[Federal Register Volume 79, Number 128 (Thursday, July 3, 2014)]
[Proposed Rules]
[Pages 37974-37976]
From the Federal Register Online via the Government Printing Office [www.gpo.gov]
[FR Doc No: 2014-15534]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 35

[EPA-R09-0AR-2014-0203; FRL-9913-10-Region-9]


Clean Air Act Grant: Santa Barbara County Air Pollution Control 
District; Opportunity for Public Hearing

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed action; Determination with request for comments and 
notice of opportunity for public hearing.

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SUMMARY: The Environmental Protection Agency (EPA) has made a proposed 
determination that the reduction in expenditures of non-Federal funds 
for the Santa Barbara County Air Pollution Control District (SBCAPCD) 
in support of its continuing air program under section 105 of the Clean 
Air Act (CAA), for the calendar year 2013 is a result of non-selective 
reductions in expenditures. This determination, when final, will permit 
the SBCAPCD to receive grant funding for FY2014 from the EPA under 
section 105 of the Clean Air Act.

DATES: Comments and/or requests for a public hearing must be received 
by EPA at the address stated below by August 4, 2014.

ADDRESSES: Submit comments, identified by docket ID No. EPA-R09-OAR-
2014-0203, by one of the following methods:
    1. Federal Portal: www.regulations.gov. Follow the online 
instructions.
    2. Email to: bartholomew.sara@epa.gov or
    3. Mail to: Sara Bartholomew (Air-8), U.S. Environmental Protection 
Agency Region IX, 75 Hawthorne Street, San Francisco, CA 94105-3901.

FOR FURTHER INFORMATION CONTACT: Sara Bartholomew, EPA Region IX, 
Grants & Program Integration Office, Air Division, 75 Hawthorne Street, 
San Francisco, CA 94105; phone: (415) 947-4100, fax: (415) 947-3579 or 
email address at bartholomew.sara@epa.gov.

SUPPLEMENTARY INFORMATION: Section 105 of the Clean Air Act (CAA), 42 
U.S.C. 7405, provides grant support for the continuing air programs of 
eligible state, local, and tribal agencies. In accordance with CAA 
section 105(a)(1)(A) and 40 CFR 35.145(a), the Regional Administrator 
may provide air pollution control agencies up to three-fifths of the 
approved costs of implementing programs for the prevention and control 
of air pollution. Section 105 contains two cost-sharing provisions 
which recipients must meet to qualify for a CAA section 105 grant. An 
eligible entity must meet a minimum 40% match. In addition, to remain 
eligible for section 105 funds, an eligible entity must continue to 
meet the minimum match requirement as well as meet a maintenance of 
effort (MOE) requirement under section 105(c)(1) of the CAA and 40 CFR 
35.146.
    Program activities relevant to the match consist of both recurring 
and non-recurring expenses. The MOE provision requires that a state or 
local agency spend at least the same dollar level of funds as it did in 
the previous grant year, but only for the costs of recurring 
activities. Specifically, section 105(c)(1) provides that ``no agency 
shall receive any grant under this section during any fiscal year when 
its expenditures of non-Federal funds for recurrent expenditures for 
air pollution control programs will be less than its expenditures were 
for such programs during the preceding fiscal year.'' Pursuant to CAA 
section 105(c)(2), however, EPA may still award a grant to an agency 
not meeting the requirements of section 105(c)(1), ``if the 
Administrator, after notice and opportunity for public hearing, 
determines that a reduction in expenditures is attributable to a non-
selective reduction in the expenditures in the programs of all 
Executive branch agencies of the applicable unit of Government.'' These 
statutory requirements are repeated in EPA's implementing regulations 
at 40 CFR 35.140-35.148. EPA issued additional guidance to recipients 
on what constitutes a nonselective reduction on September 30, 2011. In 
consideration of legislative history, the guidance clarified that a 
non-selective reduction does not necessarily mean that each Executive 
branch agency need be reduced in equal proportion. However, it must be 
clear to EPA, from the weight of evidence, that a recipient's CAA-
related air program is not being disproportionately impacted or singled 
out for a reduction.
    A section 105 recipient must submit a final financial status report 
no later than 90 days from the close of its grant period that documents 
all of its federal and non-federal expenditures for the completed 
period. The recipient seeking an adjustment to its MOE for that period 
must provide the rationale and the

[[Page 37975]]

documentation necessary to enable EPA to make a determination that a 
nonselective reduction has occurred. In order to expedite that 
determination, the recipient must provide details of the budget action 
and the comparative fiscal impacts on all the jurisdiction's executive 
branch agencies, the recipient agency itself, and the agency's air 
program. The recipient should identify any executive branch agencies or 
programs that should be excepted from comparison and explain why. The 
recipient must provide evidence that the air program is not being 
singled out for a reduction or being disproportionately reduced. 
Documentation in two key areas will be needed: Budget data specific to 
the recipient's air program, and comparative budget data between the 
recipient's air program, the agency containing the air program, and the 
other executive branch agencies. EPA may also request information from 
the recipient about how impacts on its program operations will affect 
its ability to meet its CAA obligations and requirements; and 
documentation which explains the cause of the reduction, such as 
legislative changes or the issuance of a new executive order.
    In FY2013, EPA awarded the SBCAPCD $490,838, which represented 
approximately 5% of the SBCAPCD budget. In FY2014, EPA intends to award 
the SBCAPCD $499,231, which represents approximately 5% of the SBCAPCD 
budget.
    SBCAPCD's final Federal Financial Report for FY2012 indicated that 
SBCAPCD's maintenance of effort (MOE) level was $6,317,663. SBCAPCD's 
final Federal Financial Report for FY2013 indicates that SBCAPCD's MOE 
level is at $6,013,506.
    The projected MOE is not sufficient to meet the MOE requirements 
under the CAA section 105 because it is not equal to or greater than 
the MOE for the previous fiscal year. In order for the SBCAPCD to be 
eligible to receive its FY2014 CAA section 105 grant EPA must make a 
determination, after notice and an opportunity for a public hearing, 
that the reduction in expenditures is attributable to a non-selective 
reduction in the expenditures in the programs of the Santa Barbara 
County Air Pollution Control District.
    The shortfall stems from the change in the SBCAPCD's budget over 
the past two years. During the budget process in early 2012 (the 
SBCAPCD's fiscal year is July 1, 2012-June 30, 2013) the SBCAPCD was 
anticipating a very large deficit. This was largely due to a projected 
decrease in permit fee revenues. In order to balance the budget, the 
SBCAPCD actively scaled back their services and supplies expenditure 
budget by $298,438 and also cut back staff from 50.25 to 48.0 full time 
equivalents (FTE). This resulted in the overall SBCAPCD adopted budget 
for FY12-13 being reduced by $448,224 from the previous year. The 
SBCAPCD monitored expenditures closely in FY12-13 to stay within 
budget. The result was that actual year-end expenses (of fixed assets, 
salaries and benefits, and services and supplies) for FFY12-13 were 
$494,155.86 less than the prior federal fiscal year (FFY2011-12).
    The SBCAPCD was unable to meet MOE in FY13 for the following 
reasons:
    (1) Decrease in permit revenues (licenses and permits)
    (2) Staffing decreases (FTE and salaries and benefits)
    (3) Decrease in service and supplies allocations and expenses 
(services and supplies)
    The table below shows the actual changes for the above items 
between FFY 11-12 and 12-13:

----------------------------------------------------------------------------------------------------------------
                                                            FFY 2011-12        FFY 2012-13
                          Item                                 Actual             Actual           Difference
----------------------------------------------------------------------------------------------------------------
Licenses and Permits...................................      $4,051,252.03      $3,682,017.72      ($369,234.31)
Salaries and Benefits..................................      $5,501,809.76      $5,318,670.46      ($183,139.30)
Service and Supplies...................................      $3,021,850.88      $2,780,654.29      ($241,196.59)
FTE....................................................              50.25              48.00             (2.25)
----------------------------------------------------------------------------------------------------------------

    As noted above, budgeted staff were reduced in order to balance the 
FY 12-13 budget. Actual permit fee revenues decreased $369,234 in FFY 
12-13. In addition, the SBCAPCD had three people retire in FY 12-13. 
The retirements resulted in additional reductions in salary expenses as 
positions remained vacant for periods of the time. Furthermore, new 
employees eventually hired to replace retirees were paid a starting 
salary less than the more senior retirees. Leave of absences were 
another factor causing reduced salaries in FY 12-13. Salary expenses 
for employees on leave were not incurred which further contributed to 
the decrease in salary and benefits. All these factors resulted in an 
overall decrease of $183,139 in salaries and benefits in FFY12-13. In 
addition, SBCAPCD service and supply actual expenses declined by 
$241,197 in FFY12-13.
    Additionally, due to the relatively small size of the SBCAPCD, 
small changes in total staff hours worked or incoming revenue sources 
year to year can cause fluctuations in MOE. This happened to a large 
extent in FFY 12-13, and actual expenses declined significantly from 
the previous year. Despite the economic pressures that have resulted in 
agency staff reductions, the SBCAPCD was able to keep up with program 
goals by implementing efficiencies. Automation of several functions was 
done, including automatic generation of basic permits.
    The SBCAPCD is a single-purpose agency whose primary source of 
funding is emission fee revenue; it does not benefit from the proceeds 
of property tax, sales tax or income tax. It is the ``unit of 
government for section 105(c)(2) purposes.''
    Based on: (1) Decrease in permit revenues, (2) Weakened economic 
conditions, (3) Staffing decreases, and (4) Decrease in service and 
supplies allocations and expenses, the request for a reset of SBCAPCD's 
MOE meets the criteria for a non-selective reduction determination.
    Although SBCAPCD receives approximately 5 percent of its support 
from the section 105 grant, the loss of that funding would seriously 
impact SBCAPCD's ability to carry out its clean air program.
    The SBCAPCD's MOE reduction resulted from a loss of revenues due to 
circumstances beyond its control. EPA proposes to determine that the 
SBCAPCD lowering the FY2013 MOE level to $6,013,506 meets the CAA 
section 105(c)(2) criteria as resulting from a non-selective reduction 
of expenditures.
    This document constitutes a request for public comment and an 
opportunity for public hearing as required by the Clean Air Act. All 
written comments received by August 4, 2014 on this proposal will be 
considered. EPA will conduct a public hearing on this proposal only if 
a written request for such is received by EPA at the address above by 
August 4, 2014. If no written request for a hearing is received, EPA 
will proceed to the final determination.

[[Page 37976]]

While notice of the final determination will not be published in the 
Federal Register, copies of the determination can be obtained by 
sending a written request to Sara Bartholomew at the above address.

    Dated: June 19, 2014.
Jared Blumenfeld,
Regional Administrator, Region IX.
[FR Doc. 2014-15534 Filed 7-2-14; 8:45 am]
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