Conditional Approval of Arizona State Implementation Plan Revisions; Maricopa County Air Quality Department; Mobile Source Emission Reduction Credits

ENVIRONMENTAL PROTECTION AGENCY <CFR>40 CFR Part 52</CFR> <DEPDOC>[EPA-R09-OAR-2024-0311; FRL-12092-01-R9]</DEPDOC> <SUBJECT>Conditional Approval of Arizona State Implementation Plan Revisions; Maricopa County Air Quality Department; Mobile Source Emission Reduction Credits</SUBJECT> <HD SOURCE="HED">AGENCY:</HD> Environmental Protection Agency (EPA). <HD SOURCE="HED">ACTION:</HD> Proposed rule. <SUM> <HD SOURCE="HED">SUMMARY:</HD> The Environmental Protection Agency (EPA) is proposing to conditionally approve a revision to the Maricopa County Air Quality Department's (MCAQD or “Department”) portion of the Arizona State Implementation Plan (SIP). This rule revision establishes a program allowing fleet owners/operators to generate emission reduction credits (ERCs) by either retrofitting or replacing existing fleet vehicles with lower emitting vehicles and meeting other ongoing requirements. These ERCs are intended for use as offsets under the Department's nonattainment New Source Review (NNSR) program. We are taking comments on this proposal and plan to follow with a final action. </SUM> <EFFDATE> <HD SOURCE="HED">DATES:</HD> Comments must be received on or before September 23, 2024. </EFFDATE> <HD SOURCE="HED">ADDRESSES:</HD> Submit your comments, identified by Docket ID No. EPA-R09-OAR-2024-0311 at <E T="03">https://www.regulations.gov.</E> For comments submitted at <E T="03">Regulations.gov</E> , follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from <E T="03">Regulations.gov</E> . The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information the disclosure of which is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission ( <E T="03">i.e.,</E> on the web, cloud, or other file sharing system). For additional submission methods, please contact the person identified in the <E T="02">FOR FURTHER INFORMATION CONTACT</E> section. For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit <E T="03">https://www.epa.gov/dockets/commenting-epa-dockets.</E> If you need assistance in a language other than English or if you are a person with a disability who needs a reasonable accommodation at no cost to you, please contact the person identified in the <E T="02">FOR FURTHER INFORMATION CONTACT</E> section. <FURINF> <HD SOURCE="HED">FOR FURTHER INFORMATION CONTACT:</HD> Laura Yannayon, EPA Region IX, 75 Hawthorne St., San Francisco, CA 94105; by phone: (415) 972-3534; or by email to <E T="03">yannayon.laura@epa.gov.</E> </FURINF> <SUPLINF> <HD SOURCE="HED">SUPPLEMENTARY INFORMATION:</HD> Throughout this document, “we,” “us,” and “our” refer to the EPA. <HD SOURCE="HD1">Table of Contents </HD> <EXTRACT> <FP SOURCE="FP-2">I. The State's Submittal</FP> <FP SOURCE="FP1-2">A. What rule did the State submit?</FP> <FP SOURCE="FP1-2">B. Are there other versions of this rule?</FP> <FP SOURCE="FP1-2">C. What is the purpose of the submitted rule?</FP> <FP SOURCE="FP-2"> II. The EPA's Evaluation and Action </FP> <FP SOURCE="FP1-2">A. How is the EPA evaluating the rule?</FP> <FP SOURCE="FP1-2">B. Does the rule meet the evaluation criteria?</FP> <FP SOURCE="FP1-2">C. Deferred Action</FP> <FP SOURCE="FP1-2">D. Proposed Action and Public Comment</FP> <FP SOURCE="FP-2">III. Incorporation by Reference</FP> <FP SOURCE="FP-2">IV. Statutory and Executive Order Reviews</FP> </EXTRACT> <HD SOURCE="HD1">I. The State's Submittal</HD> <HD SOURCE="HD2">A. What rule did the State submit?</HD> Table 1 lists the rule addressed by this proposal with the date it was adopted by the MCAQD and submitted by the Arizonia Department of Environmental Quality (ADEQ), which is the governor's designee for Arizona SIP submittals. <GPOTABLE COLS="4" OPTS="L2,i1" CDEF="s50,r200,10C,10C"> <TTITLE>Table 1—Submitted Rule</TTITLE> <CHED H="1">Rule No.</CHED> <CHED H="1">Rule title</CHED> <CHED H="1">Adopted</CHED> <CHED H="1">Submitted</CHED> <ROW> <ENT I="01">Rule 205</ENT> <ENT>Emission Offsets Generated by Voluntary Mobile Source Emission Reduction Credits</ENT> <ENT>4/26/23</ENT> <ENT>5/4/23</ENT> </ROW> </GPOTABLE> On November 4, 2023, the submittal of Rule 205 was deemed complete by operation of law. <HD SOURCE="HD2">B. Are there other versions of this rule?</HD> There are no previous versions of Rule 205 in the Maricopa County portion of the Arizona SIP. <HD SOURCE="HD2">C. What is the purpose of the submitted rule?</HD> Portions of Maricopa County are currently designated as “Moderate” nonattainment for the 2008 and 2015 ozone National Ambient Air Quality Standards (NAAQS) and as “Serious” nonattainment for the 1987 particulate matter equal to or less than 10 micrometers (PM <E T="52">10</E> ) NAAQS. <SU>1</SU> <FTREF/> Therefore, the MCAQD is required to implement a NNSR program, which requires sources emitting ozone precursors in large quantities to provide surplus emission reductions to offset a proposed project's projected emission increases. In Maricopa County, the quantity of surplus emission reductions available for use as offsets does not appear sufficient to support current and projected economic growth. <FTNT> <SU>1</SU>  40 CFR 81.303. </FTNT> Rule 205, “Emission Offsets Generated by Voluntary Mobile Source Emission Reduction Credits,” is intended to provide a regulatory structure for the generation and use of nontraditional emission reduction credits (ERCs) from mobile sources to be used as offsets for new and modified major sources. When ERCs are generated from mobile sources, they are referred to as mobile ERCs or “MERCs.” The rule allows mobile source fleet owners that reduce emissions from their fleets to sell those reductions to stationary sources, who can then use them to offset their proposed emission increases. Rule 205 outlines the requirements a “permitted generator” of emission reductions must meet before the Department can certify these emission reductions as meeting the offset integrity criteria specified for NNSR programs. <SU>2</SU> <FTREF/> Generally speaking, the rule requires the permitted generator to submit certain information in its application; procedures for processing an application; use of specific methodologies to calculate emission reductions; issuance of MERC certificates; and ongoing monitoring, recordkeeping, and reporting requirements. The rule also contains certain requirements for the MERC user and the Control Officer. More information on the contents of Rule 205 can be found in the Technical Support Document (TSD) included in the docket for this action. <FTNT> <SU>2</SU>  See, <E T="03">e.g.,</E> 40 CFR 51.165(a)(3)(ii)(C)( <E T="03">1</E> )( <E T="03">i</E> ) and CAA sections 172(a) and (c)(1). </FTNT> <HD SOURCE="HD1">II. The EPA's Evaluation and Action</HD> <HD SOURCE="HD2">A. How is the EPA evaluating the rule?</HD> In evaluating Rule 205 we reviewed it for compliance with the requirements for offsets found in 40 CFR 51.165(a)(3)(ii)(C)( <E T="03">1</E> )( <E T="03">i</E> ) and CAA section 173 and the substantive CAA requirements for SIPs and SIP revisions as set forth in CAA sections 110(a)(2), 110(l), and 193. Throughout our evaluation we also referred to our 2001 Economic Incentive Programs (EIP) guidance document. The requirements for emission reductions used as NNSR offsets are found in 40 CFR 51.165(a)(3)(ii)(C). Specifically, paragraph (a)(3)(ii)(C)( <E T="03">1</E> )( <E T="03">i</E> ) requires emission reductions to be surplus, permanent, quantifiable, and federally enforceable. We refer to this group of requirements as the “offset integrity criteria.” In addition, CAA section 173(a) requires increased emissions to be offset by reductions in “actual” emissions, meaning that the pollutant was actually emitted during the baseline period and is not a paper reduction in a source's potential to emit; in other words, it requires that each offset represents emissions that have been taken out of the air. CAA section 173(c)(1) also provides a timing requirement for the offsets, in that the emission reductions must be, “by the time a new or modified source commences operation, in effect and enforceable.” CAA section 110(a)(2) requires that regulations submitted to the EPA for SIP approval be clear and legally enforceable. CAA section 110(l) requires that states provide public notice and an opportunity for public hearing of SIP revisions prior to their submittal and prohibits the EPA from approving any SIP revisions that would interfere with attainment or maintenance of a NAAQS, reasonable further progress (RFP), or other applicable requirements of the CAA. CAA section 193 prohibits the modification of any SIP-approved control requirement in effect before November 15, 1990, in a nonattainment area, unless the modification ensures equivalent or greater emission reductions of the relevant pollutants. In 2001, the EPA issued a guidance document entitled “Improving Air Quality with Economic Incentive Programs” (“2001 EIP guidance”), <SU>3</SU> <FTREF/> which sets out the EPA's non-binding guidelines on discretionary EIPs. <SU>4</SU> <FTREF/> An EIP is a regulatory program that implements market-based strategies to achieve an air quality objective. Rule 205 is classified as an EIP because it provides a framework for generating ERCs from mobile sources. The ERCs generated under the EIP ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━ Preview showing 10k of 23k characters. Full document text is stored and available for version comparison. ━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━━