with respect to emission limitations in SIPs.
In addition, director's discretion provisions functionally could allow
de facto revisions of approved emission limitations required by the
SIP, without complying with the process for SIP revisions required by
the CAA.
    The provision NR 431.05(1), which applies to emissions limitations
and visible emissions control for all air contaminant sources, states,
``No owner or operator of a direct or portable source on which
construction or modification is commenced after April 1, 1972 may cause
or allow emissions of shade or density greater than number 1 of the
Ringlemann chart or 20% opacity with the following exceptions: (1) When
combustion equipment is being cleaned or a new fire started, emissions
may exceed number 1 of the Ringlemann chart or 20% opacity but may not
exceed number 4 of the Ringlemann chart or 80% opacity for 6 minutes in
any one hour. Combustion equipment may not be cleaned nor a fire
started more than 3 times per day.'' While the CAA does allow for
alternative emission limitations or other enforceable control measures
or techniques that apply during startup or shutdown, 431.05(1) does not
comply with the Act's requirements for an alternative emission limit as
interpreted in EPA's SSM policy. While the provision appears on its
face to provide for a numerical limitation on visible emissions
exceedances at all times, an 80% opacity limit provides for
functionally uncontrolled emissions. In EPA's experience, for most
source categories, a source displaying 80% opacity would likely be
operating without any emissions controls at all. Opacity limits in EPA
rules and permits that represent controlled sources are typically much
lower than 80% (most often 20% or lower). While framed as an
alternative emissions limitation, EPA views this provision as operating
in practice as an automatic exemption, which does not comply with the
CAA or EPA's SSM policy. Further, the limit applies to emissions
limitations and visible emissions control for all air contaminant
sources--it is not ``limited to specific, narrowly defined source
categories'' as EPA's SSM Policy for alternative emission limits
recommends. As articulated in 1999 SSM SIP Guidance and 2015 SSM SIP
Action, for some source categories, given the types of control
technologies available, there may exist short periods of emissions
during startup and shutdown when, despite best efforts regarding
planning, design, and operating procedures, otherwise applicable
emission limitation cannot be met. In these instances, it may be
appropriate to create SIP revisions providing for alternative emission
limitations, so long as they meet the criteria for developing and
evaluating alternative emission limitations laid out by EPA, including
that the revision be ``limited to specific, narrowly defined source
categories.'' \59\ Even if an 80 percent opacity limit were to be
appropriate for certain sources in very specific scenarios, it operates
too broadly to be appropriate in all situations.
---------------------------------------------------------------------------

    \59\ See 80 FR 33840 at 33914 and EPA's 1999 SSM Guidance
(Memorandum to EPA Regional Administrators, Regions I-X from Steven
A. Herman and Robert Perciasepe, USEPA, Subject: State
Implementation Plans: Policy Regarding Excess Emissions During
Malfunctions, Startup, and Shutdown, dated September 20, 1999).
---------------------------------------------------------------------------

    Both NR 431.05(2) and NR 436.03(2) provide for unbounded director's
discretion exemptions, authorizing exemptions from otherwise applicable
emission limitations, in violation of EPA's SSM Policy that emission
limits apply at all times. NR 431.05(2), which applies to emission
limitations and visible emissions control for all air contaminant
sources, states, ``No owner or operation of a direct or portable source
on which construction or modification is commenced after April 1, 1972
may cause or allow emissions of shade or density greater than number 1
of the Ringlemann chart or 2 percent opacity with the following
exceptions: (2) Emissions may exceed number 1 of the Ringlemann chart
or 20 percent opacity for stated periods of time, as permitted by the
department, for such

purpose as an operating test, use of emergency equipment, or other good
cause, provided no hazard or unsafe condition arises.'' This provision
constitutes a director's discretion exemption because it allows
exceptions ``as permitted by the department'' for various purposes
including ``other good cause.'' Although it limits the department
head's discretion so that ``no hazard or unsafe condition arises,''
this vague language provides the department head with extremely broad
discretion to approve emissions exceedances in accordance with ``good
cause'' which could preclude enforcement by the EPA or the public who
might disagree about whether enforcement action is warranted due to
emissions exceedances.
    NR 436.03(2), which applies to emission limitations exceptions for
all air contaminant sources, states, ``Emissions in excess of the
emission limitations set in NR 400 to 499 may be allowed in the
following circumstances: (a) When an approved program or plan with a
time schedule for correction has been undertaken and correction is
being pursued with diligence; (b) When emissions in excess of the
limits are temporary and due to scheduled maintenance, startup or
shutdown of operations carried out in accord with a plan and schedule
approved by the department; (c) The use of emergency or reserve
equipment needed for meeting of high peak loads, testing of the
equipment or other uses approved by the department. Such equipment must
be specified in writing as emergency or reserve equipment by the
department. Upon startup of this equipment notification must be given
to the department which may or may not give approval for continued
equipment use.''
    This provision constitutes a director's discretion exemption
because, for example, NR 436.03(2) references exceptions to emissions
limitations during periods of SSM as being acceptable so long as the
emissions are ``carried out in accord with a plan and schedule approved
by the department.'' Like NR 431.05(2), this vague language provides
the department head or director with extremely broad discretion to
approve emissions exceedances in accordance with an unspecified
department plan, which could preclude enforcement by the EPA or the
public who might disagree about whether enforcement action is
warranted. Most importantly, however, the provision may be read to
authorize the state official to create an exemption from applicable
emission limitations, and such an exemption is impermissible in the
first instance. There are no other provisions in the WI SIP that could
act as an appropriate alternative emission limit to fill the periods of
time the emission limits do not apply.
    As such, the EPA proposes to find that Wis. Admin. Code NC
431.05(1)-(2) and NR 436.03(2), which appears to provide for automatic
and director's discretion exemptions from the emission limitations that
would otherwise apply to air contaminant sources in the WI SIP, are
substantially inadequate to comply with the CAA requirements in
sections 110(a)(2)(A), 110(a)(2)(C), and 302(k) and, thus, are
impermissible for the aforementioned reasons.

F. Louisiana

Louisiana Administrative Code (LAC) Title 33 Chapter 9 Section 917
    The EPA is proposing in this document to make a finding of
substantial inadequacy and issue a SIP call to Louisiana for the LA.
Admin Code Tit. 33 section 917 provision on the basis that it contains
an impermissible director's discretion exemption.
    As explained earlier in this document, EPA's position is that the
best reading of the CAA is that it does not allow for exemptions from
otherwise applicable SIP emission limitations, whether automatic or
through the exercise of a state official's discretion. In accordance
with the requirements of CAA section 110(a)(2)(A), emission limitations
that appear in SIPs must be continuous, in accordance with the
definition of ``emission limitations'' in CAA section 302(k). Thus, any
excess emissions above the level of the applicable emission limitation
must be considered violations, whether or not the state elects to
exercise its enforcement discretion. SIP provisions that seek to
provide or create exemptions such that the excess emissions during
startup, shutdown, or malfunctions are not violations are inconsistent
with the fundamental requirements of the CAA with respect to emission
limitations in SIPs.
    The EPA proposes to find that a provision in Louisiana's SIP that
allows emissions in excess of otherwise applicable SIP emission
limitations due to ``exceptional circumstances'' (LA. Admin Code Tit.
33 section 917) is impermissible under the CAA as interpreted in EPA's
SSM Policy because it includes an unbounded director's discretion
provision. The provision authorizes a state official to grant a
``variance'' from any generally applicable SIP emission limitation if
the state official ``finds that by reason of exceptional circumstances
strict conformity with any provisions of [Louisiana's air quality]
regulations would cause undue hardship, would be unreasonable,
impractical or not feasible under the circumstances.'' This provision
could be read to mean that once the state official has granted a
variance for excess emissions due to conditions that make it difficult
for sources to comply with otherwise applicable SIP limitations, those
excess emissions are not violations. In fact, the state of Louisiana
has granted several variances in recent years to allow for excess
emissions during periods of SSM.\60\ This is contrary to the
fundamental enforcement structure of the CAA, as provided in CAA
section 113 and CAA section 304, through which the EPA and other
parties are authorized to bring enforcement actions for violations of
SIP emission limitations.
---------------------------------------------------------------------------

    \60\ See Louisiana variance memorandum in Docket ID EPA-HQ-OAR-
2022-0814.
---------------------------------------------------------------------------

    As discussed in section V.A. of this document, such director's
discretion provisions are impermissible. Such an interpretation would
make the state official the unilateral arbiter of whether the excess
emissions in a given event constitute a violation, which could preclude
enforcement by the EPA or the public who might disagree about whether
enforcement action is warranted. Most importantly, however, the
provision may be read to authorize the state official to create an
exemption from applicable emission limitations, and such an exemption
is impermissible in the first instance. Inclusion of an unbounded
director's discretion provision in LA. Admin Code Tit. 33 section 917
is thus a substantial inadequacy and renders this specific SIP
provision impermissible for this reason.
    The EPA notes that the Louisiana provision also states that ``No
variance may permit or authorize the maintenance of a nuisance, or a
danger to public health or safety.'' While this seems to be meant to
limit the scope of Louisiana's authority to grant such a variance, the
EPA does not believe that it provides any objective criteria that might
allow for meaningful EPA or citizen enforcement. Such a vague
limitation does not remedy the CAA inadequacies discussed above and
does not comply with EPA's interpretation of the CAA as applied through
EPA's SSM Policy regarding alternative emission limitations. There are
no other provisions in the LA SIP that could act as an appropriate
alternative emission limit to fill the periods of time the emission
limits do not apply.

    The EPA proposes to find that LA. Admin Code Tit. 33 section 917
provision appears to provide for exemptions from otherwise applicable
emission limitations through a state official's unilateral exercise of
discretionary authority that is unbounded. Such provisions are
inconsistent with the fundamental requirements of the CAA with respect
to emission limitations in SIPs as required by CAA sections
110(a)(2)(A), 110(a)(2)(C), and 302(k). For these reasons, the EPA is
proposing to find that this provision is substantially inadequate to
meet CAA requirements and thus proposing to issue a SIP call with
respect to this provision.

VIII. Legal Authority, Process, and Timing for SIP Calls

A. SIP Call Process Under CAA Section 110(k)(5)

    Section 110(k)(5) of the CAA provides the EPA with authority to
determine whether a SIP is substantially inadequate to attain or
maintain the NAAQS or otherwise comply with any requirement of the CAA.
Where the EPA makes such a determination, the EPA then has a duty to
issue a SIP call. In addition to providing general authority for a SIP
call, CAA section 110(k)(5) sets forth the process and timing for such
an action.
    First, the statute requires the EPA to notify the state of the
final finding of substantial inadequacy. The EPA intends to provide
notice to states via letter to the appropriate state officials in
addition to publication of the final action in the Federal Register.
Second, the statute requires the EPA to establish ``reasonable
deadlines (not to exceed 18 months after the date of such notice)'' for
the state to submit a corrective SIP submission to eliminate the
inadequacy in response to the SIP call. The EPA implements this by
proposing and taking comment on the schedule for the submission of
corrective SIP revisions in order to ascertain the appropriate
timeframe, depending on the nature of the SIP inadequacy. Third, the
statute requires that any finding of substantial inadequacy and notice
to the state be made public. By undertaking a notice-and-comment
rulemaking, the EPA ensures that the air agency, affected sources, and
members of the public all are adequately informed and afforded the
opportunity to participate in the process. Through this proposal
document and the subsequent final document, the EPA intends to provide
a full evaluation of the issues and to use this process as a means of
giving clear guidance concerning SIP provisions relevant to SSM events
that are consistent with CAA requirements.
    If the state fails to submit the corrective SIP revision concerning
the deficiency by the deadline that the EPA finalizes as part of the
SIP call, CAA section 110(c) authorizes the EPA to ``find that [the]
State has failed to make a required submission.'' \61\ Once EPA makes
such a finding of failure to submit, CAA section 110(c)(1) requires the
EPA to ``promulgate a Federal implementation plan at any time within 2
years after the [finding] * * * unless the State corrects the
deficiency, and [the EPA] approves the plan or plan revision, before
[the EPA] promulgates such [FIP].'' Thus, if EPA finalizes a SIP call
and then finds that the air agency failed to submit a complete SIP
revision that responds to the SIP call, or if the EPA disapproves such
SIP revision, then the EPA will have an obligation under CAA section
110(c)(1) to promulgate a FIP no later than 2 years from the date of
the finding or the disapproval, if the deficiency has not been
corrected before that time.\62\
---------------------------------------------------------------------------

    \61\ See CAA section 110(c)(1)(A).
    \62\ The 2-year deadline does not necessarily apply to FIPs
following disapproval of a tribal implementation plan.
---------------------------------------------------------------------------

    The finding of failure to submit a revision in response to a SIP
call, or EPA's disapproval of that corrective SIP revision, can also
trigger sanctions under CAA section 179. If a state fails to submit a
complete SIP revision that responds to a final SIP call, CAA section
179(a) provides for the EPA to issue a finding of state failure. Such a
finding starts mandatory 18-month and 24-month sanctions clocks. The
two sanctions that apply under CAA section 179(b) are the 2-to-1
emission offset requirement for all new and modified major sources
subject to the nonattainment new source review program and restrictions
on highway funding. However, CAA section 179 leaves it to the EPA to
decide the order in which these sanctions apply. The EPA issued an
order of sanctions rule in 1994 but did not specify the order of
sanctions where a state fails to submit or submits a deficient SIP
revision in response to a SIP call.\63\ In this document, we are now
proposing and taking comment on the following timeline: the EPA
proposes that the 2-to-1 emission offset requirement will apply for all
new sources subject to the nonattainment new source review program 18
months following such finding or disapproval unless the state corrects
the deficiency before that date. The EPA proposes that the highway
funding restrictions sanction will also apply 24 months following such
finding or disapproval unless the state corrects the deficiency before
that date. The EPA is proposing that the provisions in 40 CFR 52.31
regarding staying the sanctions clock and deferring the imposition of
sanctions would also apply.
---------------------------------------------------------------------------

    \63\ See, ``Selection of Sequence of Mandatory Sanctions for
Findings Made Pursuant to Section 179 of the Clean Air Act,'' 59 FR
39832 (August. 4, 1994), codified at 40 CFR 52.31.
---------------------------------------------------------------------------

    Mandatory sanctions under CAA section 179 generally apply only in
nonattainment areas. By its definition, the emission offset sanction
applies only in areas required to have a part D NSR program, typically
areas designated nonattainment. CAA section 179(b)(1) expressly limits
the highway funding restriction to nonattainment areas. Additionally,
EPA interprets the section 179 sanctions to apply only in the area or
areas of the state that are subject to or required to have in place the
deficient SIP and for the pollutant or pollutants the specific SIP
element addresses. For example, if the deficient provision applies
statewide and applies for all NAAQS pollutants, then the mandatory
sanctions would apply in all areas designated nonattainment for all
NAAQS within the state. Following through on this interpretation, it is
reasonable to expect that any newly designated nonattainment areas
subsequent to the EPA taking final action on this proposal would also
be subject to sanctions for failure to comply with SIP submittal
obligations stemming from this SIP call, if finalized (or failure to
comply with similar obligations for previously identified deficient
statewide SSM provisions). In such cases, the EPA will evaluate the
geographic scope of potential sanctions at the time it makes a final
determination whether the state's SIP is substantially inadequate and
issues a SIP call, as this may vary depending upon the provisions at
issue.

B. SIP Call Timing Under CAA Section 110(k)(5)

    If the EPA finalizes a proposed finding of substantial inadequacy
and a proposed SIP call for any state, CAA section 110(k)(5) requires
EPA to establish a SIP submission deadline by which the state must make
a SIP submission to rectify the identified deficiency. Pursuant to CAA
section 110(k)(5), the EPA has authority to set a SIP submission
deadline up to 18 months from the signature date of the final finding
of inadequacy. The EPA is proposing here that if it promulgates a final
finding of inadequacy and a SIP call for a state, it will establish a
date 18 months from the date of

promulgation of the final finding for the state to respond to the SIP
call. Thereafter, the EPA will review the adequacy of that new SIP
submission and take appropriate action on the submission in accordance
with the CAA requirements of sections 110(a), 110(k), 110(l), 113(b),
113(e), 193, and 304, including EPA's interpretation of the CAA
reflected in the SSM Policy as clarified and updated through this
action.
    Considering the affected air agencies' need to develop appropriate
regulatory provisions to address the SIP call and conduct any required
processes for developing a SIP, we are proposing the 18-month due date
because we believe that states should be provided the maximum time
allowable under CAA section 110(k)(5) in order to ensure they have
sufficient time. EPA expects that such a schedule will allow for the
necessary SIP development process to correct the deficiencies yet still
achieve the necessary SIP improvements as expeditiously as practicable.
In light of the potential for public health impacts during this time
period, we solicit comment on whether establishing a shorter time
period than 18 months could instead be sufficient for the affected air
agencies to develop and submit their SIP revisions.
    The EPA acknowledges that the longstanding existence of many of the
provisions at issue, such as automatic exemptions for SSM events, may
have resulted in undue reliance on them as a compliance mechanism by
some sources. As a result, development of appropriate SIP revisions may
entail reexamination of the applicable emission limitations themselves,
and this process may require the maximum time allowed by the CAA.
Nevertheless, the EPA encourages the affected states to make the
necessary revisions in as timely a fashion as possible and encourages
the states to work with the respective EPA Regional office as they
develop the corrective SIP revisions.
    The EPA notes that the SIP calls that it is proposing for affected
states in this document would be narrow and apply only to the specific
SIP provisions determined to be inconsistent with the requirements of
the CAA. To the extent that a state is concerned that elimination of a
particular aspect of an existing emission limitation, such as an
impermissible exemption, will render that emission limitation more
stringent than the state originally intended and more stringent than
needed to meet the CAA requirements it was intended to address, EPA
anticipates that the state will revise the emission limitation
accordingly, but without the impermissible exemption or other feature
that necessitated the SIP call. The EPA will evaluate any such SIP
revision in accordance with applicable CAA requirements, including CAA
section 110(l).
    Finally, the EPA notes that its authority under CAA section
110(k)(5) does not extend to requiring a state to adopt a particular
control measure in its SIP in response to the SIP call. Under
principles of cooperative federalism, the CAA vests air agencies with
substantial discretion to develop SIP provisions, so long as the
provisions meet the legal requirements and objectives of the CAA.\64\
Thus, the issuance of a SIP call should not be misconstrued as a
directive to the state in question to adopt a particular control
measure. The EPA is merely proposing to require that affected states
make a SIP revision to remove or revise existing SIP provisions that
fail to comply with fundamental requirements of the CAA. The states
retain discretion to remove or revise those provisions as they
determine best, so long as they bring their SIPs into compliance with
the requirements of the CAA.\65\
---------------------------------------------------------------------------

    \64\ See, Virginia, et al. v. EPA, 108 F.3d 1397 (D.C. Cir.
1997) (SIP call remanded and vacated because, inter alia, the EPA
had issued a SIP call that required states to adopt a particular
control measure for mobile sources).
    \65\ Notwithstanding the latitude states have in developing SIP
provisions, the EPA is required to assure that states meet the basic
legal criteria for SIPs. See, Michigan, et al. v. EPA, 213 F.3d 663,
686 (D.C. Cir. 2000) (upholding NOX SIP call because,
inter alia, the EPA was requiring states to meet basic legal
requirement that SIPs comply with CAA section 110(a)(2)(D), not
dictating the adoption of a particular control measure).
---------------------------------------------------------------------------

C. Severability

    The findings of substantial inadequacy discussed in this action are
based on an individual analysis of whether each SIP at issue contains
provisions that are inconsistent with the CAA and EPA's SSM SIP policy.
As such, it is reasonable to consider each SIP call as severable from
the others because the SIP calls do not depend on one another. If any
particular SIP call is stayed or determined to be invalid by a court,
it is the EPA's intention that the remaining SIP calls shall continue
in effect.

IX. Environmental Justice Considerations

    This proposal applies, but does not change, EPA's interpretation of
the statutory requirements of the CAA outlined in its 2015 SSM SIP
Action. Through the SIP calls issued to certain states as part of this
SIP call action under CAA section 110(k)(5), EPA is requiring each
affected state to revise its SIP to comply with existing requirements
of the CAA. EPA's action, therefore, leaves to each affected state the
flexibility bound by the CAA as to how to revise the SIP provision in
question to make it consistent with CAA requirements and to determine,
among other things, which of the several lawful approaches to the
treatment of excess emissions during SSM events will be applied to
particular sources. In the 2015 SSM SIP Action, the EPA did not perform
an environmental justice analysis for purposes of this action, because
it determined that it cannot geographically identify or quantify the
resulting source-specific emission reductions.\66\
---------------------------------------------------------------------------

    \66\ See 80 FR 33840 at 33982.
---------------------------------------------------------------------------

    The EPA believes it is not practicable to assess whether the
conditions that exist prior to this proposed action result in
disproportionate and adverse effects on people of color, low-income
populations, and/or indigenous peoples. While it is difficult to assess
the environmental justice implications of this proposed action because
the EPA cannot geographically identify or quantify the resulting
source-specific emission reductions, the EPA believes that this
proposed action is likely to either reduce or have no adverse impact on
existing disproportionate and adverse effects on people of color, low-
income populations and/or indigenous peoples.
    As articulated in the 2021 McCabe memo, SIP provisions that contain
exemptions or affirmative defense provisions are not consistent with
CAA requirements and, therefore, generally are not approvable if
contained in a SIP submission. While there are many different kinds of
SSM provisions with varying scope and effect, the EPA notes that the
overarching effect of these provisions is to allow or excuse excess
emissions that exceed SIP limitations. Eliminating impermissible SSM
provisions is intended to ensure that all communities and populations,
including overburdened communities, receive the full health and
environmental protections provided by the CAA. The correction of SIP
deficiencies by the states affected by this document is, therefore,
expected to contribute to reduced excess emissions during SSM periods
and improve human and environmental health for U.S. citizens, including
people of color, low-income populations, and/or indigenous peoples.
    Although not a basis for this proposed action, EPA would be
interested in hearing from communities that have

seen impacts from emissions events during SSM periods. This
information, while not necessary to justify this action, may be useful
to EPA in continuing to implement the Agency's SSM Policy. If the EPA
finalizes this action, as described elsewhere in this document,
affected states will be required to revise their SIPs. In complying
with minimum public notice and comment requirements associated with SIP
development processes, the EPA encourages affected state and local air
agencies to provide for meaningful public engagement during that SIP
review process and, where appropriate and applicable, evaluate
environmental justice considerations.

X. Statutory and Executive Order Reviews

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

    The EPA submitted this action to the Office of Management and
Budget (OMB) for review under Executive Orders 12866 and 13563 (76 FR
3821, January 21, 2011) and any changes made in response to OMB
recommendations have been documented in the docket for this action.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden.
This proposed action is merely reiterates EPA's interpretation of the
statutory requirements of the CAA and does not require states to
collect any additional information. To the extent that the EPA proposes
to issue a SIP call to a state under CAA section 110(k)(5), the EPA is
only proposing an action that requires the state to revise its SIP to
comply with existing requirements of the CAA.

C. Regulatory Flexibility Act

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities.\67\ Instead,
the action merely reiterates EPA's interpretation of the statutory
requirements of the CAA. Through the SIP calls issued to certain states
as part of this SIP call action under CAA section 110(k)(5), EPA is
only requiring each affected state to revise its SIP to comply with
existing requirements of the CAA. EPA's action, therefore, leaves to
each affected state the choice as to how to revise the SIP provision in
question to make it consistent with CAA requirements and to determine,
among other things, which of the several lawful approaches to the
treatment of excess emissions during SSM events will be applied to
particular sources.
---------------------------------------------------------------------------

    \67\ Small entities include small businesses, small
organizations, and small governmental jurisdictions. For purposes of
assessing the impacts of this document on small entities, small
entity is defined as: (1) A small business that is a small
industrial entity as defined in the U.S. Small Business
Administration (SBA) size standards (see 13 CFR 121.201); (2) a
small governmental jurisdiction that is a government of a city,
county, town, school district, or special district with a population
of less than 50,000; or (3) a small organization that is any not-
for-profit enterprise that is independently owned and operated and
is not dominant in its field.
---------------------------------------------------------------------------

D. Unfunded Mandates Reform Act (URMA)

    This action does not contain an unfunded of $100 million or more as
described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or
uniquely affect small governments. The action may impose a duty on
certain state governments to meet their existing obligations to revise
their SIPs to comply with CAA requirements. The direct costs of this
action on states would be those associated with preparation and
submission of a SIP revision by those states for which the EPA issues a
SIP call. Examples of such costs could include development of a state
rule, conducting notice and public hearing, and other costs incurred in
connection with a SIP submission. These aggregate costs would be far
less than the $100-million threshold in any 1 year. Thus, this action
is not subject to the requirements of sections 202 or 205 of the
Unfunded Mandates Reform Act (UMRA).
    This proposed action is also not subject to the requirements of
section 203 of UMRA because it contains no regulatory requirements that
might significantly or uniquely affect small governments. The
regulatory requirements of this action would apply to the states for
which the EPA issues a SIP call. To the extent that such states allow
local air districts or planning organizations to implement portions of
the state's obligation under the CAA, the regulatory requirements of
this action would not significantly or uniquely affect small
governments because those governments have already undertaken the
obligation to comply with the CAA.

E. Executive Order 13132: Federalism

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

F. Executive Order 13175: Consultation and Coordination With Indian
Tribal Governments

    This action does not have tribal implications, as specified in
Executive Order 13175 (65 FR 67249, November 9, 2000). In this
document, the EPA is not addressing any tribal implementation plans.
This action is limited to states. Thus, Executive Order 13175 does not
apply to this action. However, the EPA invites comment on this action
from tribal officials.

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

    The EPA interprets Executive Order 13045 as applying only to those
regulatory actions that concern environmental health or safety risks
that the EPA has reason to believe may disproportionately affect
children, per the definition of ``covered regulatory action'' in
section 2-202 of the Executive Order. This action is not subject to
Executive Order 13045 because it because it merely prescribes EPA's
action for states regarding their obligations for SIPs under the CAA.

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

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

I. National Technology Transfer and Advancement Act (NTAA)

    This rulemaking does not involve technical standards.

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

    Executive Order 12898 (59 FR 7629, February 16, 1994) directs
federal agencies, to the greatest extent practicable and permitted by
law, to make environmental justice part of their mission by identifying
and addressing, as appropriate, disproportionately high and adverse
human health or environmental effects of their programs, policies, and
activities on minority populations (people of color and/or indigenous
peoples) and low-income populations.
    The EPA believes it is not practicable to assess whether the
conditions that exist prior to this proposed action result in
disproportionate and adverse effects

on people of color, low-income populations, and/or indigenous peoples.
While it is difficult to assess the environmental justice implications
of this proposed action because the EPA cannot geographically identify
or quantify the resulting source-specific emission reductions, the EPA
believes that this proposed action is likely to either reduce or have
no adverse impact on existing disproportionate and adverse effects on
people of color, low-income populations and/or indigenous peoples. The
basis for this decision is contained in section IX of this preamble.

K. Judicial Review

    Section 307(b)(1) of the CAA governs judicial review of final
actions by the EPA. This section provides, in part, that petitions for
review must be filed in the Court of Appeals for the District of
Columbia Circuit: (i) When the agency action consists of ``nationally
applicable regulations promulgated, or final actions taken, by the
Administrator,'' or (ii) when such action is locally or regionally
applicable, if ``such action is based on a determination of nationwide
scope or effect and if in taking such action the Administrator finds
and publishes that such action is based on such a determination.'' For
locally or regionally applicable final actions, the CAA reserves to the
EPA complete discretion whether to invoke the exception in (ii).\68\
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    \68\ In deciding whether to invoke the exception by making and
publishing a finding that this action, if finalized, is based on a
determination of nationwide scope or effect, the Administrator
intends to take into account a number of policy considerations,
including his judgment balancing the benefit of obtaining the D.C.
Circuit's authoritative centralized review versus allowing
development of the issue in other contexts and the best use of
agency resources.
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    The EPA is proposing to issue SIP calls to eight states (applicable
in 10 statewide and local jurisdictions) located in four of the ten EPA
regions pursuant to a uniform process and analytical approach. The EPA
is proposing to apply a nationally consistent policy regarding SSM
provisions in SIPs in each of these eight states as a follow-up to
EPA's larger 2015 SSM SIP Action, in which the Agency issued SIP calls
pursuant to the same nationally consistent policy to 36 states
(applicable in 45 statewide and local jurisdictions), for which
petitions for review were all filed in the D.C. Circuit in 2015. The
jurisdictions that would be affected by this action, if finalized,
represent a wide geographic area and fall within six different judicial
circuits.
    If the Administrator takes final action on this proposal, then, in
consideration of the effects of the action across the country, the EPA
views this action to be ``nationally applicable'' within the meaning of
CAA section 307(b)(1). In the alternative, to the extent a court finds
this proposal, if finalized, to be locally or regionally applicable,
the Administrator intends to exercise the complete discretion afforded
to him under the CAA to make and publish a finding that this action is
based on a determination of ``nationwide scope or effect'' within the
meaning of CAA section 307(b)(1).\69\
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    \69\ In the report on the 1977 Amendments that revised CAA
section 307(b)(1), Congress noted that the Administrator's
determination that the ``nationwide scope or effect'' exception
applies would be appropriate for any action that has a scope or
effect beyond a single judicial circuit. See H.R. Rep. No. 95-294 at
323-24, reprinted in 1977 U.S.C.C.A.N. 1402-03.
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XI. Statutory Authority

    The statutory authority for this proposed action is provided in CAA
section 101 et seq. (42 U.S.C. 7401 et seq.).

List of Subjects in 40 CFR Part 52

    Environmental protection, Affirmative defense, Air pollution
control, Carbon dioxide, Carbon dioxide equivalents, Carbon monoxide,
Excess emissions, Greenhouse gases, Hydrofluorocarbons, Incorporation
by reference, Intergovernmental relations, Lead, Methane, Nitrogen
dioxide, Nitrous oxide, Ozone, Particulate matter, Perfluorocarbons,
Reporting and recordkeeping requirements, Shutdown and malfunction,
Startup, State implementation plan, Sulfur hexafluoride, Sulfur oxides,
Volatile organic compounds.

Michael S. Regan,
Administrator.
[FR Doc. 2023-03575 Filed 2-23-23; 8:45 am]
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