Proposed Rule2026-07405
Air Plan Revisions; Arizona; Maricopa County Air Quality Department; New Source Review; Emission Reduction Credits
Primary source
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Published
April 16, 2026
Issuing agencies
Environmental Protection Agency
Abstract
The Environmental Protection Agency (EPA) is proposing to approve a revision to the Maricopa County Air Quality Department (MCAQD or "Department") portion of the Arizona State Implementation Plan (SIP). This revision establishes a federally enforceable program allowing fleet owners/operators to generate emission reduction credits (ERCs) by either retrofitting or replacing existing fleet vehicles with lower emitting vehicles while meeting other Clean Air Act (CAA or "Act") requirements. These ERCs are intended for use as offsets for major stationary sources under the Department's Nonattainment New Source Review (NNSR) program. We are proposing to approve a local rule to allow for the generation of ERCs through voluntary on-road mobile source emission reductions under the CAA. We are taking comments on this proposal and plan to follow with a final action.
Full Text
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<title>Federal Register, Volume 91 Issue 73 (Thursday, April 16, 2026)</title>
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[Federal Register Volume 91, Number 73 (Thursday, April 16, 2026)]
[Proposed Rules]
[Pages 20394-20397]
From the Federal Register Online via the Government Publishing Office [<a href="http://www.gpo.gov">www.gpo.gov</a>]
[FR Doc No: 2026-07405]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 52
[EPA-R09-OAR-2026-1684; FRL-13268-01-R9]
Air Plan Revisions; Arizona; Maricopa County Air Quality
Department; New Source Review; Emission Reduction Credits
AGENCY: Environmental Protection Agency (EPA).
ACTION: Proposed rule.
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SUMMARY: The Environmental Protection Agency (EPA) is proposing to
approve a revision to the Maricopa County Air Quality Department (MCAQD
or ``Department'') portion of the Arizona State Implementation Plan
(SIP). This revision establishes a federally enforceable program
allowing fleet owners/operators to generate emission reduction credits
(ERCs) by either retrofitting or replacing existing fleet vehicles with
lower emitting vehicles while meeting other Clean Air Act (CAA or
``Act'') requirements. These ERCs are intended for use as offsets for
major stationary sources under the Department's Nonattainment New
Source Review (NNSR) program. We are proposing to approve a local rule
to allow for the generation of ERCs through voluntary on-road mobile
source emission reductions under the CAA. We are taking comments on
this proposal and plan to follow with a final action.
DATES: Comments must be received on or before May 18, 2026.
ADDRESSES: Submit your comments, identified by Docket ID No. EPA-R09-
OAR-2026-1684 at <a href="https://www.regulations.gov">https://www.regulations.gov</a>. For comments submitted at
<a href="http://Regulations.gov">Regulations.gov</a>, follow the online instructions for submitting
comments. Once submitted, comments cannot be edited or removed from
<a href="http://Regulations.gov">Regulations.gov</a>. 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 whose
disclosure is restricted by statute. Multimedia submissions (audio,
video, etc.) must be accompanied by a written comment. The written
comment is considered the
[[Page 20395]]
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 (i.e., on the web,
cloud, or other file sharing system). For additional submission
methods, please contact the person identified in the FOR FURTHER
INFORMATION CONTACT section. For the full EPA public comment policy,
information about CBI or multimedia submissions, and general guidance
on making effective comments, please visit <a href="https://www.epa.gov/dockets/commenting-epa-dockets">https://www.epa.gov/dockets/commenting-epa-dockets</a>. 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 FOR FURTHER INFORMATION CONTACT section.
FOR FURTHER INFORMATION CONTACT: Elijah Gordon, EPA Region IX, 75
Hawthorne St., San Francisco, CA 94105; telephone number: (415) 972-
3158; email address: <a href="/cdn-cgi/l/email-protection#94f3fbe6f0fbfabaf1f8fdfef5fcd4f1e4f5baf3fbe2"><span class="__cf_email__" data-cfemail="ec8b839e888382c2898085868d84ac899c8dc28b839a">[email protected]</span></a>.
SUPPLEMENTARY INFORMATION: Throughout this document, ``we,'' ``us,''
and ``our'' refer to the EPA.
Table of Contents
I. The State's Submittal
A. What rule did the State submit?
B. Are there other versions of this rule?
C. What is the purpose of the submitted rule?
II. The EPA's Evaluation and Action
A. How is the EPA evaluating the rule?
B. Does the rule meet the evaluation criteria?
C. Proposed Action and Public Comment
III. Incorporation by Reference
IV. Statutory and Executive Order Reviews
I. The State's Submittal
A. What rule did the State submit?
The Arizona Department of Environmental Quality (ADEQ), the
governor's designee for Arizona SIP submittals, submitted a SIP
revision to the EPA on behalf of the MCAQD. Table 1 lists the rule,
which the ADEQ included in the submittal with the Department's
technical support materials, addressed by this proposal with the dates
that it was adopted by the MCAQD and submitted to the EPA by the ADEQ.
Table 1--Submitted Rule
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Local agency Rule No. Rule title Revised Submitted
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MCAQD................................. 205 Emission Offsets Generated by 05/21/25 05/30/25
Voluntary Mobile Source Emission
Reductions.
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On November 30, 2025, the submittal for MCAQD Rule 205, ``Emission
Offsets Generated by Voluntary Mobile Source Emission Reductions,''
(revised May 21, 2025) (``Rule 205'') became complete by operation of
law with respect to the completeness criteria in 40 CFR part 51,
appendix V.
B. Are there other versions of this rule?
There are no previous versions of Rule 205 approved in the Arizona
SIP, however the MCAQD adopted an earlier version of this rule on April
26, 2023, and the ADEQ submitted it to the EPA on May 4, 2023 (``2023
submittal''). The EPA proposed conditional approval of the 2023
submittal on August 22, 2024.\1\ On May 30, 2025, the ADEQ submitted a
SIP revision requesting the EPA approve the revised version of Rule 205
(``2025 submittal'') into the Arizona SIP. In the 2025 submittal, the
ADEQ also withdrew the 2023 submittal, including the April 26, 2023
version of Rule 205. Because the 2023 submittal was withdrawn and
superseded by the 2025 submittal, and due to other changes to the rule,
as explained in our TSD, the EPA is not finalizing our 2024 proposed
conditional approval.
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\1\ 89 FR 67919 (August 22, 2024).
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C. What is the purpose of the submitted rule?
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<INF>10</INF>) NAAQS.\2\ Sections 110(a) and 173 of the CAA require
States with areas designated nonattainment to submit regulations that
include a preconstruction permit program for new or modified major
stationary sources of air pollutants within the applicable
nonattainment areas (NAAs), referred to as the NNSR program. Therefore,
the MCAQD is required to implement a NNSR program, which requires new
or modified sources emitting ozone precursors or PM<INF>10</INF>
exceeding specific thresholds to provide surplus emissions reductions
to offset the proposed project's projected emissions
increases.<SUP>3 4</SUP>
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\2\ 40 CFR 81.303.
\3\ 40 CFR 51.165(a)(1)(iv). The major source threshold for both
VOC and NO<INF>X</INF>, which are precursors of ozone, is 100 tons
per year for the portions of Maricopa designated as Moderate
nonattainment for the 2008 and 2015 ozone NAAQS. Rule 205 applies to
ozone precursors only and cannot be used to generate NNSR offsets
for the PM<INF>10</INF> NAAQS.
\4\ 40 CFR 51.165(a)(9)(ii). The offset ratio for Moderate
nonattainment ozone areas is at least 1.15 to 1.
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The MCAQD states that the quantity of surplus emissions reductions
currently available for use as NNSR offsets does not appear sufficient
to support current and projected economic growth. The MCAQD developed
Rule 205 to generate NNSR offsets for oxides of nitrogen
(NO<INF>X</INF>) and volatile organic compounds (VOC), which are ozone
precursors. Rule 205 creates a regulatory structure for the generation
and use of nontraditional ERCs from on-road mobile sources for the
Department's NNSR program. When ERCs are generated from on-road mobile
sources, they are referred to as mobile ERCs or ``MERCs.'' The rule
allows on-road mobile source fleet owners/operators that permanently
reduce NO<INF>X</INF> or VOC emissions from their fleets to trade those
reductions to stationary sources, or ``credit users,'' who can then use
them to offset their proposed NO<INF>X</INF> or VOC emissions increases
for the purpose of meeting NNSR requirements. Rule 205 outlines the
requirements a ``generator'' of emissions reductions must meet before
the Department can certify the emissions reductions as meeting the
offset requirements specified for NNSR programs. In general, the rule
requires the generator to submit certain information in its MERC
application; provides procedures for processing an application;
provides methodologies to calculate emissions reductions; requires the
issuance of MERC certificates; and provides ongoing monitoring,
recordkeeping, and reporting requirements for MERC generators. The rule
also contains certain requirements for the credit user and the
Department's Control Officer. The EPA's technical support document
(TSD) includes more information about this rule.
II. The EPA's Evaluation and Action
A. How is the EPA evaluating the rule?
In evaluating Rule 205, we reviewed it for compliance with the NNSR
offset requirements found in CAA section 173
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and 40 CFR 51.165 and the substantive CAA requirements for SIPs and SIP
revisions as set forth in CAA sections 110(a)(2), 110(l), and 193.
CAA section 173(a)(1)(A) states that ``. . . permits to construct
and operate may be issued if (1) . . . the permitting agency determines
that (A) by the time the source is to commence operation, sufficient
offsetting emissions reductions have been obtained. . . .'' CAA section
173(a) concludes that ``[a]ny emission reductions required as a
precondition of the issuance of a permit under paragraph (1) shall be
federally enforceable before such permit may be issued.'' CAA section
173(c)(1) requires emissions reductions to be ``by the time a new or
modified source commences operation, in effect and enforceable.''
Collectively, CAA section 173 requires permitting authorities to
determine that offsets have been obtained and are federally enforceable
before an NNSR permit is issued and that such offsets will be in effect
before the source commences operation. These requirements, which mostly
pertain to NNSR permit issuance, are generally met by the requirements
in the MCAQD's SIP-approved NNSR program.\5\ In our evaluation, we also
considered whether Rule 205 would interfere with these requirements.
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\5\ MCAQD Rule 240, ``Federal Major New Source Review (NSR),''
revised December 11, 2019, contains the majority of the MCAQD's NNSR
program. 87 FR 8418 (February 15, 2022).
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Regarding whether emissions reductions qualify as offsets, CAA
section 173(c)(1) requires that emissions increases ``shall be offset
by an equal or greater reduction, as applicable, in the actual
emissions of such air pollutant from the same or other sources in the
area,'' meaning the emissions reductions must be ``real'' and not a
theoretical reduction in the 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)(2) only allows emissions
reductions to be creditable as offsets if they are not otherwise
required by the CAA, meaning they must be ``surplus'' to other CAA
requirements. Building on this, 40 CFR 51.165(a)(3)(ii)(C)(1)(i)
requires offsets for SIP-approved NNSR programs to be surplus,
permanent, quantifiable, and federally enforceable. Collectively, CAA
section 173(c) and 40 CFR 51.165 require offsets to be real, surplus,
quantifiable, permanent, and federally enforceable. We refer to these
requirements colloquially as the offset ``integrity elements'' or
``integrity criteria.'' Generally, emissions reductions meet these
requirements if they are based on reductions in actual emissions, have
not been relied upon in any air quality-related programs under the CAA,
can be reliably calculated using methods that can be replicated, will
last in the NAA for the life of the source utilizing the credits, and
are legally and practicably enforceable by the EPA.
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,
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 emissions reductions of the
relevant pollutants.
Throughout our evaluation, we also referred to the EPA's 2001
Economic Incentive Programs (EIPs) guidance document titled ``Improving
Air Quality with Economic Incentive Programs'' (``2001 EIP guidance''),
which sets out the EPA's non-binding guidelines on discretionary
EIPs.\6\ 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 may be traded with
stationary sources to provide the offsets required under a NNSR
program.\7\ The 2001 EIP guidance document does not represent final EPA
action on the requirements for EIPs, but it identifies several
different types of EIPs and proposed elements for each type that, if
met, could assure that the program meets the applicable CAA
requirements.
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\6\ A discretionary EIP is not subject to the requirements for
mandatory EIPs found in 40 CFR part 51, subpart U.
\7\ See Id.
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Guidance and policy documents that we used to evaluate
enforceability, revision/relaxation, and rule stringency requirements
for the applicable criteria pollutants include the following:
1. ``Improving Air Quality with Economic Incentive Programs,''
EPA-452/R-01-001, OAQPS, January 2001.
2. ``MOVES5 Technical Guidance: Using MOVES to Prepare Emission
Inventories for State Implementation Plans and Transportation
Conformity,'' EPA-420-B-24-043, OTAQ, November 2024.
B. Does the rule meet the evaluation criteria?
As stated previously, the EPA proposed conditional approval of the
2023 submittal for Rule 205 on August 22, 2024, but the submittal was
later withdrawn, and the EPA did not finalize that action. The TSD from
that proposed conditional approval action informs our analysis and is
included in the docket for this action. We primarily focus on the
revisions to the 2025 version of Rule 205 and supplemental information
\8\ provided in the 2025 submittal and how it addresses comments and
concerns we previously provided to the MCAQD on Rule 205.
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\8\ See the Department's EIP Support document in Appendix 18 of
the 2025 submittal.
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We find that Rule 205 complies with the applicable CAA requirements
and is consistent with relevant guidance. We find that the rule ensures
offsets will meet the offset requirements in CAA section 173 and 40 CFR
51.165, including the criteria for being real, surplus, quantifiable,
permanent, and federally enforceable. For generators that are issued
MERCs, the rule contains monitoring, recordkeeping, and reporting
requirements and other implementation and enforcement provisions to
ensure that compliance is consistently evaluated and determined.
Finally, we find that the rule meets the substantive requirements for
SIPs and SIP revisions set forth in CAA sections 110(a)(2), 110(l), and
193. Our TSD, which is in the docket for this action, contains a
detailed and complete evaluation of how Rule 205 satisfies CAA
requirements.
C. Proposed Action and Public Comment
As authorized in section 110(k)(3) of the Act, the EPA proposes to
approve the Rule 205 submittal because it fulfills all relevant
requirements. We will accept comments from the public on this proposal
until May 18, 2026. If we take final action to approve the Rule 205
submittal, our final action will incorporate Rule 205 into the
federally enforceable SIP and codify revisions to 40 CFR 52.120.
III. Incorporation by Reference
In this document, the EPA is proposing to include in a final EPA
rule regulatory text that includes incorporation by reference. In
accordance with requirements of 1 CFR 51.5, the EPA is proposing to
incorporate by reference Maricopa County Air Quality Department Rule
205, ``Emission Offsets Generated by Voluntary Mobile Source Emission
[[Page 20397]]
Reductions,'' revised May 21, 2025, which establishes a program
allowing fleet owners/operators to generate ERCs by either retrofitting
or replacing existing fleet vehicles with lower emitting vehicles and
meeting other ongoing requirements. The EPA has made, and will continue
to make, these materials available through <a href="https://www.regulations.gov">https://www.regulations.gov</a>
and at the EPA Region IX Office (please contact the person identified
in the FOR FURTHER INFORMATION CONTACT section of this preamble for
more information).
IV. Statutory and Executive Order Reviews
Under the CAA, the Administrator is required to approve a SIP
submission that complies with the provisions of the Act and applicable
federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in
reviewing SIP submissions, the EPA's role is to approve state choices,
provided that they meet the criteria of the CAA. Accordingly, this
proposed action merely proposes to approve state law as meeting federal
requirements and does not impose additional requirements beyond those
imposed by state law. For that reason, this proposed action:
<bullet> Is not a significant regulatory action subject to review
by the Office of Management and Budget under Executive Order 12866 (58
FR 51735, October 4, 1993);
<bullet> Is not subject to Executive Order 14192 (90 FR 9065,
February 6, 2025) because SIP actions are exempt from review under
Executive Order 12866;
<bullet> Does not impose an information collection burden under the
provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);
<bullet> Is certified as not having a significant economic impact
on a substantial number of small entities under the Regulatory
Flexibility Act (5 U.S.C. 601 et seq.);
<bullet> Does not contain any unfunded mandate or significantly or
uniquely affect small governments, as described in the Unfunded
Mandates Reform Act of 1995 (Pub. L. 104-4);
<bullet> Does not have federalism implications as specified in
Executive Order 13132 (64 FR 43255, August 10, 1999);
<bullet> Is not subject to Executive Order 13045 (62 FR 19885,
April 23, 1997) because it proposes to approve a state program;
<bullet> Is not a significant regulatory action subject to
Executive Order 13211 (66 FR 28355, May 22, 2001); and
<bullet> Is not subject to requirements of Section 12(d) of the
National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272
note) because application of those requirements would be inconsistent
with the CAA.
In addition, the SIP is not approved to apply on any Indian
reservation land or in any other area where the EPA or an Indian Tribe
has demonstrated that a Tribe has jurisdiction. In those areas of
Indian country, the rule does not have Tribal implications and will not
impose substantial direct costs on Tribal governments or preempt Tribal
law as specified by Executive Order 13175 (65 FR 67249, November 9,
2000).
List of Subjects in 40 CFR Part 52
Environmental protection, Administrative practice and procedure,
Air pollution control, Incorporation by reference, Intergovernmental
relations, Nitrogen oxides, Ozone, Reporting and recordkeeping
requirements, Volatile organic compounds.
Dated: April 7, 2026.
Michael Martucci,
Acting Regional Administrator, Region IX.
[FR Doc. 2026-07405 Filed 4-15-26; 8:45 am]
BILLING CODE 6560-50-P
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