We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2012-0108; Directorate Identifier 2011-NM-049-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

On June 16, 2003, we issued AD 2003-13-01, Amendment 39-13201 (68 FR 37402, June 24, 2003), for certain Model 767 airplanes. That AD requires an inspection to detect cracks and fractures of the outboard hinge fitting assemblies on the trailing edge of the inboard main flap, and follow-on and corrective actions if necessary. For certain airplanes, that AD also requires a one-time inspection to determine if a tool runout option has been performed in the area. That AD resulted from a report indicating that, during a routine maintenance inspection, fractured lugs were found on both hinge fittings of the outboard hinge assembly mounted to the inboard main flap on a Boeing Model 767-300 series airplane. We issued that AD to prevent the inboard aft flap from separating from the wing and potentially striking the airplane, which could result in damage to the surrounding structure and potential personal injury.

Since we issued AD 2003-13-01, Amendment 39-13201 (68 FR 37402, June 24, 2003), we have determined that, due to hinge assembly fractures found before the currently-required inspection cycle compliance times on certain airplanes affected by that AD, compliance times need to be reduced for the initial and repetitive inspections for Model 767-400ER series airplanes.

In addition, we have determined that the airplane having line number 877 was inadvertently omitted from the applicability of AD 2003-13-01, Amendment 39-13201 (68 FR 37402, June 24, 2003).

AD 2003-13-01, Amendment 39-13201 (68 FR 37402, June 24, 2003), referred to Boeing Alert Service Bulletin 767-57A0079, dated June 20, 2002, as the appropriate source of service information for inspections and terminating actions for Model 767-400ER series airplanes. Boeing has since revised this service bulletin. We reviewed Boeing Alert Service Bulletin 767-57A0079, Revision 1, dated May 6, 2010. This service bulletin reduces the initial compliance time and repetitive intervals for inspections of the outboard hinge fitting assemblies on the trailing edge of the inboard main flap for Model 767-400ER series airplanes.

We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would retain certain requirements of AD 2003-13-01, Amendment 39-13201 (68 FR 37402, June 24, 2003). This proposed AD would reduce the compliance times for Model 767-400ER series airplanes. In addition, this proposed AD would revise the applicability to include an additional airplane.

This proposed AD would retain certain requirements of AD 2003-13-01, Amendment 39-13201 (68 FR 37402, June 24, 2003). Since AD 2003-13-01 was issued, the AD format has been revised, and certain paragraphs have been rearranged. As a result, the corresponding paragraph identifiers have changed in this proposed AD, as listed in the following table:

Because there is no longer a need for inspection results, this proposed AD would also remove the reporting requirement from AD 2003-13-01, Amendment 39-13201 (68 FR 37402, June 24, 2003).

We estimate that this proposed AD affects 38 airplanes of U.S. registry.

We estimate the following costs to comply with this proposed AD:

We estimate the following costs to do any necessary replacements that would be required based on the results of the proposed inspection. We have no way of determining the number of aircraft that might need these replacements:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, Section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We have determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect 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.

For the reasons discussed above, I certify that the proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska, and

(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

Comments Invited

We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2012-0109; Directorate Identifier 2010-NM-244-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

On August 24, 2005, we issued AD 2005-18-05, Amendment 39-14245 (70 FR 52009, September 1, 2005). That AD required actions intended to address an unsafe condition on Bombardier, Inc. Model CL-215-1A10, CL-215-6B11 (CL-215T Variant), and CL-215-6B11 (CL-415 Variant) airplanes.

Since we issued AD 2005-18-05, Amendment 39-14245 (70 FR 52009, September 1, 2005) Transport Canada Civil Aviation (TCCA), which is the airworthiness authority for Canada, has issued Airworthiness Directive CF-1992-26R2, dated September 1, 2010 (referred to after this as “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

AD 2005-18-05, Amendment 39-14245 (70 FR 52009, September 1, 2005), specifies Model CL-215-6B11 (CL-415 Variant) airplanes in the applicability, but also specifies serial numbers 1001 though 1125. The serial numbers for Model CL-215-6B11 (CL-415 Variant) airplanes start at 2001. We have determined that Model CL-215-6B11 (CL-415 Variant) airplanes are not subject to the identified unsafe condition. Therefore, we have removed Model CL-215-6B11 (CL-415 Variant) airplanes from the applicability of this proposed AD.

Bombardier Inc. has issued Alert Service Bulletin 215-A454, Revision 4, dated November 18, 2009. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI.

This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.

Based on the service information, we estimate that this proposed AD would affect about 7 products of U.S. registry.

The actions that are required by AD 2005-18-05, Amendment 39-14245 (70 FR 52009, September 1, 2005) and retained in this proposed AD take about 17 work-hours per product, at an average labor rate of $85 per work hour. Based on these figures, the estimated cost of the currently required actions is $1,445 per product.

We estimate that it would take about 6 work-hour per product to comply with the new basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of the proposed AD on U.S. operators to be $3,570, or $510 per product.

In addition, we estimate that any necessary follow-on actions would take about 480 work-hours for a cost of $40,800 per product. We have received no definitive data that would enable us to provide a parts cost estimate for the on-condition requirement specified in this proposed AD. We have no way of determining the number of products that may need these actions.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. “Subtitle VII: Aviation Programs,” describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in “Subtitle VII, Part A, Subpart III, Section 44701: General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect 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.

For the reasons discussed above, I certify this proposed regulation:

1. Is not a “significant regulatory action” under Executive Order 12866;

2. Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979); and

3. Will not affect intrastate aviation in Alaska; and

4. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act. We prepared a regulatory evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2012-0110; Directorate Identifier 2011-NM-148-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this proposed AD.

We have received at least six reports of corrosion on the housings of ATSDs. This condition, if not corrected, could result in the loss of high voltage transient protection ( e.g., lightning protection) in the fuel tanks and consequent fuel tank explosion and loss of the airplane.

We have reviewed Goodrich Principal Instructions for Continued Airworthiness Manual for the Analog Transient Suppression Device Installation Applicable to Boeing 737-100 through -500 Airplanes Supplemental Type Certificate—ST00146BO, Document T3044-0010-0101, Revision D, dated September 26, 2011, which describes various limitations, including Critical Design Control Limitations (CDCCL), inspections, and checks of the ATSD, ground straps, and safe-side harness.

We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would require accomplishing the actions specified in the service information described previously.

We estimate that this proposed AD affects 384 airplanes of U.S. registry.

We estimate the following costs to comply with this proposed AD:

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII: Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in Subtitle VII, Part A, Subpart III, Section 44701: “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

We determined that this proposed AD would not have federalism implications under Executive Order 13132. This proposed AD would not have a substantial direct effect 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.

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

(2) Is not a “significant rule” under the DOT Regulatory Policies and Procedures (44 FR 11034, February 26, 1979),

(3) Will not affect intrastate aviation in Alaska, and

(4) Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, under the authority delegated to me by the Administrator, the FAA proposes to amend 14 CFR part 39 as follows:

The FAA has been reviewing policies and practices regarding the registration of aircraft in the United States involving U.S. citizen trustees and non-U.S. citizen trustors and beneficiaries. Such arrangements are commonly referred to as non-citizen trusts. The FAA began its review in part because of problems the FAA has experienced in obtaining important operational and maintenance information concerning such aircraft from the registered owners, i.e., the owner trustees. The problems in obtaining such information in turn affected the FAA's ability to conduct fully effective oversight of such aircraft when operated outside the United States, and to provide foreign civil aviation authorities with information on those operations in support of the safety oversight activities of those authorities. The FAA also undertook the review of non-citizen trusts because of concerns that some of those arrangements may not have complied with FAA requirements for non-citizen trusts.

As part of its review of non-citizen trusts, the FAA published a notice of public meeting inviting members of the public to discuss the use of non-citizen trusts to register aircraft in the United States. See 76 FR 23353 (April 26, 2011). In the notice, the FAA set forth several questions in order to elicit a robust discussion of the issues. Among other things, the FAA summarized the requirements in existing U.S. law that only an “owner” may register an aircraft, and that generally speaking only citizens of the United States that are owners are eligible to register aircraft. Thus, the FAA Aircraft Registry is an “ownership” registry. It is not an “operator” registry.

The FAA met with interested members of the public on June 1, 2011, in Oklahoma City. Representatives of trade associations, law firms, aircraft manufacturers, lenders, lessors, aircraft operators, trustees and others were present. The proceedings of that meeting were transcribed. The transcript is available for members of the public to read. Copies of the transcript (File No. A505180) may be purchased through Atkinson-Baker, Inc., Court Reporters, via email at abi@depo.com or by contacting Customer Service at 800-288-3376.

The FAA received a number of written comments from members of the public in response to the questions raised in the April 26, 2011 Federal Register notice. The FAA also received written comments in response to its request at the conclusion of the public meeting for additional input from the meeting participants and all others who had an interest in the issues surrounding non-citizen trusts. An organization (the Aviation Working Group) that represents a wide range of aviation industry participants on aviation regulatory and commercial issues submitted a document on May 26, 2011, in which its members and other supporting entities shared their views concerning the various questions posed by the FAA in its April 26, 2011 Federal Register notice. That organization also participated at the public meeting on June 1, 2011, and submitted additional written comments on June 30, 2011.

The discussion at the public meeting and the written comments received by the FAA have helped it to better understand the practices and concerns of the aviation industry with regard to the use of non-citizen trusts to register aircraft in the United States. In addition, the FAA gained a better understanding of the perceptions that exist with regard to the regulatory obligations on a trustee with regard to it registering an aircraft in the United States using a non-citizen trust. The FAA's improved understanding has allowed it to sharpen the focus of its review of non-citizen trusts. The FAA also believes that the public meeting was useful in helping members of the public to better understand the critical safety information that the FAA needs to communicate to aircraft operators, through owner trustees, and the critical information that the FAA needs to receive from them in order for the FAA to meet its safety oversight obligations under international and U.S. law.

The FAA will discuss the issues in terms of the law and safety since the two are greatly intertwined. International law and U.S. law impose safety oversight responsibilities on the FAA, existing law restricts aircraft registration in the U.S. to “owners,” and existing law imposes certain safety requirements on aircraft owners. After the FAA discusses the legal issues, the FAA will suggest which provisions in trust agreements may need to be changed and it will suggest language that would enable the FAA to facilitate the registration of aircraft in the future that are owned in trust. The suggested language and the reasons for the suggested language, if adopted as the FAA's final policy on this matter, will guide the FAA in the future in determining eligibility for registering non-U.S. citizen trusts. An example of a standard trust agreement with FAA- suggested changes incorporated is attached at the end of this Notice.

Whenever an aircraft is registered in a country, that country becomes the State of Registry for that aircraft. Under U.S. law, the FAA has responsibility for the oversight of civil aircraft of the United States.

Under international law, a State of Registry has numerous responsibilities with regard to each aircraft on its registry. A number of these responsibilities, which are set forth in the Convention on International Civil Aviation (the Chicago Convention) and its annexes, relate to how a State registers an aircraft and manages its aircraft registry. Included among these responsibilities is the obligation to provide information on the registration and ownership of aircraft on its registry when requested by another contracting State or by the International Civil Aviation Organization.

Other responsibilities under the Chicago Convention relate to the regulation and oversight of the safety of the aircraft and its operations. The State of Registry of an aircraft is responsible for issuing certificates of competency and licenses for the crewmembers of those aircraft and issuing a certificate of airworthiness to each aircraft on its registry. The State of Registry also is responsible for overseeing the continuing airworthiness of each aircraft on its registry. Because the Chicago Convention provides for the registration of an aircraft in only one State at any given time, there can only be a single set of requirements for the airworthiness certification of a particular aircraft or for the licensing of an individual crewmember of that aircraft. Those requirements apply regardless of where the operator is incorporated or resides or the location of the operation.

With regard to the operation of aircraft, each contracting State to the Chicago Convention must require that every aircraft on its registry, when operated outside the territory of that State, comply with the rules and regulations relating to the flight and maneuver of aircraft there in force. Over international waters, the rules for the flight and maneuver of aircraft are set forth in Annex 2 to the Chicago Convention. (The FAA has incorporated these particular international requirements in Sections 91.703(a)(2) and Section 91.703(a)(3) of Title 14, Code of Federal Regulations.) Each contracting State also has undertaken to insure the prosecution of all persons violating the applicable rules for the flight and maneuver of aircraft. In order to execute its responsibilities as to compliance with, and enforcement of, flight and maneuver rules, the State of Registry must be able to obtain information about particular aircraft and operations in a timely manner and, in some cases, provide that information to other States.

Depending on the circumstances, the State of Registry also may be the State of the Operator of an aircraft if the operator's principal place of business is located in the State of Registry or, if there is no such place of business, the operator permanently resides in the State of Registry. The State of the Operator must oversee the operators of aircraft for which it is responsible in accordance with the standards set forth in Annex 6 to the Chicago Convention. Where the State of Registry and the State of the Operator are one and the same, the execution of safety oversight responsibilities is seamless because it occurs under a single regulatory system. However, the certification and oversight responsibilities of the State of the Operator are made more complicated when an operator uses an aircraft registered in another State. In those cases, the State of the Operator must consider and act consistently with certain State of Registry requirements—particularly with regard to the performance, equipage, and maintenance of the aircraft—when certifying and overseeing the operator. The effective execution of these responsibilities requires an ongoing exchange of information between the State of Registry and the State of the Operator.

In the course of its review of the use of non-citizen trusts to register aircraft, the FAA determined that the basing and operation of such aircraft outside the United States frequently gives rise to problems in the execution of the oversight responsibilities. The FAA's ability to carry out its State of Registry responsibilities for those aircraft is hampered by the fact that it has little or no presence in most foreign locations where the operations occur, and little or no information about the identity of the operators or the nature of the operations being conducted. Moreover, the United States is not the State of the Operator in many of those situations, inasmuch as the operators for the most part do not maintain their principal place of business or reside in the United States. The FAA's lack of information about the identity of the operators or the nature of the operations substantially diminishes the FAA's ability to provide information to the State that is either responsible for the oversight of the operator or the State where a flight operation actually occurs.

In the laws and regulations that establish and govern the FAA Aircraft Registry of the United States, no distinction is made between types or categories of aircraft owners for purposes of regulatory compliance. All registered owners of aircraft on the FAA Aircraft Registry, whether they are individuals, partnerships, corporations, or associations, any of which may act in the capacity of owner trustees, have the same obligations when it comes to compliance with the applicable FAA regulations. Once the FAA completes the registration process, the person to whom the aircraft is registered is the owner for all purposes under the regulations whether or not it acts as owner trustee.

The owners of U.S.-registered aircraft have a substantial role in the FAA's system for overseeing the safety of those aircraft and their operation. For example, the regulations specify that the application for an airworthiness certificate must be submitted by the owner of the aircraft. 14 CFR 21.173. The regulations also impose certain maintenance responsibilities on owners of aircraft as well as the actual operators of the aircraft. 14 CFR 91.403(a) and 91.405.

The importance of the owner's role in the FAA's safety oversight system may be best illustrated by Airworthiness Directive (AD) process. In situations involving unsafe conditions or defects in an aircraft type, the FAA issues ADs—frequently on an emergency basis—to the registered owners of such aircraft. Sometimes in the interests of safety, those ADs, which are mandatory rules, require the grounding of the aircraft while critical airworthiness inspections are conducted or while important repairs or alterations are made to the aircraft. The FAA requires aircraft owners to comply with the requirements of an AD. All owners, including owner trustees, must be able to communicate critical safety information in an AD in a timely manner to those who can take appropriate action.

The FAA may also communicate with the registered owner of aircraft when conducting an investigation about suspected operational or maintenance violations in situations where the identity of the pilot or operator of the aircraft is not readily apparent. Where a registered owner has caused or authorized another person to operate his aircraft and where the owner has not cooperated with the FAA in providing information about such operation, the FAA has taken enforcement action against the owner as an “operator” using the broadly defined term “operate” in part 1 of the Federal Aviation Regulations. 1 In In the Matter of Fenner, FAA Order No. 96-17 (May 3, 1996) aff'd, Fenner v. FAA, 113 F.3d 1251 (11th Cir. 1997), the registered aircraft owner personally knew who had operated his aircraft dangerously, but refused to provide that person's name to the FAA. The FAA Administrator used the long-standing, broad definition of “operate” to find that the owner, by authorizing the use of the aircraft was responsible for the operation of the aircraft. The owner was assessed a $4000 civil penalty for the operation of the aircraft.

In Fenner, the FAA Administrator held that: “While aircraft owners might not be held liable for all infractions committed in their aircraft, they can be held liable for infractions committed by a pilot who had permission to use their aircraft. The FAA has the statutory duty to protect the public from dangerous actions. Moreover, holding aircraft owners responsible in cases like this may help ensure that aircraft owners grant permission to use their aircraft only to persons they know to be responsible.” Fenner, at p. 3

In a letter to Edward M. Plaza from Assistant Chief Counsel for Regulations and Enforcement Carl B. Schellenberg, March 28, 1979, the FAA stated that a lessor could be considered to have operated an aircraft and be considered in violation of [now section 91.13] when the lessee flew the aircraft in a careless or reckless manner.) (FAA Interpretation No. 1979-11)

In In the Matter of Gatewood, FAA Order No. 2001-1, (February 3, 2000), an aircraft owner was found to have “operated” an unairworthy aircraft where an inexperienced mechanic made an erroneous airworthiness finding and the mechanic/pilot flew the aircraft.

In most circumstances the FAA will prefer to focus on the actual operator of an aircraft when conducting an investigation or taking enforcement action. However, an aircraft owner is expected to cooperate fully in providing information in support of the FAA's investigatory and enforcement efforts.

In reviewing the issues surrounding the use of trusts to register aircraft, the FAA has focused attention on the role of the owner trustee of a U.S.-registered aircraft in ensuring compliance with the laws and regulations that relate to the operation of the aircraft. In particular, the FAA has considered whether the status of the trustee as the owner of the aircraft under a trust agreement affects its responsibilities for compliance issues related to the operation of the aircraft as compared to other owners of a U.S.-registered aircraft. After considering the comments submitted by the public, FAA has determined that there is nothing inherent in the status of a trustee owner of a U.S.-registered aircraft that would affect or limit its responsibilities for ensuring compliance with the laws and regulations that relate to the operation of the aircraft. The FAA is not aware of any basis for treating one type of owner—such as a trustee under a non-citizen trust—differently from any other owner of a civil aircraft on the U.S. registry when considering issues of regulatory compliance.

Several commenters indicated that a trustee could relieve itself of its regulatory compliance obligations if, in transferring the aircraft to another party for purposes of operating it, the trustee includes a contractual requirement that the operator fully comply with all applicable laws and regulations. The FAA disagrees. No commenter cited any legal authority in support of the proposition that a private party could somehow avoid a regulatory obligation imposed on it by the FAA simply by entering into a private contract with another party. The FAA in its regulations and policies does not recognize such a right.

The FAA also disagrees with the suggestion that 49 U.S.C. 44112 provides a basis for relieving owners of aircraft of their regulatory obligations. In its current form, section 44112, entitled “Limitations on Liability,” provides in part:

Some of the commenters stated that, presently, most U.S. citizen owner trustees exercise due diligence when investigating the background of foreign trustors and beneficiaries before those U.S. citizen trustees enter into trust relationships or any other type of relationship with such non-U.S. citizens. As those commenters explained, those U.S. citizen trustees are endeavoring “* * * to protect the interests of the United States * * *”, and do so by, among other things, exercising due diligence pursuant to the USA Patriot Act, the Department of Commerce export control regulations, and the Office of Foreign Asset Control economic sanction regulations.

The FAA acknowledges that the due-diligence reviews described by the commenters are important for purposes of protecting the interests of the U.S. as to issues of national security, export control, and economic sanctions. Those reviews do not, however, necessarily meet the needs of the FAA with regard to protecting U.S. interests concerning aviation safety inasmuch as they do not consider the technical aviation issues that drive a safety oversight system. The FAA is concerned with technical qualification and the ability to comply on an ongoing basis with technical, operating, and maintenance standards. Such issues are outside the scope of the due-diligence reviews for national security, export control, and economic sanction compliance purposes.

As indicated in the foregoing discussion, the FAA by regulation and practice imposes important safety obligations on all owners of aircraft. These obligations require that the information about the identity and whereabouts of the actual operators of aircraft and location and nature of operation be updated on an ongoing basis, thereby allowing owners to provide operators with safety critical information in a timely manner, and to obtain information responsive to FAA inquiries, including investigations of alleged violations of FAA regulations. The FAA expects this level of due diligence from owners with regard to issues concerning aviation safety oversight. Moreover, the FAA believes such obligations are not unduly burdensome or beyond the capabilities of any owner of a U.S.-registered aircraft to meet.

Some commenters have suggested however that the FAA should not expect that U.S. owner trustee be able to identify the operator or be able to insure quick contact with the operator of the aircraft. We reject these suggestions. To accept such suggestions would result in the removal of existing obligations on U.S. citizen owner trustees that would otherwise continue to exist for all other owners.

For the majority of the aircraft on the FAA Aircraft Registry, including some aircraft registered to non-U.S. citizens under trusts, the FAA has adequate sources of information about the aircraft and their operations to effectively and efficiently carry out its State of Registry responsibilities under international law. However, for aircraft registered to non-U.S. citizens under trusts that are primarily or exclusively used in general aviation or aerial works operations outside the United States, the FAA has been less successful in accessing information necessary to the execution of its State of Registry responsibilities. In all cases, the FAA will look to the trustee, as the registered owner of the aircraft, for information about the aircraft and its operations when needed to comply with the United States' State of Registry obligations under the Chicago Convention. In particular, the FAA expects that within 2 business days a trustee will be able to provide to the FAA the following information about the aircraft and its operation:

• The identity of the person normally operating, or managing the operations of, the aircraft;

• Where that person currently resides or has its principal place of business;

• The location of maintenance and other aircraft records; and

• Where the aircraft is normally based and operated.

The FAA further expects that within 5 business days the trustee, as the registered owner of the aircraft, will be able to respond to FAA requests for more detailed information about the aircraft and its operations, including:

• Information about the operator, crew, and aircraft operations on specific dates;

• Maintenance and other aircraft records; and

• The current airworthiness status of the aircraft.

In the event of an emergency, the FAA may request a trustee to provide information more quickly than the timelines specified above.

During the course of its review of non-citizen trusts, the FAA has had an opportunity to review a number of aircraft operating agreements between the trustee owners of aircraft and the trustors or beneficiaries of the trust. 2 The operating agreements reviewed had not been submitted to the FAA along with aircraft registration application and other required documents of the aircraft concerned. 3

In its review, the FAA found that many operating agreements contained clauses that addressed issues not covered in the non-citizen trust agreement or that modified or contradicted provisions in the trust agreement, particularly as to enlarging the degree of control exercised by a non-U.S. citizen over the trustee. The ultimate impact of many operating agreements was to affect the relationship and balance established under the non-citizen trust between the trustor and/or beneficiary on one hand and the trustee on the other.

The FAA requires that a person holding legal title to an aircraft in trust must, when applying to register that aircraft in the United States, submit a “copy of each document legally affecting a relationship under the trust. * * *” 14 CFR 47.7(c)(2)(i). The fact that the operating agreements referenced above have not been routinely submitted to the FAA in conjunction with an application to register an aircraft held in trust troubles the FAA because of the effect of the operating agreements on the relationship established under the trust. The FAA concludes, contrary to the views of some commenters, that a relationship established under a trust agreement is necessarily affected by an operating agreement or similar side agreement or arrangement involving trustee and trustor which allows possession and use of the aircraft at all times to remain with the trustor. The operating agreement and the trust agreement are so intertwined that the operating agreement will always affect the relationship established under the trust.

A fundamental part of the registration process for aircraft held in trust is determining whether the underlying agreements meet the applicable requirements and therefore are sufficient to establish the trustee's eligibility to register the aircraft. The failure to submit required documents such as an operating agreement frustrates this objective. To avoid this result in the future, the FAA will require that all operating agreements or similar side agreements involving the trustee transferring custody and use of the aircraft held in trust to the trustor be submitted to the FAA along with other documents that affect a relationship under the trust pursuant to 14 CFR 47.7(c)(2)(i).

In cases where a non-citizen trust is used to establish eligibility for registration and no operating agreement or other similar side agreement or arrangement is submitted along with a registration application, the FAA will expect the applicant to provide sufficient assurances that no such operating agreement or other side agreement or arrangement exists between the trustee and the trustor. An adequate assurance might take the form of an additional declaration by the trustee in an affidavit submitted in support of a non-citizen trust registration that no such operating agreement or other side agreement or arrangement has been entered into by the trustee and the trustor and/or beneficiary. There may be other means by which the trustee could adequately assure the FAA that no operating agreement or other side agreement or arrangement exists between the trustee and the trustor and/or beneficiary; the FAA will consider alternate approaches. In the end, however, the FAA must be certain that it has the opportunity to review all documents that affect the relationship established under a non-citizen trust in order to insure the integrity of the registration process. Silence by the trustee with regard to this important issue will not be sufficient.

In promulgating regulations to permit the use of a non-citizen trust to establish eligibility to register an aircraft in the U.S., the FAA imposed restrictions on the ability of non-U.S. citizens or resident aliens to remove the trustee. Such restrictions, in the FAA's view, lend more meaningful status and permanence to the trustee as the owner of the aircraft held in trust.” Section 47.7(c)(3) of the regulations provides:

The FAA is concerned that non-citizen trusts being used to establish eligibility to register an aircraft do not adequately limit the ability of non-U.S. citizens to remove a trustee. In general, the agreements allow trustees to be removed for cause without specifying what constitutes a sufficient cause. The FAA's view is that such lack of specificity appears to provide a non-U.S. citizen beneficiary with virtually unconditional power to remove a trustee, since practically any cause for removal might be interpreted as sufficient.

Therefore, the FAA believes that a non-citizen trust agreement must describe with specificity what would be a sufficient cause for removal of a trustee by a non-U.S. citizen beneficiary. Some trust agreements on file with the FAA have loosely attempted to define what constitutes cause to remove consistent with the general law of trusts. The grounds for removal listed in the Third Restatement of Trusts at Section 37 are illustrative of possible (but not always relevant) grounds for removing a trustee that might be included in a non-citizen trust agreement.

Section 47.7(c)(3) of the Federal Aviation Regulations provides that non-U.S. citizens or non-resident aliens may not have more than 25% of the aggregate power to direct or remove a trustee. In those cases where a non-citizen trustor appears to have 100% of such power (not just 25%), the FAA needs to be assured in writing (in the trust agreement, trust affidavit of citizenship, or elsewhere) how and why it is that such non-citizens will not be able to exercise such aggregate power in excess of 25%. 4

In summary, the FAA believes that without a description of the causes that might justify removal, and without the power to remove by non-U.S. citizen or non-resident aliens being clearly limited to 25% of the aggregate power, that a clause that simply vests a non-U.S. citizen trustor with the power to remove a trustee for cause is insufficient.

Finally, the FAA would note that none of the restrictions on the power of non-U.S. citizen to control or remove a trustee affect the ability of a non-U.S. citizen beneficiary or trustor otherwise to terminate a trust in accordance with its terms. With regard to the registration of the aircraft, the FAA expects that the likely effect of a termination, not involving removal of the trustee, would be to end registration or render the registration ineffective under 14 CFR 47.41(a). The aircraft could be re-registered in the United States if ownership were transferred to a person eligible to register it, whether under a non-citizen trust or some other mechanism recognized under the FAA's regulations.

Likewise, the FAA does not have any restrictions on the ability of a trustee to resign without first being replaced by a successor trustee. Contrary to the suggestion of at least one commenter, the FAA does not have any regulation or policy that requires the inclusion of a requirement in the non-citizen trust agreement that a resignation may take effect only upon the appointment of a successor trustee. The FAA allows the parties to the non-citizen trust to address that issue as they see fit. The FAA believes the consequences of a resignation by a trustee without the prior appointment of an eligible successor trustee would be the same as a termination of the trust as described above.

A standard non-citizen trust agreement has developed over the years. The FAA believes it is useful to offer suggestions to that document. 5 In some instances we recommend striking language that we believe is ambiguous or perhaps contrary to law. We also suggest some new language that we believe might be included in trust agreements ( e.g., in paragraph 3.02, illustrative language has been added regarding for cause removal). That language reflects what the FAA might deem acceptable for aircraft registration purposes and that the owner trustee applicant is making a bona fide effort to comply with existing legal requirements imposed on all aircraft owners. Below is a discussion of significant suggested revisions to a standard trust agreement.

We propose new paragraphs (e) and (f) to Section 4.01 of the standard trust agreement. As discussed earlier in this document, foreign civil aviation authorities and others come to the FAA with information that a U.S.-registered aircraft may have conducted an unsafe operation or that it is presently in an unairworthy condition. Trustee aircraft owners, just like non-trustee aircraft owners, must be able to provide the FAA with information about who normally operates and maintains the aircraft. 6 We feel that 2 business days is enough time for the trustee, with the cooperation of the trustor, to provide the FAA with information about those who normally operate the aircraft and about the usual location of aircraft maintenance records and other records. We also believe that it is reasonable to expect that within 5 business days of an FAA request, that a trustee, with the cooperation of the trustor should be able to provide the FAA with: (i) Information about the actual operator, crew, and aircraft operations for specified dates; (ii) information about where the aircraft will be on specified dates in order for the FAA to conduct direct oversight inspections and investigations regarding the condition of the aircraft or the manner in which the aircraft is being operated; and (iii) maintenance and other records in order to identify the current airworthiness status of the aircraft, who performed maintenance on the aircraft, and the manner and methods used to perform that maintenance.

We note that proposed new paragraphs (e) and (f) includes language to address emergency situations identified by the FAA. If an emergency arises, the FAA may issue an emergency order to the owner trustee requiring the production of information and documents in a shorter time frame. In an emergency situation, the nonemergency time frames specified in draft paragraphs (e) and (f) would not apply.

We are proposing a new paragraph (g) to Section 4.01 of the trust agreement in order for the parties to recognize that it is the owner trustee's duty to expeditiously communicate emergency airworthiness directives concerning the aircraft to the Trustor and/or Lessee of the aircraft. Again, the FAA through the appropriate Aircraft Certification Office uses the information about aircraft owners, which is listed in the FAA Aircraft Registry, to communicate time-critical safety requirements and restrictions to aircraft owners, who under the regulations are primarily responsible for the airworthiness of the aircraft. See § 91.403. Similarly, a situation could develop where the FAA may already have sufficient evidence about an aircraft's condition or misuse to warrant the issuance of a Cease and Desist Order or some other type of order immediately grounding the aircraft.

In regard to draft paragraph (h), the United States has an interest in being informed by the most expeditious means possible of the resignation of a trustee or the “for cause” removal of a trustee. Among other things, the agency needs that information in order to determine whether to de-register the aircraft.

Much of the language in the existing Article 9 is ambiguous or problematic. For example, subsection 9.01(a) beginning at line 2 states:

In the proposed rewrite of subsection 9.01(a) FAA has tried to make it clear that the Trustor may not control the Owner Trustee's duties under the Agreement including, but not limited to, matters involving ownership or the operation of the aircraft.

FAA is seeking comment on the proposed policy clarifications and trust agreement revisions, and invites interested parties to visit its Web site for background information. The FAA will consider the comments and other information received in formulating a final notice of policy clarification, or in determining whether a new policy or rule should be developed to address FAA safety and oversight concerns with non-citizen trust registrations. The FAA also will consider whether an additional public meeting is required to ensure an adequate airing of the public's views on the use of non-citizen trusts to register aircraft in the United States.

THIS TRUST AGREEMENT (XXX), dated as of XXX, (the “Agreement”) by and between XXX, a [corporation organized and existing] [limited liability company formed]  7 under the laws of XXX (“Trustor”), and XXX, a XXX organized and existing under the laws of the XXX (“Owner Trustee”);

WHEREAS, Trustor desires to cause title to the Aircraft (as hereinafter defined) to be conveyed to Owner Trustee;

WHEREAS, Trustor desires to create a trust (the “Trust”) and contribute the Aircraft thereto in order to ensure the eligibility of the Aircraft for United States registration with the Federal Aviation Administration (the “FAA”);

WHEREAS, this Agreement is designed to create a Trust in order that the Owner Trustee may hold title to the Aircraft until such time as Trustor directs the Owner Trustee to distribute the Aircraft in accordance with Trustor's written instructions; and

WHEREAS, Owner Trustee is willing to accept the trusts as herein provided;

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, Trustor and Owner Trustee agree as follows:

Capitalized terms used in this Agreement shall have the respective meanings assigned thereto below, unless such terms are otherwise defined herein or the context hereof shall otherwise require. The terms “hereof”, “herein”, “hereunder” and comparable terms refer to this Agreement, as amended, modified or supplemented from time to time, and not to any particular portion hereof. References in this Agreement to sections, paragraphs and clauses are to sections, paragraphs and clauses in this Agreement unless otherwise indicated.

“ Affidavit” means the Affidavit of Owner Trustee pursuant to Section 47.7(c)(2)(iii) of Part 47 of the Federal Aviation Regulations.

“ Aircraft ” means the XXX Aircraft, serial number XXX, FAA Registration Number N XXX together with the XXX engines, bearing manufacturer's serial numbers XXX and XXX, which are transferred to the Owner Trustee in trust under this Trust Agreement.

“ Aircraft Registration Application ” means AC Form 8050-1 Aircraft Registration Application by Owner Trustee covering the Aircraft.

“ Citizen of the United States ” means “citizen of the United States” as that term is defined in Section 40102(a)(15) of Title 49 of the United States Code.

“ FAA ” means the Federal Aviation Administration of the United States or any Government Entity succeeding to the functions of such Federal Aviation Administration.

“ FAA Bill of Sale ” means an AC Form 8050-2 Bill of Sale for the Aircraft from Trustor to Owner Trustee.

“ Lessee ” means any lessee under any Lease, or any operator under any Operating Agreement.

“ Lease ” means any agreement from time to time entered into with respect to the Aircraft by the Owner Trustee, as Lessor, and a third party Lessee, whether or not at the direction of the Trustor.

“ Operating Agreement ” means any agreement entered into between the Owner Trustee and the Trustor, or between a third party Lessee and the Trustor, transferring to the Trustor the right to possess, use, operate or manage the Aircraft.

“ Trust Estate ” means all estate, right, title and interest of Owner Trustee in and to the Aircraft, the Lease, the Warranty Bill of Sale and the FAA Bill of Sale, including, without limitation, all amounts of the rentals under any Lease, insurance proceeds (other than insurance proceeds payable to or for the benefit of Owner Trustee, for its own account or in its individual capacity, or Trustor), and requisition, indemnity or other payments of any kind for or with respect to the Aircraft, (other than amounts owing to Owner Trustee, for its own account or in its individual capacity, Trustor or any Lessee of the Aircraft).

“ Warranty Bill of Sale ” means a full warranty bill of sale for the Aircraft, executed by Trustor in favor of Owner Trustee and specifically referring to each engine installed on the Aircraft.

Section 2.01  Transfer of Control. Trustor shall cause title to the Aircraft to be conveyed to Owner Trustee.

Section 2.02  Acceptance and Declaration of Trust. Owner Trustee accepts the Trust created hereby, and declares that it will hold the Trust Estate upon the trusts hereinafter set forth for the use and benefit of Trustor, in accordance with and subject to all of the terms and conditions contained in this Agreement, and agrees to perform the same, including without limitation the actions specified in Section 4.01 hereof, and agrees to receive and disburse all moneys constituting part of the Trust Estate, all in accordance with the terms hereof.

Section 3.01  Status. Owner Trustee hereby represents and warrants that it is a Citizen of the United States.

Section 3.02  Removal. Owner Trustee may be removed at any time, but for cause only, by a written instrument or instruments signed by Trustor, subject to the regulatory limitation that a non-U.S. citizen not hold more than 25 percent of the aggregate power to remove a trustee. [For purposes of this Section, “for cause” shall mean willful misconduct or gross neglect so as to endanger the [Trust estate]. Mere disagreements between Owner Trustee and Trustor shall not constitute a cause warranting removal.] Such removal shall take effect immediately upon the appointment of a successor Owner Trustee pursuant to Section 3.04, whereupon all powers, rights and obligations of the removed Owner Trustee under this Agreement (except the rights set forth in Section 3.08) shall cease and terminate. Without any affirmative action by Trustor, any Owner Trustee shall cease immediately to be an Owner Trustee at such time as it ceases to be a Citizen of the United States or at such time as it for any reason is not free from control by Trustor as described in Article 9, and shall give immediate notice thereof to Trustor. Any Owner Trustee shall also give Trustor notice of a possible change of citizenship at the later of (i) 90 days prior to a change in citizenship and (ii) actual knowledge by Owner Trustee that such a change in citizenship is probable.

Section 3.03  Resignation. Owner Trustee may resign at any time upon giving 30 days prior written notice of such resignation to Trustor. Such resignation shall take effect only upon the appointment of a successor Owner Trustee pursuant to Section 3.04, whereupon all powers, rights and obligations of the resigning Owner Trustee under this Agreement (except the rights set forth in Section 3.08) shall cease and terminate.

Section 3.04  Successor Owner Trustee. Promptly upon receipt of a notice of resignation from the Owner Trustee in accordance with Section 3.03, a successor trustee shall be appointed by a written instrument signed by a duly authorized officer of Trustor and the successor trustee shall execute and deliver to the predecessor Owner Trustee an instrument accepting such appointment. Such successor trustee shall be a Citizen of the United States and shall assume all powers, rights and obligations of such Owner Trustee hereunder immediately upon the resignation of such Owner Trustee becoming effective. Such successor, concurrently with such appointment, shall file an Affidavit with the FAA and all other documents then required by law to be filed in connection therewith. If the Trustor shall not have so appointed a successor Owner Trustee within 30 days after such resignation or removal, the Owner Trustee may apply to any court of competent jurisdiction to appoint a successor Owner Trustee to act until such time, if any, as a successor or successors shall have been appointed by the Trustor as above provided. Any successor Owner Trustee so appointed shall immediately and without further act be superseded by any successor Owner Trustee appointed by the Trustor as above provided.

Section 3.05  Merger. Any corporation into which Owner Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which Owner Trustee shall be a party, or any corporation to which substantially all the corporate trust business of Owner Trustee may be transferred, shall, subject to the terms of Section 3.04, be Owner Trustee without further act.

Section 3.06  Tax Returns. The Owner Trustee shall keep all appropriate books and records relating to the receipt and disbursement by it of all monies under this Agreement or any agreement contemplated hereby. The Trustor will prepare all tax returns required to be filed with respect to the trust hereby and the Owner Trustee, upon request, will furnish the Trustor with all such information as may be reasonably required from the Owner Trustee in connection with the preparation of such tax returns. The Owner Trustee will execute and file the tax returns as prepared by the Trustor.

Section 3.07  Vacancies. If any vacancy shall occur in the position of Owner Trustee for any reason, including, without limitation, removal, resignation, loss of United States citizenship or the inability or refusal of such Owner Trustee to act as Owner Trustee, the vacancy shall be filled in accordance with Section 3.04.

Section 3.08  Fees; Compensation. The Owner Trustee shall receive from the Trustor as compensation for the Owner Trustee's services hereunder such fees as may heretofore and from time to time hereafter be agreed upon by the Owner Trustee and the Trustor and shall be reimbursed by the Trustor for all reasonable costs and expenses incurred or made by it in accordance with any of the provisions of this Agreement. If an event of default under any Lease shall occur, the Owner Trustee shall be entitled to receive reasonable compensation for its additional responsibilities, and payment or reimbursement for its expenses. Owner Trustee shall have a lien on the Trust Estate, prior to any interest therein of the Trustor, to secure payment of such fees and expenses.

Section 3.09  No Duties. Owner Trustee shall not have any duty (i) to see to any insurance on the Aircraft or maintain any such insurance, (ii) to see to the payment or discharge of any tax, assessment or other governmental charge or any lien or encumbrance of any kind owing with respect to, assessed or levied against, the Aircraft ( provided, however, that Owner Trustee shall not create, permit or suffer to exist any lien or encumbrance on any part of the Aircraft which results from claims against Owner Trustee unrelated to its capacity as Owner Trustee hereunder), (iii) to confirm or verify any notices or reports, (iv) to inspect the Aircraft at any time or ascertain the performance or observance by either of any Lessee or Trustor of its covenants under any Lease, or (v) except as set forth herein, to see to any recording or see to the maintenance of any such recording or filing with the FAA or other government agency.

Section 3.10  Status of Moneys Received. All moneys received by Owner Trustee under or pursuant to any provisions of this Agreement shall constitute trust funds for the purpose for which they are paid or held, and shall be segregated from any other moneys and deposited by Owner Trustee under such conditions as may be prescribed or permitted by law for trust funds.

Section 3.11  Owner Trustee May Rely. Owner Trustee shall not incur any liability to anyone in acting or refraining from acting upon any signature, instrument, notice, resolution, request, consent, order, certificate, report, opinion, bond or other document or paper reasonably believed by it to be genuine and reasonably believed by it to be signed by the proper party or parties. As to any fact or matter, the manner or ascertainment of which is not specifically described herein, Owner Trustee may for all purposes hereof rely on a certificate, signed by or on behalf of the party executing such certificate, as to such fact or matter, and such certificate shall constitute full protection of Owner Trustee for any action taken or omitted to be taken by it in good faith in reliance thereon. In the administration of the Trust, Owner Trustee may, at the reasonable cost and expense of Trustor, seek advice of counsel, accountants and other skilled persons to be selected and employed by them, and Owner Trustee shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the actions, advice or opinion of any such counsel, accountants or other skilled persons.

Section 3.12  Owner Trustee Acts as Trustee. In accepting the Trust, Owner Trustee acts solely as trustee hereunder and not in any individual capacity (except as otherwise expressly provided in this Agreement or any Lease), and all persons other than Trustor having any claim against the Owner Trustee by reason of the transactions contemplated hereby shall not have any recourse to Owner Trustee in its individual capacity.

Section 3.13  No Expenses for Owner Trustee. Owner Trustee shall not have any obligation by virtue of this Agreement to expend or risk any of its own funds, or to take any action which could, in the reasonable opinion of Owner Trustee, result in any cost or expense being incurred by Owner Trustee. Owner Trustee shall not be required to take any action or refrain from taking any action under this Agreement unless it shall have been indemnified by Trustor in a manner and form satisfactory to Owner Trustee against any liability, cost or expense (including reasonable attorneys' fees) which may be incurred in connection therewith. No provisions of this Agreement shall be deemed to impose any duty on Owner Trustee to take any action if Owner Trustee shall have been advised by counsel that such action would expose it to personal liability, is contrary to the terms hereof or is contrary to law.

Section 3.14  Notice of Event of Default. In the event that a responsible officer in the Corporate Trust Department of the Owner Trustee shall have actual knowledge of a default or an event of default under any Lease, the Owner Trustee shall give or cause to be given prompt notice of such default or event of default to the Trustor. The Owner Trustee shall take such action with respect to such default or event of default as shall be specified in written instructions from the Trustor. For all purposes of this Agreement and any Lease, in the absence of actual knowledge of a responsible officer in the Corporate Trust Department of the Owner Trustee, the Owner Trustee shall not be deemed to have knowledge of a default or event of default unless notified in writing by the Trustor.

Section 3.15  Certain Duties and Responsibilities of Owner Trustee.

(a) Owner Trustee undertakes to perform such duties and only such duties as are specifically set forth in this Agreement and in any Lease or Operating Agreement or as required by law and no implied duties, covenants or obligations shall be read into this Agreement or any Lease or Operating Agreement against Owner Trustee. Owner Trustee agrees that it will deal with the Aircraft or any other part of the Trust Estate in accordance with the terms of this Agreement and any Lease or Operating Agreement or as required by law.

(b) Whether or not herein expressly so provided, every provision of this Trust Agreement [relating to the conduct or] affecting the liability of or affording protection to Owner Trustee shall be subject to the provisions of this Section 3.15.

Section 3.16  No Representations or Warranties as to the Aircraft or Documents. OWNER TRUSTEE MAKES (i) NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED, AS TO THE VALUE, CONDITION, DESIGN, OPERATION, MERCHANTABILITY OR FITNESS FOR USE OF THE AIRCRAFT OR AS TO THE TITLE THERETO, OR ANY OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE AIRCRAFT WHATSOEVER, except that XXX, in its individual capacity warrants that on the date on which the Aircraft is transferred to the Trust contemplated by this TRUST AGREEMENT, Owner Trustee shall have received whatever title was conveyed to it, and (ii) no other representations or warranties are made by the Owner Trustee other than to the extent expressly made herein by Owner Trustee, except that Owner Trustee represents and warrants that it has full right, power and authority to enter into, execute, deliver and perform this Agreement and that this Agreement constitutes the legal, valid and binding obligation of the Owner Trustee.

Section 4.01  Authorization and Direction to Owner Trustee. Trustor hereby authorizes and directs Owner Trustee, not individually but solely as Owner Trustee hereunder, and Owner Trustee covenants and agrees:

(a) to execute and deliver each agreement, instrument or document to which Owner Trustee is a party in the respective forms thereof in which delivered from time to time by Trustor for execution and delivery and, subject to the terms hereof, to exercise its rights and perform its duties under any Lease in accordance with the terms thereof, including without limitation, accepting title to, and delivery of, the Aircraft and leasing the Aircraft to any Lessee or, subject to the provisions of Section 7 hereof, distributing the Aircraft to Trustor pursuant to the specific written instructions of Trustor;

(b) to effect the registration of the Aircraft with the FAA by duly executing and filing or causing to be filed with the FAA (i) the Aircraft Registration Application, (ii) the Affidavit, (iii) the FAA Bill of Sale, (iv) an executed counterpart of this Agreement, and (v) any other document or instrument required therefore including any Operating Agreement;

(c) to execute and deliver each other document referred to in any Lease or which Owner Trustee is required to deliver pursuant to any Lease or this Agreement; and

(d) subject to the terms of this Agreement, to perform the obligations and duties and exercise the rights of Owner Trustee under any Lease.

(e) upon request by FAA, and with the cooperation of Trustor, to provide the FAA with the following information within 2 business days of the request (or immediately in an emergency identified by the FAA): (i) the identity and contact information (address, phone number, email) of person or entity normally operating, or maintaining the operations of the aircraft; (ii) where that person or entity resides or is incorporated and has its principal place of business; (iii) the location of the aircraft maintenance and other records; and; (iv) where the aircraft is normally based and operated.

(f) upon request by FAA, and with the cooperation of Trustor, to provide the FAA with the following information within 5 business days of the request (or immediately in an emergency identified by the FAA): (i) information about the operator, crew (names and pilot certificate numbers) and aircraft operations on specific dates; (ii) information about where the aircraft will be on a specific date in the future and (iii) maintenance and other aircraft records.

(g) upon receipt of an emergency airworthiness directive from the FAA, to immediately forward the emergency airworthiness directive to the Trustor and or Lessee by the most expeditious means available.

(h) to notify the FAA Aircraft Registry by the most expeditious means available of the trustee's resignation under Article 3.03 or removal under 3.02, or of the termination of the trust under 7.01.

(i) to authorize U.S. and foreign government officials to inspect the aircraft.

Section 4.02  Supplier Warranties. Trustor hereby assigns to Owner Trustee any and all warranties and indemnities of, and other claims against, any supplier relating to the Aircraft.

Section 4.03  Advances by Trustor. Trustor shall make advances to Owner Trustee in such amounts and at such times as may be necessary to permit Owner Trustee to satisfy its obligations under any Lease and this Trust Agreement.

Section 5.01  Receipts. Except as otherwise provided in this Agreement, any payment received by Owner Trustee for which provision as to the application thereof is made in any Lease shall be applied promptly to the purpose for which such payment shall have been made in accordance with the terms of such Lease; and any payment received by Owner Trustee for which no provision as to the application thereof is made in any Lease or in this Article 5 shall, unless Trustor shall have otherwise instructed Owner Trustee in writing, be distributed promptly to Trustor.

Section 5.02  Manner of Making Distributions. Owner Trustee shall make all distributions to Trustor under this Agreement and any Lease promptly upon the receipt of proceeds available for distribution, but shall not be obligated to make any distributions until the funds therefor have been received by Owner Trustee. All distributions to Trustor hereunder shall be made to such account and in such manner as Trustor shall from time to time direct in writing.

Section 6.01  Indemnification. Trustor hereby agrees, whether or not any of the transactions contemplated hereby shall be consummated, to assume liability for, and does hereby indemnify, protect, save and keep harmless XXX, in its individual capacity and its successors, assigns, legal representatives, agents and servants, from and against any and all liabilities, obligations, losses, damages, penalties, taxes (excluding any taxes payable by XXX in its individual capacity on or measured by any compensation received by XXX in its individual capacity for its services hereunder), claims, actions, suits, costs, expenses or disbursements (including, without limitation, reasonable ongoing fees of Owner Trustee and reasonable attorneys' fees and expenses) of any kind and nature whatsoever which may be imposed on, incurred by or asserted against XXX in its individual capacity (whether or not also indemnified against by a Lessee under any Lease or also indemnified against by any other person) in any way relating to or arising out of this Agreement or any Lease or the enforcement of any of the terms hereof or thereof, or in any way relating to or arising out of the manufacture, purchase, acceptance, nonacceptance, rejection, ownership, delivery, lease, possession, use, operation, condition, sale, return or other disposition of the Aircraft (including, without limitation, latent and other defects, whether or not discoverable, and any claim for patent, trademark or copyright infringement), or in any way relating to or arising out of the administration of the Trust Estate or the action or inaction of Owner Trustee or XXX in its individual capacity hereunder, except (a) in the case of willful misconduct or gross negligence on the part of Owner Trustee or XXX in its individual capacity in the performance or nonperformance of its duties hereunder, or (b) those resulting from the inaccuracy of any express representation or warranty of XXX in its individual capacity (or from the failure of XXX in its individual capacity to perform any of its covenants) contained in this Agreement or any Lease, or (c) in the case of the failure to use ordinary care on the part of Owner Trustee or XXX in its individual capacity in the disbursement of funds. The indemnities contained in this Article 6 extend to XXX only in its individual capacity and shall not be construed as indemnities of the Trust Estate. The Indemnities contained in this Article 6 shall survive the termination of this Agreement. In addition, and to secure the foregoing indemnities, Owner Trustee shall have a lien on the Trust Estate, which shall be prior to any interest therein of Trustor.

Section 7.01  Termination Date. The Trust shall terminate without any notice or other action of Owner Trustee upon the earlier of (a) such date as may be directed by Trustor and the sale or other final disposition by the Owner Trustee of all property constituting the Trust Estate or (b) twenty one years less one day after the earliest execution of this Trust Agreement by any party hereto.

Section 7.02  Distribution of Trust Estate Upon Termination. Upon any termination of the Trust pursuant to the provisions of Section 7.01 hereof, Owner Trustee shall convey the Trust Estate to Trustor or its nominee.

Section 8.01  Nature of Title of Trustor. Trustor shall not have legal title to any part of the Trust Estate. No transfer, by operation of law or otherwise, of the right, title and interest of Trustor in and to the Trust Estate or the trusts hereunder, in accordance with the terms hereof, shall operate to terminate this Agreement or the trusts hereunder or entitle any successor or transferee of Trustor to an accounting or to the transfer of it of legal title to any part of the Trust Estate.

Section 8.02  Power of Owner Trustee to Convey. Any assignment, sale, transfer or other conveyance by Owner Trustee of the interest of Owner Trustee in the Aircraft or any part thereof made pursuant to the terms of this Agreement or any Lease shall bind Trustor and shall be effective to transfer or convey all right, title and interest of Owner Trustee and Trustor in and to the Aircraft or such part thereof. No permitted purchaser or other permitted grantee shall be required to inquire as to the authorization, necessity, expediency or regularity of such assignment, sale, transfer or conveyance or as to the application of any sale or other proceeds with respect thereto by Owner Trustee.

Section 8.03  Trust Agreement for Benefit of Certain Parties Only. Nothing herein, whether expressed or implied, shall be construed to give any person other than Owner Trustee and Trustor any legal or equitable right, remedy or claim under or in respect of this Agreement; but this Agreement shall be held to be for the sole and exclusive benefit of Owner Trustee and Trustor.

Section 8.04  Notices. Unless otherwise expressly provided herein, all notices, instructions, demands and other communications hereunder shall be in writing and shall be delivered personally or sent by registered or certified mail, postage prepaid and return receipt requested, or sent by facsimile transmission, with a confirming copy sent by air mail, postage prepaid, and the date of personal delivery or facsimile transmission or 7 business days after the date of mailing (other than in the case of the mailing of a confirming copy of a facsimile transmission), as the case may be, shall be the date of such notice, in each case addressed (i) if to the Owner Trustee, to XXX at its office at XXX, Attention: XXX and (ii) if to the Trustor, to XXX, Attention: XXX.

Section 8.05  Co-Trustee and Separate Trustees. If at any time it shall be necessary or prudent in order to conform to any law of any jurisdiction in which all or any part of the Trust Estate is located, or Owner Trustee being advised by counsel shall determine that it is so necessary or prudent in the interest of Trustor or Owner Trustee, or Owner Trustee shall have been directed to do so by Trustor, Owner Trustee and Trustor shall execute and deliver an agreement supplemental hereto and all other instruments and agreements necessary or proper to constitute another bank or trust company or one or more persons (any and all of which shall be a Citizen of the United States) approved by Owner Trustee and Trustor, either to act as co-trustee jointly with Owner Trustee, or to act as separate trustee hereunder (any such co-trustee or separate trustee being herein sometimes referred to as “additional trustee”). In the event Trustor shall not have joined in the execution of such agreements supplemental hereto within 10 days after the receipt of a written request from Owner Trustee so to do, or in case an event of default, as defined in any Lease, shall have occurred and be continuing, Owner Trustee may act under the foregoing provisions of this Section 8.05 without the concurrence of Trustor; and Trustor hereby appoints Owner Trustee its agent and attorney-in-fact to act for it under the foregoing provisions of this Section 8.05 in either of such contingencies.

Every additional trustee hereunder shall, to the extent permitted by law, be appointed and act, and Owner Trustee and its successors shall act, subject to the following provisions and conditions:

(a) all powers, duties, obligations and rights conferred upon Owner Trustee in respect of the custody, control and management of moneys, the Aircraft or documents authorized to be delivered hereunder or under any Lease shall be exercised solely by Owner Trustee;

(b) all other rights, powers, duties and obligations conferred or imposed upon Owner Trustee shall be conferred or imposed upon and exercised or performed by Owner Trustee and such additional trustee jointly, except to the extent that under any law of any jurisdiction in which any particular act or acts are to be performed (including the holding of title to the Trust Estate) Owner Trustee shall be incompetent or unqualified to perform such act or acts, in which event such rights, powers, duties and obligations shall be exercised and performed by such additional trustee;

(c) no power given to, or which it is provided hereby may be exercised by, any such additional trustee shall be exercised hereunder by such additional trustee, except jointly with, or with the consent in writing of, Owner Trustee;

(d) no trustee hereunder shall be personally liable by reason of any act or omission of any other trustee hereunder;

(e) Trustor, at any time, by an instrument in writing may remove any such additional trustee. In the event that Trustor shall not have executed any such instrument within 10 days after the receipt of a written request from Owner Trustee so to do, Owner Trustee shall have the power to remove any such additional trustee without the concurrence of Trustor; and Trustor hereby appoints Owner Trustee its agent and attorney-in-fact for it in such connection in such contingency; and

(f) no appointment of, or action by, any additional trustee will relieve the Owner Trustee of any of its obligations under, or otherwise affect any of the terms of, this Agreement or any Lease.

Section 8.06  Situs of Trust; Applicable Law. The Trust has been accepted by Owner Trustee and will be administered in the State of Utah. The validity, construction and enforcement of this Agreement shall be governed by the laws of the State of Utah without giving effect to principles of conflict of law. If any provision of this Agreement shall be invalid or unenforceable, the remaining provisions hereof shall continue to be fully effective, provided that such remaining provisions do not increase the obligations or liabilities of Owner Trustee.

Section 8.07  Amendment. This Agreement may not be amended, modified, supplemented, or otherwise altered except by an instrument in writing signed by the parties thereto.

Section 8.08  Successors and Assigns. In accordance with the terms hereof, this Agreement shall be binding upon and shall inure to the benefit of, and shall be enforceable by, the parties hereto and their respective successors and permitted assigns, including any successive holder of all or any part of Trustor's interest in the Trust Estate.

Section 8.09  Headings. The headings of the Articles and Sections of this Agreement are inserted for convenience only and shall not affect the meaning or construction of any of the provisions hereof.

Section 8.10  Counterparts. This Agreement may be executed in any number of counterparts, each of which when so executed shall be deemed to be an original, and such counterparts together shall constitute and be one and the same instrument.

Section 9.01  Limitations on Control, Exceptions.

(a) Limitation on Control. Notwithstanding any other provision of this Agreement, but subject to paragraph (b) of this Section 9.01, the Trustor will have no rights or powers to direct, influence or control the Owner Trustee in the performance of the Owner Trustee's duties under this Agreement, including matters involving the ownership and operation of the Aircraft. In all matters arising under the Agreement, including the ownership and operation of the Aircraft the Owner Trustee shall have absolute and complete discretion in connection therewith and shall be free of any kind of influence or control whatsoever by the Trustor. The Owner Trustee shall exercise its duties under this Agreement in connection with matters involving the ownership and operation of the Aircraft, as the Owner Trustee, in its discretion, shall deem necessary to protect the interests of the United States, notwithstanding any countervailing interest of any foreign power which, or whose citizens, may have a direct or indirect interest in the Trustor and any such action by the Owner Trustee shall not be considered malfeasance or in breach of any obligation which the Owner Trustee might otherwise have to the Trustor; provided, however, that subject to the foregoing limitations, the Owner Trustee shall exercise this discretion in all matters arising under the Agreement, including the ownership and operation of the Aircraft with due regard for the interests of the Trustor. In exercising any of its rights and duties under this Agreement in connection with matters which may arise not relating to the ownership and operation of the Aircraft, the Owner Trustee shall be permitted to seek the advice of the Trustor before taking, or refraining from taking, any action with respect thereto. The Owner Trustee shall notify the Trustor of its exercise of rights and duties under this Agreement in connection with matters involving the ownership and operation of the Aircraft.

(b) Certain Exceptions. Subject to the requirements of the preceding paragraph (a), the Owner Trustee agrees that it will not, without the prior written consent of the Trustor, sell, mortgage, pledge or otherwise dispose of the Aircraft or other assets held in the Trust Estate relating thereto except as otherwise expressly provided for herein.

(c) Purpose. The purpose of this Section 9.01 is to assure that (i) the Aircraft shall be controlled with respect to such matters by a Citizen of the United States and (ii) the Trustor shall have no power to influence or control the exercise of the Owner Trustee's authority with respect to such matters and (iii) Owner Trustee shall be able to give the affidavit required by Section 47.7(c)(2)(iii) of the Federal Aviation Regulations, 14 CFR 47.7 (c)(2)(iii). Section 9.01 shall be construed in furtherance of the foregoing purpose.

Section 9.02  General. Notwithstanding anything to the contrary in this Agreement, the Owner Trustee and the Trustor hereby agree as follows:

If persons who are neither U.S. citizens or resident aliens have the power to direct or remove the Owner Trustee, either directly or indirectly through the control of another person, those persons together shall not have more than twenty five (25%) percent of the aggregate power to direct or remove the Owner Trustee.

Section 9.03  Priority. In creating and accepting the Trust, Trustor, and Owner Trustee each acknowledges that in case of conflict, the limitations in Article 9 of this Agreement are paramount and superior to any other terms and conditions in this Agreement; or in any other document or documents to which trustor/beneficiary and trustee are a party.]

Section 10.1  Covenant to Comply with Export Restrictions and U.S. Laws. Trustor acknowledges that the Aircraft may be subject to restrictions involving the export and re-export of the same pursuant to the laws and regulations of the United States, that the laws and regulations of the United States restrict the transfer of any interest in the Aircraft to certain persons (collectively, the “Export Restrictions”) and that such Export Restrictions may apply to the Aircraft even after the Aircraft has been physically removed or transferred from the United States. Trustor also acknowledges that the Owner Trustee, as a U.S. regulated financial institution, is subject to the laws and regulations of the United States, including, without limitation, those promulgated by the U.S. Department of the Treasury's Office of Foreign Assets Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) (collectively, the “U.S. Laws”). Trustor agrees that it will comply with, and will not knowingly permit the Aircraft to be used in a manner that is contrary to, Export Restrictions and U.S. Laws applicable to (1) the Trustor; (2) the Owner Trustee; or (3) the Aircraft, including the acquisition, possession, operation, use, maintenance, leasing, subleasing, or other transfer or disposition thereof.

Section 10.2  Approval of Transfer. Trustor agrees that it will not permit the assignment of this Agreement, any transfer of the beneficial interest of the Trustor created by this Agreement, or a lease or sublease of the Aircraft (collectively, a “Transfer”) without Owner Trustee's prior written approval of such Transfer. Owner Trustee shall not unreasonably delay its decision on a request for approval from Trustor nor shall it unreasonably withhold its approval to such request. To facilitate Owner Trustee's evaluation of the Transfer, Trustor agrees that it will use reasonable efforts to provide Owner Trustee with any information reasonably requested by the Owner Trustee regarding the Transfer, the proposed transferee and/or the ownership of the proposed transferee. Owner Trustee's decision to approve or disapprove the proposed Transfer shall not be deemed to have been unreasonably delayed if Owner Trustee has not obtained the information it needs to make the decision, and Owner Trustee's approval of the proposed Transfer shall not be deemed to have been unreasonably withheld if Owner Trustee has determined that the Transfer will or may reasonably be expected to put Owner Trustee at risk of violating any laws or regulations applicable to Owner Trustee including, without limitation, the Export Restrictions and/or U.S. Laws. If Owner Trustee withholds approval of a Transfer as set forth herein, then: (i) subject to the terms of this Agreement, Owner Trustee may resign; and (ii) Owner Trustee shall have no obligation to consent to or facilitate a Transfer while Owner Trustee's resignation is pending.

IN WITNESS WHEREOF, Owner Trustee and Trustor have caused this Agreement to be duly executed all as of the date first above written.

Interested persons are invited to participate in this rulemaking by submitting written data, views, or arguments on all aspects on the proposed rule. CBP also invites comments that relate to the economic, environmental, or federalism effects that might result from this proposed rule. Comments that will provide the most assistance to CBP in developing these procedures will reference a specific portion of the proposed rule, explain the reason for any recommended change, and include data, information, or authority that support such recommended change.

Vessels and aircraft arriving in the United States from a foreign place are generally required to report their arrival to CBP and make entry. Under current regulations, certain vessels and aircraft owned or chartered by the Department of Defense (DoD) are exempt from entry requirements and, in some cases, reporting requirements upon their arrival in the United States from a foreign place. The exemptions generally apply when the vessel or aircraft is transporting cargo that is solely the property of DoD or when it is transporting passengers traveling on official business of the United States. This rule proposes to expand the exemptions to entry requirements and, to a lesser extent, arrival reporting requirements to improve the flow of cargo and passengers that support DoD missions.

Section 433 of the Tariff Act of 1930, as amended, requires vessels and aircraft arriving in the United States from a foreign place to report their arrival. 19 U.S.C. 1433. The statute authorizes the Secretary of Homeland Security (Secretary) to promulgate regulations concerning the manner and timing of reporting arrival for vessels and aircraft. Two regulatory provisions govern the method of reporting arrival to CBP for vessels and aircraft. First, concerning vessels, CBP regulations require that the master of a vessel arriving in the United States from a foreign port or place immediately report the arrival to the nearest CBP facility or other location designated by the port director. See 19 CFR 4.2. Second, regarding aircraft, CBP regulations require all aircraft entering the United States to provide advance notice of arrival, subject to certain exceptions. See 19 CFR 122.31.

In contrast to reporting arrival, making entry is a more formal process and typically involves filing certain necessary information with CBP. Separate statutes provide for vessel and aircraft entry requirements and separate regulatory provisions implement them.

First, sections 434 and 441 of the Tariff Act of 1930, as amended, govern vessel entry requirements. 19 U.S.C. 1434 and 1441. Section 434 describes the vessels that are subject to formal entry requirements and authorizes the Secretary to promulgate regulations relating to the manner, format, and timeframe regarding the filing of the entry. Section 441 describes the types of vessels that are not required to make entry under section 434. CBP regulations require certain vessels, including vessels arriving in the United States from a foreign place, to make formal entry within 48 hours after the arrival at any port or place in the United States, unless specifically excepted by law. See 19 CFR 4.3.

Second, concerning aircraft, 19 U.S.C. 1644a grants the Secretary discretion to apply the laws and regulations of vessel entry and clearance to civil air navigation. Accordingly, CBP regulations provide that all aircraft coming into the United States from a foreign place are required to make entry, subject to specified exemptions. See 19 CFR 122.41.

Under existing regulations, certain vessels and aircraft owned or chartered by the DoD are exempt from entry requirements and, in some cases, reporting requirements upon their arrival in the United States from a foreign place. These exemptions generally apply when the vessel or aircraft is transporting cargo that is solely the property of DoD or when it is transporting passengers traveling on official business of the United States.

Pursuant to 19 U.S.C. 1441, certain public vessels and vessels of war are not subject to formal entry requirements. CBP regulations provide that neither a report of arrival nor entry is required of any vessel that is:

• Owned by, or under the complete control and management of the United States or any of its agencies;

• Manned by members of the uniformed armed services of the United States, by personnel in the civil service of the United States, or by both; and

• Transporting only property of the United States, or passengers traveling on official business of the United States, or is in ballast.

CBP regulations provide exemptions for certain public and private aircraft and DoD-chartered aircraft from making entry. These regulations, however, do not provide exemptions from arrival reporting requirements. “Public aircraft” is defined as a government-owned aircraft that is carrying only property of the government or passengers traveling on official business of the government. See 19 CFR 122.1. CBP regulations provide an exemption from entry for DoD-chartered aircraft, but only if it is carrying cargo that is solely DoD property. 19 CFR 122.41(b). Thus, under both the public aircraft exemption and the DoD-chartered aircraft exemption, the cargo being transported must be the exclusive property of the government. In the case of passengers traveling on official business of the government, the entry exemption applies only if the aircraft is owned by the government.

CBP regulations require vessels (19 CFR 4.7) and aircraft (19 CFR 122.48a) arriving in the United States, to provide advance cargo information when the vessel or aircraft is required to make entry. Therefore, vessels and aircraft that are exempt from entry requirements are also exempt from the requirement to present advance cargo information.

Currently, DoD-owned or DoD-chartered vessels and aircraft that are exempt from entry requirements are also exempt from advance cargo information requirements. Under this proposed rule, those additional vessels and aircraft that would be exempt from entry requirements would also be exempt from the advance cargo information requirements in 19 CFR 4.7 and 122.48a.

Many vessels and aircraft that are under DoD's control and used to support DoD's missions do not fit within the current exemptions, either because the cargo is not the property of DoD or because the vessel or aircraft is a chartered vessel or aircraft. Therefore, formal entry, advance reporting, and, in some cases, reports of arrival are required. These requirements can impede the flow of cargo and passengers moved in support of the U.S. government's and DoD's missions.

DoD transports all goods and passengers supporting its missions under DoD's control through its own transportation system, the Defense Transportation System (DTS). The DTS, administered pursuant to the DoD directive on Transportation and Traffic Management (DoD Directive 4500.09E), is the system by which DoD manages the secure shipment of cargo and personnel in peace and in war. Although the cargo that is transported in the DTS is under the strict control of DoD, much of this cargo is not owned by DoD. The controlling DoD directive requires that any non-DoD traffic transported in the DTS be in support of the mission of DoD or the United States or be of an emergency, lifesaving nature (DoD Directive 4500.09E E4.3.1). Vessels and aircraft often carry, for example, defense contractor owned cargo used to support DoD missions, personal property (household goods) of military members, humanitarian cargo, or security assistance cargo. These conveyances are not covered by the current entry exemptions, even though this cargo is normally transported under DoD's control through the DTS. In fact, much of the cargo that moves in the DTS renders the conveyance on which it is transported ineligible for an entry exemption. These conveyances are currently subject to entry requirements and thus also subject to advanced electronic presentation of cargo information requirements.

Under current regulations, although DoD-owned vessels and aircraft that transport passengers traveling on official U.S. business are exempt from entry, DoD-chartered vessels and aircraft are not exempt and must make entry if transporting any passengers. DoD often utilizes chartered vessels and aircraft to transport, for example, DoD personnel, personnel of the Red Cross or the United Service Organizations (USO), or DoD contractor employees, in addition to cargo. Even though all passengers transported on DoD conveyances must be approved to travel in the DTS, regardless of whether the conveyance is owned or chartered by DoD, the chartered vessel or aircraft would be subject to entry and advance cargo information requirements if transporting passengers, while DoD-owned vessels would not.

Based on the above considerations, CBP is proposing to revise the exemptions to better address the manner in which cargo and passengers are moved in support of DoD missions. CBP is proposing to relate the DoD exemptions from entry and reporting to the DTS. Specifically, CBP is proposing to add a general definition of the DTS in the relevant parts of the CBP regulations (part 4 for vessels and part 122 for aircraft). CBP also proposes to revise the current DoD exemptions to cover vessels and aircraft owned by, or under the complete control and management of DoD, or chartered by DoD, which transport only cargo and/or passengers that have been approved for carriage in the DTS. The proposed exemptions would only apply to those chartered vessels or aircraft that are chartered in their entirety by DoD. Those vessels and aircraft that would be exempt under this proposal would also be exempt from the advance cargo information requirements in 19 CFR 4.7 and 122.48a. The proposed changes would help ensure the unimpeded flow of cargo and passengers moved in support of the U.S. government's missions and ensure that cargo and passengers supporting the defense of our nation are not unnecessarily delayed.

The proposed rule would not pose any new security risks for several reasons. First, DoD has strict security protocols for the conveyances it owns, controls, or charters and for the cargo and passengers those conveyances carry. Second, DoD has indicated that non-DoD owned cargo approved for carriage in the DTS undergoes the same stringent security protocols for transportation as DoD-owned cargo and that DoD has absolute control over non-DoD cargo carried in the DTS. Therefore, non-DoD-owned cargo approved for carriage in the DTS poses no greater security threat than DoD-owned cargo that currently qualifies for the entry exemption. Likewise, DTS-approved passengers traveling on DoD-chartered vessels and aircraft must undergo the same security protocols as those passengers traveling on conveyances owned by DoD. When CBP provided the initial exemption for DoD vessels and aircraft carrying only DoD property, neither DoD nor CBP fully appreciated the negative impact this restriction would have for DoD conveyances. The proposed expanded exemptions for cargo and passengers are intended to make CBP's exemptions more suitable to actual DoD transportation needs without posing security risks.

The proposed exemptions concern only the formal entry, clearance, and, in some cases, reporting requirements of the conveyance under the CBP regulations in title 19 of the CFR. All other requirements would still be applicable unless exempt under the relevant authorities. For example, persons on board the conveyance would still be subject to all applicable inspection and immigration controls pursuant to title 8 of the CFR, even if the conveyance is exempt from the title 19 entry requirements. Similarly, the title 7 agricultural regulations and relevant reporting requirements would still apply. This proposed rulemaking would not affect the scope or definition of the term “public vessel” in 19 U.S.C. 1441.

In addition to the substantive amendments described above, CBP also proposes several non-substantive amendments to 19 CFR parts 4 and 122.

To provide clearer organization, in sections 4.5 (“Government vessels”), CBP proposes to give headings to paragraphs (a), (b), and (c). CBP proposes to divide paragraph (a) of section 4.5 (“ Exemptions from reports of arrival and entry ”) into lower paragraphs that are headed “ Vessels owned by the United States, ” “ Additional DoD-owned vessels, ” and “ DoD-chartered vessels. ” These paragraphs would be further subdivided for additional clarity and ease of reading.

In 4.5(a), CBP proposes to change the current phrase “it is ballast” to “in ballast” to reflect proper use of the term. Additionally, “Department of Defense” is to be abbreviated “DoD” in all but its first occurrence in 4.5(a). The phrase “be entered” in paragraph (b) would be changed to the proper phrase “make formal entry,” and paragraph (c) would include a reference to newly designated paragraph (a)(1) to eliminate ambiguity. With regard to the cargo declaration requirement in section 4.5 for DoD-chartered vessels (which can be found in proposed new paragraph (a)(3)(iii)), CBP proposes to include language to clarify that the duplicate cargo declaration form must be made available to the officer at the pier upon arrival. Finally, CBP proposes to replace the word “shall” where it appears in section 4.5 with “will” or “must,” as applicable.

CBP also proposes to divide paragraph (b) of section 122.41 to include lower paragraphs (b)(1) and (b)(2).

Executive Order 12866, as supplemented by Executive Order 13563, requires Federal agencies to assess the benefits and costs of regulatory action, recognizing that some costs and benefits are difficult to quantify. Significant regulatory actions include those that may “(1) [h]ave an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) [c]reate a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) [m]aterially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) [r]aise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.” The proposed rule is not a “significant regulatory action” under Executive Order 12866. As such, the Office of Management and Budget has not reviewed this rule under that Order.

The proposed rule, if finalized, would extend the existing exemption for cargo and passengers transported by DoD to include all vessels and aircraft chartered by, owned by, or under the complete control and management of DoD that transport cargo and/or passengers that have been approved for carriage in the DTS. Extending the existing exemption facilitates the operations of another government agency, thus conveying a benefit to that agency. Because it merely extends the exemption to cargo and passengers approved for carriage in the DTS, the proposed regulation will not impose any costs or confer any benefits to private citizens or businesses. CBP welcomes comments on this conclusion.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires federal agencies to examine the impact a rule would have on small entities. A small entity may be a small business (defined as any independently owned an operated business not dominant in its field that qualifies as a small business per the Small Business Act); a small not-for-profit organization; or a small governmental jurisdiction (locality with fewer than 50,000 people).

This rule proposes to extend the current DoD exemption to entry to include vessels and aircraft chartered by, owned by, or under the complete control and management of DoD when they are transporting cargo and/or that are approved for carriage in the DTS. Because this proposed exemption does not impose any new costs on small entities, it will not have a significant economic impact on a substantial number of small entities. We welcome comments on this conclusion. If we do not receive any comments contradicting our findings, we will certify that this rule will not have a significant economic impact on a substantial number of small entities at the final rule stage.

In accordance with the Paperwork Reduction Act of 1955 (44 U.S.C. 3507 et seq. ), this document contains no new information and collection requirements that require Office of Management and Budget approval.

This notice of proposed rulemaking is being issued in accordance with 19 CFR 0.2(a). Accordingly, this notice of proposed rulemaking is signed by the Secretary of Homeland Security.

For the reasons set forth in the preamble, CBP proposes to amend 19 CFR parts 4 and 122 as set forth below.

Public Participation and Request for Comments

We encourage you to participate in this rulemaking by submitting comments and related materials. All comments received will be posted without change to http://www.regulations.gov and will include any personal information you have provided.

If you submit a comment, please include the docket number for this rulemaking (USCG-2011-1176), indicate the specific section of this document to which each comment applies, and provide a reason for each suggestion or recommendation. You may submit your comments and material online (via http://www.regulations.gov ) or by fax, mail, or hand delivery, but please use only one of these means. If you submit a comment online via www.regulations.gov , it will be considered received by the Coast Guard when you successfully transmit the comment. If you fax, hand deliver, or mail your comment, it will be considered as having been received by the Coast Guard when it is received at the Docket Management Facility. We recommend that you include your name and a mailing address, an email address, or a telephone number in the body of your document so that we can contact you if we have questions regarding your submission.

To submit your comment online, go to http://www.regulations.gov , click on the “submit a comment” box, which will then become highlighted in blue. In the “Document Type” drop down menu select “Proposed Rule” and insert “USCG-2011-1176” in the “Keyword” box. Click “Search” then click on the balloon shape in the “Actions” column. If you submit your comments by mail or hand delivery, submit them in an unbound format, no larger than 8 1/2 by 11 inches, suitable for copying and electronic filing. If you submit comments by mail and would like to know that they reached the Facility, please enclose a stamped, self-addressed postcard or envelope. We will consider all comments and material received during the comment period and may change the rule based on your comments.

To view comments, as well as documents mentioned in this preamble as being available in the docket, go to http://www.regulations.gov , click on the “read comments” box, which will then become highlighted in blue. In the “Keyword” box insert “USCG-2011-1176” and click “Search.” Click the “Open Docket Folder” in the “Actions” column. You may also visit the Docket Management Facility in Room W12-140 on the ground floor of the Department of Transportation West Building, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. We have an agreement with the Department of Transportation to use the Docket Management Facility.

Anyone can search the electronic form of comments received into any of our dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.). You may review a Privacy Act notice regarding our public dockets in the January 17, 2008, issue of the Federal Register (73 FR 3316).

We do not now plan to hold a public meeting. But you may submit a request for one on or before the end of the comment period, using one of the four methods specified under ADDRESSES . Please explain why you believe a public meeting would be beneficial. If we determine that one would aid this rulemaking, we will hold one at a time and place announced by a later notice in the Federal Register .

On June 2, 2012, Enviro-Sports Productions, Inc. of Stinson Beach, California, will sponsor an amateur swim across the Potomac River between Newburg, Maryland and King George, VA. The event consists of up to 500 swimmers on a course located upriver and parallel to the Governor Harry W. Nice Memorial (US-301) Bridge. The swimmers will be supported by sponsor-provided watercraft. The start will be located along the shore at the Aqua-Land Marina and the finish will be located along the shore at Dahlgren Wayside Park. A portion of the swim course will cross the federal navigation channel. Due to the need for vessel control during the event, the Coast Guard will temporarily restrict vessel traffic in the event area to provide for the safety of participants, spectators and other transiting vessels.

The Coast Guard proposes to establish temporary special local regulations on specified waters of the Potomac River. The regulations will be in effect from 7 a.m. to 12:30 p.m. on June 2, 2012. The regulated area, approximately 3,800 yards in length and 900 yards in width, extends across the entire width of the Potomac River between the Maryland and Virginia shorelines and includes all waters of the Potomac River, within lines connecting the following positions: from latitude 38°22′05″ N, longitude 076°59′03″ W, thence to latitude 38°21′50″ N, longitude 077°00′54″ W, and from latitude 38°21′29″ N, longitude 077°00′54″ W to latitude 38°21′45″ N, longitude 076°58′59″ W. The effect of this proposed rule will be to restrict general navigation in the regulated area during the event. Vessels intending to transit the Potomac River through the regulated area will only be allowed to safely transit the regulated area when the Coast Guard Patrol Commander has deemed it safe to do so. These regulations are needed to control vessel traffic during the event to enhance the safety of participants, spectators and transiting vessels.

We developed this proposed rule after considering numerous statutes and executive orders related to rulemaking. Below we summarize our analyses based on 13 of these statutes or executive orders.

This proposed rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget has not reviewed it under that Order. We expect the economic impact of this proposed rule to be so minimal that a full Regulatory Evaluation under the regulatory policies and procedures of DHS is unnecessary. Although this regulation will prevent traffic from transiting a portion of the Potomac River during the event, the effect of this regulation will not be significant due to the limited duration that the regulated area will be in effect and the extensive advance notifications that will be made to the maritime community via the Local Notice to Mariners and marine information broadcasts, so mariners can adjust their plans accordingly. Additionally, the regulated area has been narrowly tailored to impose the least impact on general navigation yet provide the level of safety deemed necessary. Vessel traffic will be able to transit safely through a portion of the regulated area, but only after the last participant has cleared that portion of the regulated area and when the Coast Guard Patrol Commander deems it safe to do so.

Under the Regulatory Flexibility Act (5 U.S.C. 601-612), we have considered whether this proposed rule would have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

The Coast Guard certifies under 5 U.S.C. 605(b) that this proposed rule would not have a significant economic impact on a substantial number of small entities. This proposed rule would affect the following entities, some of which might be small entities: The owners or operators of vessels intending to transit or anchor in the effected portions of the Potomac River during the event.

Although this regulation prevents traffic from transiting a portion of the Potomac River near the Governor Harry W. Nice Memorial (US-301) Bridge during the event, this proposed rule will not have a significant economic impact on a substantial number of small entities for the following reasons. This proposed rule would be in effect for only a limited period. Though the regulated area extends across the entire width of the river, vessel traffic may be permitted to safely transit a portion of the regulated area, but only after all participants have safely cleared that portion of the regulated area and when the Coast Guard Patrol Commander deems it safe for vessel traffic to do so. All Coast Guard vessels enforcing this regulated area can be contacted on marine band radio VHF-FM channel 16 (156.8 MHz). Before the enforcement period, we will issue maritime advisories so mariners can adjust their plans accordingly.

If you think that your business, organization, or governmental jurisdiction qualifies as a small entity and that this rule would have a significant economic impact on it, please submit a comment (see ADDRESSES ) explaining why you think it qualifies and how and to what degree this rule would economically affect it.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 104-121), we want to assist small entities in understanding this proposed rule so that they can better evaluate its effects on them and participate in the rulemaking. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact Coast Guard Sector Baltimore, MD. The Coast Guard will not retaliate against small entities that question or complain about this proposed rule or any policy or action of the Coast Guard.

This proposed rule would call for no new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520.).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on State or local governments and would either preempt State law or impose a substantial direct cost of compliance on them. We have analyzed this proposed rule under that Order and have determined that it does not have implications for federalism.

The Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this proposed rule would not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This proposed rule would not cause a taking of private property or otherwise have taking implications under Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights.

This proposed rule meets applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this proposed rule under Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks. This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.

This proposed rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

We have analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use. We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under Executive Order 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy. The Administrator of the Office of Information and Regulatory Affairs has not designated it as a significant energy action. Therefore, it does not require a Statement of Energy Effects under Executive Order 13211.

The National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note) directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through the Office of Management and Budget, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This proposed rule does not use technical standards. Therefore, we did not consider the use of voluntary consensus standards.

We have analyzed this proposed rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have made a preliminary determination that this action is one of a category of actions which do not individually or cumulatively have a significant effect on the human environment. This proposed rule involves implementation of regulations within 33 CFR Part 100 applicable to organized marine events on the navigable waters of the United States that could negatively impact the safety of waterway users and shore side activities in the event area. The category of water activities includes but is not limited to sail boat regattas, boat parades, power boat racing, swimming events, crew racing, canoe and sail board racing. We seek any comments or information that may lead to the discovery of a significant environmental impact from this proposed rule.

For the reasons discussed in the preamble, the Coast Guard proposes to amend 33 CFR part 100 as follows:

Throughout this document, “we,” “us,” and “our” means EPA.

Section 109 of the Act requires EPA to establish NAAQS for pollutants that “may reasonably be anticipated to endanger public health and welfare,” and to develop a primary and secondary standard for each NAAQS. The primary standard is designed to protect human health with an adequate margin of safety, and the secondary standard is designed to protect public welfare and the environment. EPA has set NAAQS for six common air pollutants, referred to as criteria pollutants: carbon monoxide, lead, nitrogen dioxide, ozone, particulate matter, and sulfur dioxide. These standards present state and local governments with the minimum air quality levels they must meet to comply with the Act. Also, these standards provide information to residents of the United States about the air quality in their communities.

The SIP is a set of air pollution regulations, control strategies, other means or techniques, and technical analyses developed by the state, to ensure that the state meets the NAAQS. The SIP is required by section 110 and other provisions of the Act. These SIPs can be extensive, containing state regulations or other enforceable documents and supporting information such as emissions inventories, monitoring networks, and modeling demonstrations. Each state must submit these regulations and control strategies to EPA for approval and incorporation into the federally-enforceable SIP. Another important aspect of the SIP is to ensure that emissions from within the state do not have certain prohibited impacts upon the ambient air in other states through interstate transport of pollutants. This SIP requirement is specified in section 110(a)(2)(D) of the CAA. Pursuant to that provision, each state's SIP must contain provisions adequate to prevent, among other things, emissions that interfere with measures required to be included in the SIP of any other state to prevent significant deterioration of air quality in any other state. Each federally-approved SIP protects air quality primarily by addressing air pollution at its point of origin.

Under sections 110(a)(1) and (2) of the Act, states are required to submit SIPs that provide for the implementation, maintenance, and enforcement (the infrastructure) of a new or revised NAAQS within three years following the promulgation of the NAAQS, or within such shorter period as EPA may prescribe. Section 110(a)(2) lists the specific infrastructure elements that must be incorporated into the SIPs, including for example, requirements for emission inventories, NSR, air pollution control measures, and monitoring that are designed to assure attainment and maintenance of the NAAQS. Table 1, displayed in Section D of this rulemaking, lists all 14 infrastructure elements. 1 EPA refers to the requirements of section 110(a)(2)(A)-(C), (D)(ii), (E)-(H), and (J)-(M) as the “infrastructure” SIPs. Additionally, EPA refers to the requirements of section 110(a)(2)(D)(i) as the “interstate transport” SIPs. EPA provided separate guidance to states on each type of SIP, infrastructure and interstate transport, and these actions are on separate tracks and timelines.

On July 18, 1997, we published new and revised NAAQS for ozone (62 FR 38856) and PM (62 FR 38652). For ozone, we set an 8-hour standard of 0.08 parts per million (ppm) to replace the 1-hour standard of 0.12 ppm. For PM, we set a new annual and a new 24-hour NAAQS for particles with an aerodynamic diameter less than or equal to a nominal 2.5 micrometers (denoted PM 2.5 ). The annual PM 2.5 standard was set at 15 micrograms per cubic meter (μg/m 3 ). The 24-hour PM 2.5 standard was set at 65 μg/m 3 . On October 17, 2006, we published revised standards for PM (71 FR 61144). For PM 2.5 the annual standard of 15 μg/m 3 was retained and the 24-hour standard was revised to 35 μg/m 3 . For PM 10 the annual standard was revoked and the 24-hour standard (150 μg/m 3 ) was retained. For more information on these standards, please see the 1997 and 2006 Federal Register notices (62 FR 38856, 62 FR 38652, and 71 FR 61144).

Thus, states were required to submit such SIPs for the 1997 8-hour ozone and PM 2.5 NAAQS to EPA no later than June 2000. 2 However, intervening litigation over the 1997 8-hour ozone and PM 2.5 NAAQS created uncertainty about how to proceed and many states did not provide the required “infrastructure” SIP submission for these newly promulgated NAAQS.

On March 4, 2004, Earthjustice submitted a notice of intent to sue related to EPA's failure to issue findings of failure to submit related to the infrastructure requirements for the 1997 8-hour ozone and PM 2.5 NAAQS. EPA entered into a consent decree with Earthjustice which required EPA, among other things, to complete a Federal Register notice announcing EPA's determinations pursuant to section 110(k)(1)(B) of the Act as to whether each state had made complete submissions to meet the requirements of section 110(a)(2) for the 1997 8-hour ozone NAAQS by December 15, 2007. Subsequently, EPA received an extension of the date to complete this Federal Register notice until March 17, 2008, based upon agreement to make the findings with respect to submissions made by January 7, 2008. In accordance with the consent decree, EPA made completeness findings for each state based upon what the Agency received from each state as of January 7, 2008. With regard to the 1997 PM 2.5 NAAQS, EPA entered into a consent decree with Earthjustice which required EPA, among other things, to complete a Federal Register notice announcing EPA's determinations pursuant to section 110(k)(1)(B) of the Act as to whether each state had made complete submissions to meet the requirements of section 110(a)(2) for the 1997 PM 2.5 NAAQS by October 5, 2008.

On March 27, 2008, and October 22, 2008, we published findings concerning whether states had made the 110(a)(2) submissions for the 1997 ozone (73 FR 16205) and PM 2.5 standards (73 FR 62902). In the March 27, 2008 action, we found that Arkansas had made a submission that addressed some, but not all of the section 110(a)(2) requirements of the Act necessary to implement the 1997 8-hour ozone NAAQS. 3 In the October 22, 2008 action, we found that Arkansas had made a complete submission intended to provide for the basic program elements specified in section 110(a)(2) of the Act necessary to implement the 1997 PM 2.5 NAAQS.

On October 2, 2007, we issued “Guidance on SIP Elements Required Under Sections 110(a)(1) and (2) for the 1997 8-hour Ozone and PM 2.5 National Ambient Air Quality Standards,” Memorandum from William T. Harnett, Director, Air Quality Policy Division, Office of Air Quality Planning and Standards (OAQPS). 4 On September 25, 2009, we issued “Guidance on SIP Elements Required Under Sections 110(a)(l) and (2) for the 2006 24-Hour Fine Particle (PM 2.5 ) National Ambient Air Quality Standards (NAAQS),” Memorandum also from William T. Harnett, Director, AQPD, OAQPS. Each of these guidance memos addresses the SIP elements found in 110(a)(2). In each of these guidance memos, the guidance states that to the extent that existing SIPs for ozone and PM already meet the requirements, states need only certify that fact to us.

On December 17, 2007, March 28, 2008, and September 16, 2009, the State of Arkansas submitted letters certifying that Arkansas has addressed any potential infrastructure issues associated with ozone and PM 2.5 and fulfilled its infrastructure SIP obligations. The letters provided information on how the current Arkansas SIP provisions meet the 110(a)(2) requirements. These letters are in the docket for this rulemaking.

Additional information: EPA is currently acting upon SIPs that address the infrastructure requirements of CAA section 110(a)(1) and (2) for ozone and PM 2.5 NAAQS for various states across the country. Commenters on EPA's recent proposals for some states raised concerns about EPA statements that it was not addressing certain substantive issues in the context of acting on those infrastructure SIP submissions. 5 Those commenters specifically raised concerns involving provisions in existing SIPs and with EPA's statements in other proposals that it would address two issues separately and not as part of actions on the infrastructure SIP submissions: (i) existing provisions related to excess emissions during periods of start-up, shutdown, or malfunction at sources, that may be contrary to the CAA and EPA's policies addressing such excess emissions (“SSM”); and (ii) existing provisions related to “director's variance” or “director's discretion” that purport to permit revisions to SIP approved emissions limits with limited public process or without requiring further approval by EPA, that may be contrary to the CAA (“director's discretion”). EPA notes that there are two other substantive issues for which EPA likewise stated in other proposals that it would address the issues separately: (i) existing provisions for minor source new source review programs that may be inconsistent with the requirements of the CAA and EPA's regulations that pertain to such programs (“minor source NSR”); and (ii) existing provisions for Prevention of Significant Deterioration programs that may be inconsistent with current requirements of EPA's “Final NSR Improvement Rule,” 67 FR 80186 (December 31, 2002), as amended by 72 FR 32526 (June 13, 2007) (“NSR Reform”). In light of the comments, EPA believes that its statements in various proposed actions on infrastructure SIPs with respect to these four individual issues should be explained in greater depth. It is important to emphasize that EPA is taking the same position with respect to these four substantive issues in this action on the infrastructure SIP submittals for the 1997 8-hour ozone NAAQS and the 1997 and 2006 PM 2.5 NAAQS submissions from Arkansas.

EPA intended the statements in the other proposals concerning these four issues merely to be informational, and to provide general notice of the potential existence of provisions within the existing SIPs of some states that might require future corrective action. EPA did not want states, regulated entities, or members of the public to be under the misconception that the Agency's approval of the infrastructure SIP submission of a given state should be interpreted as a reapproval of certain types of provisions that might exist buried in the larger existing SIP for such state. Thus, for example, EPA explicitly noted that the Agency believes that some states may have existing SIP approved SSM provisions that are contrary to the CAA and EPA policy, but that “in this rulemaking, EPA is not proposing to approve or disapprove any existing State provisions with regard to excess emissions during SSM of operations at facilities.” EPA further explained, for informational purposes, that “EPA plans to address such State regulations in the future.” EPA made similar statements, for similar reasons, with respect to the director's discretion, minor source NSR, and NSR Reform issues. EPA's objective was to make clear that approval of an infrastructure SIP for these ozone and PM 2.5 NAAQS should not be construed as explicit or implicit reapproval of any existing provisions that relate to these four substantive issues. EPA is reiterating that position in this action on these infrastructure SIP submittals for Arkansas.

Unfortunately, the commenters and others evidently interpreted these statements to mean that EPA considered action upon the SSM provisions and the other three substantive issues to be integral parts of acting on an infrastructure SIP submission, and therefore that EPA was merely postponing taking final action on the issues in the context of the infrastructure SIPs. This was not EPA's intention. To the contrary, EPA only meant to convey its awareness of the potential for certain types of deficiencies in existing SIPs, and to prevent any misunderstanding that it was reapproving any such existing provisions. EPA's intention was to convey its position that the statute does not require that infrastructure SIPs address these specific substantive issues in existing SIPs and that these issues may be dealt with separately, outside the context of acting on the infrastructure SIP submission of a state. To be clear, EPA did not mean to imply that it was not taking a full final agency action on the infrastructure SIP submission with respect to any substantive issue that EPA considers to be a required part of acting on such submissions under section 110(k) or under section 110(c). Given the confusion evidently resulting from EPA's statements in those other proposals, however, we want to explain more fully the Agency's reasons for concluding that these four potential substantive issues in existing SIPs may be addressed separately from actions on infrastructure SIP submissions.

The requirement for the SIP submissions at issue arises out of CAA section 110(a)(1). That provision requires that states must make a SIP submission “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof)” and that these SIPs are to provide for the “implementation, maintenance, and enforcement” of such NAAQS. Section 110(a)(2) includes a list of specific elements that “[e]ach such plan” submission must meet. EPA has historically referred to these particular submissions that states must make after the promulgation of a new or revised NAAQS as “infrastructure SIPs.” This specific term does not appear in the statute, but EPA uses the term to distinguish this particular type of SIP submission designed to address basic structural requirements of a SIP from other types of SIP submissions designed to address other different requirements, such as “nonattainment SIP” submissions required to address the nonattainment planning requirements of part D, “regional haze SIP” submissions required to address the visibility protection requirements of CAA section 169A, new source review permitting program submissions required to address the requirements of part D, and a host of other specific types of SIP submissions that address other specific matters.

Although section 110(a)(1) addresses the timing and general requirements for these infrastructure SIPs, and section 110(a)(2) provides more details concerning the required contents of these infrastructure SIPs, EPA believes that many of the specific statutory provisions are facially ambiguous. In particular, the list of required elements provided in section 110(a)(2) contains a wide variety of disparate provisions, some of which pertain to required legal authority, some of which pertain to required substantive provisions, and some of which pertain to requirements for both authority and substantive provisions. 6 Some of the elements of section 110(a)(2) are relatively straightforward, but others clearly require interpretation by EPA through rulemaking, or recommendations through guidance, in order to give specific meaning for a particular NAAQS. 7

Notwithstanding that section 110(a)(2) provides that “each” SIP submission must meet the list of requirements therein, EPA has long noted that this literal reading of the statute is internally inconsistent, insofar as section 110(a)(2)(I) pertains to nonattainment SIP requirements that could not be met on the schedule provided for these SIP submissions in section 110(a)(1). 8 This illustrates that EPA must determine which provisions of section 110(a)(2) may be applicable for a given infrastructure SIP submission. Similarly, EPA has previously decided that it could take action on different parts of the larger, general “infrastructure SIP” for a given NAAQS without concurrent action on all subsections, such as section 110(a)(2)(D)(i), because the Agency bifurcated the action on these latter “interstate transport” provisions within section 110(a)(2) and worked with states to address each of the four prongs of section 110(a)(2)(D)(i) with substantive administrative actions proceeding on different tracks with different schedules. 9 This illustrates that EPA may conclude that subdividing the applicable requirements of section 110(a)(2) into separate SIP actions may sometimes be appropriate for a given NAAQS where a specific substantive action is necessitated, beyond a mere submission addressing basic structural aspects of the state's SIP. Finally, EPA notes that not every element of section 110(a)(2) would be relevant, or as relevant, or relevant in the same way, for each new or revised NAAQS and the attendant infrastructure SIP submission for that NAAQS. For example, the monitoring requirements that might be necessary for purposes of section 110(a)(2)(B) for one NAAQS could be very different than what might be necessary for a different pollutant. Thus, the content of an infrastructure SIP submission to meet this element from a state might be very different for an entirely new NAAQS, versus a minor revision to an existing NAAQS. 10

Similarly, EPA notes that other types of SIP submissions required under the statute also must meet the requirements of section 110(a)(2), and this also demonstrates the need to identify the applicable elements for other SIP submissions. For example, nonattainment SIPs required by part D likewise have to meet the relevant subsections of section 110(a)(2) such as section 110(a)(2)(A) or (E). By contrast, it is clear that nonattainment SIPs would not need to meet the portion of section 110(a)(2)(C) that pertains to part C, i.e., the PSD requirements applicable in attainment areas. Nonattainment SIPs required by part D also would not need to address the requirements of section 110(a)(2)(G) with respect to emergency episodes, as such requirements would not be limited to nonattainment areas. As this example illustrates, each type of SIP submission may implicate some subsections of section 110(a)(2) and not others.

Given the potential for ambiguity of the statutory language of section 110(a)(1) and (2), EPA believes that it is appropriate for EPA to interpret that language in the context of acting on the infrastructure SIPs for a given NAAQS. Because of the inherent ambiguity of the list of requirements in section 110(a)(2), EPA has adopted an approach in which it reviews infrastructure SIPs against this list of elements “as applicable.” In other words, EPA assumes that Congress could not have intended that each and every SIP submission, regardless of the purpose of the submission or the NAAQS in question, would meet each of the requirements, or meet each of them in the same way. EPA elected to use guidance to make recommendations for infrastructure SIPs for these ozone and PM 2.5 NAAQS.

On October 2, 2007, EPA issued guidance making recommendations for the infrastructure SIP submissions for both the 1997 8-hour ozone NAAQS and the 1997 PM 2.5 NAAQS. 11 Within this guidance document, EPA described the duty of states to make these submissions to meet what the Agency characterized as the “infrastructure” elements for SIPs, which it further described as the “basic SIP requirements, including emissions inventories, monitoring, and modeling to assure attainment and maintenance of the standards.”  12 As further identification of these basic structural SIP requirements, “attachment A” to the guidance document included a short description of the various elements of section 110(a)(2) and additional information about the types of issues that EPA considered germane in the context of such infrastructure SIPs. EPA emphasized that the description of the basic requirements listed on attachment A was not intended “to constitute an interpretation of” the requirements, and was merely a “brief description of the required elements.”  13 EPA also stated its belief that with one exception, these requirements were “relatively self explanatory, and past experience with SIPs for other NAAQS should enable States to meet these requirements with assistance from EPA Regions.”  14 For the one exception to that general assumption, however, i.e., how states should proceed with respect to the requirements of section 110(a)(2)(G) for the 1997 PM 2.5 NAAQS, EPA gave much more specific recommendations. But for other infrastructure SIP submittals, and for certain elements of the submittals for the 1997 PM 2.5 NAAQS, EPA assumed that each State would work with its corresponding EPA regional office to refine the scope of a State's submittal based on an assessment of how the requirements of section 110(a)(2) should reasonably apply to the basic structure of the State's SIP for the NAAQS in question.

On September 25, 2009, EPA issued guidance to make recommendations to states with respect to the infrastructure SIPs for the 2006 PM 2.5 NAAQS. 15 In the 2009 Guidance, EPA addressed a number of additional issues that were not germane to the infrastructure SIPs for the 1997 8-hour ozone and 1997 PM 2.5 NAAQS, but were germane to these SIP submissions for the 2006 PM 2.5 NAAQS, e.g., the requirements of section 110(a)(2)(D)(i) that EPA had bifurcated from the other infrastructure elements for those specific 1997 ozone and PM 2.5 NAAQS.

Significantly, neither the 2007 Guidance nor the 2009 Guidance explicitly referred to the SSM, director's discretion, minor source NSR, or NSR Reform issues as among specific substantive issues EPA expected states to address in the context of the infrastructure SIPs, nor did EPA give any more specific recommendations with respect to how states might address such issues even if they elected to do so. The SSM and director's discretion issues implicate section 110(a)(2)(A), and the minor source NSR and NSR Reform issues implicate section 110(a)(2)(C). In the 2007 Guidance and the 2009 Guidance, however, EPA did not indicate to states that it intended to interpret these provisions as requiring a substantive submission to address these specific issues in existing SIP provisions in the context of the infrastructure SIPs for these NAAQS. Instead, EPA's 2007 Guidance merely indicated its belief that the states should make submissions in which they established that they have the basic SIP structure necessary to implement, maintain, and enforce the NAAQS. EPA believes that states can establish that they have the basic SIP structure, notwithstanding that there may be potential deficiencies within the existing SIP. Thus, EPA's proposals for other states mentioned these issues not because the Agency considers them issues that must be addressed in the context of an infrastructure SIP as required by section 110(a)(1) and (2), but rather because EPA wanted to be clear that it considers these potential existing SIP problems as separate from the pending infrastructure SIP actions. The same holds true for this action on the infrastructure SIP submittals for Arkansas.

EPA believes that this approach to the infrastructure SIP requirement is reasonable, because it would not be feasible to read section 110(a)(1) and (2) to require a top to bottom, stem to stern, review of each and every provision of an existing SIP merely for purposes of assuring that the state in question has the basic structural elements for a functioning SIP for a new or revised NAAQS. Because SIPs have grown by accretion over the decades as statutory and regulatory requirements under the CAA have evolved, they may include some outmoded provisions and historical artifacts that, while not fully up to date, nevertheless may not pose a significant problem for the purposes of “implementation, maintenance, and enforcement” of a new or revised NAAQS when EPA considers the overall effectiveness of the SIP. To the contrary, EPA believes that a better approach is for EPA to determine which specific SIP elements from section 110(a)(2) are applicable to an infrastructure SIP for a given NAAQS, and to focus attention on those elements that are most likely to need a specific SIP revision in light of the new or revised NAAQS. Thus, for example, EPA's 2007 Guidance specifically directed states to focus on the requirements of section 110(a)(2)(G) for the 1997 PM 2.5 NAAQS because of the absence of underlying EPA regulations for emergency episodes for this NAAQS and an anticipated absence of relevant provisions in existing SIPs.

Finally, EPA believes that its approach is a reasonable reading of section 110(a)(1) and (2) because the statute provides other avenues and mechanisms to address specific substantive deficiencies in existing SIPs. These other statutory tools allow the Agency to take appropriate tailored action, depending upon the nature and severity of the alleged SIP deficiency. Section 110(k)(5) authorizes EPA to issue a “SIP call” whenever the Agency determines that a state's SIP is substantially inadequate to attain or maintain the NAAQS, to mitigate interstate transport, or otherwise to comply with the CAA. 16 Section 110(k)(6) authorizes EPA to correct errors in past actions, such as past approvals of SIP submissions. 17 Significantly, EPA's determination that an action on the infrastructure SIP submittal is not the appropriate time and place to address all potential existing SIP problems does not preclude the Agency's subsequent reliance on provisions in section 110(a)(2) as part of the basis for action at a later time. For example, although it may not be appropriate to require a state to eliminate all existing inappropriate director's discretion provisions in the course of acting on the infrastructure SIP, EPA believes that section 110(a)(2)(A) may be among the statutory bases that the Agency cites in the course of addressing the issue in a subsequent action. 18

Pursuant to the October 2, 2007 “EPA guidance for addressing the SIP infrastructure elements required under sections 110(a)(1) and (2) for the 1997 ozone and 1997 and 2006 PM 2.5 NAAQS,” there are 14 essential components that must be in the SIP. These are listed in Table 1 below.

Section 19 110(a)(2)(D)(i) pertains to interstate transport of certain emissions. On August 15, 2006, EPA issued its “Guidance for State Implementation Plan (SIP) Submission to Meet Current Outstanding Obligations Under Section 110(a)(2)(D)(i) for the 8-Hour Ozone and PM 2.5 National Ambient Air Quality Standards” (2006 Guidance). EPA developed the 2006 Guidance to make recommendations to states for making submissions to meet the requirements of section 110(a)(2)(D)(i) for the 1997 8-hour ozone standards and the 1997 PM 2.5 standards. As identified in the 2006 Guidance, the “good neighbor” provisions in section 110(a)(2)(D)(i) require each state to submit a SIP that prohibits emissions that adversely affect another state in the ways contemplated in the statute. Section 110(a)(2)(D)(i) contains four distinct requirements related to the impacts of interstate transport. The SIP must prevent sources in the state from emitting pollutants in amounts that will: (1) Contribute significantly to nonattainment of the NAAQS in other states; (2) interfere with maintenance of the NAAQS in other states; (3) interfere with provisions to prevent significant deterioration of air quality in other states; and (4) interfere with efforts to protect visibility in other states.

On December 17, 2007, we received a certification from the State of Arkansas intended to address the requirements of section 110(a)(2)(D)(i) for both the 1997 8-hour ozone and 1997 PM 2.5 standard. On March 28, 2008, we received a certification  20 from the State intended to address the requirements of section 110(a)(2)(D)(i) for the 2006 PM 2.5 NAAQS. In this rulemaking, for the 1997 ozone and 2006 PM 2.5 NAAQS, we are addressing only the 110(a)(2)(D)(i) requirement that pertains to preventing sources in Arkansas from emitting pollutants that will interfere with measures required to prevent significant deterioration of air quality in other states. 21 In its submission, Arkansas indicated that its current PSD New Source Review (NSR) SIP is adequate to prevent such interference.

To meet the infrastructure requirements of section 110(a)(2)(C) of the Act for the 1997 ozone standard, EPA believes the State must have updated its rules for PSD to treat NO X as a precursor to ozone (70 FR 71612, November 29, 2005). PSD rules to treat NO X as a precursor to ozone are also required to meet the third 110(a)(2)(D)(i) interstate transport prong, interference with provisions to prevent significant deterioration of air quality in other states. On February 17, 2010, Arkansas submitted revisions that provided for NO X to be treated as a precursor to ozone formation in its PSD program. We are proposing action on this revision to the PSD program that implements the provisions for NO X as a precursor because EPA believes that this is a necessary provision for implementation of the 1997 ozone standard.

EPA has recently undertaken a series of actions pertaining to the regulation of GHGs that, although for the most part distinct from one another, establish the overall framework for today's proposed action on the Arkansas infrastructure SIP. Four of these actions include, as they are commonly called, the “Endangerment Finding” and “Cause or Contribute Finding,” which EPA issued in a single final action, 22 the “Johnson Memo Reconsideration,”  23 the “Light-Duty Vehicle Rule,”  24 and the “Tailoring Rule.”  25 Taken together and in conjunction with the CAA, these actions established regulatory requirements for GHGs emitted from new motor vehicles and new motor vehicle engines; determined that such regulations, when they took effect on January 2, 2011, subjected GHGs emitted from stationary sources to PSD requirements; and limited the applicability of PSD requirements to GHG sources on a phased-in basis. EPA took this last action in the Tailoring Rule, which, more specifically, established appropriate GHG emission thresholds for determining the applicability of PSD requirements to GHG-emitting sources.

The approved Arkansas SIP contained errors that resulted in its failure to address, or provide adequate legal authority for, the implementation of a GHG PSD program in Arkansas. On this basis, on December 13, 2010, EPA issued a finding that Arkansas' SIP was substantially inadequate to meet CAA requirements because it did not apply PSD requirements to GHG emitting sources (75 FR 77698). This rulemaking also issued a “SIP call” to Arkansas, requiring the state to revise its SIP as necessary to correct the inadequacies. The SIP call established a deadline of December 22, 2010 for Arkansas to submit its corrective SIP revision. In response to EPA's proposal of the SIP call (75 FR 53892), the state declined the 12-month deadline for SIP revision following the finding of substantial inadequacy in order to ensure that PSD permitting authorities for newly constructed or modified sources remain in place. 26 As required following the SIP call, EPA promulgated a Federal Implementation Plan (FIP), which established EPA as the permitting authority for GHG-emitting sources in Arkansas (75 FR 82246). EPA took these actions through final rulemaking, effective upon publication, to ensure the availability of a permitting authority—EPA—in Arkansas for GHG-emitting sources when they became subject to PSD on January 2, 2011. The FIP allowed those sources to proceed with plans to construct or expand.

As we discuss further in this proposal and in the TSD, the current EPA-approved SIP PSD program does not apply to GHG-emitting sources that emit at or above the levels of emissions set in the Tailoring Rule, or at other appropriate levels. Thus, the Arkansas SIP does not satisfy portions of elements within the infrastructure and transport requirements as they pertain to GHGs. However, EPA's disapproval of those elements does not engender an additional statutory obligation, because EPA has already promulgated a FIP for the Arkansas PSD program to address permitting GHGs at or above the Tailoring Rule thresholds.

To implement the PSD NSR component of section 110(a)(2)(C) for the 1997 and 2006 PM 2.5 standards, states were required to submit the necessary SIP revisions to EPA by May 16, 2011 under EPA's Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (73 FR 28321, May 16, 2008). At present, Arkansas has not submitted revisions to satisfy this requirement, and therefore the Arkansas federally-approved PSD NSR SIP does not fully implement the PSD NSR program for the 1997 and 2006 PM 2.5 NAAQS. Although the State has indicated that regulations are currently being developed to address section 110(a)(2)(C) for the implementation of the NSR program for the 1997 and 2006 PM 2.5 standards, the state-level rulemaking process is anticipated to proceed on a timeline that will prevent Arkansas from adopting these regulations before EPA is required to take final action on the State's 110(a)(2) infrastructure SIP. Therefore, we are proposing to find that the current Arkansas PSD SIP does not meet the requirements of section 110(a)(2)(C) with respect to the 1997 and 2006 PM 2.5 NAAQS because the State failed to submit the PSD SIP revision required by the May 16, 2008 rulemaking.

EPA is proposing to partially approve and partially disapprove the Arkansas SIP submittals that identify where and how the 14 basic infrastructure elements are in the EPA-approved SIP as specified in CAA section 110(a)(2). The Arkansas submittals do not include revisions to the SIP, but do document how the current Arkansas SIP already includes the required infrastructure elements. In today's action, we are proposing to find that the following infrastructure elements are contained in the current Arkansas SIP regarding implementation of the 1997 ozone and 1997 and 2006 PM 2.5 standards: emission limits and other control measures (section 110(a)(2)(A)); ambient air quality monitoring/data system (section 110(a)(2)(B)); program for enforcement of control measures, except for the portion that addresses GHGs and PM 2.5 emissions (section 110(a)(2)(C)); international and interstate pollution abatement, except for the portion that addresses GHGs and PM 2.5 emissions (section 110(a)(2)(D)(ii)); adequate resources (section 110(a)(2)(E)); stationary source monitoring system (section 110(a)(2)(F)); emergency power (section 110(a)(2)(G)); future SIP revisions (section 110(a)(2)(H)); consultation with government officials (section 110(a)(2)(J)); public notification (section 110(a)(2)(J)); PSD and visibility protection, except for the PSD portion that addresses GHGs and PM 2.5 emissions (section 110(a)(2)(J)); air quality modeling/data (section 110(a)(2)(K)); permitting fees (section 110(a)(2)(L)); and consultation/participation by affected local entities (section 110(a)(2)(M)).

As discussed in section I.C.6 of this proposal, we are proposing to find that the current Arkansas SIP does not meet the infrastructure requirements for the 1997 and 2006 PM 2.5 NAAQS at 110(a)(2) for portions of (C), (D)(ii), and (J) because Arkansas failed to submit the PSD SIP revision required by EPA's Implementation of the New Source Review (NSR) Program for Particulate Matter Less Than 2.5 Micrometers (73 FR 28321, May 16, 2008). We are also proposing to find that the current Arkansas SIP does not meet the infrastructure requirements for the 1997 8-hour ozone NAAQS and the 1997 and 2006 PM 2.5 NAAQS at 110(a)(2) for portions of (C), (D)(ii), and (J) because the Arkansas SIP PSD program does not apply to GHG-emitting sources.

We are proposing to approve severable portions of the December 17, 2007 and the March 28, 2008 submissions from Arkansas, demonstrating that Arkansas has adequately addressed one of the four required prongs of the 110(a)(2)(D)(i) interstate transport element, specifically the prong that requires that the SIP prohibit air emissions from sources within a state from interfering with measures required to prevent significant deterioration of air quality in any other state. 27 We are proposing to determine that emissions from sources in Arkansas do not interfere with measures to prevent significant deterioration of air quality in any other state for the 1997 8-hour ozone NAAQS (CAA section 110(a)(2)(D)(i)(II)), except for the portion that addresses GHG emissions. We are proposing to disapprove the portion of the Arkansas interstate transport SIP element that prohibits GHG emissions from sources within Arkansas from interfering with measures required to prevent significant deterioration of air quality in any other state (section 110(a)(2)(D)(i)). We are proposing to determine that PM 2.5 emissions from sources in Arkansas do interfere with measures to prevent significant deterioration of air quality in any other state for the 2006 PM 2.5 NAAQS. Therefore, we are proposing to disapprove the portion of the Arkansas interstate transport SIP element that prohibits PM 2.5 emissions from sources within Arkansas from interfering with measures required to prevent significant deterioration of air quality in any other state (section 110(a)(2)(D)(i)) for the 2006 PM 2.5 NAAQS. We are not addressing in this action the 1997 PM 2.5 NAAQS nor the three remaining prongs of section 110(a)(2)(D)(i)  28 for the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS. We will take action on the three remaining prongs in separate rulemakings.

In conjunction with our proposed finding that the Arkansas SIP meets the section 110(a)(1) and (2) infrastructure SIP elements listed above, we are also proposing to fully approve four severable portions of a SIP revision submitted by the ADEQ to EPA on February 17, 2010. This submittal contains rule revisions by ADEQ to (1) Regulate NO X emissions in its PSD permit program as a precursor to ozone; (2) add NO X to the PSD definitions for Major Modification and Major Stationary Source; (3) under the PSD definition for Significant, add the emission rate for NO X , as a precursor to ozone, as 40 tpy; and (4) under the PSD requirements, allow for an exemption with respect to ambient air quality monitoring data for a source with a net emissions increase less than 100 tpy of NO X . The actions proposed herein are described in greater detail in Section III of this rulemaking and in the TSD. At this time, EPA is not taking action on other portions of the February 17, 2010 SIP revision submitted by ADEQ; EPA intends to act on the other revisions at a later date.

Section 110(k)(3) of the Act states that EPA may partially approve and partially disapprove a SIP submittal if it finds that only a portion of the submittal meets the requirements of the Act. We believe that the Arkansas SIP meets a majority of the requirements of section 110(a)(2) of the Act and that specific portions of three elements of section 110(a)(2) are not met. 29 Because the portions proposed for disapproval are independent from those proposed for approval, we believe that the Arkansas Infrastructure SIP can be partially approved and partially disapproved.

Enforcement of a state regulation (or rule) before and after it is incorporated into the federally approved SIP is primarily a state responsibility. However, after the rule is federally approved, we are authorized to take enforcement action against violators. Citizens are also offered legal recourse to address violations as described in section 304 of the Act. If a state rule is disapproved, it is not incorporated into the federally approved SIP, and is not enforceable by EPA or by citizens under section 304. Disapproval of any of the Arkansas infrastructure SIP elements would not trigger sanctions under section 179 of the Act, because the submittals are not required by part D of Title I of the Act and are not required by a call for a SIP revision under section 110(k)(5) of the Act.

Under section 110(c) of the Act, disapproval of a SIP in whole or in part requires EPA to promulgate a Federal implementation plan (FIP) at any time within two years following final disapproval, unless the State submits a plan or plan revision that corrects the deficiency—and the EPA approves the plan or plan revision—before the EPA promulgates such FIP. This two-year period is commonly referred to as the “FIP clock.” Here, based on Arkansas's failure to submit the required PM 2.5 PSD SIP revision, and because Arkansas cannot issue permits for GHG emissions, we are proposing to partially disapprove certain severable elements of the Arkansas infrastructure SIP. Accordingly, EPA is required by law to promulgate a FIP at any time within two years of the final rulemaking, unless Arkansas submits and we approve a new SIP or SIP revisions that correct the deficiencies, or unless EPA has already fulfilled its FIP obligation.

The Arkansas submittals address the elements of Section 110(a)(2) as described below. We provide a more detailed review and analysis of the Arkansas infrastructure and transport SIP elements in the TSD.

Enforceable emission limits and other control measures, pursuant to section 110(a)(2)(A): Section 110(a)(2)(A) requires that all measures and other elements in the SIP be enforceable. This provision does not require the submittal of regulations or emission limits developed specifically for attaining the 1997 8-hour ozone and 1997 and 2006 PM 2.5 standards. Those regulations are due later as part of attainment demonstrations.

The Arkansas Water and Air Pollution Control Act (AWAPCA), found in Title 8, Chapter 4 of the Arkansas Code Annotated (A.C.A.) names the Arkansas Department of Environmental Quality (ADEQ) as the state's air pollution control agency and provides enforcement authority to the ADEQ (37 FR 10841, May 31, 1972). ADEQ was originally created by the Arkansas General Assembly as the Arkansas Water Pollution Control Commission by Act 472 of 1949. Act 183 of 1965 changed the Commission's name to the Arkansas Pollution Control Commission (APCC) and gave it the power to regulate air pollution. A reorganization of state government in 1971 renamed the APCC to the Arkansas Pollution Control and Ecology Commission (APCEC), and created the Department of Pollution Control and Ecology as a cabinet-level agency headed by a director appointed by the Commission. In 1996, the Arkansas General Assembly voted to rename the Department of Pollution Control and Ecology to the Arkansas Department of Environmental Quality, effective March 31, 1999. The Department is responsible for the day-to-day administration of the Commission's regulations for a variety of environmental programs.

The APCEC has promulgated rules to limit and control emissions of, among other things, particulate matter (PM), sulfur dioxide (SO 2 ), nitrogen oxides (NO X ), and volatile organic compounds (VOCs). 30 These rules include emission limits, control measures, permits, fees, and compliance schedules and are found in APCEC Regulation 19, Regulation 26, and Regulation 31: Regulation 19, Chapters 1, 3-5, 7, 8, 10, 13-15; Regulation 26, Chapters 1, 3 and 7; and Regulation 31, Chapters 1, 3, 4 and 8.

In this proposed action, EPA has not reviewed and is not proposing to take any action to approve or disapprove any existing Arkansas SIP provisions with regard to excess emissions during startup, shutdown, or malfunction (SSM) of operations at a facility. EPA believes that a number of states have SSM SIP provisions that are contrary to the Act and inconsistent with existing EPA guidance, 31 and the Agency plans to conduct a SIP call in the future to address such SIP regulations. In the meantime, EPA encourages any state having an SSM SIP provision that is contrary to the Act and inconsistent with EPA guidance to take steps to correct the deficiency as soon as possible before a SIP call is implemented. Similarly, this proposed action does not include a review of, nor does it propose to, take any action to approve or disapprove any existing SIP rules with regard to director's discretion or variance provisions. EPA believes that a number of SIPs have such provisions that are contrary to the Act and not consistent with existing EPA guidance (52 FR 45044, November 24, 1987)  32 and the Agency plans to take action in the future to address such SIP regulations. In the meantime, EPA encourages any state having a director's discretion or variance provision in its SIP that is contrary to the Act and inconsistent with EPA guidance to take steps to correct the deficiency as soon as possible.

A detailed list of the applicable Regulation 19, Regulation 26, and Regulation 31 chapters discussed above are provided in the TSD. Arkansas' SIP clearly contains enforceable emission limits and other control measures, which are in the federally enforceable SIP. EPA is proposing to find that the Arkansas SIP meets the requirements of section 110(a)(2)(A) of the Act with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Ambient air quality monitoring/data analysis system, pursuant to section 110(a)(2)(B): Section 110(a)(2)(B) requires SIPs to include provisions for establishment and operation of ambient air quality monitors, collecting and analyzing ambient air quality data, and making these data available to EPA upon request. EPA approved Regulation 19, Chapter 3 into the SIP that makes ADEQ responsible for conducting ambient air monitoring in any area of the state that can be expected to be in excess of the NAAQS (65 FR 61103, October 16, 2000). The ADEQ operates and maintains a statewide network of air quality monitors—data are collected, results are quality assured, and the data are submitted to EPA's Air Quality System  33 on a regular basis. Arkansas' Statewide Air Quality Surveillance Network was approved by EPA on August 6, 1981 (46 FR 40005), and consists of stations that measure ambient concentrations of the six criteria pollutants, including ozone and PM 2.5 . The Air Quality Surveillance Network undergoes annual review by EPA. On June 29, 2010, ADEQ submitted its 2010 Annual Air Monitoring Network Plan (AAMNP) that included the plans for the 1997 ozone and PM 2.5 NAAQS. EPA approved the AAMNP on January 20, 2011. 34 The ADEQ Web site provides the ozone and PM 2.5 monitor locations ( http://www.adeq.state.ar.us/air/branch_planning/monitoring.htm ), as well as current data including air quality indices and concentrations for 8-hour ozone and PM 2.5 for the past 90 days ( http://www.adeq.state.ar.us/techsvs/dailyaqidata.asp#AQI ).

In summary, Arkansas meets the requirement to establish, operate, and maintain an ambient air monitoring network; collect and analyze the monitoring data; and make the data available to EPA upon request. EPA is proposing to find that the current Arkansas SIP meets the requirements of section 110(a)(2)(B) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Program for enforcement of control measures and regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that NAAQS are achieved, including a permit program, as required by Parts C and D, pursuant to section 110(a)(2)(C). As discussed previously, the AWAPCA provides the ADEQ with authority to enforce the state's environmental quality rules. The ADEQ established rules governing emissions of the NAAQS and their precursors throughout the state, and these rules are in the federally-enforceable SIP. The rules in Regulation 19, Chapters 1, 3-5, 7-10, 13 and 14; Regulation 26, Chapter 3; and Regulation 31, Chapters 1, 3, 4 and 8 include allowable rates, compliance, control plan requirements, actual and allowable emissions, monitoring and testing requirements, recordkeeping and reporting requirements, and control schedules. These rules clarify the boundaries beyond which regulated entities in Arkansas can expect enforcement action.

To meet the requirement for having a program for the regulation of the modification and construction of any stationary source within the areas covered by the plan as necessary to assure that national ambient air quality standards are achieved—including a permit program as required by Parts C and D—generally, the state is required to have SIP-approved PSD, Nonattainment, and Minor NSR permitting programs adequate to implement the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS. We are not evaluating nonattainment-related provisions—such as the Nonattainment NSR program required by part D in 110(a)(2)(C) and measures for attainment required by section 110(a)(2)(I), as part of the infrastructure SIPs for these NAAQS—because these submittals are required beyond the date (3 years from NAAQS promulgation) that section 110 infrastructure submittals are required (see footnotes 1 and 19).

PSD programs apply in areas that are meeting the NAAQS, referred to as attainment areas, or in areas that are unclassifiable, referred to as unclassifiable/attainment areas. PSD applies to new major sources and major modifications at existing sources. EPA's PSD permitting regulations are found at 40 CFR 51.166 and 40 CFR 52.21. PSD requirements for SIPs are found in 40 CFR 51.166 and 40 CFR part 51 appendix W. Similar PSD requirements for SIPs incorporating EPA's regulations by reference are found in 40 CFR 52.21.

The Arkansas' PSD program was initially approved into the SIP on January 14, 1982 (47 FR 02112). Subsequent revisions to Arkansas' PSD program were approved into the SIP on February 10, 1986 (51 FR 04910), May 2, 1991 (56 FR 20137), October 16, 2000 (65 FR 61103), and April 12, 2007 (72 FR 18394). To meet the requirements of 110(a)(2)(C) for the 1997 ozone standard, EPA believes the state must have updated its PSD rules to treat NO X as a precursor for ozone (70 FR 71612, November 29, 2005). On February 17, 2010, Arkansas submitted the provisions for NO X as a precursor consistent with EPA's November 29, 2005 Phase 2 rule for the 1997 8-hour ozone NAAQS (70 FR 71612) as part of its revisions to address NSR reform. EPA proposes to approve the following portions of the February 17, 2010 SIP revision to Regulation 19, Chapter 9: 1) the substantive change adding NO X to the definition of Major Modification through incorporation by reference of 40 CFR 52.21(b) and 40 CFR 51.301 as of November 29, 2005; 2) the substantive change adding NO X to the definition of Major Stationary Source through incorporation by reference of 40 CFR 52.21(b) and 40 CFR 51.301 as of November 29, 2005; 3) the substantive change adding NO X as a precursor to the table's criteria and other pollutants listing for ozone through incorporation by reference of 40 CFR 52.21(b)(23)(i); and 4) the substantive change allowing for an exemption with respect to ozone monitoring for a source with a net emissions increase less than 100 tpy of NO X through incorporation by reference of 40 CFR 52.21(i)(5)(i).

The February 17, 2010 revisions to the definitions in the Arkansas rules for “major modification” and “major stationary source” meet the Federal definition in 40 CFR 52.21(b) to identify a major source of NO X as a major source for ozone. The February 17, 2010 revisions to the Arkansas rules also meet the Federal definition in 40 CFR 52.21(b)(50)(i) for inclusion of NO X as an ozone precursor. The February 17, 2010 revisions to the emissions rate for NO X under the definition for Significant in the Arkansas rules also meet the Federal requirements in 40 CFR 52.21(b)(23)(i), which establishes these emission thresholds as 40 tpy. 35 The February 17, 2010 revisions allowing for an exemption for ozone monitoring for a source with a net emissions increase less than 100 tpy of NO X also meet the Federal requirement on monitoring exemptions under the footnote for 40 CFR 52.21(i)(5)(i). Because of their consistency with 40 CFR 52.21, which provides the requirements for an approvable PSD program, EPA believes these revisions are consistent with 110(l) and the revisions would not interfere with any applicable standard. Therefore, EPA is proposing to approve these revisions as meeting the requirements of section 110 of the Act and 40 CFR 52.21 for establishing NO X emissions as a precursor for ozone.

The revisions to Regulation 19, Chapter 9, and EPA's evaluation of these revisions are discussed in greater detail in the TSD. The provisions that address NO X as a precursor are severable from the remaining portions of the February 17, 2010 submittal, and EPA is proposing to approve these revisions in today's action.

To implement section 110(a)(2)(C) for the 1997 and 2006 PM 2.5 standards, states were required to submit SIP revisions for the implementation of the PSD and nonattainment NSR program for the PM 2.5 standard by May 16, 2011 (see 73 FR 28321, May 16, 2008). Because the State has failed to adopt and submit the required PM 2.5 PSD rules, we are proposing to find that the current Arkansas PSD SIP does not meet the requirements of section 110(a)(2)(C) with respect to the implementation of the PSD NSR program for the 1997 and 2006 PM 2.5 NAAQS.

Section 110(a)(2)(C) creates “a general duty on States to include a program in their SIP that regulates the modification and construction of any stationary source as necessary to assure that the NAAQS are achieved” (70 FR 71612, 71677). This duty is often referred to as “minor NSR.” EPA provides states with a “broad degree of discretion” in implementing their minor NSR programs (71 FR 48696, 48700). The “considerably less detailed” regulations for minor NSR are provided in 40 CFR 51.160 through 51.164. EPA has determined that Arkansas' minor NSR program, adopted pursuant to section 110(a)(2)(C) of the Act, regulates emissions of ozone and its precursors and PM. Arkansas' minor source permitting requirements are contained in Regulation 19, Chapter 4, and portions of Chapters 3 and 5, and were approved at 65 FR 61108.

It is important to stress that EPA is not proposing to approve or disapprove the state's existing minor NSR program itself to the extent that it is inconsistent with EPA's regulations governing this program. EPA believes that a number of states may have minor NSR provisions that are contrary to the existing EPA regulations for this program. EPA intends to work with states to reconcile state minor NSR programs with EPA's regulatory provisions for the program. The statutory requirements of section 110(a)(2)(C) provide for considerable flexibility in designing minor NSR programs, and EPA believes it may be time to revisit the regulatory requirements for this program to give the states an appropriate level of flexibility to design a program that meets their particular air quality concerns, while assuring reasonable consistency across the country in protecting the NAAQS with respect to new and modified minor sources.

As explained in section I.C.5 of this proposal, the current EPA-approved SIP PSD program does not apply to GHG-emitting sources that emit at or above the levels of emissions set in the Tailoring Rule, or at other appropriate levels. Thus, the Arkansas SIP does not satisfy this portion of section 110(a)(2)(C). We are proposing to disapprove this portion of the Arkansas SIP for failing to meet the infrastructure requirements for the 1997 ozone and the 1997 and 2006 PM 2.5 NAAQS with respect to the GHG requirement of section 110(a)(2)(C). EPA's disapproval here does not engender an additional statutory obligation, because EPA has already promulgated a FIP for the Arkansas PSD program to address permitting GHGs at or above the Tailoring Rule thresholds (75 FR 82246).

Interstate transport, pursuant to section 110(a)(2)(D): Section 110(a)(2)(D) has two components, 110(a)(2)(D)(i) and 110(a)(2)(D)(ii). Section 110(a)(2)(D)(i) requires SIPs to include provisions prohibiting any source or other type of emissions activity in one state from contributing significantly to nonattainment, interfering with maintenance of the NAAQS in another state, or from interfering with measures required to prevent significant deterioration of air quality or to protect visibility in another state. Section 110(a)(2)(D)(ii) requires SIPs to include provisions insuring compliance with sections 115 and 126 of the Act, relating to interstate and international pollution abatement.

PSD and interstate transport, pursuant to section 110(a)(2)(D)(i): One of the four prongs in section 110(a)(2)(D)(i) requires a SIP to contain adequate provisions prohibiting emissions that interfere with any other state's required measures to prevent significant deterioration of its air quality. This is the only element of 110(a)(2)(D)(i) for which EPA is proposing action in this rulemaking.

EPA's 2006 Guidance made recommendations for SIP submissions to meet this requirement with respect to both the 1997 8-hour ozone NAAQS and the 1997 PM 2.5 NAAQS.

The 2006 Guidance states that the PSD permitting program is the primary measure that each state must include to prevent interference with any other state's required measures to prevent significant deterioration of its air quality in accordance with section 110(a)(2)(D)(i)(II). EPA believes that Arkansas' December 17, 2007 and March 28, 2008 submissions, when considered in conjunction with the State's PSD program and other PSD program revisions that EPA is proposing to approve in this action address, in part, the requirements of 110(a)(2)(D)(i)(II). The submittal states that all major sources in Arkansas are subject to PSD and nonattainment NSR permitting programs. As discussed previously in our analysis of section 110(a)(2)(C) and in the TSD, the State's PSD program is in the SIP (47 FR 02112, 51 FR 04910, 56 FR 20137, 65 FR 61103, and 72 FR 18394). We also note in our discussion of 110(a)(2)(C) that Arkansas does not have a PSD program to address permitting GHG emissions and Arkansas has not adopted necessary revisions to properly address permitting of PM 2.5 emissions. Please see the attached TSD and refer to our discussion of section 110(a)(2)(C) in this rulemaking for additional information.

Consistent with EPA's November 29, 2005 rulemaking, “Final Rule to Implement the 8-hour Ozone National Ambient Air Quality Standards—Phase 2” (70 FR 71612), Arkansas submitted SIP revisions to modify its PSD provisions to address NO X as an ozone precursor. For the same reasons discussed in our analysis of section 110(a)(2)(C) of this proposed action, EPA believes that the PSD revision for the 1997 8-hour ozone NAAQS that makes NO X a precursor for ozone for PSD purposes, taken together with the PSD SIP and the interstate transport SIP, partially satisfies the requirements of the third prong of section 110(a)(2)(D)(i) for the 1997 8-hour ozone NAAQS, i.e., there will be no interference with any other state's required PSD measures. Arkansas only partially satisfies the requirements because of the deficiencies in its ability to permit sources of GHG emissions. Therefore, EPA is proposing partial approval and partial disapproval of the Arkansas SIP as it applies to section 110(a)(2)(D)(i) under the 1997 8-hour ozone NAAQS. EPA's disapproval here for the GHG emissions does not engender an additional statutory obligation, because EPA has already promulgated a FIP for the Arkansas PSD program to address permitting GHGs at or above the Tailoring Rule thresholds (75 FR 82246).

We are proposing to find that Arkansas does not meet the third prong of section 110(a)(2)(D)(i), because the current Arkansas PSD SIP does not meet the requirements of section 110(a)(2)(C) with respect to the implementation of the PSD NSR program for the 2006 PM 2.5 NAAQS because the state has not submitted the required PSD SIP revision to fully implement the PSD NSR program for the 1997 and 2006 PM 2.5 NAAQS.

Interstate and international pollution abatement, pursuant to section 110(a)(2)(D)(ii):

Section 110(a)(2)(D)(ii) of the Act requires compliance with sections 115 and 126 of the Act, relating to interstate and international pollution abatement. Section 115 addresses endangerment of public health or welfare in foreign countries from pollution emitted in the United States. Pursuant to section 115(a), the Administrator has neither received nor issued a formal notification that emissions from Arkansas are endangering public health or welfare in a foreign country.

Section 126(a) of the Act requires new or modified sources to notify neighboring states of potential impacts from such sources. Regulation 26, Chapter 6 requires that each major proposed new or modified source provide such notification and is in the federally enforceable SIP (see 66 FR 51312). The State also has no pending obligations under section 126 of the Act. For additional detail, please refer to the TSD. However, as previously noted in this rulemaking, Arkansas does not have a current EPA-approved SIP PSD program that applies to GHG-emitting sources that emit at or above the level of emissions set in the Tailoring Rule, or at other appropriate levels. Also, the State has failed to submit the required PSD NSR SIP revisions for the 1997 and 2006 PM 2.5 NAAQS. Therefore, EPA is not proposing to approve Arkansas' interstate pollution abatement provisions in full because Arkansas cannot require each major proposed or modified new source to notify neighboring states of potential impacts from PM 2.5 and GHGs emitted by such sources.

Adequate personnel, funding, and authority, pursuant to section 110(a)(2)(E): The duties, powers and structure of the ADEQ (described in A.C.A. section 8-1-202) provide that the director is empowered to administer all activities “including, but not limited to the employment and supervision of such technical, legal, and administrative staff, within approved appropriations, as is necessary to carry out the responsibilities vested within the department”. The AWAPCA provides the ADEQ adequate authority with the powers and duties, in part, “to administer and enforce all laws and regulations relating to pollution of the air.” A.C.A. section 8-4-311(7). Furthermore, the ADEQ has the power and duty to “cooperate with and receive moneys from the Federal government or any other source for the study and control of air pollution.” A.C.A. section 8-4-311(9)(A).

There are Federal sources of funding for the implementation of the 1997 8-hour ozone and PM 2.5 NAAQS, through, for example, CAA sections 103 and 105 grant funds. The ADEQ receives Federal funds on an annual basis, under sections 103 and 105 of the Act, to support its air quality programs. Fees collected for the NSR permit programs, and other inspections, maintenance and renewals required of other air pollution sources also provide necessary funds to help implement the State's air programs. More specific information on permitting fees is provided in the discussion of section 110(a)(2)(L) below and in the TSD.

Section 110(a)(2)(E)(ii) requires that the state comply with section 128. Section 128 requires: (1) that the majority of members of the state body that approves permits or enforcement orders do not derive any significant portion of their income from entities subject to permitting or enforcement orders under the CAA; and (2) any potential conflicts of interest by such body be adequately disclosed. In 1982, the EPA approved the state's submittal to demonstrate compliance of the SIP with Section 128 of the CAA (47 FR 19136). The submittal cited AWAPCA Section 82-1901 as demonstrating compliance with CAA Section 128(a)(1), and cited Arkansas Code of Ethics Law, Act 570 of 1979 as addressing CAA Section 128(a)(2). See Arkansas Code of Ethics Law, Act 570 of 1979, Section 3: Use of Public Office to Obtain Special Privilege Prohibited; Section 4: Use and Disclosure of Information Acquired by Reason of Office—Activities Requiring Disclosure; Section 5: Requirement to File Statement; and Section 6: Statements—Period Retained—Public Access—Signature Required.

EPA is proposing to find that the current Arkansas PSD SIP meets section 110(a)(2)(E) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Stationary source monitoring system, pursuant to section 110(a)(2)(F): Regulation 19, chapters 2-4, 7-10, and 13 require that stationary sources monitor for compliance, provide recordkeeping and reporting, and provide for enforcement of ozone standards, PM 2.5 standards, and precursors to these pollutants ( e.g., NO X , SO 2 , and VOCs). These source monitoring requirements also generate data for these pollutants.

Under the Arkansas SIP, the ADEQ is required to analyze the emissions data from point, area, mobile, and biogenic (natural) sources. The ADEQ uses this data to track progress toward maintaining the NAAQS, develop control and maintenance strategies, identify sources and general emission levels, and determine compliance with Arkansas and EPA requirements. The State's emissions data are available on the ADEQ Web site ( http://www.adeq.state.ar.us ) and EPA's AirData Web site ( www.epa.gov/air/data/index.html ). 36 These rules are in the federally-approved SIP. A list of the chapters and Federal Register citations is provided in the TSD.

EPA is proposing to find that the Arkansas SIP meets the requirements of section 110(a)(2)(F) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Emergency power, pursuant to section 110(a)(2)(G): Section 110(a)(2)(G) requires States to provide for authority to address activities causing imminent and substantial endangerment to public health, including contingency plans to implement the emergency episode provisions in their SIPs. The AWAPCA, pursuant to A.C.A. sections 8-1-202(b)(2)(C) and 8-4-202(e)(1), provides the ADEQ with authority to address environmental emergencies, and the ADEQ has contingency plans to implement emergency episode provisions in the SIP. The ADEQ promulgated the “Prevention of Air Pollution Emergency Episodes,” which includes contingency measures, and these provisions were approved into the SIP on May 31, 1972 (37 FR 10850). The criteria for ozone are based on a 1-hour average ozone level. These episode criteria and contingency measures are adequate to address ozone emergency episodes and are in the federally-approved SIP.

The 2009 Infrastructure SIP Guidance for PM 2.5 recommends that a state with at least one monitored 24-hour PM 2.5 value exceeding 140.4 μg/m 3 since 2006 establishes an emergency episode plan and contingency measures to be implemented if such level is exceeded again. The 2006-2010 ambient air quality monitoring data  37 for Arkansas do not exceed 140.4 μg/m 3 . The PM 2.5 levels have consistently remained below 140.4 μg/m 3 . Furthermore, the State has appropriate general emergency powers to address PM 2.5 related episodes to protect the environment and public health. Given the State's low monitored PM 2.5 levels, EPA is proposing the State is not required to submit an emergency episode plan and contingency measures at this time for the 1997 and 2006 PM 2.5 standards. Additional detail is provided in the TSD.

EPA is proposing to find that the Arkansas SIP meets the requirements of section 110(a)(2)(G) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Future SIP revisions, pursuant to section 110(a)(2)(H): The AWAPCA, Section 82-1935(1), empowers the APCEC to “formulate and promulgate, amend, repeal, and enforce rules and regulations implementing or effectuating the powers and duties of the Commission [* * *] to control air pollution”. In addition, A.C.A. 8-4-202(d)(4)(A) authorizes the Commission to “refer to the CFR for regulations and standards identical to those sanctioned by EPA.” Thus, Arkansas has the authority to revise its SIP from time to time as may be necessary to take into account revisions of primary or secondary NAAQS, or the availability of improved or more expeditious methods of attaining such standards. Furthermore, Arkansas also has the authority under these AWAPCA provisions to revise its SIP in the event the EPA pursuant to the Act finds the SIP to be substantially inadequate to attain the NAAQS.

EPA is proposing to find that the Arkansas SIP meets the requirements of section 110(a)(2)(H) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Consultation with government officials, pursuant to section 110(a)(2)(J):   38 The AWAPCA, as codified under A.C.A. section 8-1-203 provides that the APCEC “shall meet regularly in publicly noticed open meetings to discuss and rule upon matters of environmental concern” prior to the adoption of any rule or regulation implementing the substantive statutes charged to the ADEQ for administration. In addition, A.C.A. section 8-4-311 provides that the ADEQ or its successor shall have the power and duty “to advise, consult, and cooperate with other agencies of the state, political subdivisions, industries, other states, the Federal government, and with affected groups in the furtherance of the purposes of this chapter.” Further, Regulation 19.904(D) provides that ADEQ shall make determinations that a source may affect air quality or visibility in a mandatory Class I Federal area based on screening criteria agreed upon by the Department and the Federal Land Manager (see 72 FR 18394). These rules are in the federally approved SIP. EPA is proposing to find that the Arkansas SIP meets the requirements of this portion of section 110(a)(2)(J) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Public notification if NAAQS are exceeded, pursuant to section 110(a)(2)(J): Public notification begins with the air quality forecasts, which advise the public of conditions capable of exceeding the 8-hour ozone  39 and PM 2.5 NAAQS. The air quality forecasts can be found on the ADEQ Web site: for 8-hour ozone and PM 2.5 , the forecast includes 2 regions  40 in the State. Ozone forecasts are made daily during the ozone season for each of the forecast areas. 41 The ozone forecasts are made, in most cases, a day in advance by 2 p.m. local time and are valid for the next day. When the forecast indicates that ozone levels will be above the 8-hour ozone standard, the ADEQ and the Arkansas Department of Health issue an Ozone Health Advisory.

In addition, the State implements an Ozone Action Day (OAD) program  42 and will issue an ozone alert in the afternoon on the day before an elevated level of ozone is expected to occur. Announcements for an OAD will be broadcast through television and other news media, and to employers participating in the OAD program. The OAD program includes examples of actions that can be implemented by individuals and organizations to reduce ozone levels and exposure to ozone. Also through the Metroplan Web site, the public can subscribe to an electronic information system that provides air quality forecast and ozone alert information via email. Ozone data are posted on the ADEQ Web site; current, regional hourly and regional 8-hour ozone data are posted hourly (see http://www.adeq.state.ar.us/techsvs/ozonemonitors.asp ). EPA is proposing to find that the Arkansas SIP meets this portion of section 110(a)(2)(J) with respect to the 1997 8-hour ozone 1997 and 2006 PM 2.5 NAAQS.

PSD and visibility protection, pursuant to section 110(a)(2)(J): This portion of section 110(a)(2)(J) in part requires that a state's SIP meet the applicable requirements of section 110(a)(2)(C) as relating to PSD programs. As discussed in our section 110(a)(2)(C) analysis and in the TSD, the State's PSD program is in the SIP (47 FR 02112, 51 FR 04910, 56 FR 20137, 65 FR 61103 and 72 FR 18394) . In addition to the approved program and to meet the requirements of 110(a)(2)(C) and 110(a)(2)(D)(i) for the 1997 ozone standard, EPA believes the State must have updated its PSD rules to treat NO X as a precursor for ozone. Thus, we are proposing to approve portions of a SIP revision (submitted February 17, 2010) to implement NO X as a precursor to ozone. These revisions are proposed for APCEC Regulation 19, Chapter 9, as described above.

For Arkansas to meet the requirements of the PSD portion of section 110(a)(2)(J), it must comply with section 110(a)(2)(C). 43 To implement section 110(a)(2)(C) for the 1997 and 2006 PM 2.5 standards, states were required to submit PSD NSR SIP revisions for the PM 2.5 standards by May 16, 2011 (73 FR 28321, May 16, 2008). At present, Arkansas has not submitted revisions to satisfy this requirement. Therefore, Arkansas fails to meet the requirements of section 110(a)(2)(C) for the 1997 and 2006 PM 2.5 NAAQS. We are proposing to find that the current Arkansas PSD SIP does not meet the requirements of section 110(a)(2)(J) with respect to the 1997 and 2006 PM 2.5 NAAQS.

Moreover, as stated in our discussion of the PSD program under section 110(a)(2)(C), the current EPA-approved SIP PSD program does not apply to GHG-emitting sources that emit at or above the levels of emissions set in the Tailoring Rule, or at other appropriate levels. Thus, the Arkansas SIP does not satisfy the portion of section 110(a)(2)(J) that relates to permitting GHGs with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS. EPA's disapproval here does not engender any additional statutory obligation, because EPA has already promulgated a FIP for the Arkansas PSD program related to permitting GHGs at or above the Tailoring Rule thresholds (75 FR 82246).

EPA approved Arkansas' Visibility Protection Plan (Protection of Visibility in Mandatory Class I Federal Areas) into the Arkansas SIP on February 10, 1986 (51 FR 4910). EPA approved revisions to the Arkansas Visibility Protection Plan and approved a Long-Term Strategy for Visibility Protection into the Arkansas SIP on July 21, 1988 (53 FR 27514). The State's most recent SIP revision of their Regional Haze program was submitted to EPA on July 29, 2008, and we will take action on it in a separate rulemaking. With regard to the applicable requirements for visibility protection, EPA recognizes that States are subject to visibility and regional haze program requirements under Part C of the Act (which includes sections 169A and 169B). In the event of the establishment of a new NAAQS, however, the visibility and regional haze program requirements under part C do not change. Thus, we find that there is no new visibility obligation “triggered” under section 110(a)(2)(J) when a new NAAQS becomes effective. This would be the case even in the event a secondary PM 2.5 NAAQS for visibility is established, because this NAAQS would not affect visibility requirements under part C. EPA is therefore proposing to find that the Arkansas SIP meets this portion of section 110(a)(2)(J) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

EPA is proposing to find that the Arkansas SIP meets the requirements of this portion of section 110(a)(2)(J) with respect to the 1997 8-hour ozone NAAQS with the exception of section 110(a)(2)(J) as it relates to the GHG component of the PSD program. EPA is proposing to find that the Arkansas SIP does not meet the requirements of section 110(a)(2)(J) as it relates to the GHG component of the PSD program with respect to the 1997 8-hour ozone NAAQS. EPA is also proposing to find that the Arkansas SIP does not meet the requirements of this portion of section 110(a)(2)(J) with respect to the 1997 and 2006 PM 2.5 NAAQS because the state has not submitted the required PSD SIP revision to fully implement the PSD NSR program for the 1997 and 2006 PM 2.5 NAAQS.

Air quality modeling and submission of data, pursuant to section 110(a)(2)(K): The AWAPCA prescribes at A.C.A. section 8-4-311(a)(1) that the ADEQ shall “[d]evelop and effectuate a comprehensive program for the prevention and control of all sources of pollution of the air of this state.” Arkansas has extensive modeling in numerous submitted SIP revisions. For example, Arkansas submitted modeling in SIP revisions for implementing an Economic Development Zone in Crittenden County, and demonstrating maintenance of the 1997 8-hour ozone standard in Crittenden County. EPA approved the modeling as part of the Arkansas SIP. 44

This section of the Act also requires that a SIP provides for the submission of data related to such air quality modeling to the EPA upon request. A.C.A. section 8-4-311 authorizes ADEQ to cooperate with the Federal government, allowing it to make this submission to the EPA.

EPA is proposing to find that the Arkansas SIP meets the requirements of section 110(a)(2)(K) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Permitting fees, pursuant to section 110(a)(2)(L): The AWAPCA, as codified in Regulation 9, Chapter 5 provides authority for the ADEQ to charge and collect fees for Title V and non-Title V permit applications, revisions, renewals, and inspections. The non-Title V rules that address permit fees found in APCEC Regulation 9, Chapter 5 are in the federally-approved SIP. A detailed list of the applicable chapters listed herein is provided in the TSD. EPA is proposing to find that the Arkansas SIP meets the requirements of section 110(a)(2)(L) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

Consultation/participation by affected local entities, pursuant to section 110(a)(2)(M): As indicated above, the Arkansas statute under A.C.A. section 8-1-203 provides that the APCEC “shall meet regularly in publicly noticed open meetings to discuss and rule upon matters of environmental concern” prior to the adoption of any rule or regulation implementing the substantive statutes charged to the ADEQ for administration. In addition, AWAPCA Section 82-1935 empowers the APCEC to develop and put into effect a comprehensive program for the prevention and control of all sources of pollution in the air in the state. The State has the power to advise, consult and cooperate with other agencies of the State, political subdivisions, other states, the Federal government, and with affected groups. EPA is proposing to find that the Arkansas SIP meets the requirements of section 110(a)(2)(M) with respect to the 1997 8-hour ozone and 1997 and 2006 PM 2.5 NAAQS.

We are proposing to partially approve and partially disapprove the submittals provided by the State of Arkansas to demonstrate that the Arkansas SIP meets the requirements of Section 110(a)(1) and (2) of the Act for the 1997 ozone and 1997 and 2006 PM 2.5 NAAQS. For the 1997 ozone standard, we are proposing to find that the current Arkansas SIP meets the infrastructure elements listed below:

Emission limits and other control measures (110(a)(2)(A) of the Act);

Ambient air quality monitoring/data system (110(a)(2)(B) of the Act);

Program for enforcement of control measures (110(a)(2)(C) of the Act), except for the portion that addresses GHGs;

Interstate Transport, pursuant to section (110(a)(2)(D)(ii) of the Act), except for the portion that addresses GHGs;

Adequate resources (110(a)(2)(E) of the Act);

Stationary source monitoring system (110(a)(2)(F) of the Act);

Emergency power (110(a)(2)(G) of the Act);

Future SIP revisions (110(a)(2)(H) of the Act);

Consultation with government officials (110(a)(2)(J) of the Act);

Public notification (110(a)(2)(J) of the Act);

Prevention of significant deterioration and visibility protection (110(a)(2)(J) of the Act), except for the portion that addresses GHGs;

Air quality modeling data (110(a)(2)(K) of the Act);

Permitting fees (110(a)(2)(L) of the Act); and

Consultation/participation by affected local entities (110(a)(2)(M) of the Act).

For the 1997 ozone standard, we are proposing to find that the current Arkansas SIP does not meet the infrastructure elements listed below:

Program for enforcement of control measures (110(a)(2)(C) of the Act), only as it relates to GHGs;

Interstate transport, pursuant to section 110(a)(2)(D)(ii) of the Act, only as it relates to GHGs; and

Prevention of significant deterioration (110(a)(2)(J) of the Act), only as it relates to GHGs.

We are also proposing to approve the Arkansas Interstate Transport SIP provisions that address the requirement of section 110(a)(2)(D)(i)(II) that emissions from sources in Arkansas do not interfere with measures required in the SIP of any other state under part C of the CAA to prevent significant deterioration of air quality, except as they relate to GHGs for the 1997 ozone NAAQS.

We are proposing to disapprove the portion of the Arkansas Interstate Transport SIP provisions that address the requirement of section 110(a)(2)(D)(i)(II), as it relates to GHGs, that emissions from sources in Arkansas do not interfere with measures required in the SIP of any other state under part C of the CAA to prevent significant deterioration of air quality, for the 1997 ozone NAAQS.

For the 1997 and 2006 PM 2.5 standards, we are proposing to find that the current Arkansas SIP meets the infrastructure elements listed below:

Emission limits and other control measures (110(a)(2)(A) of the Act);

Ambient air quality monitoring/data system (110(a)(2)(B) of the Act);

Adequate resources (110(a)(2)(E) of the Act);

Stationary source monitoring system (110(a)(2)(F) of the Act);

Emergency power (110(a)(2)(G) of the Act);

Future SIP revisions (110(a)(2)(H) of the Act);

Consultation with government officials (110(a)(2)(J) of the Act);

Public notification (110(a)(2)(J) of the Act);

Air quality modeling data (110(a)(2)(K) of the Act);

Permitting fees (110(a)(2)(L) of the Act); and

Consultation/participation by affected local entities (110(a)(2)(M) of the Act).

For the 1997 and 2006 PM 2.5 standards, we are proposing to find that the current Arkansas SIP does not address the 110(a)(2) infrastructure elements listed below:

Program for enforcement of control measures (110(a)(2)(C) of the Act);

Interstate Transport, pursuant to section 110(a)(2)(D)(ii) of the Act; and

Prevention of significant deterioration and visibility protection (110(a)(2)(J) of the Act).

We are also proposing to disapprove the portion of the Arkansas Interstate Transport SIP that addresses the requirement of section 110(a)(2)(D)(i)(II)—that emissions from sources in Arkansas do not interfere with measures required in the SIP of any other state under part C of the CAA to prevent significant deterioration of air quality—for the 2006 PM 2.5 NAAQS.

EPA is also proposing to approve the following revisions to APCEC Regulation 19, Chapter 9, submitted by the State of Arkansas on February 17, 2010:

1. The substantive change adding NO X to the definition of Major Modification through incorporation by reference of 40 CFR 52.21(b) and 40 CFR 51.301 as of November 29, 2005.

2. The substantive change adding NO X to the definition of Major Stationary Source through incorporation by reference of 40 CFR 52.21(b) and 40 CFR 51.301 as of November 29, 2005.

3. The substantive change adding NO X as a precursor to the table's criteria and other pollutants listing for ozone through incorporation by reference of 40 CFR 52.21(b)(23)(i).

4. The substantive change allowing for an exemption with respect to ozone monitoring for a source with a net emissions increase less than 100 tpy of NO X through incorporation by reference of 40 CFR 52.21(i)(5)(i).

EPA is proposing these actions in accordance with section 110 and part C of the Act and EPA's regulations and consistent with EPA guidance. We are also proposing to make ministerial corrections to the attainment status table in 40 CFR 81.304 to accurately reflect the redesignation date of Crittenden County, Arkansas to attainment for the 1997 8-hour ozone standard. On March 24, 2010, we redesignated the county with an effective date of April 23, 2010 (75 FR 14077).

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, EPA's role is to act on state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by State law.

This proposed action is not a “significant regulatory action” under the terms of Executive Order 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011).

This proposed action does not impose an information collection burden under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq., because this proposed SIP disapproval under section 110 and subchapter I, part D of the CAA will not in-and-of itself create any new information collection burdens but simply disapproves certain State requirements for inclusion into the SIP. Burden is defined at 5 CFR 1320.3(b).

The Regulatory Flexibility Act (RFA) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Small entities include small businesses, small not-for-profit enterprises, and small governmental jurisdictions. For purposes of assessing the impacts of today's rule on small entities, small entity is defined as: (1) A small business as defined by the Small Business Administration's (SBA) regulations at 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; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.

After considering the economic impacts of today's proposed rule on small entities, I certify that this action will not have a significant impact on a substantial number of small entities. This rule does not impose any requirements or create impacts on small entities. This proposed SIP disapproval under section 110 and subchapter I, part D of the CAA will not in-and-of itself create any new requirements but simply disapproves certain State requirements for inclusion into the SIP. Accordingly, it affords no opportunity for EPA to fashion for small entities less burdensome compliance or reporting requirements or timetables or exemptions from all or part of the rule. The fact that the CAA prescribes that various consequences ( e.g., higher offset requirements) may or will flow from this disapproval does not mean that EPA either can or must conduct a regulatory flexibility analysis for this action. Therefore, this action will not have a significant economic impact on a substantial number of small entities.

We continue to be interested in the potential impacts of this proposed rule on small entities and welcome comments on issues related to such impacts.

This action contains no Federal mandates under the provisions of Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), 2 U.S.C. 1531-1538 for State, local, or tribal governments or the private sector. EPA has determined that the proposed disapproval action does not include a Federal mandate that may result in estimated costs of $100 million or more to either State, local, or tribal governments in the aggregate, or to the private sector. This action proposes to disapprove pre-existing requirements under State or local law, and imposes no new requirements. Accordingly, no additional costs to State, local, or tribal governments, or to the private sector, result from this action.

Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999), requires EPA to develop an accountable process to ensure “meaningful and timely input by State and local officials in the development of regulatory policies that have federalism implications.” “Policies that have federalism implications” is defined in the Executive Order to include regulations that 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.”

This proposed 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, as specified in Executive Order 13132, because it merely disapproves certain State requirements for inclusion into the SIP and does not alter the relationship or the distribution of power and responsibilities established in the CAA. Thus, Executive Order 13132 does not apply to this action.

This proposed action does not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000), because the action EPA is proposing neither imposes substantial direct compliance costs on tribal governments, nor preempts tribal law. Therefore, the requirements of section 5(b) and 5(c) of the Executive Order do not apply to this rule. Consistent with EPA policy, EPA nonetheless is offering consultation to Tribes regarding this rulemaking action. EPA will respond to relevant comments in the final rulemaking action.

EPA interprets Executive Order 13045 (62 FR 19885, April 23, 1997) as applying only to those regulatory actions that concern health or safety risks, such that the analysis required under section 5-501 of the Executive Order has the potential to influence the regulation. This proposed action is not subject to Executive Order 13045 because it is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997). This proposed SIP disapproval under section 110 and subchapter I, part D of the CAA will not in-and-of itself create any new regulations but simply disapproves certain State requirements for inclusion into the SIP.

This proposed action is not subject to Executive Order 13211 (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866.

Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (“NTTAA”), Public Law 104-113, section 12(d) (15 U.S.C. 272 note) directs EPA to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards ( e.g., materials specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies. NTTAA directs EPA to provide Congress, through OMB, explanations when the Agency decides not to use available and applicable voluntary consensus standards.

The EPA believes that this proposed action is not subject to requirements of Section 12(d) of NTTAA because application of those requirements would be inconsistent with the CAA.

Executive Order 12898 (59 FR 7629, February 16, 1994) establishes Federal executive policy on environmental justice. Its main provision 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 and low-income populations in the United States.

EPA lacks the discretionary authority to address environmental justice in this proposed action. In reviewing SIP submissions, EPA's role is to approve or disapprove state choices, based on the criteria of the CAA. Accordingly, this action merely proposes to disapprove certain State requirements for inclusion into the SIP under section 110 and subchapter I, part D of the CAA and will not in-and-of itself create any new requirements. Accordingly, it does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898.

The statutory authority for this action is provided by section 110 of the CAA, as amended (42 U.S.C. 7410).

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

When submitting comments, remember to:

1. Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

2. Follow directions—EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

4. Describe any assumptions and provide any technical information and/or data that you used.

5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

6. Provide specific examples to illustrate your concerns, and suggest alternatives.

7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

8. Make sure to submit your comments by the comment period deadline identified.

EPA is proposing to determine that the Milwaukee-Racine and Sheboygan ozone nonattainment areas have met the requirements for redesignation under section 107(d)(3)(E) of the CAA. EPA is thus proposing to approve Wisconsin's requests to change the legal designations of the Milwaukee-Racine and Sheboygan areas from nonattainment to attainment for the 1997 8-hour ozone NAAQS. EPA is also proposing to approve Wisconsin's maintenance plan SIP revisions for the Milwaukee-Racine and Sheboygan areas (such approval being one of the CAA criteria for redesignation to attainment status). The maintenance plans are designed to keep the Milwaukee-Racine and Sheboygan areas in attainment of the ozone NAAQS through 2022. EPA is proposing to approve the 2005 comprehensive emissions inventories for the Milwaukee-Racine and Sheboygan areas as meeting the requirements of section 182(a)(1) of the CAA. Finally, EPA is proposing to approve the newly-established 2015 and 2022 MVEBs for the Milwaukee-Racine and Sheboygan areas. The adequacy comment period for the MVEBs began on December 6, 2011, with EPA's posting of the availability of the submittal on EPA's Adequacy Web site (at http://www.epa.gov/otaq/stateresources/transconf/adequacy.htm ). The adequacy comment period for these MVEBs ended on January 5, 2012. EPA did not receive any requests for this submittal, or adverse comments on this submittal during the adequacy comment period. See section V. B. of this rulemaking, “Adequacy of Wisconsin's MVEBs,” for further explanation on this process. Therefore, EPA finds adequate, and is proposing to approve, the state's 2015 and 2022 MVEBs for use in future transportation conformity analyses for the areas.

Ground-level ozone is not emitted directly by sources. Rather, emissions of nitrogen oxides (NO X ) and volatile organic compounds (VOCs) react in the presence of sunlight to form ground-level ozone. NO X and VOCs are referred to as precursors of ozone.

The CAA establishes a process for air quality management through the NAAQS. Before promulgation of the 8-hour standard, the ozone NAAQS was based on a 1-hour standard. On November 6, 1991 (56 FR 56693 and 56852), the Milwaukee-Racine and Sheboygan areas were designated as severe and moderate nonattainment areas, respectively, under the 1-hour ozone NAAQS. The Sheboygan area was subsequently redesignated to attainment of the 1-hour standard on August 26, 1996 (61 FR 43675). Although the Milwaukee-Racine area was monitoring attainment of the 1-hour ozone standard by the end of the 2005 ozone season, at the time EPA revoked the 1-hour ozone NAAQS, on June 15, 2005, the Milwaukee-Racine area was never redesignated as attainment under the 1-hour ozone NAAQS.

On July 18, 1997 (62 FR 38856), EPA promulgated an 8-hour ozone standard of 0.08 parts per million parts (ppm). On April 30, 2004 (69 FR 23857), EPA published a final rule designating and classifying areas under the 8-hour ozone NAAQS. These designations and classifications became effective June 15, 2004. EPA designated as nonattainment any area that was violating the 8-hour ozone NAAQS based on the three most recent years of air quality data, 2001-2003.

The CAA contains two sets of provisions, subpart 1 and subpart 2, that address planning and control requirements for nonattainment areas. (Both are found in title I, part D, 42 U.S.C. 7501-7509a and 7511-7511f, respectively.) Subpart 1 contains general requirements for nonattainment areas for any pollutant, including ozone, governed by a NAAQS. Subpart 2 provides more specific requirements for ozone nonattainment areas.

Under EPA's implementation rule for the 1997 8-hour ozone standard, (69 FR 23951, April 30, 2004), an area was classified under subpart 2 based on its 8-hour ozone design value, 1 if it had a 1-hour design value at the time of designation at or above 0.121 ppm (the lowest 1-hour design value in Table 1 of subpart 2) (69 FR 23954). All other areas were covered under subpart 1, based upon their 8-hour design values (69 FR 23958). The Milwaukee-Racine and Sheboygan areas were designated as subpart 2, 8-hour ozone moderate nonattainment areas by EPA on April 30, 2004 (69 FR 23857 and 23947) based on air quality monitoring data from 2001-2003 (69 FR 23860).

40 CFR 50.10 and appendix I of 40 CFR part 50 provide that the 8-hour ozone standard is attained when the three-year average of the annual fourth-highest daily maximum 8-hour average ozone concentration is less than or equal to 0.08 ppm, when rounded. The data completeness requirement is met when the average percent of days with valid ambient monitoring data is greater than 90 percent, and no single year has less than 75 percent data completeness. See 40 CFR part 50, appendix I, 2.3(d).

WDNR submitted requests to redesignate the Milwaukee-Racine and Sheboygan areas to attainment for the 1997 8-hour ozone standard on September 11, 2009, and supplemented the request on November 16, 2011. Complete, quality-assured and certified data for the 2006-2008, 2007-2009, and 2008-2010 time periods indicate the 8-hour NAAQS for ozone, as promulgated in 1997, has been attained for the Milwaukee-Racine and Sheboygan areas. In addition, available monitoring data for 2011 continue to show the areas in attainment of the standard. Under the CAA, nonattainment areas may be redesignated to attainment if sufficient complete, quality-assured data are available for the Administrator to determine that the area has attained the standard, and the area meets the other CAA redesignation requirements in section 107(d)(3)(E).

On March 27, 2008 (73 FR 16436), EPA promulgated a revised 8-hour ozone standard of 0.075 ppm. EPA has not yet designated areas under the 2008 standard. The actions addressed in this proposed rulemaking relate only to the 1997 8-hour ozone standard.

On December 22, 2006, in South Coast Air Quality Management Dist. v. EPA, the U.S. Court of Appeals for the District of Columbia (DC Circuit) vacated EPA's Phase 1 Implementation Rule for the 1997 8-hour Ozone Standard (69 FR 23951, April 30, 2004). 472 F.3d 882 (D.C. Cir. 2006). On June 8, 2007, in response to several petitions for rehearing, the DC Circuit clarified that the Phase 1 Rule was vacated only with regard to those parts of the rule that had been successfully challenged. Id., Docket No. 04 1201. Therefore, several provisions of the Phase 1 Rule remain effective: Provisions related to classifications for areas currently classified under subpart 2 of title I, part D, of the CAA as 8-hour nonattainment areas; the 8-hour attainment dates; and the timing for emissions reductions needed for attainment of the 8-hour ozone NAAQS. The June 8, 2007, decision also left intact the court's rejection of EPA's reasons for implementing the 8-hour standard in certain nonattainment areas under subpart 1 in lieu of subpart 2. By limiting the vacatur, the D.C. Circuit let stand EPA's revocation of the 1-hour standard and those anti-backsliding provisions of the Phase 1 Rule that had not been successfully challenged.

The June 8, 2007, decision reaffirmed the December 22, 2006, decision that EPA had improperly failed to retain four measures required for 1-hour nonattainment areas under the anti-backsliding provisions of the regulations: (1) Nonattainment area New Source Review (NSR) requirements based on an area's 1-hour nonattainment classification; (2) Section 185 penalty fees for 1-hour severe or extreme nonattainment areas; (3) measures to be implemented pursuant to section 172(c)(9) or 182(c)(9) of the Act, on the contingency of an area not making reasonable further progress toward attainment of the 1-hour NAAQS, or for failure to attain that NAAQS; and (4) certain transportation conformity requirements for certain types of Federal actions. The June 8, 2007, decision clarified that the court's reference to conformity requirements was limited to requiring the continued use of 1-hour motor vehicle emissions budgets until 8-hour budgets were available for 8-hour conformity determinations.

This section sets forth EPA's views on the potential effect of the Court's rulings on this proposed redesignation action. For the reasons set forth below, EPA does not believe that the court's rulings alter any requirements relevant to this redesignation action so as to preclude redesignation or prevent EPA from proposing or ultimately finalizing this redesignation. EPA believes that the D.C. Circuit's December 22, 2006, and June 8, 2007, decisions impose no impediment to moving forward with redesignation of this area to attainment, because even in light of the court's decisions, redesignation is appropriate under the relevant redesignation provisions of the CAA and longstanding policies regarding redesignation requests.

With respect to the 1997 8-hour standard, the Milwaukee-Racine and Sheboygan areas are classified under subpart 2. The June 8, 2007, opinion clarifies that the court did not vacate the Phase 1 Rule's provisions with respect to classifications for areas under subpart 2. The court's decision therefore upholds EPA's classifications for those areas classified under subpart 2 for the 8-hour ozone standard.

In its June 8, 2007 decision the D.C. Circuit limited its vacatur so as to uphold those provisions of the anti-backsliding requirements that were not successfully challenged. Therefore, an area must meet the anti-backsliding requirements which apply by virtue of the area's classification for the 1-hour ozone standard. See 40 CFR 51.900, et seq.; 70 FR 30592, 30604 (May 26, 2005). As set forth in more detail below, the area must also address four additional anti-backsliding provisions identified by the court in its decisions.

The anti-backsliding provisions at 40 CFR 51.905(a)(1) prescribe 1-hour ozone standard requirements that continue to apply after revocation of the 1-hour ozone NAAQS to former 1-hour ozone nonattainment areas. 40 CFR 51.905(a)(1)(i) provides that:

In addition, the D.C. Circuit held that EPA should have retained four additional measures in its anti-backsliding provisions: (1) Nonattainment area NSR; (2) section 185 penalty fees; (3) contingency measures under section 172(c)(9) or 182(c)(9) of the Act; and (4) 1-hour MVEBs that were not yet replaced by 8-hour emissions budgets. EPA has addressed these four requirements as follows:

With respect to NSR, EPA has determined that an area being redesignated need not have an approved nonattainment NSR program, provided that the state demonstrates maintenance of the standard in the area without part D NSR in effect. The rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994, entitled, “Part D New Source Review Requirements for Areas Requesting Redesignation to Attainment.” This policy assumes that the state's PSD program will become effective in the area immediately upon redesignation to attainment. Consequently EPA concludes that an approved NSR program is not an applicable requirement for purposes of redesignation. See the more detailed explanations in the following rulemakings: Detroit, Michigan (60 FR 12467-12468, March 7, 1995); Cleveland-Akron-Lorrain, Ohio (61 FR 20458, 20469-70, May 7, 1996); Louisville, Kentucky (66 FR 53665, 53669, October 23, 2001); Grand Rapids, Michigan (61 FR 31831, 31836-31837, June 21, 1996). Furthermore, EPA approved Wisconsin's NSR program on January 18, 1995 (60 FR 3538), February 6, 2006 (71 FR 5979), March 8, 2006 (71 FR 55062) and May 16, 2006 (71 FR 28274).

With regard to the requirement for section 185 source penalty fees, the Milwaukee-Racine area was classified as severe nonattainment under the 1-hour standard and is, therefore, subject to this requirement. EPA approved an excess VOC emissions fee rule for the Milwaukee-Racine area on June 25, 2002 (67 FR 42729). On April 24, 2009 (74 FR 18641), EPA published a final rule making a determination that the Milwaukee-Racine area had attained the 1-hour ozone standard and confirming that this finding of attainment relieved Wisconsin of the obligation to adopt section 185 source penalty fee regulations for this area.

With respect to the 1-hour MVEBs that were not yet replaced by 8-hour emissions budgets, the conformity portion of the court's June 8, 2007 ruling clarified that, for those areas with MVEBs for the 1-hour ozone standard, anti-backsliding requires that these MVEBs be used for 8-hour conformity determinations until replaced by MVEBs for the 8-hour ozone standard. To meet this requirement, conformity determinations in such areas must comply with the applicable requirements of EPA's conformity regulations at 40 CFR part 93. Note below that EPA is proposing to find adequate and approve 8-hour MVEBs established by Wisconsin's 8-hour ozone maintenance plans for the Milwaukee and Sheboygan areas.

With respect to the contingency measure requirements under sections 172(c)(9) and 182(c)(9) of the CAA, these requirements must be addressed in state ozone Reasonable Further Progress (RFP) and attainment demonstration plans. Wisconsin addressed these requirements in the 1-hour ozone RFP and attainment demonstration plans for the Milwaukee-Racine area by adopting and implementing extra VOC and NO X emission controls that go beyond the emission reductions needed for RFP and attainment of the 1-hour ozone standard. EPA approved these ozone control plans, including their contingency elements as follows: VOC 15 percent RFP plan, March 22, 1996 (61 FR 11735); post-1996 RFP plan, November 10, 2001 (66 FR 51572); and 1-hour ozone attainment demonstration and post-1999 RFP plan, November 13, 2001 (66 FR 56931). Therefore, Wisconsin has met the contingency measure requirements of sections 172(c)(9) and 182(c)(9) of the CAA for the 1-hour ozone standard.

With respect to the 1-hour standard requirements, the Sheboygan area was an attainment area subject to a CAA section 175A maintenance plan under the 1-hour standard. The D.C. Circuit's decisions do not impact redesignation requests for these types of areas, except to the extent that the court, in its June 8, 2007, decision, clarified that for those areas with 1-hour MVEBs in their maintenance plans, anti-backsliding provisions require that those 1-hour budgets must be used for 8-hour conformity determinations until replaced by 8-hour budgets. All conformity determinations must comply with the applicable requirements of EPA's conformity regulations at 40 CFR part 93.

With respect to the three other anti-backsliding provisions for the 1-hour standard that the court found were not properly retained, the Sheboygan area is an attainment area subject to a maintenance plan for the 1-hour standard, and the nonattainment NSR, contingency measures (pursuant to section 172(c)(9) or 182(c)(9)), and fee provision requirements no longer apply to an area that has been redesignated to attainment of the 1-hour standard.

Thus the decision in South Coast should not alter requirements that would preclude EPA from proposing or finalizing the redesignations of these areas.

The CAA provides the requirements for redesignating a nonattainment area to attainment. Specifically, section 107(d)(3)(E) allows for redesignation provided that: (1) The Administrator determines that the area has attained the applicable NAAQS; (2) the Administrator has fully approved the applicable implementation plan for the area under section 110(k); (3) the Administrator determines that the improvement in air quality is due to permanent and enforceable reductions in emissions resulting from implementation of the applicable SIP and applicable Federal air pollutant control regulations and other permanent and enforceable reductions; (4) the Administrator has fully approved a maintenance plan for the area as meeting the requirements of section 175A; and, (5) the state containing such area has met all requirements applicable to the area under section 110 and part D.

EPA provided guidance on redesignation in the General Preamble for the Implementation of Title I of the CAA Amendments of 1990 on April 16, 1992 (57 FR 13498), and supplemented this guidance on April 28, 1992 (57 FR 18070). EPA has provided further guidance on processing redesignation requests in the following documents:

“Ozone and Carbon Monoxide Design Value Calculations,” Memorandum from William G. Laxton, Director Technical Support Division, June 18, 1990;

“Maintenance Plans for Redesignation of Ozone and Carbon Monoxide Nonattainment Areas,” Memorandum from G.T. Helms, Chief, Ozone/Carbon Monoxide Programs Branch, April 30, 1992;

“Contingency Measures for Ozone and Carbon Monoxide (CO) Redesignations,” Memorandum from G.T. Helms, Chief, Ozone/Carbon Monoxide Programs Branch, June 1, 1992;

“Procedures for Processing Requests to Redesignate Areas to Attainment,” Memorandum from John Calcagni, Director, Air Quality Management Division, September 4, 1992;

“State Implementation Plan (SIP) Actions Submitted in Response to Clean Air Act (ACT) Deadlines,” Memorandum from John Calcagni, Director, Air Quality Management Division, October 28, 1992;

“Technical Support Documents (TSD's) for Redesignation Ozone and Carbon Monoxide (CO) Nonattainment Areas,” Memorandum from G.T. Helms, Chief, Ozone/Carbon Monoxide Programs Branch, August 17, 1993;

“State Implementation Plan (SIP) Requirements for Areas Submitting Requests for Redesignation to Attainment of the Ozone and Carbon Monoxide (CO) National Ambient Air Quality Standards (NAAQS) On or After November 15, 1992,” Memorandum from Michael H. Shapiro, Acting Assistant Administrator for Air and Radiation, September 17, 1993;

“Use of Actual Emissions in Maintenance Demonstrations for Ozone and CO Nonattainment Areas,” Memorandum from D. Kent Berry, Acting Director, Air Quality Management Division, to Air Division Directors, Regions 1-10, November 30, 1993.

“Part D New Source Review (part D NSR) Requirements for Areas Requesting Redesignation to Attainment,” Memorandum from Mary D. Nichols, Assistant Administrator for Air and Radiation, October 14, 1994; and

“Reasonable Further Progress, Attainment Demonstration, and Related Requirements for Ozone Nonattainment Areas Meeting the Ozone National Ambient Air Quality Standard,” Memorandum from John S. Seitz, Director, Office of Air Quality Planning and Standards, May 10, 1995.

EPA is proposing to determine that the Milwaukee-Racine and Sheboygan areas have met all applicable redesignation criteria under CAA section 107(d)(3)(E). The bases for EPA's proposed approval of the redesignation requests are as follows:

On March 1, 2011 (76 FR 11080), EPA determined that the Milwaukee-Racine and Sheboygan areas have attained the 1997 8-hour ozone NAAQS based on monitoring data for 2006-2008 and 2007-2009, and 2008-2010 time periods. An area may be considered to be attaining the 1997 8-hour ozone NAAQS if there are no violations, as determined in accordance with 40 CFR 50.10 and 40 CFR part 50, appendix I, based on three complete, consecutive calendar years of quality-assured air quality monitoring data. To attain this standard, the three-year average of the fourth-highest daily maximum 8-hour average ozone concentrations measured at each monitor within an area over each year must not exceed 0.08 ppm. Based on the rounding convention described in 40 CFR part 50, appendix I, the standard is attained if the design value is 0.084 ppm or below. The data must be collected and quality-assured in accordance with 40 CFR part 58, and recorded in EPA's Air Quality System (AQS). The monitors generally should have remained at the same location for the duration of the monitoring period required for demonstrating attainment.

All 2006-2010 monitoring data have been quality-assured in accordance with 40 CFR 58.10, recorded in the AQS database, and certified. The data meet the completeness criteria in 40 CFR 50, appendix I, which requires a minimum completeness of 75 percent annually and 90 percent over each three-year period. Monitoring data is presented in Table 1 below. In addition, available preliminary monitoring data for 2011 continue to show the areas in attainment of the standard.

In addition, as discussed below with respect to the maintenance plan, WDNR has committed to continue to operate an EPA-approved monitoring network in the areas. WDNR will continue to quality assure monitoring data in accordance with 40 CFR part 58 and enter all data into the AQS in accordance with Federal guidelines. In summary, EPA believes that the data provide an adequate demonstration that the Milwaukee-Racine and Sheboygan areas have attained and continue to attain the 8-hour ozone NAAQS.

We are proposing to determine that Wisconsin has met all currently applicable SIP requirements for purposes of redesignation of the Milwaukee-Racine and Sheboygan areas to attainment of the 1997 8-hour ozone standard under section 110 and part D of the CAA, in accordance with section 107(d)(3)(E)(v). We are also proposing to determine that the Wisconsin SIP, with the exception of the comprehensive emission inventory and certain VOC RACT rules, is fully approved with respect to all applicable requirements for purposes of redesignation to attainment of the 1997 8-hour ozone standard, in accordance with section 107(d)(3)(E)(ii) of the CAA. As discussed below, in this action EPA is proposing to approve Wisconsin's 2005 comprehensive emissions inventory as meeting the comprehensive emissions inventory requirement of section 182(a)(1) for the areas. EPA is taking action on the Wisconsin VOC RACT regulations in a separate rule.

Recognizing that the comprehensive emissions inventory and VOC RACT rules must be approved on or before we complete final rulemaking approving the redesignation requests, we determine here that, assuming that this occurs, Wisconsin will have met all applicable section 110 and part D SIP requirements of the CAA for purposes of approval of Wisconsin's ozone redesignation requests for the Milwaukee-Racine and Sheboygan areas. In making these determinations, we have ascertained what SIP requirements are applicable to the area for purposes of redesignation, and have determined that the portions of the SIP meeting these requirements are fully approved or will be fully approved under section 110(k) of the CAA by the time we complete final rulemaking on Wisconsin's ozone redesignation requests for the Milwaukee-Racine and Sheboygan areas. As discussed more fully below, SIPs must be fully approved only with respect to currently applicable requirements of the CAA.

The September 4, 1992, Calcagni memorandum (see “Procedures for Processing Requests to Redesignate Areas to Attainment,” Memorandum from John Calcagni, Director, Air Quality Management Division, September 4, 1992) describes EPA's interpretation of section 107(d)(3)(E) of the CAA. Under this interpretation, a state and the area it wishes to redesignate must meet the relevant CAA requirements that are due prior to the state's submittal of a complete redesignation request for the area. See also the September 17, 1993, Michael Shapiro memorandum and 60 FR 12459, 12465-66 (March 7, 1995) (redesignation of Detroit-Ann Arbor, Michigan to attainment of the 1-hour ozone NAAQS). Applicable requirements of the CAA that come due subsequent to the state's submittal of a complete request remain applicable until a redesignation to attainment is approved, but are not required as a prerequisite to redesignation. See section 175A(c) of the CAA. Sierra Club v. EPA, 375 F.3d 537 (7th Cir. 2004). See also 68 FR 25424, 25427 (May 12, 2003) (redesignation of the St. Louis/East St. Louis area to attainment of the 1-hour ozone NAAQS).

Since EPA determined that the areas have attained the 1997 8-hour ozone standard, under 40 CFR 51.918, the requirements to submit certain planning SIPs related to attainment, including attainment demonstration requirements (the reasonably available control measure (RACM) requirement of section 172(c)(1) of the CAA, the RFP and attainment demonstration requirements of sections 172(c)(2) and (6) and 182(b)(1) of the CAA, and the requirement for contingency measures of section 172(c)(9) of the CAA) are not applicable to the areas as long as they continue to attain the NAAQS and will cease to apply upon redesignation. In addition, in the context of redesignations, EPA has interpreted requirements related to attainment as not applicable for purposes of redesignation. For example, in the General Preamble EPA stated that:

Section 110(a) of title I of the CAA contains the general requirements for a SIP. Section 110(a)(2) provides that the implementation plan submitted by a state must have been adopted by the state after reasonable public notice and hearing, and that, among other things, it includes enforceable emission limitations and other control measures, means or techniques necessary to meet the requirements of the CAA; provides for establishment and operation of appropriate devices, methods, systems and procedures necessary to monitor ambient air quality; provides for implementation of a source permit program to regulate the modification and construction of any stationary source within the areas covered by the plan; includes provisions for the implementation of part C, PSD, and part D, NSR permit programs; includes criteria for stationary source emission control measures, monitoring, and reporting; includes provisions for air quality modeling; and provides for public and local agency participation in planning and emission control rule development.

Section 110(a)(2)(D) of the CAA requires that SIPs contain measures to prevent sources in a state from significantly contributing to air quality problems in another state. To implement this provision, EPA has required certain states to establish programs to address transport of air pollutants, e.g., the NO X SIP Call. 3 However, the section 110(a)(2)(D) requirements for a state are not linked with a particular nonattainment area's designation and classification. EPA believes that the requirements linked with a particular nonattainment area's designation and classification are the relevant measures to evaluate in reviewing a redesignation request. The transport SIP submittal requirements, where applicable, continue to apply to a state regardless of the designation of any one particular area in the state. Thus, we believe that these requirements should not be construed to be applicable requirements for purposes of redesignation.

Further, we conclude that the other section 110 elements described above that are not connected with nonattainment plan submissions and not linked with an area's attainment status are also not applicable requirements for purposes of redesignation. A state remains subject to these requirements after an area is redesignated to attainment. We conclude that only the section 110 and part D requirements which are linked with a particular area's designation and classification are the relevant measures which we may consider in evaluating a redesignation request. This approach is consistent with EPA's existing policy on applicability of conformity and oxygenated fuels requirements for redesignation purposes, as well as with section 184 ozone transport requirements. See Reading, Pennsylvania, proposed and final rulemakings (61 FR 53174-53176, October 10, 1996), (62 FR 24826, May 7, 1997); Cleveland-Akron-Lorain, Ohio, final rulemaking (61 FR 20458, May 7, 1996); and Tampa, Florida, final rulemaking (60 FR 62748, December 7, 1995). See also the discussion on this issue in the Cincinnati, Ohio 1-hour ozone redesignation (65 FR 37890, June 19, 2000), and in the Pittsburgh, Pennsylvania 1-hour ozone redesignation (66 FR 50399, October 19, 2001).

We have reviewed Wisconsin's SIP and have concluded that it meets the general SIP requirements under section 110 of the CAA, to the extent those requirements are applicable for purposes of redesignation. EPA has previously approved provisions of the Wisconsin SIP addressing section 110 elements under the 1-hour ozone standard (40 CFR 52.2570). Further, in submittals dated December 12, 2007, January 24, 2011, and March 28, 2011, Wisconsin confirmed that the state continues to meet the section 110 requirements for the 8-hour ozone standard. EPA approved some elements of this Wisconsin submittal on July 13, 2011, at 76 FR 41075. The requirements of section 110(a)(2), however, are statewide requirements that are not linked to the 8-hour ozone nonattainment status of the Milwaukee-Racine and Sheboygan areas. Therefore, EPA concludes that these infrastructure SIP elements are not applicable requirements for purposes of review of the state's 8-hour ozone redesignation request.

EPA has determined that, if EPA finalizes the approval of the 2005 comprehensive emissions inventory, discussed in section V.C. of this rulemaking, and the VOC RACT submittal, discussed below under the heading “Subpart 2 Section 182(a) and (b) Requirements,” the Wisconsin SIP will meet the SIP requirements applicable for purposes of redesignation under part D of the CAA for the Milwaukee-Racine and Sheboygan areas. Subpart 1 of part D, found in sections 172-176 of the CAA, sets forth the basic nonattainment requirements applicable to all nonattainment areas. Subpart 2 of part D, which includes section 182 of the CAA, establishes additional specific requirements depending on the area's nonattainment classification.

The Milwaukee-Racine and Sheboygan areas were classified as moderate areas under subpart 2. Therefore, the state must meet the applicable requirements of both subpart 1 and subpart 2 of part D. The applicable subpart 1 requirements are contained in sections 172(c)(1)-(9) and in section 176. The applicable subpart 2 requirements are contained in sections 182(a) and (b) (marginal and moderate nonattainment area requirements).

Subpart 1 Section 172 Requirements. For purposes of evaluating this redesignation request, the applicable section 172 SIP requirements for the Milwaukee-Racine and Sheboygan areas are contained in sections 172(c)(1)-(9). A thorough discussion of the requirements contained in section 172 can be found in the General Preamble for Implementation of Title I (57 FR 13498, April 16, 1992).

Section 172(c)(1) requires the plans for all nonattainment areas to provide for the implementation of all RACM as expeditiously as practicable and to provide for attainment for the national primary ambient air quality standards. EPA interprets this requirement to impose a duty on all states containing nonattainment areas to consider all available control measures and to adopt and implement such measures as are reasonably available for implementation in each area as components of the area's attainment demonstration. Because attainment has been reached in the Milwaukee-Racine and Sheboygan areas, no additional measures are needed to provide for attainment and section 172(c)(1) requirements are no longer considered to be applicable as long as the area continues to attain the standard until redesignation. See 40 CFR 51.918.

The RFP requirement under section 172(c)(2) is defined as progress that must be made toward attainment. This requirement is not relevant for purposes of redesignation because the Milwaukee-Racine and Sheboygan areas have demonstrated monitored attainment of the 1997 8-hour ozone NAAQS. (General Preamble, 57 FR 13564). See also 40 CFR 51.918. In addition, because the Milwaukee-Racine and Sheboygan areas have attained the ozone NAAQS and are no longer subject to an RFP requirement, the section 172(c)(9) contingency measures are not applicable for purposes of redesignation. Id.

Section 172(c)(3) requires submission and approval of a comprehensive, accurate and current inventory of actual emissions. This requirement was superseded by the inventory requirement in section 182(a)(1) discussed below.

Section 172(c)(4) requires the identification and quantification of allowable emissions for major new and modified stationary sources in an area, and section 172(c)(5) requires source permits for the construction and operation of new and modified major stationary sources anywhere in the nonattainment area. EPA approved Wisconsin's current NSR program on December 17, 2008 (73 FR 76558 and 76560). Nonetheless, EPA has determined that, since PSD requirements will apply after redesignation, areas being redesignated need not comply with the requirement that a NSR program be approved prior to redesignation, provided that the area demonstrates maintenance of the NAAQS without part D NSR. A more detailed rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994, entitled, “Part D New Source Review Requirements for Areas Requesting Redesignation to Attainment.” Wisconsin has demonstrated that the Milwaukee-Racine and Sheboygan areas will be able to maintain the standard without part D NSR in effect; therefore, EPA concludes that the state need not have a fully approved part D NSR program prior to approval of the redesignation request. The state's PSD program will become effective in the Milwaukee-Racine and Sheboygan areas upon redesignation to attainment. See rulemakings for Detroit, Michigan (60 FR 12467-12468, March 7, 1995); Cleveland-Akron-Lorain, Ohio (61 FR 20458, 20469-20470, May 7, 1996); Louisville, Kentucky (66 FR 53665, October 23, 2001); and Grand Rapids, Michigan (61 FR 31834-31837, June 21, 1996).

Section 172(c)(6) requires the SIP to contain control measures necessary to provide for attainment of the standard. Because attainment has been reached, no additional measures are needed to provide for attainment.

Section 172(c)(7) requires the SIP to meet the applicable provisions of section 110(a)(2). As noted above, we believe the Wisconsin SIP meets the requirements of section 110(a)(2) for purposes of redesignation.

Subpart 1, Section 176 Conformity Requirements.

Section 176(c) of the CAA requires states to establish criteria and procedures to ensure that Federally-supported or funded activities, including highway projects, conform to the air quality planning goals in the applicable SIPs. The requirement to determine conformity applies to transportation plans, programs and projects developed, funded or approved under title 23 of the U.S. Code and the Federal Transit Act (transportation conformity) as well as to all other Federally-supported or funded projects (general conformity). State conformity revisions must be consistent with Federal conformity regulations relating to consultation, enforcement, and enforceability, which EPA promulgated pursuant to CAA requirements.

EPA interprets the conformity SIP requirements as not applying for purposes of evaluating the redesignation request under section 107(d) for two reasons. First, the requirement to submit SIP revisions to comply with the conformity provisions of the CAA continues to apply to areas after redesignation to attainment, since such areas would be subject to a section 175A maintenance plan. Second, EPA's Federal conformity rules require the performance of conformity analyses in the absence of Federally-approved state rules. Therefore, because areas are subject to the conformity requirements regardless of whether they are redesignated to attainment and, because they must implement conformity under Federal rules if state rules are not yet approved, it is reasonable to view these requirements as not applying for purposes of evaluating a redesignation request. See Wall v. EPA, 265 F.3d 426 (6th Cir. 2001), upholding this interpretation. See also 60 FR 62748, 62749-62750 (Dec. 7, 1995) (Tampa, Florida).

EPA approved Wisconsin's general and transportation conformity SIPs on July 29, 1996 (61 FR 39329) and August 27, 1996 (61 FR 43970), respectively. Wisconsin has submitted onroad motor vehicle budgets for the Milwaukee-Racine area of 21.08 tons per day (tpd) and 15.98 tpd VOC and 51.22 tpd and 31.91 tpd NO X for the years 2015 and 2022, respectively. Wisconsin has submitted onroad motor vehicle budgets for the Sheboygan area of 2.024 tpd and 1.615 tpd VOC and 4.321 tpd and 2.778 tpd NO X for the years 2015 and 2022, respectively. The areas must use the MVEBs from the maintenance plan in any conformity determination that is effective on or after the effective date of the maintenance plan approval.

Subpart 2 Section 182(a) and (b) Requirements .

Comprehensive Emissions Inventory. Section 182(a)(1) requires the submission of a comprehensive emissions inventory. As part of Wisconsin's redesignation request for the Milwaukee-Racine and Sheboygan areas, the state submitted a 2005 comprehensive emissions inventory. As discussed below in section V.C., EPA is proposing to approve the 2005 inventory as meeting the section 182(a)(1) comprehensive emissions inventory requirement.

Emissions Statements. EPA approved Wisconsin's emission statement SIP, as required by section 182(a)(3)(B), on December 6, 1993 (58 FR 64155).

Reasonable Further Progress and Attainment Demonstration. On September 11, 2009, Wisconsin submitted an attainment demonstration and RFP plans for the Milwaukee-Racine and Sheboygan areas as required by section 182(b)(1) of the CAA. Because attainment has been reached, section 182(b)(1) requirements are no longer considered to be applicable as long as the area continues to attain the standard. If EPA finalizes approval of the redesignation of the Milwaukee-Racine and Sheboygan areas, EPA will take no further action on the attainment demonstration and RFP plans submitted by Wisconsin for the areas.

VOC RACT Requirements. Section 182(b)(2) requires states with moderate nonattainment areas to implement RACT under section 172(c)(1) with respect to each of the following: (1) All sources covered by a Control Technology Guideline (CTG) document issued between November 15, 1990, and the date of attainment; (2) all sources covered by a CTG issued prior to November 15, 1990; and, (3) all other major non-CTG stationary sources. As required under the 1-hour ozone standard, Wisconsin submitted VOC RACT rules covering the second and third categories. EPA approved these VOC RACT rules on the following dates: August 15, 1994 (59 FR 41709), April 27, 1995 (60 FR 20643), June 30, 1995 (60 FR 34170), July 28, 1995 (60 FR 38722), February 12, 1996 (61 FR 5307), February 13, 1996 (61 FR 5514), April 4, 1996 (61 FR 14972), April 9, 1996 (61 FR 15706), April 25, 1996 (61 FR 18257), July 17, 1996 (61 FR 37216), August 29, 1996 (61 FR 45327), June 8, 2000 (65 FR 36351), November 13, 2001 (66 FR 56931), and September 22, 2006 (71 FR 55287). With respect to the first category, EPA issued CTGs for five source categories in September 2006 and three additional source categories in September 2007. Areas classified as moderate and above were required to submit VOC RACT for the source categories covered by these CTGs, by September 2007 and September 2008, respectively. Wisconsin submitted SIP revisions to address these CTGs on September 1, 2009, and November 16, 2011. EPA is taking action on these revisions in a separate rulemaking action. Full approval of Wisconsin's RACT submittals is a prerequisite for approval of the redesignation of the Milwaukee-Racine and Sheboygan areas to attainment.

NO X RACT. Section 182(f) establishes NO X requirements for ozone nonattainment areas. EPA approved Wisconsin's NO X RACT SIP on October 19, 2010 (75 FR 64155).

Stage II Vapor Recovery. Section 182(b)(3) requires states to submit Stage II rules no later than November 15, 1992. EPA approved Wisconsin's Stage II rule on August 13, 1993 (58 FR 43080), August 15, 1994 (59 FR 41709), and April 27, 1995 (60 FR 206423).

Vehicle Inspection and Maintenance (I/M). EPA's final I/M regulations in 40 CFR part 85 required the states to submit a fully adopted I/M program by November 15, 1993. EPA approved Wisconsin's enhanced I/M program on January 12, 1995 (60 FR 2881) and August 16, 2001 (66 FR 42949).

Thus, as discussed above, with approval of the comprehensive emissions inventory and Wisconsin's VOC RACT submittals, the Milwaukee-Racine and Sheboygan areas will satisfy the requirements applicable for purposes of redesignation under section 110 and part D of the CAA.

If EPA issues a final approval of the comprehensive emissions inventory and Wisconsin's VOC RACT submittals, EPA will have fully approved the Wisconsin SIP for the Milwaukee-Racine and Sheboygan areas under section 110(k) of the CAA for all requirements applicable for purposes of redesignation. EPA may rely on prior SIP approvals in approving a redesignation request ( See page three of the September 4, 1992, John Calcagni memorandum; Southwestern Pennsylvania Growth Alliance v. Browner, 144 F.3d 984, 989-990 (6th Cir. 1998); Wall v. EPA, 265 F.3d 426 (6th Cir. 2001)), plus any additional measures it may approve in conjunction with a redesignation action. See 68 FR 25413, 25426 (May 12, 2003). Since the passage of the CAA of 1970, Wisconsin has adopted and submitted, and EPA has fully approved, provisions addressing the various required SIP elements applicable to the Milwaukee-Racine and Sheboygan areas under the 1-hour ozone standard. In this action, EPA is proposing to approve Wisconsin's 2005 comprehensive emissions inventory for the Milwaukee-Racine and Sheboygan areas as meeting the requirement of section 182(a)(1) of the CAA. In a separate rule, EPA will take action on the Wisconsin VOC RACT submittals.

The anti-backsliding provisions at 40 CFR 51.905(a)(1) prescribe 1-hour ozone NAAQS requirements that continue to apply after the revocation of the 1-hour ozone NAAQS for former 1-hour ozone nonattainment areas. 40 CFR 51.905(a)(1)(i) provides that:

In addition to applicable requirements listed under 40 CFR 51.900(f) and as discussed above, the state must also comply with the 1-hour anti-backsliding requirements discussed in the DC Circuit's decisions in South Coast Air Quality Management Dist. v. EPA . See III.B.i, above.

Pursuant to 40 CFR 51.905(c), the Milwaukee-Racine area is subject to the obligations set forth in 40 CFR 51.905(a) and 40 CFR 51.900(f). The following paragraphs address the 1-hour ozone SIP requirements applicable to the Milwaukee-Racine area pursuant to all the anti-backsliding requirements described above.

Prior to the revocation of the 1-hour ozone standard on June 15, 2005, the Milwaukee-Racine area was classified as a severe nonattainment area for the 1-hour ozone standard with an attainment deadline of November 15, 2007, and was therefore subject to the ozone SIP requirements for severe 1-hour ozone nonattainment areas contained in sections 182(a) through 182(d) of the CAA. In reviewing Wisconsin's ozone redesignation request for the Milwaukee-Racine area, we assessed whether the area satisfied the CAA requirements under the 1-hour ozone standard. We conclude that this area and the state of Wisconsin have satisfied all anti-backsliding CAA requirements applicable to a severe ozone nonattainment area by complying with all applicable 1-hour ozone SIP requirements. The following discusses how the applicable CAA requirements have been met in the Milwaukee-Racine area.

Section 182(a)(2)(A) of the CAA requires RACT corrections. Section 182(b)(2) requires RACT for each category of VOC sources covered by a CTG and for all other major sources of VOC within an ozone nonattainment area. Section 182(d) specifies requirements for severe ozone nonattainment areas, including a major source emissions cut-off of 25 tons per year.

Under the 1-hour ozone standard, EPA fully approved Wisconsin's VOC RACT regulations as SIP revisions for CTG sources and for major non-CTG sources through rulemakings on the following dates: August 15, 1994 (59 FR 41709), April 27, 1995 (60 FR 20643), June 30, 1995 (60 FR 34170), July 28, 1995 (60 FR 38722), February 12, 1996 (61 FR 5307), February 13, 1996 (61 FR 5514), April 4, 1996 (61 FR 14972), April 9, 1996 (61 FR 15706), April 25, 1996 (61 FR 18257), July 17, 1996 (61 FR 37216), August 29, 1996 (61 FR 45327), June 8, 2000 (65 FR 36351), November 13, 2001 (66 FR 56931), and September 22, 2006 (71 FR 55287). These RACT SIP revisions include rules covering all non-CTG sources in the Milwaukee-Racine area with the potential to emit VOCs at or in excess of 25 tons per year.

EPA issued CTGs for five source categories in September 2006 and three additional source categories in September 2007. Areas classified as moderate and above for the 1997 8-hour standard were required to submit VOC RACT for the source categories covered by these CTGs by September 2007 and September 2008, respectively. Wisconsin submitted SIP revisions to address these CTGs on September 1, 2009, and November 16, 2011. EPA is taking action on these revisions in a separate rulemaking action. Full approval of Wisconsin's RACT submittals is a prerequisite for approval of the redesignation of the Milwaukee-Racine and Sheboygan areas to attainment.

EPA approved Wisconsin's enhanced I/M program on January 12, 1995 (60 FR 2881), and August 16, 2001 (66 FR 42949).

Sections 182(b)(1)(A) and 182(c)(2)(B) of the CAA establish the ROP requirements for ozone nonattainment areas. EPA has fully approved Wisconsin's SIP revisions that demonstrate that Wisconsin achieved ROP in the Milwaukee-Racine area. On March 22, 1996 (61 FR 11735), EPA approved Wisconsin's plan to achieve a 15 percent reduction in VOC emissions in the Milwaukee-Racine area, as required in section 182(b) of the CAA. On October 10, 2001 (66 FR 51572), EPA approved Wisconsin's plan to achieve ROP between 1996 and 1999 in this area, meeting the ROP requirements of section 182(c) of the CAA. Finally, on November 13, 2001 (66 FR 56931), EPA approved Wisconsin's plan to achieve ROP emission reductions for the period of 1999 through 2007.

EPA approved Wisconsin's Stage II rule on August 13, 1993 (58 FR 43080), August 15, 1994 (59 FR 41709), and April 27, 1995 (60 FR 206423).

EPA approved Wisconsin's clean fuel fleet program rules as required by section 182(c)(4) of the CAA on March 11, 1996 (61 FR 9639).

Section 182(e)(3) of the CAA, which requires clean fuels for boilers, does not apply to the Milwaukee-Racine area. This CAA requirement only applies to extreme ozone nonattainment areas.

This requirement applies to areas subject to section 182(e)(4) of the CAA, which covers extreme ozone nonattainment areas, and, therefore, does not apply to the Milwaukee-Racine area.

On March 18, 1994 (59 FR 1251), EPA approved Wisconsin's SIP revision establishing an enhanced monitoring program for ozone in the Milwaukee-Racine area, as required by section 182(c)(1) of the CAA.

Within six months of November 15, 1990, and every three years thereafter, section 182(c)(5) of the CAA requires states to submit a demonstration that current aggregate vehicle mileage, aggregate vehicle emissions, congestion levels, and other relevant traffic-related and vehicle emissions-related factors are consistent with those used for the area's ozone attainment demonstration for serious and above 1-hour ozone nonattainment areas. If the levels of relevant parameters that are projected in the attainment demonstration are exceeded, a state has 18 months to develop and submit a revision to the SIP to include TCMs to reduce mobile source emissions to levels consistent with the emission levels in the attainment demonstration.

The section 182(c)(5) requirements are included in those measures subject to EPA's interpretation under EPA's May 10, 1995, Clean Data Policy memorandum. As provided by the clean data policy, since the Milwaukee-Racine area is attaining the 1-hour ozone standard, any requirement for submitting the section 182(c)(5) measures for the Milwaukee-Racine area is suspended. See also 40 CFR 51.918.

Section 182(d)(1)(A) of the CAA requires severe ozone nonattainment areas to offset the growth in emissions attributed to growth in VMT; to select and implement TCMs necessary to comply with the periodic emission reduction requirements of sections 182(b) and (c); and, to consider TCMs specified in section 108(f) of the CAA, and implement TCMs as necessary to demonstrate attainment with the ozone standard. EPA approved Wisconsin's section 182(d)(1)(A) VMT SIP on May 5, 1995 (60 FR 22284), and September 11, 1995 (60 FR 47088).

Section 182(f) requires major sources of NO X in an ozone nonattainment area to be covered by emission control requirements equivalent to those required for major sources of VOC, unless EPA waives the NO X emission control requirements as provided in section 182(f). The section 182(f) NO X emission control requirements include NO X RACT in ozone nonattainment areas required to implement VOC RACT for 1-hour ozone nonattainment areas classified as moderate or above. On February 3, 1998 (63 FR 5460), EPA approved a NO X emissions control waiver for the Milwaukee-Racine area for the 1-hour ozone standard.

On November 13, 2001 (66 FR 56931), EPA approved Wisconsin's 1-hour ozone attainment demonstration SIP revision for the Milwaukee-Racine area.

EPA has determined that an area being redesignated need not have an approved nonattainment NSR program, provided that the state demonstrates maintenance of the standard in the area without part D NSR in effect. The rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994, entitled, “Part D New Source Review Requirements for Areas See III.3.a., above

The conformity portion of the court's ruling does not impact the redesignation request for the Milwaukee-Racine area except to the extent that the court, in its June 8, 2007, decision clarified that, for those areas with MVEBs for the 1-hour ozone standard, anti-backsliding requires that these MVEBs be used for 8-hour conformity determinations until replaced by MVEBs for the 8-hour ozone standard. To meet this requirement, conformity determinations in such areas must comply with the applicable requirements of EPA's conformity regulations at 40 CFR part 93. Note below that EPA is proposing to find adequate and approve 8-hour MVEBs established by Wisconsin's 8-hour ozone maintenance plans for the Milwaukee and Sheboygan areas.

The contingency measure requirements under sections 172(c)(9) and 182(c)(9) of the CAA must be addressed in state ozone RFP and attainment demonstration plans. Wisconsin addressed these requirements in the 1-hour ozone RFP and attainment demonstration plans for the Milwaukee-Racine area by adopting and implementing extra VOC and NO X emission controls that go beyond the emission reductions needed for RFP and attainment of the 1-hour ozone standard. EPA approved these ozone control plans, including their contingency elements as follows: VOC 15 percent RFP plan, March 22, 1996 (61 FR 11735); post-1996 RFP plan, November 10, 2001 (66 FR 51572); and 1-hour ozone attainment demonstration and post-1999 RFP plan, November 13, 2001 (66 FR 56931). Therefore, Wisconsin has met the contingency requirements of sections 172(c)(9) and 182(c)(9) of the CAA for the 1-hour ozone standard.

EPA approved an excess VOC emissions fee rule for the Milwaukee-Racine area on June 25, 2002 (67 FR 42729). On April 24, 2009 (74 FR 18641), EPA published a final rule making a determination that the Milwaukee-Racine area had attained the 1-hour ozone standard and confirming that this finding of attainment relieved Wisconsin of the obligation to adopt section 185 source penalty fee regulations for this area.

For the reasons discussed above, EPA concludes that Wisconsin has met all part D SIP requirements for the 1-hour ozone standard applicable to the Milwaukee-Racine area for purposes of redesignation, as addressed in the DC Circuit's and EPA's anti-backsliding requirements.

EPA finds that Wisconsin has demonstrated that the observed air quality improvement in the Milwaukee-Racine and Sheboygan areas is due to permanent and enforceable reductions in emissions resulting from implementation of the SIP, Federal measures, and other state-adopted measures.

In making this demonstration, the state has calculated the change in emissions between 2005 and 2008. For the nonattainment inventory, Wisconsin used the 2005 emissions inventory developed to meet the comprehensive emissions inventory requirement of section 182(a)(1) of the CAA. The state developed an attainment inventory for 2008, one of the years the Milwaukee-Racine and Sheboygan areas monitored attainment of the 1997 8-hour ozone standard. The reduction in emissions and the corresponding improvement in air quality over this time period can be attributed to a number of regulatory control measures that the Milwaukee-Racine and Sheboygan areas and upwind areas have implemented in recent years.

The following is a discussion of permanent and enforceable measures that have been implemented in the areas:

i. Automobile Inspection and Maintenance (I/M) program. Wisconsin operates an enhanced automobile inspection and maintenance program in the Milwaukee-Racine and Sheboygan areas.

ii. Stationary Source NO X Rules. As part of the state's ROP plan under the 1-hour ozone standard, Wisconsin adopted regulations that control NO X emissions at electric utilities and large industrial combustion sources and establish NO X emissions standards for new sources. The regulation of existing sources was estimated to achieve a 55 ton per day reduction by 2007.

iii. Federal Mobile Source Emission Control Measures. Reductions in VOC and NO X emissions have occurred statewide and in upwind areas as a result of Federal emission control measures, with additional emission reductions expected to occur in the future. Federal emission control measures include the following.

Tier 2 Emission Standards for Vehicles and Gasoline Sulfur Standards. These emission control requirements result in lower VOC and NO X emissions from new cars and light duty trucks, including sport utility vehicles. The Federal rules were phased in between 2004 and 2009. The EPA has estimated that, by the end of the phase-in period, the following vehicle NO X emission reductions will occur nationwide: passenger cars (light duty vehicles) (77 percent); light duty trucks, minivans, and sports utility vehicles (86 percent); and, larger sports utility vehicles, vans, and heavier trucks (69 to 95 percent). VOC emission reductions are expected to range from 12 to 18 percent, depending on vehicle class, over the same period. Some of these emission reductions occurred by the attainment years and additional emission reductions will occur throughout the maintenance period.

Heavy-Duty Diesel Engine Rule. In July 2000, EPA issued a rule, effective in 2004, that includes standards limiting the sulfur content of diesel fuel. A second phase took effect in 2007 which further reduced the highway diesel fuel sulfur content to 15 parts per million, leading to additional reductions in combustion NO X and VOC emissions. This rule is expected to achieve a 95 percent reduction in NO X emissions from diesel trucks and busses.

Nonroad Diesel Rule. EPA issued this rule in 2004. This rule applies to diesel engines used in industries, such as construction, agriculture, and mining. It is estimated that compliance with this rule will cut NO X emissions from nonroad diesel engines by up to 90 percent. Some of these emission reductions occurred by the attainment years and additional emission reductions will occur throughout the maintenance period.

iv. New Source Performance Standards (NSPS), National Emissions Standards for Hazardous Air Pollutants (NESHAPS) and Maximum Achievable Control Technology Standards (MACT). A broad range of emission sectors are subject to Federal NSPS, NESHAP, and MACT standards with compliance requirements which take effect over the attainment period.

v. Control Measures in Upwind Areas. On October 27, 1998 (63 FR 57356), EPA issued a NO X SIP Call requiring the District of Columbia and 22 states to reduce emissions of NO X. Affected states were required to comply with Phase I of the SIP Call beginning in 2004, and Phase II beginning in 2007. The reduction in NO X emissions has resulted in lower concentrations of transported ozone entering the Milwaukee-Racine and Sheboygan areas. Emission reductions resulting from regulations developed in response to the NO X SIP Call are permanent and enforceable.

Wisconsin is using the 2005 emissions inventory developed pursuant to section 182(a)(1) of the CAA as the nonattainment inventory. This inventory is discussed in more detail in section V.C., below. In summary, WDNR developed the point source inventory using actual reported emissions, EPA's Clean Air Markets Database and EPA techniques for emissions calculation. The area source inventory was created by backcasting Wisconsin's 2008 emissions inventory that was submitted to EPA for the National Emissions Inventory. The nonroad mobile inventory was created using EPA's National Mobile Inventory Model (NMIM) (2009/05/04 version). In addition, emissions estimates were developed for commercial marine vessels, aircraft, and railroads, three nonroad categories not included in the model. The onroad mobile source inventory was developed using EPA's MOVES2010a model. Wisconsin is using the 2008 emissions inventory for the attainment inventory. The point source sector of the emissions inventory was created using annually reported point source emissions, EPA's Clean Air Markets Database, and EPA techniques for emissions calculation. Emissions were estimated by collecting process-level information from each facility that qualifies for inclusion in the state's point source database. Area source emissions estimates were taken from the 2008 emissions inventory developed by WDNR to meet the periodic emissions inventory requirement of 40 CFR part 51, subpart A.

In general, area source emissions estimates were calculated using population, gasoline consumption, employment, crop acreages, and other activity surrogates along with emission factors. Emission factors were derived from local data, local or national surveys and EPA guidance for the development of emissions inventories. Nonroad emissions estimates were developed using EPA's NMIM (2009/05/04 version). In addition, emissions estimates were developed for commercial marine vessels, aircraft, and railroads, three nonroad categories not included in the model. The onroad mobile source inventory was developed using EPA's MOVES2010a model.

Using the inventories described above, Wisconsin's submittal documents changes in VOC and NO X emissions from 2005 to 2008 for the Milwaukee-Racine and Sheboygan areas. Emissions data are shown in Tables 2 through 4.

Table 4 shows that the Milwaukee-Racine area reduced VOC emissions by 19.85 tpd and NO X emissions by 54.22 tpd between 2005 and 2008, and the Sheboygan area reduced VOC emissions by 1.600 tpd and NO X emissions by 7.208 tpd between 2005 and 2008. Based on the information summarized above, Wisconsin has adequately demonstrated that the improvement in air quality is due to permanent and enforceable emissions reductions.

In conjunction with its requests to redesignate the Milwaukee-Racine and Sheboygan nonattainment areas to attainment status, WDNR submitted SIP revisions to provide for the maintenance of the 1997 8-hour ozone NAAQS in the areas through 2022.

Section 175A of the CAA sets forth the required elements of a maintenance plan for areas seeking redesignation from nonattainment to attainment. Under section 175A, the plan must demonstrate continued attainment of the applicable NAAQS for at least ten years after the Administrator approves a redesignation to attainment. Eight years after the redesignation, the state must submit a revised maintenance plan which demonstrates that attainment will continue to be maintained for ten years following the initial ten-year maintenance period. To address the possibility of future NAAQS violations, the maintenance plan must contain contingency measures with a schedule for implementation as EPA deems necessary to assure prompt correction of any future violations of the 1997 8-hour ozone standard.

The September 4, 1992, John Calcagni memorandum provides additional guidance on the content of a maintenance plan. The memorandum clarifies that an ozone maintenance plan should address the following items: The attainment VOC and NO X emissions inventories, a maintenance demonstration showing maintenance for ten years of the maintenance period, a commitment to maintain the existing monitoring network, factors and procedures to be used for verification of continued attainment of the NAAQS, and a contingency plan to prevent or correct future violations of the NAAQS.

WDNR developed an emissions inventory for 2008, one of the years Wisconsin used to demonstrate monitored attainment of the 1997 8-hour NAAQS, as described above. The attainment level of emissions is summarized in Table 3, above.

Along with the redesignation requests, WDNR submitted revisions to the 8-hour ozone SIP to include maintenance plans for the Milwaukee-Racine and Sheboygan areas, in compliance with section 175A of the CAA. These demonstrations show maintenance of the 1997 8-hour ozone standard through 2022 by assuring that current and future emissions of VOC and NO X for the Milwaukee-Racine and Sheboygan areas remain at or below attainment year emission levels. A maintenance demonstration need not be based on modeling. See Wall v. EPA, 265 F.3d 426 (6th Cir. 2001), Sierra Club v. EPA, 375 F. 3d 537 (7th Cir. 2004). See also 66 FR 53094, 53099-53100 (October 19, 2001), 68 FR 25413, 25430-25432 (May 12, 2003).

Wisconsin is using emissions inventories for the years 2015 and 2022 to demonstrate maintenance. The emissions inventories were developed as described below.

Electric Generating Unit (EGU) point source emissions for 2018 were estimated using IPM3.0. Non-EGU point source emissions for 2018 were derived by applying growth and control factors, developed by Pechan for the Lake Michigan Air Directors Consortium (LADCO), to the 2005 inventory. Growth factors were initially based on the Economic Growth and Analysis System (EGAS) model and were modified for select priority categories by examining emissions activity data. Projected emissions for 2015 and 2022 were estimated using linear interpolation and extrapolation from 2008 and 2018 emissions estimates.

Area source emissions inventories were created by projecting the 2008 emissions inventory. The emission projections were primarily based on growth factors from the EGAS model. If EGAS growth factors were not available, population based growth factors were used.

Nonroad emissions estimates were developed using EPA's NMIM model (2009/05/04 version). In addition, emissions estimates were developed for commercial marine vessels, aircraft, and railroads, three nonroad categories not included in the model. Onroad emissions estimates were generated using the MOVES2010a model.

Emissions data are shown in Tables 5 through 7 below.

The emission projections show that WDNR does not expect emissions in the Milwaukee-Racine and Sheboygan areas to exceed the level of the 2008 attainment year inventory during the maintenance period. In the Milwaukee-Racine area, WDNR projects VOC emissions to decrease by 36.79 tpd and NO X emissions to decrease by 73.88 tpd between 2008 and 2022. In the Sheboygan area, WDNR projects VOC emissions to decrease by 2.434 tpd and NO X emissions to decrease by 8.394 tpd between 2008 and 2022.

Further, ozone modeling performed by the Lake Michigan Air Directors Consortium supports the conclusion that the Milwaukee-Racine and Sheboygan areas will maintain the 1997 8-hour ozone standard throughout the maintenance period. Peak modeled ozone levels in the Milwaukee-Racine area for 2012 and 2018 are 0.080 ppm, and 0.077 ppm, respectively. Peak modeled ozone levels in the Sheboygan area for 2012 and 2018 are 0.081 ppm, and 0.076 ppm, respectively. These projected ozone levels were modeled applying only legally enforceable controls; e.g., consent decrees, rules, the NO X SIP Call, Federal motor vehicle control programs, etc.

As part of its maintenance plans, the state elected to include “safety margins” for the areas. A “safety margin” is the difference between the attainment level of emissions (from all sources) and the projected level of emissions (from all sources) in the maintenance plan, which continues to demonstrate attainment of the standard. The attainment level of emissions is the level of emissions during one of the years in which the area met the NAAQS. The Milwaukee-Racine and Sheboygan areas attained the 8-hour ozone NAAQS during the 2006-2008, 2007-2009, and 2008-2010 time periods. Wisconsin used 2008 as the attainment level of emissions for the areas. In the maintenance plans, WDNR projected emission levels for 2022. For the Milwaukee-Racine area, the emissions from point, area, nonroad, and onroad mobile sources in 2008 equaled 155.76 tpd of VOC. WDNR projected VOC emissions for the year 2022 to be 118.97 tpd of VOC. The SIP submission demonstrates that the Milwaukee-Racine area will continue to maintain the standard with emissions at this level. The safety margin for VOC is calculated to be the difference between these amounts or, in this case, 36.79 tpd of VOC for 2022. By this same method, for the Milwaukee-Racine area, 73.88 tpd ( i.e., 192.00 tpd less 118.12 tpd) is the safety margin for NO X for 2022. For the Sheboygan area, the safety margin for 2022 is 2.434 tpd of VOC and 8.394 tpd of NO X . The safety margin, or a portion thereof, can be allocated to any of the source categories, as long as the total attainment level of emissions is maintained.

Wisconsin currently operates ten ozone monitors in the Milwaukee-Racine area and one monitor in the Sheboygan area. WDNR has committed to continue to monitor ozone levels in the areas. WDNR will work with EPA should changes in siting become necessary. Wisconsin remains obligated to meet monitoring requirements and continue to quality assure monitoring data in accordance with 40 CFR part 58, and to enter all data into the AQS in accordance with Federal guidelines.

Continued attainment of the ozone NAAQS in the Milwaukee-Racine and Sheboygan areas depends, in part, on the state's efforts toward tracking indicators of continued attainment during the maintenance period. Wisconsin's plan for verifying continued attainment of the 8-hour standard in the Milwaukee-Racine and Sheboygan consists of plans to continue ambient ozone monitoring in accordance with the requirements of 40 CFR part 58. WDNR will also continue to develop and submit periodic emission inventories as required by the Federal Consolidated Emissions Reporting Rule (67 FR 39602, June 10, 2002) to track future levels of emissions.

The contingency plan provisions are designed to promptly correct or prevent a violation of the NAAQS that might occur after redesignation of an area to attainment. Section 175A of the CAA requires that a maintenance plan include such contingency measures as EPA deems necessary to assure that the state will promptly correct a violation of the NAAQS that occurs after redesignation. The maintenance plan should identify the contingency measures to be adopted, a schedule and procedure for adoption and implementation of the contingency measures, and a time limit for action by the state. The state should also identify specific indicators to be used to determine when the contingency measures need to be adopted and implemented. The maintenance plan must include a requirement that the state will implement all measures with respect to control of the pollutant(s) that were contained in the SIP before redesignation of the area to attainment. See section 175A(d) of the CAA.

As required by section 175A of the CAA, Wisconsin has adopted contingency plans for the Milwaukee-Racine and Sheboygan areas to address possible future ozone air quality problems. A contingency plan response will be triggered whenever a three-year average fourth-high monitored value of 0.085 ppm or greater is monitored within the maintenance area. When a response is triggered, WDNR will evaluate existing but not fully implemented, forthcoming, and, if necessary, new control measures to correct the violation of the standard within 18 months. Wisconsin has confirmed EPA's interpretation that this commitment means that the measure will be adopted and implemented within 18 months of the triggering event. In addition, it is EPA's understanding that to acceptably address a violation of the standard, existing and forthcoming control measures must be in excess of emissions reductions included in the projected maintenance inventories.

WDNR included the following list of potential contingency measures in its maintenance plans:

i. Broaden the application of the NO X RACT program by including a larger geographic area, and/or including sources with potential emissions of 50 tons per year, and/or increasing the cost-effectiveness thresholds utilized as a basis for Wisconsin's NOx RACT Program;

ii. Develop an anti-idling control program for mobile sources targeting diesel vehicles;

iii. Adopt a rule reducing VOC content in architectural, industrial and maintenance coatings; and

iv. Adopt a rule reducing VOC content in commercial and consumer products.

As required by section 175A(b) of the CAA, WDNR commits to submit to the EPA updated ozone maintenance plans eight years after redesignation of the Milwaukee-Racine and Sheboygan areas to cover an additional ten-year period beyond the initial ten-year maintenance period. As required by section 175A of the CAA, Wisconsin has committed to retain the VOC and NO X control measures contained in the SIP prior to redesignation.

EPA has concluded that the maintenance plans adequately address the five basic components of a maintenance plan: Attainment inventory, maintenance demonstration, monitoring network, verification of continued attainment, and a contingency plan. Thus EPA proposes to find that the maintenance plan SIP revisions submitted by Wisconsin for the Milwaukee-Racine and Sheboygan areas meet the requirements of section 175A of the CAA.

Under the CAA, states are required to submit, at various times, control strategy SIP revisions and ozone maintenance plans for ozone nonattainment areas and for areas seeking redesignations to attainment of the ozone standard. These emission control strategy SIP revisions ( e.g., RFP and attainment demonstration SIP revisions) and ozone maintenance plans create MVEBs based on onroad mobile source emissions for criteria pollutants and/or their precursors to address pollution from onroad transportation sources. The MVEBs are the portions of the total allowable emissions that are allocated to highway and transit vehicle use that, together with emissions from other sources in the area, will provide for attainment or maintenance.

Under 40 CFR part 93, a MVEB for an area seeking a redesignation to attainment is established for the last year of the maintenance plan. The MVEB serves as a ceiling on emissions from an area's planned transportation system. The MVEB concept is further explained in the preamble to the November 24, 1993, transportation conformity rule (58 FR 62188).

Under section 176(c) of the CAA, new transportation projects that receive Federal funding or support, such as the construction of new highways, must “conform” to ( i.e., be consistent with) the SIP. Conformity to the SIP means that transportation activities will not cause new air quality violations, worsen existing air quality violations, or delay timely attainment of the NAAQS. If a transportation plan does not conform, most new transportation projects that would expand the capacity of roadways cannot go forward. Regulations at 40 CFR part 93 set forth EPA policy, criteria, and procedures for demonstrating and assuring conformity of such transportation activities to a SIP.

When reviewing SIP revisions containing MVEBs, including attainment strategies, rate-of-progress plans, and maintenance plans, EPA must affirmatively approve or find that the MVEBs are “adequate” for use in determining transportation conformity before the MVEBs can be used. Once EPA affirmatively approves or finds the submitted MVEBs to be adequate for transportation conformity purposes, the MVEBs must be used by state and Federal agencies in determining whether proposed transportation projects conform to the SIP as required by section 176(c) of the CAA. EPA's substantive criteria for determining the adequacy of MVEBs are set out in 40 CFR 93.118(e)(4).

EPA's process for determining adequacy of a MVEB consists of three basic steps: (1) Providing public notification of a SIP submission; (2) providing the public the opportunity to comment on the MVEB during a public comment period; and, (3) EPA taking action on the MVEB. The process for determining the adequacy of submitted SIP MVEBs is codified at 40 CFR 93.118.

The maintenance plans submitted by Wisconsin for the Milwaukee-Racine and Sheboygan areas contain new VOC and NO X MVEBs for the areas for the years 2015 and 2022. The availability of the SIP submission with these 2015 and 2022 MVEBs was announced for public comment on EPA's Adequacy Web site on December 6, 2011, at: http://www.epa.gov/otaq/stateresources/transconf/currsips.htm. The EPA public comment period on adequacy of the 2015 and 2022 MVEBs for the Milwaukee-Racine and Sheboygan areas closed on January 5, 2012. No adverse comments on the submittal were received during the adequacy comment period. The submitted maintenance plan, which included the MVEBs, was endorsed by the Governor (or his or her designee) and was subject to a state public hearing. The MVEBS were developed as part of an interagency consultation process which includes Federal, state, and local agencies. The MVEBS were clearly identified and precisely quantified. These MVEBs, when considered together with all other emissions sources, are consistent with maintenance of the 1997 8-hour ozone standard.

EPA, through this rulemaking, has found adequate and is proposing to approve the MVEBs for use to determine transportation conformity in the Milwaukee-Racine and Sheboygan areas, because EPA has determined that the areas can maintain attainment of the 8-hour ozone NAAQS for the relevant maintenance period with mobile source emissions at the levels of the MVEBs. WDNR has determined the 2015 MVEBs for the Milwaukee-Racine and Sheboygan areas to be 21.08 tpd for VOC and 51.22 tpd for NO X , and 2.024 tpd for VOC and 4.321 tpd for NO X , respectively. WDNR has determined the 2022 MVEBs for the Milwaukee-Racine and Sheboygan areas to be 15.98 tpd for VOC and 31.91 tpd for NO X , and 1.615 tpd for VOC and 2.778 tpd for NO X , respectively. These MVEBs are consistent with the onroad mobile source VOC and NO X emissions projected by the Wisconsin Department of Transportation for 2015 and 2022, as summarized in Table 7 above. Wisconsin has demonstrated that the Milwaukee-Racine area can maintain the 8-hour ozone NAAQS with mobile source emissions of 21.08 tpd and 15.98 tpd of VOC and 51.22 tpd and 31.91 tpd of NO X in 2015 and 2022, respectively, since emissions will remain under attainment year emission levels. Wisconsin has demonstrated that the Sheboygan area can maintain the 8-hour ozone NAAQS with mobile source emissions of 2.024 tpd and 1.615 tpd of VOC and 4.321 tpd and 2.778 tpd of NO X in 2015 and 2022, respectively, since emissions will remain under attainment year emission levels.

As discussed above, section 182(a)(1) of the CAA requires states containing areas classified as marginal and above to submit a comprehensive emissions inventory. As part of Wisconsin's redesignation request for the Milwaukee-Racine and Sheboygan areas, the state submitted a 2005 comprehensive emissions inventory. Emissions contained in the submittal cover the general source categories of point sources, area sources, nonroad mobile sources and onroad mobile sources.

WDNR developed the point source inventory using annually reported point source emissions, EPA's Clean Air Markets Database and EPA techniques for emissions calculation. Where feasible, Federal, state and local controls were factored into the emission calculations. Emissions were estimated by collecting process-level information from each facility that qualifies for inclusion in the Wisconsin's point source database.

The area source inventory was created by backcasting Wisconsin's 2008 emissions inventory that WDNR submitted to EPA for the National Emissions Inventory. The backcasting factors were primarily based on growth factors from the EGAS model. If growth factors were not available for source classification code, population based growth factors were used.

The nonroad mobile inventory was created using NMIM (2009/05/04 version). In addition, emissions estimates were developed for commercial marine vesels, aircraft, and railroads, three nonroad categories not included in the model. Through LADCO, Pechan, an independent contractor, provided marine and rail emission estimates. Aircraft emissions were calculated using the Federal Aviation Administration's Emissions and Dispersion Modeling System.

The Onroad mobile source inventory was developed using EPA's MOVES2010a model. Emissions estimates were made in accordance with the User Guide for MOVES2010a  4 and Technical Guidance on the Use of MOVES2010 for Emission Inventory Preparation in State Implementation Plans and Transportation Conformity  5 .

The 2005 emissions estimates are summarized in Table 2, above. EPA is proposing to approve the 2005 emissions inventory as meeting the section 182(a)(1) comprehensive emissions inventory requirement for the Milwaukee-Racine and Sheboygan areas.

After evaluating the redesignation requests submitted by Wisconsin, EPA concludes that the requests meet the redesignation criteria set forth in section 107(d)(3)(E) of the CAA. Therefore, EPA is proposing to approve the redesignation of the Milwaukee-Racine and Sheboygan areas from nonattainment to attainment for the 1997 8-hour ozone NAAQS. EPA is also proposing to approve Wisconsin's maintenance plan SIP revisions for the Milwaukee-Racine and Sheboygan areas. EPA's proposed approval of the maintenance plans is based on the state's demonstration that the plans meet the requirements of section 175A of the CAA, as described more fully above. EPA is also proposing to approve WDNR's 2005 comprehensive emissions inventories for the Milwaukee-Racine and Sheboygan areas as meeting the requirements of section 182(a)(1) of the CAA. Finally, EPA finds adequate under 40 CFR 93.118(e) and is proposing to approve Wisconsin's 2015 and 2022 MVEBs for the Milwaukee-Racine and Sheboygan areas.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because redesignation is an action that affects the status of a geographical area and does not impose any new regulatory requirements on tribes, impact any existing sources of air pollution on tribal lands, nor impair the maintenance of ozone national ambient air quality standards in tribal lands. However, because there are tribal lands located in Milwaukee County, we provided the affected tribe with the opportunity to consult with EPA on the redesignation. The affected tribe raised no concerns with the proposed rule.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

When submitting comments, remember to:

1. Identify the rulemaking by docket number and other identifying information (subject heading, Federal Register date and page number).

2. Follow directions—EPA may ask you to respond to specific questions or organize comments by referencing a Code of Federal Regulations (CFR) part or section number.

3. Explain why you agree or disagree; suggest alternatives and substitute language for your requested changes.

4. Describe any assumptions and provide any technical information and/or data you used.

5. If you estimate potential costs or burdens, explain how you arrived at your estimate in sufficient detail to allow for it to be reproduced.

6. Provide specific examples to illustrate your concerns, and suggest alternatives.

7. Explain your views as clearly as possible, avoiding the use of profanity or personal threats.

8. Make sure to submit your comments by the comment period deadline identified in the proposed rule.

EPA is proposing to take several related actions. First, EPA is proposing to approve the redesignation of the Illinois portion of the Greater Chicago area from nonattainment to attainment of the 1997 8-hour ozone NAAQS. EPA is also proposing to approve Illinois' ozone maintenance plan for the Illinois portion of the Greater Chicago area as a revision of the Illinois SIP (such approval being one of the CAA criteria for redesignation to attainment). The ozone maintenance plan demonstrates that the Greater Chicago area should remain in attainment of the 1997 8-hour ozone standard through 2025, and specifies the measures that will be taken in the Illinois portion of the Greater Chicago area to assure maintenance of the 1997 8-hour ozone standard in the Greater Chicago area.

EPA is proposing to approve 2002 VOC and NO X emission inventories for the Illinois portion of the Greater Chicago area as a revision of the Illinois SIP. These emission inventories satisfy the requirements in section 182(a)(1) of the CAA for comprehensive, accurate, and current emission inventories.

Finally, EPA is proposing to approve VOC and NO X 2008 and 2025 MVEBs for the Illinois portion of the Greater Chicago area.

EPA has determined that ground-level ozone (O 3 ) is detrimental to human health. On July 18, 1997 (62 FR 38856), EPA promulgated an 8-hour ozone NAAQS of 0.08 parts per million parts of air (0.08 ppm) (the 1997 8-hour ozone standard). This standard is violated in an area when any monitor in the area records 8-hour ozone concentrations with a 3-year average of the annual fourth-highest daily maximum 8-hour ozone concentrations equaling or exceeding 0.085 ppm.

Ground-level ozone is generally not emitted directly by sources. Rather, emitted NO X and VOC react in the presence of sunlight to form ground-level ozone, as a secondary pollutant, along with other secondary compounds. NO X and VOC are “ozone precursors.” Reduction of peak ground-level ozone concentrations is achieved through controlling VOC and NO X emissions.

Section 107 of the CAA required EPA to designate as nonattainment any area that violated the 1997 8-hour ozone standard. EPA promulgated 8-hour ozone designations and classifications on April 30, 2004 (69 FR 23857). The Greater Chicago area was designated and classified as a moderate nonattainment area for the 1997 8-hour ozone standard. The designation and classification became effective on June 15, 2004.

The CAA contains two sets of provisions, subparts 1 and 2, that address planning and emission control requirements for ozone nonattainment areas. Both of these subparts are found in title I, part D of the CAA; sections 171-179 and sections 181-185, respectively. Subpart 1 contains general, less prescriptive requirements for all nonattainment areas of any pollutant, including ozone, governed by a NAAQS. Subpart 2 contains additional, more specific requirements for certain ozone nonattainment areas, and applies to ozone nonattainment areas classified under section 181 of the CAA.

Under EPA's implementation rule for the 1997 8-hour ozone standard (69 FR 23951, April 30, 2004), an area was classified under subpart 2 based on its 8-hour ozone design value (i.e., the 3-year average annual fourth-highest daily maximum 8-hour average ozone concentration at the worst-case monitoring site in the area or in its immediate downwind environs), if it had a 1-hour ozone design value  1 at the time of designation at or above 0.121 ppm. All other areas were covered under subpart 1 based on their 8-hour ozone design values  2 (69 FR 23958). The Greater Chicago area was designated as a subpart 2 moderate ozone nonattainment area by EPA on April 30, 2004 (69 FR 23898), based on air quality monitoring data from 2001-2003 (69 FR 23898).

40 CFR 50.10 and 40 CFR part 50, appendix I provide that the 8-hour ozone standard is attained when the 3-year averages of the annual fourth-highest daily maximum 8-hour average ozone concentrations at all monitoring sites in the area are less than or equal to 0.08 ppm. The ozone data must be complete over the 3-year period, meeting the data completeness requirements of 40 CFR part 50, appendix I, section 2.3(d).

On March 27, 2008 (73 FR 16436), EPA promulgated a revised 8-hour ozone standard of 0.075 ppm (the 2008 8-hour ozone standard). EPA has not yet promulgated area designations for this standard. The actions addressed in this proposed rule relate only to the 1997 8-hour ozone standard.

On July 23, 2009, IEPA requested that EPA redesignate the Illinois portion of the Greater Chicago area to attainment for the 1997 8-hour ozone standard based on ozone data for the period of 2006-2008. On September 16, 2011, IEPA supplemented the original redesignation request, submitting ozone data for the period of 2008-2010, revising the mobile source emission estimates using EPA's new on-road mobile source emissions model, MOVES, and extending the demonstration of maintenance through 2025, with new MVEBs.

On December 22, 2006, the U.S. Court of Appeals for the District of Columbia Circuit (D.C. Circuit) vacated EPA's Phase 1 implementation rule for the 1997 8-hour ozone standard (69 FR 23591, April 30, 2004). South Coast Air Quality Management Dist. v. EPA, 472 F.3d 882 (D.C. Cir. 2006). On June 8, 2007, in response to several petitions for rehearing, the D.C. Circuit Court (Court) clarified that the Phase 1 rule was vacated only for those parts of the rule that had been successfully challenged. Id., Docket No. 04 1201. Therefore, several provisions of the Phase 1 rule remain effective: Provisions related to classifications for areas currently classified under subpart 2 of title I, part D of the CAA as 8-hour ozone nonattainment areas; 8-hour ozone attainment dates for these areas; and, the timing of emission reductions needed for attainment of the 8-hour ozone NAAQS in these areas. The June 8, 2007, decision also left intact the Court's rejection of EPA's reasons for implementing the 8-hour ozone standard in certain nonattainment areas under subpart 1 in lieu of subpart 2 of the CAA. By limiting the vacatur, the Court let stand EPA's revocation of the 1-hour ozone standard and those anti-backsliding provisions of the Phase 1 rule that had not been successfully challenged.

The June 8, 2007, decision reaffirmed the December 22, 2006, decision that EPA had failed to retain four measures required for 1-hour ozone nonattainment areas under the anti-backsliding provisions of the regulations: (1) Part D New Source Review (NSR) requirements based on an area's 1-hour nonattainment classification; (2) section 185 penalty fees for 1-hour severe or extreme ozone nonattainment areas; (3) measures to be implemented pursuant to section 172(c)(9) or 182(c)(9) of the CAA, on the contingency of an area not making reasonable further progress toward attainment of the 1-hour ozone NAAQS, or for failure to attain the NAAQS; and, (4) certain transportation conformity requirements for Federal actions. The June 8, 2007, decision clarified that the Court's reference to conformity requirements was limited to requiring the continued use of 1-hour MVEBs until 8-hour MVEBs are available for the 8-hour conformity determinations.

This section sets forth EPA's views on the potential effect of the Court's rulings on this proposed redesignation action. For the reasons set forth below in sections III.B.2 and B.3, EPA does not believe that the Court's rulings alter any requirements relevant to this redesignation action so as to preclude redesignation, and do not prevent EPA from proposing and ultimately finalizing this redesignation. EPA believes that the Court's decisions impose no impediment to moving forward with redesignation of this area to attainment, because, even in light of the Court's decisions, redesignation is appropriate under the relevant redesignation provisions of the CAA and longstanding policies regarding redesignation requests.

With respect to the 1997 8-hour ozone standard, the Greater Chicago area is classified as moderate nonattainment under subpart 2, part D of the CAA. The June 8, 2007, decision clarifies that the Court did not vacate the Phase 1 rule's provisions with respect to classifications for areas under subpart 2. The Court's decision, therefore, upholds EPA's classifications for those areas classified under subpart 2 for the 1997 8-hour ozone standard, and all 8-hour ozone requirements for these areas remain in place.

In its June 8, 2007, decision, the Court limited its Phase 1 rule vacatur so as to uphold provisions of EPA's anti-backsliding requirements that were not successfully challenged. Therefore, an area must meet the anti-backsliding requirements which apply by virtue of the area's classification for the 1-hour ozone standard. See 40 CFR 51.900, et seq.; 70 FR 30592, 30604 (May 26, 2005). As set forth in more detail below, the area must address four anti-backsliding provisions identified by the Court in its decisions.

The anti-backsliding provisions at 40 CFR 51.905(a)(1) prescribe 1-hour ozone standard requirements that continue to apply after revocation of the 1-hour ozone standard for former 1-hour ozone nonattainment areas. Section 51.905(a)(1)(i) provides that:

With regard to part D NSR requirements, EPA has determined that an area being redesignated to attainment need not have an approved nonattainment NSR program, provided that the state demonstrates maintenance of the standard in the area without part D NSR in effect. The rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation dated October 14, 1994, titled, “Part D New Source Requirements for Areas Requesting Redesignation to Attainment.” This policy assumes that the state's Prevention of Significant Deterioration (PSD) program will become effective in the area upon redesignation of the area to attainment. Consequently, EPA concludes that an approved part D NSR program is not an applicable requirement for purposes of redesignation. See the more detailed explanations of this issue in the following rulemakings: Detroit, Michigan (60 FR 12467-12468 (March 7, 1995); Cleveland-Akron-Lorain, Ohio (61 FR 20458, 20469-20470, May 7, 1996); Louisville, Kentucky (66 FR 53665, 53669, October 23, 2001); Grand Rapids, Michigan (61 FR 31831, 31836-31837, June 21, 1996).

The conformity portion of the Court's ruling does not impact the redesignation request for the Illinois portion of the Greater Chicago area except to the extent that the Court, in its June 8, 2007, decision clarified that, for those areas with MVEBs for the 1-hour ozone standard, anti-backsliding requires that these MVEBs must be used for 8-hour conformity determinations until replaced by MVEBs for the 8-hour ozone standard. To meet this requirement, conformity determinations in such areas must comply with the applicable requirements of EPA's conformity regulations at 40 CFR part 93. Note below that EPA is proposing to find adequate and approve 8-hour MVEBs established by Illinois' 8-hour ozone maintenance plan for the Illinois portion of the Greater Chicago area.

Severe ozone nonattainment areas must meet the CAA requirement for section 185 source penalty fees. Since the Greater Chicago area was classified as severe nonattainment under the 1-hour ozone standard, the Illinois portion of the Greater Chicago area and the Illinois SIP for this area are subject to this CAA requirement. It should be noted, however, that on December 30, 2008 (73 FR 79652), EPA published a final rule making a determination that the Greater Chicago area had attained the 1-hour ozone standard and confirming that this finding of attainment relieved Illinois (and Indiana) of the obligation to adopt section 185 source penalty fee regulations for this area.

Finally, with regard to the contingency measure requirements under sections 172(c)(9) and 182(c)9) of the CAA, it is noted that these requirements must be addressed in state ozone Reasonable Further Progress (RFP) and attainment demonstration plans. Illinois addressed these requirements in the 1-hour ozone RFP and attainment demonstration plans for the Illinois portion of the Greater Chicago area by adopting and implementing extra VOC and NO X emission controls that go beyond the emission reductions needed for RFP and attainment of the 1-hour ozone standard. EPA approved these ozone control plans, including their contingency elements: VOC-15 percent RFP plan (December 18, 1997, 62 FR 66279); post-1996 RFP plan (December 18, 2000, 65 FR 78961); and, 1-hour ozone attainment demonstration and post-1999 RFP plan (November 13, 2001, 66 FR 56904). Therefore, Illinois has met the contingency requirements of sections 172(c)(9) and 182(c)(9) of the CAA for the 1-hour ozone standard. As noted later in this proposed rule, Illinois has committed to retain and to implement all VOC and NO X emission control measures under the 1-hour ozone RFP and attainment plans for the Illinois portion of the Greater Chicago area.

The CAA provides the basic requirements for redesignating a nonattainment area to attainment. Specifically, section 107(d)(3)(E) of the CAA authorizes redesignation provided that: (1) The Administrator determines that the area has attained the applicable NAAQS based on current air quality data; (2) the Administrator has fully approved an applicable state implementation plan for the area under section 110(k) of the CAA; (3) the Administrator determines that the improvement in air quality is due to permanent and enforceable emission reductions resulting from implementation of the applicable SIP, Federal air pollution control regulations, and other permanent and enforceable emission reductions; (4) the Administrator has fully approved a maintenance plan for the area meeting the requirements of section 175A of the CAA; and, (5) the state has met all requirements applicable to the area under section 110 and part D of the CAA.

EPA provided guidance on redesignations in the General Preamble for the Implementation of Title I of the CAA Amendments of 1990 on April 16, 1992 (57 FR 13498), and supplemented this guidance on April 28, 1992 (57 FR 18070).

Two significant policy documents affecting the review of ozone redesignation requests are the following: (1) “Procedures for Processing Requests To Redesignate Areas to Attainment,” Memorandum from John Calcagni, Director, Air Quality Management Division, September 4, 1992 (the September 4, 1992 Calcagni memorandum); and, (2) “Reasonable Further Progress, Attainment Demonstration, and Related Requirements for Ozone Nonattainment Areas Meeting the Ozone National Ambient Air Quality Standard,” Memorandum from John S. Seitz, Director, Office of Air Quality Planning and Standards, May 10, 1995 (the May 10, 1995 Clean Data Policy memorandum). Additional guidance on processing redesignation requests is included in the following documents:

• “Maintenance Plans for Redesignation of Ozone and Carbon Monoxide Nonattainment Areas,” Memorandum from G.T. Helms, Chief Ozone/Carbon Monoxide Programs Branch, April 30, 1992;

• “Contingency Measures for Ozone and Carbon Monoxide (CO) Redesignations,” Memorandum from G.T. Helms, Chief, Ozone/Carbon Monoxide Programs Branch, June 1, 1992;

• “State Implementation Plan (SIP) Actions Submitted in Response to Clean Air Act (Act) Deadlines,” Memorandum from John Calcagni, Director, Air Quality Management Division, October 28, 1992;

• “Technical Support Documents (TSDs) for Redesignation of Ozone and Carbon Monoxide (CO) Nonattainment Areas,” Memorandum from G.T. Helms, Chief, Ozone/Carbon Monoxide Programs Branch, August 17, 1993;

• “State Implementation Plan (SIP) Requirements for Areas Submitting Requests for Redesignation to Attainment of the Ozone and Carbon Monoxide (CO) National Ambient Air Quality Standards (NAAQS) On or After November 15, 1992,” Memorandum from Michael H. Shapiro, Acting Assistant Administrator for Air and Radiation, September 17, 1993;

• “Use of Actual Emissions in Maintenance Demonstrations for Ozone and CO Nonattainment Areas,” Memorandum from D. Kent Berry, Acting Director, Air Quality Management Division, November 30, 1993; and,

• “Part D New Source Review (Part D NSR) Requirements for Areas Requesting Redesignation to Attainment,” Memorandum from Mary D. Nichols, Assistant Administrator for Air and Radiation, October 14, 1994.

EPA is proposing to approve Illinois' ozone redesignation request for the Illinois portion of the Greater Chicago area with a determination that the Greater Chicago area has attained the 1997 8-hour ozone standard based on current ozone monitoring data for 2008-2010 and that the State of Illinois and the Illinois portion of this area have met all other applicable redesignation criteria for the 1997 8-hour ozone standard under section 107(d)(3)(E) of the CAA. The basis for EPA's proposed approval of the redesignation request is discussed in more detail as follows.

An area may be considered to be attaining the 1997 8-hour ozone NAAQS if there are no violations of the NAAQS, as determined in accordance with 40 CFR 50.10 and appendix I, based on the most recent 3 consecutive years of complete, quality-assured air quality monitoring data at all ozone monitoring sites in the area and in its nearby downwind environs. To attain this standard, the average of the annual fourth-high daily maximum 8-hour average ozone concentrations measured and recorded at each monitoring site over the most recent 3-year period (the monitoring site's ozone design value) must not exceed 0.084 ppm. The data must be collected and quality-assured in accordance with 40 CFR part 58, and must be recorded in EPA's Air Quality System (AQS).

As part of the July 23, 2009, ozone redesignation request, IEPA summarized the annual fourth-high daily maximum 8-hour ozone concentrations and the 3-year 8-hour ozone design values for the period of 2006-2008 for all ozone monitoring sites in the Greater Chicago area. This ozone data summary also includes ozone concentration data for the Chiwaukee Prairie monitoring site in Wisconsin, an ozone peak downwind impact site for ozone precursor emissions originating in the Greater Chicago area. The September 16, 2011, updated ozone redesignation request from Illinois also summarized the annual fourth-high ozone data for all monitoring sites for the period of 2006-2008.

Table 1 summarizes the monitoring site-specific annual fourth-high daily maximum 8-hour ozone concentrations and 3-year ozone design values for all monitoring sites covered in Illinois' ozone redesignation request for the period of 2006-2010. Note that we have included 2009 and 2010 ozone monitoring data in this summary. These additional data were obtained from EPA's AQS. Since Illinois' July 23, 2009, submittal of the ozone redisignation request, 2009 and 2010 ozone monitoring data have been quality assured and submitted to EPA's AQS.

IEPA notes that the 2006-2008 ozone design values for all monitoring sites are below the 0.084 ppm attainment level. We also note that the 2008-2010 ozone design values for all monitoring sites are below the 0.084 ppm attainment level. Therefore, the ozone monitoring data for the Greater Chicago area and for Chiwaukee Prairie in Wisconsin show attainment of the 1997 8-hour ozone standard.

IEPA commits to continue ozone monitoring at the Illinois monitoring sites in accordance with EPA-approved monitoring plans, as required to confirm maintenance of the 1997 8-hour ozone standard. Should changes in the ozone monitoring system become necessary, IEPA commits to work with the EPA to assure the continued adequacy of the ozone monitoring network in the Illinois portion of the Greater Chicago area.

Based on the available ozone monitoring data, we conclude that the Greater Chicago area has attained the 1997 8-hour ozone standard, and has continued to attain this ozone standard through the most recent three years of quality-assured ozone monitoring data.

In April 2004, the Greater Chicago area was designated as a moderate nonattainment area with a June 15, 2010, attainment deadline for the 1997 8-hour ozone standard. Prior to this, the Greater Chicago area had been designated as a severe nonattainment area with a November 15, 2007, attainment deadline for the 1-hour ozone standard. As a result of these nonattainment designations, the State of Illinois was required to submit SIP revisions that meet certain ozone planning and emission control requirements of the CAA.

The September 4, 1992, Calcagni memorandum confirms that a state with an area seeking redesignation to attainment has to fully adopt rules and meet SIP requirements that come due prior to the submittal of a complete redesignation request. See also 60 FR 12459, 12465-66 (March 7, 1995) (redesignation of Detroit-Ann Arbor, Michigan); 68 FR 25424, 25427 (May 12, 2003) (redesignation of St. Louis); Sierra Club v. EPA, 375 F.3d 537 (7th Cir. 2004); and, 70 FR 19895, 19900 (April 15, 2005) (redesignation of Cincinnati). Furthermore, requirements of the CAA that come due subsequent to the state's submittal of a complete redesignation request would continue to be applicable to the area until redesignation to attainment is approved, but are not required as a prerequisite for redesignation (see section 175A(c) of the CAA). If the redesignation is disapproved or is not completed due to a subsequent violation of the ozone standard in the area prior to final approval of the state's ozone redeignation request, the state remains obligated to fulfill these CAA requirements.

We are proposing to determine that the State of Illinois and the Illinois portion of the Greater Chicago area have met all currently applicable SIP requirements for purposes of redesignation of the Illinois portion of the Greater Chicago area to attainment of the 1997 8-hour ozone standard under section 110 and part D of the CAA. We have determined that the Illinois SIP, with the exception of the 2002 base year VOC and NO X emission inventories and certain VOC RACT rules: (1) Meets all SIP requirements currently applicable for purposes of redesignation under part D of title I of the CAA, in accordance with section 107(d)(3)(E)(v) of the CAA; and, (2) is fully approved with respect to all applicable requirements for purposes of redesignation to attainment of the 1997 8-hour ozone standard, in accordance with section 107(d)(3)(E)(ii) of the CAA.

As discussed below in section VII, EPA is proposing to approve Illinois' 2002 base year VOC and NO X emission inventories as meeting the SIP emission inventory requirement of section 182(a)(1) of the CAA. If EPA approves the emission inventories in a final rule, Illinois will have met the ozone precursor emission inventory requirements of the CAA.

In the September 16, 2011, submittal the IEPA submitted VOC emission control regulations and other rule revisions needed to meet the VOC RACT requirements of the CAA. 3 On November 30, 2011, EPA proposed to approve all of these regulations and rule revisions as revisions of the Illinois SIP. If these VOC emission control regulations and revised rules are approved through a final rulemaking and are incorporated into the Illinois SIP, Illinois will have met the CAA requirements for VOC RACT.

Recognizing that the base year VOC and NO X emission inventories and VOC RACT rules must be approved on or before we complete final rulemaking approving Illinois' ozone redesignation request, we determine here that, assuming that these approvals occur, Illinois will have met all applicable section 110 and part D SIP requirements of the CAA for purposes of approval of Illinois' ozone redesignation request for the Illinois portion of the Greater Chicago area. In making this determination, we have ascertained what SIP requirements are applicable to the Illinois portion of the Greater Chicago area for purposes of redesignation.

Section 110(a) of the CAA contains the general requirements for a SIP. Section 110(a)(2) provides that the SIP implemented by a state must have been adopted by the state after reasonable public notice and hearing, and that, among other things, it must: (1) Include enforceable emission limitations and other control measures, means or techniques necessary to meet the requirements of the CAA; (2) provide for establishment and operation of appropriate devices, methods, systems and procedures necessary to monitor ambient air quality; (3) provide for implementation of a source permit program to regulate the modification and construction of stationary sources within the areas covered by the plan; (4) include provisions for the implementation of part C PSD and part D NSR permit programs; (5) include criteria for stationary source emission control measures, monitoring, and reporting; (6) include provisions for air quality modeling; and, (7) provide for public and local agency participation in planning and emission control rule development.

Section 110(a)(2)(D) of the CAA requires SIPs to contain measures to prevent sources in a state from significantly contributing to air quality problems in another state. To implement this provision, EPA has required certain states to establish programs to address transport of certain air pollutants, e.g., NO X SIP call. 4 However, the section 110(a)(2)(D) SIP requirements are not linked with a particular area's designation and classification. EPA concludes that the SIP requirements linked with an area's designation and classification are the relevant measures to evaluate when reviewing a redesignation request for the area. The section 110(a)(2)(D) requirements, where applicable, continue to apply to a state regardless of the designation of any one particular area within the state. Thus, we believe these requirements are not applicable requirements for purposes or redesignation. See 65 FR 37890 (June 15, 2000), 66 FR 50399 (October 19, 2001), 68 FR 25418, 25426-27 (May 13, 2003).

Further, we believe that section 110(a)(2) elements, other than those described above that are not connected with nonattainment plan submissions and that are not linked with an area's attainment status are also not applicable requirements for purposes of redesignation. A state remains subject to these requirements regardless of an area's designation and after the area is redesignated to attainment. We conclude that only the section 110 and part D requirements that are linked with an area's designation and classification are the relevant measures for evaluating this aspect of a redesignation request. This approach is consistent with EPA's policy on applicability of conformity and oxygenated fuel requirements for redesignation purposes, as well as with section 184 ozone transport requirements. See: Reading, Pennsylvania proposed and final rulemakings (61 FR 53174-53176, October 10, 1996 and 62 FR 24826, May 7, 1997); Cleveland-Akron-Loraine, Ohio final rulemaking (61 FR 20458, May 7, 1996); and Tampa, Florida final rulemaking (60 FR 62748, December 7, 1995). See also the discussion on this issue in the Cincinnati, Ohio ozone redesignation (65 FR 37890, June 19, 2000), and the Pittsburgh, Pennsylvania ozone redesignation (66 FR 50399, October 19, 2001).

We have reviewed the Illinois SIP and conclude that it meets the general SIP requirements under section 110 of the CAA applicable to the State's request for redesignation. EPA has previously approved provisions of the Illinois SIP addressing section 110 elements under the 1-hour ozone standard (40 CFR 52.720 and 40 CFR 52.722). Further, in a submittal dated December 12, 2007, Illinois confirmed that the State continues to meet the section 110(a)(2) infrastructure requirements for the 8-hour ozone standard. EPA approved elements of this Illinois submittal on July 13, 2011, at 76 FR 41075. The requirements of section 110(a)(2), however, are statewide requirements that are not linked to the 8-hour ozone nonattainment status of the Illinois portion of the Greater Chicago area. Therefore, EPA concludes that these infrastructure elements are not applicable requirements for purposes of review of the State's 8-hour ozone redesignation request.

EPA has determined that, if EPA finalizes the approval of the 2002 base year VOC and NO X emission inventories and the Illinois VOC RACT rules, discussed below under the heading “Subpart 2 Section 182(a) and (b) Requirements,” the Illinois SIP will meet the SIP requirements applicable for purposes of redesignation under part D of the CAA for the Illinois portion of the Greater Chicago area. Subpart 1 of part D, found in sections 172-176 of the CAA, sets forth the basic nonattainment area requirements applicable to all nonattainment areas. Subpart 2 of part D, which includes section 182 of the CAA, establishes additional, specific requirements for ozone nonattainment areas depending on an area's ozone nonattainment classification.

As noted above, the Greater Chicago area was classified as moderate nonattainment for the 1997 8-hour ozone standard under subpart 2 of part D of the CAA. Therefore, Illinois must meet the requirements of subpart 1 and subpart 2 of part D of the CAA applicable for purposes of redesignation. The applicable subpart 1 requirements are contained in sections 172(c)(1)-(9) and 176 of the CAA. The applicable subpart 2 requirements are contained in sections 182(a)-(b) (moderate nonattainment area requirements) of the CAA.

A thorough discussion of the requirements contained in section 172 can be found in the General Preamble for Implementation of Title I (57 FR 13498, April 16, 1992).

Section 172(c)(1) requires the state plans for all nonattainment areas to provide for the implementation of Reasonably Available Control Measures (RACM), including RACT at a minimum, as expeditiously as practicable. EPA interprets this requirement to impose a duty on all states with nonattainment areas to consider all available control measures and to adopt and implement such measures as are reasonably available for implementation in the areas as components of the areas' attainment demonstrations (the attainment demonstrations must address RACM). Because attainment of the 1997 8-hour ozone standard has been reached in the Greater Chicago area, no additional RACM measures, beyond RACT, are needed to provide for attainment, and section 172(c)(1) requirements (other than RACT) are no longer considered to be applicable as a prerequisite for approval of Illinois' redesignation request, provided the Greater Chicago area continues to attain the standard until redesignation of the Illinois portion of the area occurs. See 57 FR 13498, 13564 (April 16, 1991), 40 CFR 51.918.

Section 172(c)(2) requires plans for all nonattainment areas to provide for RFP toward attainment of the NAAQS. This requirement is not relevant to the Greater Chicago area for purposes of redesignation because the Greater Chicago area has monitored attainment of the 1997 8-hour ozone standard. General Preamble, 57 FR 13564. In addition, pursuant to EPA's determination of attainment of the 1997 8-hour ozone standard for the Greater Chicago area, the requirement for RFP under section 172(c)(2), as well as the section 172(c)(9) contingency measure requirement, is suspended pursuant to 40 CFR 51.918.

Section 172(c)(3) requires submission and EPA approval of a comprehensive, accurate, and current inventory of actual emissions. This requirement is superseded by the emission inventory requirement in section 182(a)(1) of the CAA. See the discussion of Illinois' emissions inventory for the Illinois portion of the Greater Chicago area below in section VII of this proposed rule.

Section 172(c)(4) requires the identification and quantification of emissions for major new and modified stationary sources to be allowed in an area, and section 172(c)(5) requires source permits for the construction and operation of new and modified major stationary sources in the nonattainment area. EPA approved the Illinois NSR program  5 on December 17, 1992 (57 FR 59928), September 27, 1995 (60 FR 49780), and May 13, 2003 (68 FR 25504). Further, EPA has determined that, since PSD requirements  6 will apply after redesignation, an area being redesignated to attainment need not comply with the requirement that a NSR program be approved prior to redesignation, provided that the state demonstrates maintenance of the NAAQS in the area without implementation of part D NSR. A more detailed rationale for this view is described in a memorandum from Mary Nichols, Assistant Administrator for Air and Radiation, dated October 14, 1994, titled “Part D New Source Review Requirements for Areas Requesting Redesignation to Attainment.” Illinois has demonstrated that the Greater Chicago area will be able to maintain the 1997 8-hour ozone standard without the continued implementation of the State's part D NSR program. Therefore, EPA concludes that the State need not have a fully approved part D NSR program as an applicable requirement for approval of the State's ozone redesignation request. The State's PSD program will become effective in the Chicago area upon redesignation to attainment of the 1997 8-hour ozone standard. See redesignation rulemakings for Detroit, Michigan (60 FR 12467-12468, March 7, 1995); Cleveland-Akron-Lorain, Ohio (61 FR 20458, 20469-20470, May 7, 1996); Louisville, Kentucky (66 FR 53665, October 23, 2001); and, Grand Rapids, Michigan (61 FR 31834-31837, June 21, 1996).

Section 172(c)(6) requires the SIP to contain emission control measures necessary to provide for attainment of the standard. Because attainment has been reached in the Greater Chicago area, no additional emission control measures are needed to provide for attainment of the standard.

Section 172(c)(7) requires the SIP to meet the applicable provisions of section 110(a)(2). As noted above, in section V.B.1.a, we conclude the Illinois SIP meets the requirements of section 110(a)(2) applicable for purposes of redesignation.

Section 176(c) of the CAA requires States to establish criteria and procedures to ensure that Federally-supported or funded activities, including highway projects, conform to the air quality planning goals of the SIPs. The requirement to determine conformity applies to transportation plans, programs, and projects developed, funded, or approved under title 23 of the U.S. Code and the Federal Transit Act (transportation conformity) as well as to all other Federally-supported or funded projects (general conformity). State conformity SIP revisions must be consistent with Federal conformity regulations relating to consultation, enforcement, and enforceability, which EPA promulgated pursuant to CAA requirements.

EPA thinks that it is reasonable to interpret the conformity SIP requirements as not applying for purposes of evaluating the redesignation request under section 107(d) for two reasons. First, the requirement to submit SIP revisions to comply with the conformity provisions of the CAA continues to apply to areas after redesignation to attainment since such areas would be subject to section 175A maintenance plans. Second, EPA's Federal conformity rules require the performance of conformity analyses in the absence of Federally-approved state rules. Therefore, because areas are subject to the conformity requirements regardless of whether they are redesignated to attainment and, because they must implement conformity under Federal rules if state rules are not yet approved, EPA believes it is reasonable to view these requirements as not applying for purposes of evaluating a redesignation request. See Wall v. EPA, 265 F.3d 426 (6th Cir. 2001), upholding this interpretation. See also 60 FR 62748, 62749-62750 (December 7, 1995) (Tampa, Florida).

EPA approved Illinois' general conformity SIP on December 23, 1997 (62 FR 67000). Illinois does not have a Federally-approved transportation conformity SIP. However, Illinois performs conformity analyses pursuant to EPA's Federal conformity rules. Illinois has submitted on-road motor vehicle emission budgets for the Illinois portion of the Greater Chicago area of 117.23 tons VOC per ozone season weekday and 373.52 tons NO X per ozone season weekday for 2008 and 48.13 tons VOC per ozone season weekday and 125.27 tons NO X per ozone season weekday for 2025, respectively. Illinois must use these MVEBs in any conformity determination that is effective on or after the effective date of the ozone maintenance plan approval.

As set forth in the September 4, 1992, and September 17, 1993, EPA guidance memoranda referenced in section IV of this action, only those requirements which came due prior to Illinois' July 23, 2009, submittal of the request for redesignation of the Illinois portion of the Greater Chicago area must be fully approved into the SIP by the time EPA approves the redesignation of the area to attainment. These requirements are discussed below.

Comprehensive Emissions Inventory. Section 182(a)(1) requires the submission of a comprehensive, accurate, current emission inventory of ozone precursor emissions as a revision of the SIP. IEPA submitted inventories of 2002 VOC and NO X emissions for the Illinois portion of the Greater Chicago area on June 21, 2006, to meet the requirements of section 182(a)(1). On September 16, 2011, IEPA supplemented the 2002 emissions inventory with updated on-road mobile source emission estimates based on the use of EPA's MOVES model. As discussed below, EPA is proposing to approve the 2002 emission inventories as meeting the section 182(a)(1) emission inventory requirement.

Emission Statements. Section 182(a)(3)(B) requires a State to adopt provisions in the SIP to require the owners or operators of stationary sources of VOC or NO X to provide the state with annual statements of actual emissions from the sources. EPA approved Illinois' emission statement SIP revisions on September 9, 1993 (58 FR 47379), and May 15, 2002 (67 FR 34614).

Reasonable Further Progress and Attainment Demonstrations. On July 2, 2007, IEPA submitted an attainment demonstration for the Greater Chicago area and an RFP plan for the Illinois portion of the Greater Chicago area as required by section 182(b)(1) of the CAA. Because attainment has been reached, 7 section 182(b)(1) planning requirements are no longer considered to be applicable for purposes of redesignation as long as the area continues to attain the standard. If EPA finalizes approval of the redesignation of the Illinois portion of the Greater Chicago area, EPA will take no further action on the ozone attainment demonstration and RFP plan submitted by Illinois for this area.

VOC RACT. Section 182(b)(2) requires states with moderate ozone nonattainment areas to implement RACT under section 172(c)(1) with respect to each of the following: (1) All sources covered by a Control Technology Guideline (CTG) document issued between November 15, 1990, and the date of attainment; (2) all sources covered by a CTG document issued prior to November 15, 1990; and, (3) all other major non-CTG stationary sources. 8

As required under the 1-hour ozone standard, Illinois submitted VOC RACT rules covering the second and third source categories above. EPA approved these VOC RACT rules on February 21, 1980 (45 FR 11472), November 21, 1987 (52 FR 45333), and September 9, 1994 (59 FR 46562).

EPA issued CTGs for five source categories in September 2006, three source categories in September 2007, and five source categories in September 2008. States with ozone nonattainment areas classified as moderate and above were required to submit VOC RACT for the source categories covered by these CTGs within one year after the release of each CTG, by September 2007, September 2008, and September 2009, respectively.

Illinois submitted a SIP revision to address all of the new CTGs on July 29, 2010, September 16, 2011, and September 29, 2011. EPA is taking action on these revisions in a separate rulemaking action. Full approval of IEPA's VOC RACT submittals is a prerequisite for approval of the redesignation of the Illinois portion of the Greater Chicago area to attainment of the 1997 8-hour ozone standard.

NO X RACT. Section 182(f) of the CAA establishes NO X requirements for ozone nonattainment areas. Section 182(f)(1) generally requires major sources of NO X to be covered by the same levels of emission controls as required for major sources of VOC. Since moderate (or above) ozone nonattainment areas are required to be covered by RACT rules for major VOC sources, these ozone nonattainment areas are also required to have NO X RACT rules. Section 182(f)(1) of the CAA, however, also provides that the requirement for such NO X emission controls does not apply (can be waived) in an area if the Administrator determines that net air quality benefits are greater in the absence of the NO X emission reductions. The NO X emission control requirements can also be waived if the Administrator determines that additional reductions of NO X emissions would not contribute to attainment of the ozone NAAQS.

In its July 29, 2010, submittal, IEPA requested a waiver from the NO X RACT requirements based on the fact that the 1997 8-hour ozone standard had been attained in the Greater Chicago area and additional NO X emission reductions in this area are not needed to attain the ozone standard. Based on a clean air determination for this area for the 1997 8-hour ozone standard, EPA granted Illinois a waiver from NO X RACT for this area on February 22, 2011 (76 FR 9655).

Stage II Vapor Recovery. Section 182(b)(3) of the CAA requires states with moderate nonattainment areas to submit Stage II vapor recovery rules (requiring the capture of gasoline vapor at service stations during vehicle refueling). EPA approved Illinois' Stage II vapor recovery regulations on January 12, 1993 (58 FR 3841). Illinois has implemented and continues to implement Stage II vapor recovery rules in the Illinois portion of the Greater Chicago area.

Vehicle Inspection and Maintenance (I/M). Section 182(b)(4) of the CAA and EPA's final I/M regulations in 40 CFR part 85 require states with moderate (or above) ozone nonattainment areas to submit a fully adopted I/M programs as a revision of the SIP. EPA approved Illinois' enhanced I/M program on February 22, 1999 (64 FR 8517).

Thus, as discussed above, with EPA approval of the 2002 base year emission inventories and Illinois' VOC RACT submittals, the Illinois portion of the Greater Chicago area will satisfy the requirements applicable for purposes of redesignation under section 110 and part D of the CAA.

If EPA issues a final approval of the 2002 base year emission inventories and the Illinois VOC RACT submittals, EPA will have fully approved the Illinois SIP for the Illinois portion of the Greater Chicago area under section 110(k) of the CAA for all requirements applicable for purposes of redesignation. EPA may rely on prior SIP approvals when rulemaking on a redesignation request (see page 3 of the September 4, 1992, John Calcagni memorandum; Southwestern Pennsylvania Growth Alliance v. Browner, 144 F.3d 984, 989-990 (6th Cir. 1998), Wall v. EPA, 265 F.3d 426 (6th Cir. 2001)) plus any additional measures it may approve in conjunction with a redesignation action. See 68 FR 25412, 25426 (May 12, 2003).

Since the passage of the CAA of 1970, Illinois has adopted and submitted, and EPA has fully approved, SIP provisions addressing various required SIP elements under the 1-hour ozone standard. In this action, EPA is proposing to approve Illinois' 2002 base year emission inventories for the Illinois portion of the Greater Chicago area as meeting the requirement of section 182(a)(1) of the CAA. As noted above, in a separate rule, EPA is proposing action on the Illinois VOC RACT submittals.

No SIP provisions for the Illinois portion of the Greater Chicago area are currently disapproved, conditionally approved, or partially approved.

The anti-backsliding provisions at 40 CFR 51.905(a)(1) prescribe 1-hour ozone NAAQS requirements that continue to apply after the revocation of the 1-hour ozone NAAQS for former 1-hour ozone nonattainment areas. 40 CFR 51.905(a)(1) provides that:

In addition to applicable requirements listed under 40 CFR 51.900(f) and as discussed above, the state must also comply with the 1-hour anti-backsliding requirements discussed in the Court's decisions in South Coast Air Quality Management Dist. v. EPA: (1) NSR requirements based on the area's 1-hour ozone nonattainment classification; (2) section 185 source penalty fees; (3) contingency measures to be implemented pursuant to section 172(c)(9) or 182(c)(9) of the CAA for areas not making reasonable further progress toward attainment of the 1-hour ozone NAAQS, or for failure to attain the 1-hour ozone NAAQS; and, (4) transportation conformity requirements for certain types of Federal actions.

Pursuant to 40 CFR 51.905(c), the Illinois portion of the Greater Chicago area is subject to the obligations set forth in 40 CFR 51.905(a) and 40 CFR 51.900(f). The following paragraphs address the 1-hour ozone SIP requirements applicable to the Illinois portion of the Greater Chicago area pursuant to these anti-backsliding requirements and those discussed in the Court's decision in South Coast Air Quality Management Dist. v. EPA. Note that Illinois commits to continue to comply with these requirements unless revised through SIP revisions approved by EPA.

Prior to the revocation of the 1-hour ozone standard on June 15, 2005, the Greater Chicago area was classified as a severe nonattainment area for the 1-hour ozone standard with an attainment deadline of November 15, 2007, and, therefore, was subject to ozone SIP requirements for severe 1-hour ozone nonattainment areas (sections 182(a) through 182(d) of the CAA). In reviewing Illinois' ozone redesignation request for the Illinois portion of the Greater Chicago area, we assessed whether the area satisfied the CAA requirements under the 1-hour ozone standard. We conclude that this area and the State of Illinois have satisfied all anti-backsliding CAA requirements applicable to a severe ozone nonattainment area by complying with all applicable 1-hour ozone SIP requirements. The following discusses how the applicable CAA requirements have been met in the Illinois portion of the Greater Chicago area.

Section 182(a)(2)(A) of the CAA requires RACT corrections. Section 182(b)(2) requires RACT for each category of VOC sources covered by a CTG and for all other major sources of VOC within an ozone nonattainment area. Section 182(d) specifies requirements for severe ozone nonattainment areas, including a major source emissions cut-off of 25 tons per year. Section 182(f), as discussed above in section V.B.2, requires major sources of NO X in an ozone nonattainment area to be covered by emission control requirements equivalent to those required for major sources of VOC, unless EPA waives the NO X emission control requirements as provided in section 182(f). The section 182(f) NO X emission control requirements include NO X RACT in ozone nonattainment areas required to implement VOC RACT for 1-hour ozone nonattainment areas classified as moderate or above.

Under the 1-hour ozone standard, EPA fully approved Illinois' VOC RACT regulations as SIP revisions for CTG sources and for major non-CTG sources through rulemakings on the following dates: February 21, 1980 (45 FR 11472); November 21, 1987 (52 FR 45333); and, September 9, 1994 (59 FR 46562). As noted elsewhere in this proposed rule, on September 16, 2011, Illinois EPA submitted final, adopted VOC emission control regulations covering CTG-source categories not yet addressed and covered by the Illinois ozone SIP. As noted above, on July 29, 2010, Illinois submitted a NO X RACT waiver request for the Illinois portion of the Chicago area. On February 22, 2011, at 76 FR 9655, we approved Illinois' NO X RACT waiver request for this area based on an ozone clean air determination. This suspended the NO X RACT requirement for the Illinois portion of the Greater Chicago area for as long the Greater Chicago area continues to attain the 1997 8-hour ozone standard, and becomes permanent for the 1997 8-hour ozone standard if EPA approves the redesignation of the Illinois portion of the Greater Chicago area to attainment of this standard.

As noted elsewhere in this proposed rule, we cannot approve Illinois' ozone redesignation request in a final rule until we can also approve all of Illinois' required VOC RACT rules through a final rule. With these new final rule approvals, we can conclude that Illinois has met all RACT requirements under the 1-hour ozone standard, as well as the 1997 8-hour ozone standard.

Through rulemaking on February 22, 1999 (64 FR 8517), EPA fully approved Illinois' vehicle I/M program as meeting the enhanced I/M requirements of section 182(c)(3) of the CAA. Therefore, the Illinois portion of the Greater Chicago area meets the I/M requirements for severe 1-hour ozone nonattainment areas.

We have determined that Illinois' VOC RACT rules for CTG source categories already incorporated into Illinois' ozone SIP and the new CTG-based VOC RACT rules currently being reviewed by the EPA cover source size cut-offs that are well below CTG-recommended major source cut-offs for severe ozone nonattainment areas. In addition, Illinois' major non-CTG source RACT rule covers all sources with the potential to emit VOC at or in excess of 25 tons per year. Therefore, Illinois' RACT rules meet the major source size cut-off requirement of section 182(d) of the CAA.

Sections 182(b)(1)(A) and 182(c)(2)(B) of the CAA establish the ROP requirements for ozone nonattainment areas. EPA has fully approved Illinois' SIP revisions that demonstrate that Illinois achieved ROP in the Illinois portion of the Greater Chicago area. On December 18, 1997, at 62 FR 66279, EPA approved Illinois' plan to achieve a 15 percent reduction in VOC emissions in the Illinois portion of the Greater Chicago area, as required in section 182(b) of the CAA. On December 18, 2000, at 65 FR 78961, EPA approved Illinois' plan to achieve ROP between 1996 and 1999 in this area, meeting the ROP requirements of section 182(c) of the CAA. Finally, on November 13, 2001, at 66 FR 56904, EPA approved Illinois' plan to achieve ROP emission reductions for the period of 1999 through 2007. Therefore, Illinois has met all 1-hour ozone ROP requirements for the Illinois portion of the Greater Chicago area.

On January 12, 1993 (58 FR 3841), EPA approved Illinois' Stage II gasoline vapor recovery rules for the Illinois portion of the Greater Chicago area as required by section 182(b)(3) of the CAA.

On March 19, 1996, at 61 FR 11139, EPA approved Illinois' clean fuel fleet program rules as required by section 182(c)(4) of the CAA. Therefore, the State of Illinois has met this CAA requirement under the 1-hour ozone standard.

Section 182(e)(3) of the CAA, which requires clean fuels for boilers, does not apply to the Greater Chicago area. This CAA requirement only applies to extreme ozone nonattainment areas.

This requirement applies to areas subject to section 182(e)(4) of the CAA, which covers extreme ozone nonattainment areas, and, therefore, does not apply to the Greater Chicago area.

On February 25, 1994, EPA fully approved Illinois' SIP revision establishing an enhanced monitoring program for ozone in the Illinois portion of the Greater Chicago area. Therefore, Illinois has complied with the enhanced monitoring requirement of section 182(c)(1) of the CAA.

Within six months of November 15, 1990, and every three years thereafter, section 182(c)(5) of the CAA requires states to submit a demonstration that current aggregate vehicle mileage, aggregate vehicle emissions, congestion levels, and other relevant traffic-related and vehicle emissions-related factors (collectively “relevant parameters”) are consistent with those used for the area's ozone attainment demonstration for serious and above 1-hour ozone nonattainment areas. If the levels of relevant parameters that are projected in the attainment demonstration are exceeded, a state has 18 months to develop and submit a revision to the SIP to include TCMs to reduce mobile source emissions to levels consistent with the emission levels in the attainment demonstration.

On December 26, 2000, Illinois submitted a SIP revision request consisting of an adopted emissions control strategy and a demonstration that the Greater Chicago area would attain the 1-hour ozone standard by November 15, 2007, the statutory attainment deadline for the area. EPA approved this requested SIP revision on November 13, 2001 (66 FR 56904). This SIP revision provided base period mobile source information for the Chicago area that can be compared to subsequent mobile source information needed to demonstrate compliance with section 182(c)(5) of the CAA. Through revisions to State's emissions inventory data, submitted to EPA every three years, Illinois has updated the mobile source emissions, and related mobile source data, in the Illinois portion of the Greater Chicago area on a three-year cycle. These updated mobile source emissions can be compared to those documented in the December 26, 2000 Illinois submittal to show the downward trend in mobile source emissions. EPA, therefore, concludes that Illinois has complied with the requirements of section 182(c)(5), has no currently due section 182(c)(5) obligations.

In addition, the section 182(c)(5) requirements are also included in those measures subject to EPA's interpretation under EPA's May 10, 1995, Clean Data Policy memorandum. That is, attainment of the 1-hour ozone standard suspends the need for the State to submit additional TCMs under section 182(c)(5) of the CAA. EPA, therefore, concludes that, since the Greater Chicago area is attaining the 1-hour ozone standard, 9 any requirement for submitting the section 182(c)(5) measures for the Illinois portion of the Greater Chicago area is suspended. See also 40 CFR 51.918.

Section 182(d)(1)(A) of the CAA requires severe ozone nonattainment areas to offset the growth in emissions attributed to growth in VMT; to select and implement TCMs necessary to comply with the periodic emission reduction requirements of sections 182(b) and (c); and, to consider TCMs specified in section 108(f) of the CAA, and implement TCMs as necessary to demonstrate attainment with the ozone standard. Through rulemaking on September 21, 1995, at 60 FR 48896, EPA approved Illinois' TCMs as meeting these requirements of the CAA.

As noted above, EPA approved a NO X emissions control waiver for the Illinois portion of the Greater Chicago area for the 1-hour ozone standard. See 61 FR 2428, January 26, 1996. In addition, we have approved Illinois' NO X emission control regulations, adopted in response to EPA's NO X SIP call. See 66 FR 56449 and 66 FR 56454, both published on November 8, 2001.

As noted above, on November 13, 2001, at 66 FR 56904, EPA fully approved Illinois' 1-hour ozone attainment demonstration SIP revision for the Greater Chicago area. Therefore, Illinois has met the ozone attainment demonstration requirements of sections 182(b)(1)(A) and 182(c)(2)(A) of the CAA for the 1-hour ozone standard.

As noted elsewhere in this proposed rule, EPA believes that a part D NSR program is not an applicable requirement for purposes of evaluating an ozone redesignation request. EPA has determined that states with areas being redesignated to attainment need not have an approved part D NSR program, provided that the states demonstrate maintenance of the standard without part D NSR programs in effect.

Nonetheless, as also discussed above, the Court's decision in South Coast Air Management Dist. v. EPA preserved 1-hour part D NSR requirements as an anti-backsliding requirement. Section 182(a)(2)(C) of the CAA requires states to adopt part D NSR permit programs and to correct the existing part D NSR permit programs to meet EPA NSR guidance issued prior to 1990. EPA approved Illinois' NSR permit program as meeting EPA's guidance and CAA part D NSR requirements for the 1-hour ozone standard, including the requirements in sections 182(c)(6), (c)(7) and (c)(8), and the source offset requirements in section 182(d)(2), through rulemakings on September 27, 1995 (60 FR 49778).

Regardless of how one views the part D NSR requirements of the CAA for purposes of redesignation, we concluded that Illinois has met the NSR requirements with regard to Illinois' ozone redesignation request. The State has an approved NSR program, and the approval status of this NSR program is not relevant to Illinois' ozone redesignation request.

On December 30, 2008 (73 FR 79652), EPA finalized a determination that the Greater Chicago area had attained the 1-hour ozone standard based on 2005-2007 ozone data. Based on the determination of attainment, the section 185 fee requirements no longer apply to the Illinois portion of the Greater Chicago area and to the State of Illinois.

Sections 172(c)(9) and 182(c)(9) of the CAA require the ozone control portion of SIPs to contain measures to be implemented in the event that any milestone (standard attainment date, rate-of-progress emission reduction milestone dates, etc.) in the SIP is missed. EPA approved Illinois' contingency measures for attainment of the 1-hour ozone standard in the Greater Chicago area in our approval of the State's 1-hour ozone attainment plan. See 66 FR 56904, November 13, 2001.

The transportation conformity portion of the court's ruling in South Coast Air Quality Management District v. EPA does not impact the redesignation request for the Illinois portion of the Greater Chicago area because there are no transportation conformity requirements that are relevant to redesignation requests for any standard, including the requirement for a state to submit a transportation conformity SIP. 10 Under longstanding EPA policy, EPA thinks that it is reasonable to interpret the conformity SIP requirements as not applying for purposes of evaluating a redesignation request under section 107(d) because State conformity rules are still required after redesignation and Federal conformity rules apply where state rules have not been approved. See 40 CFR 51.390. Also see Wall v. EPA, 265 F.3d 426 (6th Cir. 2001), upholding this interpretation, and 60 FR 62748 (December 7, 1995) (Tampa, Florida ozone redesignation).

For the above reasons, EPA concludes that Illinois has met all applicable part D SIP requirements for the 1-hour ozone standard as addressed in the court's and EPA's anti-backsliding requirements for the purposes of redesignation of the Illinois portion of the Greater Chicago area to attainment of the 1997 8-hour ozone standard. It is again noted that the State of Illinois has committed in its maintenance plan to maintain the VOC and NO X emission controls already in place and included in Illinois' ozone SIP, as approved by EPA.

EPA finds that Illinois has demonstrated that the observed air quality improvement in the Greater Chicago area is due to permanent and enforceable reductions in emissions resulting from the implementation of the Illinois and Indiana SIPs, Federal measures, and other State-adopted measures. As discussed below, Illinois made this demonstration by considering VOC and NO X emissions in the entire Greater Chicago area as well as emission reductions in upwind areas (primarily resulting from the implementation of EPA's NO X SIP call) contributing to pollution transport into the Greater Chicago area.

In making this demonstration, Illinois first determined and documented the changes in VOC and NO X emissions in the Illinois portion of the Greater Chicago area between 2002 (a standard-violation year) and 2008 (an attainment year). Second, the State documented the VOC and NO X emission controls that have been implemented in the Greater Chicago area. Illinois demonstrated that the reductions in emissions and the corresponding improvement in air quality over the intervening period (2002-2008) can be attributed to a number of regulatory control measures that the Greater Chicago area and upwind areas have implemented in recent years.

The following is a discussion of the permanent and enforceable emission control measures that have been implemented in the Greater Chicago area and in upwind areas that have resulted in VOC and NO X emission reductions subsequent to the ozone standard violation period (2001-2003) in the Greater Chicago area.

On March 18, 2009, IEPA submitted an ozone attainment demonstration plan for the Greater Chicago area to EPA. Even though EPA has not taken action on this attainment demonstration as a revision of the Illinois SIP, 11 Illinois notes that the VOC and NO X emission controls contained in the attainment plan have been implemented, resulting in VOC and NO X emission reductions that have contributed to attainment of the 1997 8-hour ozone standard in the Greater Chicago area. The implemented emission control measures include the following:

• NO X SIP call emission controls

• New Source Performance Standards (NSPS), National Emission Standards for Hazardous Air Pollutants (NESHAPS), and Maximum Available Control Technology (MACT) standards for new sources

• VOC Solvent Category Emission Controls: Aerosol Coatings; Architectural and Industrial Maintenance (AIM) Coatings; and Consumer Solvents

• Enhanced Vehicle Inspection and Maintenance

• Reformulated Gasoline

• Federal Tier 2 Motor Vehicle Emission Standards and Gasoline Sulfur Control Requirements

• Federal On-Highway Heavy-Duty Engine and Vehicle Standards, and Federal Highway Diesel Fuel Sulfur Control Requirements

• Federal Off-Road Mobile Source Emission Control Programs Incorporated into EPA's NONROAD Emissions Model, including EPA's Nonroad Diesel Emissions Control Rule and Evaporative Large Spark Ignition and Recreational Vehicle Standards

• Federal Tier 4 Nonroad Diesel Engine Standards and Diesel Fuel Sulfur Content Restrictions

• Marine Compression-Ignition Engine Standards and Locomotive Engine Standards

• Consent Decrees requiring emission controls for: Dynergy Midwest Generation; Conoco Phillips; CITGO; Exxon-Mobil; Marathon Ashland; and Archer Daniels Midland.

Since the Greater Chicago area was classified as a moderate nonattainment area for the 1997 8-hour ozone standard, Illinois was required to achieve a 15 percent net reduction in VOC emissions in the Illinois portion of the Greater Chicago area between 2002 and 2008 to meet the RFP requirements of CAA section 182(b)(1)(A). These emission reductions were primarily achieved through the implementation of the emission controls listed above for the ozone attainment demonstration plan. These emission controls resulted in a 15.7 percent reduction in VOC emissions in the Illinois portion of the Greater Chicago area between 2002 and 2008, and continued to provide additional VOC emission controls in 2009 and 2010. IEPA estimates that these VOC emission controls resulted in a VOC emission reduction of 210 tons per day between 2002 and 2008 in the Illinois portion of the Greater Chicago area.

RACT is required for all major stationary sources of VOC in the Greater Chicago area. Since the Greater Chicago area was designated as a moderate nonattainment area for ozone under the 1997 8-hour ozone standard, a major stationary source is any source that has a potential to emit VOC equal to or greater than 100 tons per year. EPA defines RACT as the lowest emission limitation that a source is capable of meeting by the application of control technology that is reasonably available considering technological feasibility and economic reasonableness (70 FR 71612, November 29, 2005). The sum of emissions from all emission units at a source facility determines if the source facility is a major source and, therefore, subject to RACT requirements.

Sections 172 and 182(b)(2) of the CAA required implementation of VOC RACT for sources that are subject to CTGs that have been published by the EPA. In addition to CTG source categories, major VOC sources that are not covered by any CTG must also be covered by State RACT regulations.

Illinois has adopted and implemented all required VOC RACT regulations with the exception of source categories covered by CTGs published in 2006, 2007, and 2008. The State has documented that the implemented VOC RACT rules have reduced VOC emissions in the Illinois portion of the Greater Chicago area, contributing to the attainment of the 1997 8-hour ozone standard in the Greater Chicago area.

In addition to VOC emission reductions resulting from the implementation of VOC RACT in the Illinois portion of the Greater Chicago area, IEPA points out that additional VOC emission reductions were achieved in this area as the result of the implementation of MACT and achieving NESHAPS for VOC sources that also emit toxic chemicals, and implementation of NSPS for new VOC sources. Illinois believes that all of these emission control requirements are more stringent than RACT, and, therefore, have resulted in additional VOC reductions in the Illinois portion of the Greater Chicago area. 12

Reductions in VOC and NO X emissions have occurred statewide and in upwind areas as a result of Federal emission control measures, with additional emission reductions expected to occur in the future. Federal emission control measures include the following.

Tier 2 Emission Standards for Vehicles and Gasoline Sulfur Standards. 40 CFR part 86, subpart S. These emission control requirements result in lower VOC and NO X emissions from new cars and light duty trucks, including sport utility vehicles. The Federal rules were phased in between 2004 and 2009. EPA has estimated that, by the end of the phase-in period, the following vehicle NO X emission reductions will occur nationwide: Passenger cars (light duty vehicles) (77 percent); light duty trucks, minivans, and sports utility vehicles (86 percent); and larger sports utility vehicles, vans, and heavier trucks (69 to 95 percent). VOC emission reductions are expected to range from 12 to 18 percent, depending on vehicle class, over the same period. Although some of these emission reductions occurred by the attainment years (2006-2008) in the Greater Chicago area, additional emission reductions will occur during the maintenance period for the Illinois portion of the Greater Chicago area. For example, the Tier 2 emission standards for passenger vehicles weighing over 8,500 pounds were not implemented until 2008 or later.

Heavy-Duty Diesel Engine Rule. EPA issued this rule in January 2001 (66 FR 5002). This rule includes standards limiting the sulfur content of diesel fuel, which went into effect in 2004. A second phase took effect in 2007, which further reduced the highway diesel fuel sulfur content to 15 parts per million, leading to additional reductions in combustion NO X and VOC emissions. This rule is expected to achieve a 95 percent reduction in NO X emissions from diesel trucks and buses.

Non-Road Diesel Rule. EPA issued this rule in June 2004 (69 FR 38958), which applies to diesel engines used in industries, such as construction, agriculture, and mining. It is estimated that compliance with this rule will cut NO X emissions from non-road diesel engines by up to 90 percent. The non-road diesel rule was fully implemented by 2010.

NSPS, NESHAPS, and MACT . A broad range of emission sectors are subject to Federal NSPS, NESHAPS, and MACT standards with compliance deadlines that led to VOC emission reductions after 2002 and prior to 2008/2009.

Illinois commits to maintain all of the current emission control measures for VOC and NO X after the Illinois portion of the Greater Chicago area is redesignated to attainment. Illinois also commits to submit any emission control revisions needed for maintenance of the ozone standard in the Greater Chicago area to the EPA as requested SIP revisions. Illinois has the legal authority and necessary resources to actively enforce against any violations of the State's air pollution emission control rules.

Illinois chose 2008 (the end of the 3-year period in which the Greater Chicago area first attained the 1997 8-hour ozone standard) as the attainment year. IEPA compared 2002 and 2008 VOC and NO X emissions to show that emission reductions have occurred in the area, explaining the ozone air quality improvement in the area.

As required by sections 172(c)(3) and 182(a)(1) of the CAA and EPA's Phase 2 ozone implementation rule (November 29, 2005, at 70 FR 71612), IEPA prepared comprehensive VOC and NO X emission inventories for 2002. These emission inventories and their documentation were submitted to the EPA in June 2006. Table 2 summarizes the 2002 VOC and NO X emissions by source category and by pollutant for the Illinois portion of the Greater Chicago area. For a discussion of emission inventory preparation methods used to develop these emission inventories, see the discussion of 2002 base year emission inventories below in section VII of this proposed rule.

To demonstrate that VOC and NO X emissions have decreased between a standard violation year and the attainment year, IEPA documented the VOC and NO X emissions in the Illinois portion of the Greater Chicago area for 2008 and compared these emissions to those in 2002.

For the attainment year, point source emissions were compiled from 2008 annual emission reports submitted to the IEPA, in compliance with the State's point source emission statement reporting regulations, and from EPA's Clean Air Markets Division emissions database for electric utilities. Area sources were projected from the 2002 area source emissions using source type-specific growth factors. On-road mobile source emissions were calculated using EPA's MOVES emissions model and vehicle miles travelled data provided by the Illinois Department of Transportation. Off-road emissions were calculated using EPA's NONROAD emissions model. These emission estimation procedures are consistent with those used to develop the 2002 emission inventories. Biogenic emissions were not included in the 2008 emission inventories (and also not in the 2002 emission inventories) because it was assumed that these emissions are approximately constant over the time period (2002-2008) considered.

Table 3 summarizes the 2008 VOC and NO X emissions in the Illinois portion of the Greater Chicago area. From this table and table 2, it can be seen that VOC and NO X emissions have decreased significantly in the Illinois portion of the Greater Chicago area between 2002 and 2008. IEPA concludes that the decrease in VOC and NO X emissions during the 2002-2008 period are primarily due to the implementation of permanent and enforceable emission controls, and are the primary cause (along with emission reductions in the Indiana portion of the Greater Chicago area) of the ozone air quality improvement in the Greater Chicago area. We concur with the State's conclusion.

One must also consider the total VOC and NO X emissions for the Greater Chicago area. EPA has consistently concluded that emissions from all portions of ozone nonattainment areas have the potential to contribute to ozone standard violations anywhere within the ozone nonattainment areas. Therefore, for the Greater Chicago area, it is important to also consider the changes in VOC and NO X emissions from the Indiana portion of the Greater Chicago area. In a March 12, 2010, proposed rulemaking (75 FR 12090) addressing an ozone redesignation request from the State of Indiana, we discussed the 2002, 2006, and 2010 VOC and NO X emissions for Lake and Porter Counties, Indiana. Table 2 of that proposed rule (75 FR 12103) lists 2002 VOC and NO X emissions for Lake and Porter Counties, and table 7 of that proposed rulemaking (75 FR 12106) lists 2006 and 2010 VOC and NO X emissions for these counties. The 2006 and 2010 emissions may be interpolated to estimate the 2008 emissions for Lake and Porter Counties. Adding 2002 and estimated 2008 Lake and Porter Counties' emissions to those in tables 2 and 3 for the Illinois portion of the Greater Chicago area above gives the total 2002 and 2008 VOC and NO X emissions for the Greater Chicago area. The total 2002 and 2008 VOC and NO X emissions for the Greater Chicago area are listed in table 4 of this proposed rule. The change in emissions between 2002 and 2008 emissions for the Greater Chicago area shows that VOC and NO X emissions have significantly decreased in this area between 2002 and 2008. We conclude that these emission reductions have contributed to attainment of the ozone standard in this area.

Besides the 2002-2008 reductions in VOC and NO X emissions in the Illinois and Indiana portions of the Greater Chicago area, IEPA also notes that upwind areas have lowered their VOC and NO X emissions during this period. Illinois, however, has not documented these emission reductions in the redesignation request.

Section 175A of the CAA sets forth the required elements of a maintenance plan for areas seeking redesignation from nonattainment to attainment. Under section 175A, the maintenance plan must demonstrate continued attainment of the applicable NAAQS for at least 10 years after the Administrator approves a redesignation to attainment. Eight years after the redesignation, the state must submit a revised maintenance plan which demonstrates that attainment of the NAAQS will continue to be maintained for 10 years following the initial 10-year maintenance period. To address the possibility of future NAAQS violations, the maintenance plan must contain contingency measures with a schedule for implementation, as EPA deems necessary, to assure prompt correction of any future standard violations.

The September 4, 1992, John Calcagni memorandum provides additional guidance on the content of maintenance plans. The memorandum clarifies that an ozone maintenance plan should, at minimum, address the following: (1) The attainment VOC and NO X emission inventories; (2) a maintenance demonstration showing maintenance for the 10-year maintenance period; (3) a commitment to maintain the existing monitoring network; (4) factors and procedures to be used for verification of continued attainment of the NAAQS; and, (5) a contingency plan to prevent or correct future violations of the NAAQS.

As noted above, 2008 is the final year of the 3-year period (2006-2008) in which all ozone monitors in the Greater Chicago nonattainment area recorded attainment of the 1997 8-hour ozone standard. Therefore, IEPA chose 2008 as an attainment year. The discussion above describes how Illinois derived the 2008 VOC and NO X emission inventories for the Illinois portion of the Greater Chicago area.

The maintenance plan, as revised in the State's September 16, 2011, submittal, shows maintenance of the 1997 8-hour ozone standard through 2025 by showing that future (2015, 2020, and 2025) VOC and NO X emissions for the Illinois portion of the Greater Chicago area remain at or below attainment year (2008) emission levels. 13

Point source emissions in the Illinois portion of the Greater Chicago area were projected to 2015, 2020, and 2025 using 2002 and 2008 point source emissions and source category-specific growth factors. Area source emissions were similarly projected to 2015, 2020, and 2025 using the 2002 and 2008 area source emissions and source category-specific growth factors. Area source category emissions, determined using county populations, were projected by using projected growth in county-specific populations. Off-road mobile source emissions were projected using the 2002 emissions and growth factors contained in EPA's NONROAD model. On-road mobile source emissions were estimated using projected VMT levels and the MOVES model. The projected mobile source emissions assumed the continued use of reformulated gasoline, the phase-in of Tier 2 motor vehicle emission standards, and the operation of an enhanced vehicle inspection and maintenance program in the Illinois portion of the Greater Chicago area.

Table 5 compares the VOC and NO X emissions estimated for the Illinois portion of the Greater Chicago area for 2008 with those for 2015, 2020, and 2025 by source category. The projected VOC and NO X emissions show that VOC and NO X emissions in Illinois portion of the Greater Chicago area are expected to remain below the attainment levels throughout the 10-year-plus maintenance period.

Illinois has successfully demonstrated maintenance of the 1997 8-hour ozone standard between 2008 and 2025. In addition, VOC and NO X emissions in the Greater Chicago area are projected to decline between 2006 and 2020 (see table 8 in the proposed rule to redesignate Lake and Porter Counties, Indiana to attainment of the 1997 8-hour ozone standard, March 12, 2010, 75 FR 12106).

IEPA has demonstrated maintenance of the 1997 8-hour ozone standard during the 10-year ozone maintenance period for the Illinois portion of the Greater Chicago area through projected VOC and NO X emissions that show that the emissions will remain below the 2008 attainment levels during the maintenance period.

Section 175A of the CAA requires the maintenance plan to include such contingency measures as EPA deems necessary to assure that the state will promptly correct a violation of the NAAQS that might occur after redesignation. The maintenance plan must identify the contingency measures to be considered for possible adoption, a schedule and procedure for adoption and implementation of the selected contingency measures, and a time limit for action by the state. The state should also identify specific indicators to be used to determine when the contingency measures need to be adopted and implemented. The maintenance plan must include a requirement that the state will implement all measures with respect to control of pollutant(s) that were controlled through the SIP before the redesignation of the area to attainment. See section 175A(d) of the CAA.

As required by section 175A of the CAA, Illinois has adopted a contingency plan to address possible future ozone air quality problems. The contingency plan has two levels of actions/responses depending on whether a violation of the 1997 8-hour ozone standard is only threatened (Level I) or has actually occurred (Level II).

A Level I response will be triggered whenever: (1) An annual (1-year) fourth-high daily maximum 8-hour ozone concentration of 84 parts per billion (ppb) (0.084 ppm) is monitored at any site in the Greater Chicago area; or, (2) the Illinois portion of the Greater Chicago area's NO X or VOC emissions increase more than 5 percent above the 2006 emissions levels. 14 A Level I action will consist of a study of whether adverse air quality or adverse emission trends are likely to continue. If so, Illinois will determine what and where emission controls will be needed to avoid a violation of the 1997 8-hour ozone standard. The study will be completed within 9 months after the action is triggered. If necessary, emission control measures will be adopted within 18 months of determination of the Level I triggering and implemented as expeditiously as practicable, taking into consideration the ease of implementation and the technical and economic feasibility of the selected measures.

A Level II response will be triggered when a violation of the 1997 8-hour ozone standard is monitored at any monitoring site in the Greater Chicago area. If triggered, the IEPA will conduct a thorough study to determine the appropriate emission control measures to address the cause of the ozone standard violation. Analysis will be completed within 6 months of the triggering of the Level II response. Selected emission control measures will be implemented within 18 months of the determination of the ozone standard violation.

Adoption of any additional emission control measures prompted by either of the contingency triggers will be subject to the necessary administrative and legal processes dictated by State law. This process will include publication of public notices, public hearings, and other measures required by Illinois law.

Contingency measures contained in the maintenance plan are those emission controls or other measures that the State chooses to adopt and implement in response to either of the contingency triggers discussed above. Possible contingency measures contained in Illinois' contingency plan include, but are not limited to, the following:

• Illinois' Multi-Pollutant Program for electric generating units.

• NO X RACT.

• Cross-State Air Pollution Rule.

• Best Available Retrofit Technology.

• Broader geographic applicability of existing measures.

• Tier 2 vehicle standards and low sulfur fuel.

• High-enhanced vehicle I/M.

• Federal railroad/locomotive standards.

• Federal commercial marine vessel engine standards.

• Portable fuel containers (replacement with low leak containers)

• AIM Coatings

• Commercial and consumer products standards

• Aerosol coatings standards

• Other measures to be identified.

In the State's ozone redesignation request and maintenance plan, IEPA has committed to continue to monitor ozone levels in the Illinois portion of the Greater Chicago area according to an EPA-approved monitoring plan. Should changes in the locations of ozone monitors become necessary, IEPA commits to work with EPA to ensure the adequacy of the ozone monitoring network in this area. Illinois remains obligated to continue to quality assure ozone monitoring data in accordance with 40 CFR part 58 and to enter all ozone data into EPA's Air Quality System in accordance with Federal guidelines.

Application of Illinois' ozone maintenance plan for the Illinois portion of the Greater Chicago area and continued attainment of the 1997 8-hour ozone standard in the Greater Chicago area depend, in part, on the State's efforts in tracking of ozone monitoring data to verify continued attainment of the ozone standard. IEPA's plan for verifying continued attainment of the 1997 8-hour ozone standard in the Greater Chicago area (Indiana is similarly tracking continued attainment of the standard in this area) consists of plans to continue ambient ozone monitoring in accordance with the requirements of 40 CFR part 58. IEPA will also continue to develop, review, and submit periodic emission inventories as required by the Federal Consolidated Emissions Reporting Rule (67 FR 19602, June 10, 2002) to track future levels of emissions.

Under the CAA, States are required to submit, at various times, SIP revisions, such as ozone attainment demonstrations and RFP plans, and ozone maintenance plans for applicable areas (for ozone nonattainment areas and for areas seeking redesignation to attainment of the ozone standard). These SIP revisions, including ozone maintenance plans, must create and document MVEBs based on on-road mobile source emissions allocated to highway and transit vehicle use that, together with emissions from other sources in the area, will provide for attainment and maintenance of the ozone NAAQS.

Under 40 CFR part 93, a MVEB for an area seeking a redesignation to attainment is established for the last year of the maintenance plan (MVEBs may also be specified for additional years during the maintenance period). The MVEB serves as a ceiling on emissions that would result from an area's planned transportation system. The MVEB concept is further explained in the preamble to the November 24, 1993, transportation conformity rule (58 FR 62188). The preamble describes how to establish the MVEB in the SIP and how to revise the MVEB if needed.

Under section 176(c) of the CAA, new transportation projects, such as the construction of new highways, must “conform” to (i.e., be consistent with) the SIP. Conformity to the SIP means that transportation activities will not cause new air quality violations, worsen existing air quality violations, or delay timely attainment of the NAAQS. CAA section 176(c)(1). If a transportation plan does not conform, most new transportation projects that would expand the capacity of roadways cannot go forward. Regulations at 40 CFR part 93 set forth EPA policy, criteria, and procedures for demonstrating and assuring conformity of such transportation activities to a SIP.

When reviewing SIP revisions containing MVEBs, including attainment strategies, rate-of-progress plans, and maintenance plans, EPA must affirmatively approve or find that the MVEBs are “adequate” for use in determining transportation conformity. Once EPA affirmatively approves or finds the submitted MVEBs to be adequate for transportation conformity purposes, the MVEBs must be used by state and Federal agencies in determining whether proposed transportation projects conform to the SIP as required by section 176(c) of the CAA. EPA's substantive criteria for determining the adequacy of MVEBs are set out in 40 CFR 93.118(e)(4).

EPA's process for determining adequacy of a MVEB consists of three basic steps: (1) Providing public notification of a SIP submission; (2) providing the public the opportunity to comment on the MVEB during a public comment period; and, (3) making a finding of adequacy. The process for determining the adequacy of a submitted MVEB is codified at 40 CFR 93.118.

The ozone maintenance plan submitted by Illinois for the Illinois portion of the Greater Chicago area, as revised in Illinois' September 16, 2011, supplemental submittal, contains new VOC and NO X MVEBs for the Illinois portion of the Greater Chicago area for 2008 and 2025. The availability of the SIP submission with MVEBs was announced for public comment on EPA's Adequacy Web site on September 26, 2011, at: http://www.epa.gov/otaq/stateresources/tansconf/currsips.htm, which provided a 30-day public comment period. The comment period for this notification ended on October 26, 2011, and EPA received no comments from the public. Note, however, that a second mechanism is also provided for EPA review and public comment on MVEBs, as described in 40 CFR 93.118(f)(2). This mechanism provides for EPA's review of the adequacy of an implementation plan MVEB simultaneously with its review and approval and disapproval of the implementation plan itself. In this action, EPA used the web notification discussed above to solicit public comments on the adequacy of Illinois' MVEBs for the Illinois portion of the Greater Chicago area, but is taking comment on the approvability of the submitted MVEBs through this proposed rule.

Illinois' ozone maintenance plan for the Illinois portion of the Greater Chicago area contains VOC and NO X MVEBs for 2008 and 2025. Any and all comments on the approvability of the MVEBs should be submitted during the comment period stated in the DATES section of this notice.

EPA intends to approve 2008 and 2025 MVEBs for the Illinois portion of the Greater Chicago area for transportation conformity purposes in the final rulemaking on Illinois' ozone redesignation request. If EPA approves the MVEBs in the final rulemaking action, the new MVEBs must be used in future transportation conformity determinations for the Illinois portion of the Greater Chicago area. The new MVEBs, if approved in the final rulemaking, will be effective on the date of EPA's final rulemaking in the Federal Register . For required regional emission analysis years that involve 2013 (the year after EPA is expected to approve the ozone maintenance plan and Illinois' VOC and NO X MVEBs) or beyond, the applicable VOC and NO X MVEBs for the Chicago area are defined in table 6.

The MVEBs are the on-road mobile source VOC and NO X emissions for the Illinois portion of the Greater Chicago area for 2008 and 2025, including 15 percent safety margins for 2025. The MVEBs are compatible with the 2008 and 2025 on-road mobile source VOC and NO X emissions included in Illinois' 2008 and 2025 VOC and NO X emission inventories, as summarized above in table 5. The derivation of the MVEBs is thoroughly discussed in appendix B of IEPA's April 5, 2009, ozone maintenance plan and in Illinois' September 16, 2011, supplement to the ozone maintenance plan.

EPA is proposing to approve the MVEBs for 2008 and 2025 as part of Illinois' 1997 8-hour ozone standard maintenance plan. EPA has determined that the MVEB emission targets are consistent with emission control measures in the SIP and that the Greater Chicago area can maintain attainment of the 1997 8-hour ozone NAAQS.

Section 182(a)(1) of the CAA requires States with ozone nonattainment areas to submit a comprehensive, accurate, and current inventory of actual emissions (emissions of VOC and NO X ) from all sources in the nonattainment areas, in accordance with guidance provided by the EPA. On June 21, 2006, IEPA submitted 2002 base year emissions inventories for the Illinois portion of the Greater Chicago nonattainment area. Emissions contained in that submittal cover the general source categories of point sources, area sources, on-road mobile sources, and non-road mobile sources. All emission summaries were accompanied by source-specific descriptions of emission calculation procedures and sources of input data.

IEPA prepared the point source emissions using source-reported actual 2002 emissions data for VOC and NO X . The emissions were adjusted for a typical summer day at each emissions unit within the source facilities. The annual emission reports provided ozone season hourly emissions and operating schedules that enabled the calculations of ozone season weekday emissions.

Illinois used several methods to estimate area source activity levels and emissions, including applying local activity levels, apportioning national or statewide activity levels to the local level, and applying per capita emission factors considering county-specific populations. The documentation supplied in the emissions inventory submittal shows how the county-specific emissions were calculated for each area source category.

Non-road mobile source emissions were generated using EPA's NONROAD model. In addition, separate emission estimates were developed for commercial marine vessels, aircraft, and railroads, non-road source categories not included in the NONROAD model.

On-road mobile source emissions contained in the June 21, 2006, submittal were prepared by the IEPA using EPA's MOBILE6 emissions model and daily VMT and speed estimates provided by the Illinois Department of Transportation. Note, however, that the 2002 on-road mobile source emissions documented in the September 16, 2011, submittal were derived using the MOVES mobile source emissions model rather than MOBILE6. MOVES is the currently EPA-accepted model for the determination of on-road mobile source emissions.

Illinois' September 16, 2011, submittal documents 2002 emissions for the Illinois portion of the Greater Chicago area in units of tons per summer day. These emissions were modified relative to those included in the June 21, 2006, submittal, reflecting revised mobile source emissions calculated using MOVES (the mobile source emissions included in the June 21, 2006 submittal were calculated using MOBILE6 mobile source emission factors). The 2002 emissions are summarized in table 2 above in section V.C.

EPA is proposing to approve this 2002 base year emissions inventory, as revised in the September 16, 2011, submittal, as meeting the requirements of section 182(2)(1) of the CAA.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• Does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq. );

• Is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq. );

• Does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• Does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• Is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• Is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• Is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the Clean Air Act; and

• Does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

On December 22, 2010, the NTSB published an ANPRM inviting public comments concerning the NTSB procedural rules codified at 49 CFR parts 821 and 826. 75 FR 80452. The NTSB specifically sought comments concerning the standard of review for emergency determinations, discovery and exchanges of information between parties, and electronic filing of documents in air safety enforcement cases before the Board. The NTSB also sought comments concerning outdated rules in 49 CFR part 826, governing claims brought under the EAJA.

The ANPRM included a discussion of the rationale for the Board's procedure for handling certain aspects of emergency cases. The FAA issues emergency orders when it determines the interests of aviation safety require that the order take effect immediately, and, in those cases, the certificate holder may not exercise certificate privileges during the pendency of an appeal with the NTSB. Section 716 of the Aviation Investment and Reform Act for the 21st Century  1 (hereinafter, “the Act”) amended 49 U.S.C. 44709 by granting the NTSB authority to review such emergency determinations. The ANPRM sought comments concerning this review process. Specifically, the NTSB described the considerations, including Federal court rulings and comments received in response to the NTSB's Interim Rule (published on July 11, 2000 (64 FR 42637), initially implementing section 716 of the Act) resulting in the adoption, in the Final Rule (published on April 29, 2003 (68 FR 22623)), of the standard of review found in 49 CFR 821.54(e). Section 821.54(e) directs NTSB's law judges to dispose of petitions for review of the FAA's emergency determinations by “consider[ing] whether, based on the acts and omissions alleged in the Administrator's order, and assuming the truth of such factual allegations, the Administrator's emergency determination was appropriate under the circumstances, in that it supports a finding that aviation safety would likely be compromised by a stay of the effectiveness of the order during the pendency of the respondent's appeal.” 75 FR at 80452-80453. The aspect of the standard relating to the law judges' assumption of the truth of the FAA's allegations of fact prompted much feedback from commenters.

The ANPRM also sought comments pertaining to other matters. With regard to discovery and the parties' exchanges of information, the ANPRM requested feedback as to whether law judges should routinely issue prehearing orders to govern discovery, and whether a standard sanction should apply if parties fail to comply with a prehearing order or discovery obligation. Id. at 80453. On the subject of the electronic filing of documents, the ANPRM sought comments as to how to fashion electronic filing rules that could apply to pro se litigants, who may not have computer or Internet access. Finally, with regard to procedural rules applicable to applications for attorney's fees and expenses under the EAJA, the ANPRM sought general comments concerning updates to outdated provisions in 49 CFR part 826. For example, the ANPRM cited 49 CFR 826.40, which provides incorrect contact information for the FAA office overseeing the payment of fee awards under the EAJA. Id. at 80453-80454. The language of the ANPRM indicated, however, that the Board welcomed all comments relating to the procedural rules found in 49 CFR parts 821 and 826.

The NTSB received 20 relevant comments in response to the ANPRM, which are available at http://www.regulations.gov (Docket No. NTSB-GC-2011-0001). The Board has carefully reviewed and considered all comments it received, and greatly appreciates the time and thought the commenters devoted to providing detailed comments, as the comments proved helpful in analyzing the aspects of 49 CFR parts 821 and 826 identified in the ANPRM. Our responses to the comments we received are included in the section below entitled “Proposed Changes.”

The comments received primarily focus on the first issue set forth above, concerning the NTSB's review of emergency determinations. Some comments asserted the FAA must utilize its authority to issue immediately effective orders taking action against a certificate, and that the NTSB's current rules for review of the FAA's choice of taking such immediately effective action are appropriate. Other comments, however, maintain the current standard for review of emergency determinations is fundamentally unfair because it requires the NTSB's law judges to assume the truth of the factual allegations the FAA makes in its certificate orders.

The FAA Deputy Chief Counsel submitted comments urging the NTSB to refrain from changing the language of 49 CFR 821.54(e). The submission quotes the NTSB's 2003 adoption of the Final Rule for the provision, in which the NTSB stated as follows:

An FAA Aviation Safety Inspector (ASI) also submitted comments. The ASI's submission includes several policy reasons for the current emergency enforcement procedure, and states:

Another commenter, who identified himself as part of “DOT/FAA,” submitted comments similar to the previously described comments. The DOT/FAA commenter asserts the FAA does not abuse its authority in taking emergency action against a certificate, and states emergency cases are “discussed at length at all levels of management” within the FAA. The commenter also maintains the FAA only chooses to take emergency action “when public safety is jeopardized” and when the evidence shows such jeopardy.

Another individual commenter also urges the NTSB to maintain the current standard of review for emergency determinations. His concise submission made several points, including: (1) The expedited process for reviewing emergency determinations ensures a certificate holder is not deprived of due process; (2) the certificate holder's continued ability to exercise certificate privileges “must be considered in light of the public's far greater right to expect safety in air transportation;” (3) the NTSB has found the FAA's decision to take emergency action valid in the vast majority of cases; and (4) the NTSB's mission of advancing transportation safety would be “jeopardized if reckless airmen are permitted to exercise the privileges of their certificates without fear of a swift penalty.”

The law firm of Carstens and Cahoon submitted comments stating Congress never intended the language of 49 U.S.C. 44709(e) to provide for a separate evidentiary hearing to determine whether the FAA's action in emergency cases is justified. The commenter states the NTSB should view dispositions of cases via summary judgment  2 as similar to emergency review determinations: “The facts pled by FAA should be assumed and only when the facts offered by the movant (respondent) are `signifcantly probative' [ sic ], contrasted with the facts pled by the government, should the `emergency' finding be disturbed. Otherwise, justice allows this determination to continue only for 60 days anyway, if the evidential [ sic ] trial finds it should be reversed.” Overall, the commenter urges the NTSB to maintain the current standard of review found at 49 CFR 821.54(e).

The NTSB received many comments advocating a change to the standard of review for FAA emergency determinations. The Transport Workers Union of America (TWU) posited that the current rules are “too deferential to the [FAA],” and compared reviews of emergency determinations to temporary restraining orders and preliminary injunctions. TWU's comment urges the NTSB to adopt rules similar to those proceedings with the standard of review being whether the FAA can show a likelihood of success on the merits of a case.

The NTSB also received comments from the Air Line Pilots Association, International (ALPA). ALPA's submission stated, “[n]early eight years of unsatisfactory experience under [49 CFR 821.54(e)] demonstrates that the procedure has failed to meet either the spirit or intent of the legislation” under which the NTSB promulgated section 821.54(e). ALPA's submission includes a policy discussion as to how an FAA emergency action against a pilot's airman certificate could cost the pilot his or her livelihood, as well as a number of recommendations:

The NTSB Bar Association (NTSBBA) submitted comments providing arguments similar to those provided by ALPA, as described above. Initially, NTSBBA urges the NTSB to delete the “assumption of the truth” language of 49 CFR 821.54(e), so the subsection would read, “the [law judge] * * * shall consider whether the Administrator's emergency determination was appropriate under the circumstances, in that it supports a finding that aviation safety would likely be compromised by a stay of the effectiveness of the order during the pendency of the respondent's appeal.” Also with regard to emergency cases, NTSBBA requests the NTSB to require the FAA to provide a copy of the EIR in tandem with its service of an emergency order. The NTSBBA asserts that immediate disclosure of the EIR would promote settlement discussions and result in fewer discovery disputes. Finally, NTSBBA suggests that a certificate holder seeking review of an FAA emergency determination “be allowed to concurrently submit evidence, affidavits and/or declarations in response to the FAA's factual allegations, in order to enable the law judge to properly consider whether the Administrator's emergency determination was appropriate under the circumstances.” Michael L. Dworkin and Associates submitted comments which contained the same language as the NTSBBA submission.

Similarly, the law offices of Hoff and Herran submitted comments asserting the FAA utilizes its authority to issue emergency orders too frequently and in an unfair manner. The commenter urges the NTSB to change the rules applicable to emergency cases, by requiring the FAA to provide a copy of the EIR with every emergency order; and to delete from section 821.54(e) the phrase in which the truth of the allegations set forth in emergency orders is assumed and, instead, require the FAA to prove “by clear and convincing evidence that aviation safety would be likely compromised by proceeding in the normal procedure with the due process safeguards left in play during the pendency of the respondent's appeal.”

The National Business Aviation Association (NBAA) also submitted comments urging the NTSB to delete from section 821.54(e) the provision assuming the truth of the FAA's allegations. The submission states:

The Aircraft Owners and Pilots Association (AOPA) submitted comments urging the NTSB to delete the standard in section 821.54(e) requiring the law judge to assume the truth of the allegations in the Administrator's order. In setting forth its rationale for this proposed deletion, AOPA asserts many of the same points articulated by the NBAA. AOPA's comments suggests the NTSB's rules provide its law judges with the discretion to determine whether they should assume the truth of the factual allegations contained in the FAA's emergency orders; in this regard, the comment makes an analogy to Federal Rule of Civil Procedure 65, which relates to preliminary injunctions and temporary restraining orders. In addition, AOPA proposes the NTSB amend the rules to provide specific permission for the submission of evidentiary records, “such as affidavits or other records,” in conjunction with petitions for review of FAA emergency determinations. As to the process for reviewing those determinations, AOPA urges the NTSB to adopt a rule providing for further Board review; in particular, AOPA appears to suggest the full Board should either comment on the law judge's determination in every case in which a party requests it do so, or the rule provide for “an accelerated appeal to the full Board” of the law judge's determination.

The National Air Transport Association (NATA) also submitted comments, which do not specifically ask the NTSB to delete the “assuming the truth” language from section 821.54(e), but, instead, suggest requiring law judges to consider all facts contained in “pleadings and evidence” presented by either party. NATA's submission also proposes adding a sentence to section 821.54(e), which would state the law judge should consider, but is not required to follow, the FAA's interpretation of the Federal Aviation Regulations. NATA's comments include many policy arguments, similar to those articulated in other comments, as justification for the suggested changes. The language of NATA's justification suggests the practical effect of its proposed changes would be the same as deleting the “assuming the truth” phrase from section 821.54(e). NATA also believes law judges should consider the amount of time the FAA has taken to issue an emergency order in determining whether the FAA's decision to take emergency action was appropriate. With regard to the amount of information available to certificate holders in emergency cases, NATA encourages the NTSB to issue a rule requiring the FAA to disclose the releasable portions of the EIR when the FAA issues an emergency order.

MMO Legal Services, LLC, (MMO) submitted two separate sets of comments. In one, MMO proposes the NTSB's rules should require the FAA to “allege, under oath, that its investigations have revealed `that there is a good faith belief that one or more conditions represent an imminent threat to the safety of innocent persons or property on the ground, or to pilots or passengers aboard aircraft.' ” MMO opines that, after providing this sworn statement, “FAA should be entitled to a rebuttable presumption the facts it has asserted are true,” in lieu of the requirement that NTSB law judges assume the allegations are true. MMO also suggests the NTSB's rules should provide an opportunity for the certificate holder to “cure the condition” the FAA alleges gives rise to the emergency. This suggestion is based upon the policy concern that certificate holders may lose their business and livelihood upon the FAA's issuance of an emergency order.

The Helicopter Association International (HAI) also submitted comments urging the NTSB to delete the phrase involving the assumption of the truth of the FAA's allegations in section 821.54(e). HAI's submission states:

Air Trek, Inc., submitted a comment urging the NTSB to take action to prevent the FAA from issuing emergency orders. It cites a recent Board case involving the FAA's emergency revocation of its air carrier certificate. NTSB Order No. EA-5440 (2009) (available at http://www.ntsb.gov/legal/o_n_o/docs/Aviation/5440.pdf ). There, the Board determined the FAA's case was unsupported, and later awarded attorney's fees to Air Trek under the EAJA. NTSB Order No. EA-5510 (2010) (available at: http://www.ntsb.gov/legal/o_n_o/docs/Aviation/5510.pdf ). Air Trek summarizes the facts of its case and argues the NTSB should revise part 821 “to allow input from the respondent,” and require its law judges to rule in favor of respondents “if there is any doubt which way a judgment should be made.”

Similarly, a former FAA ASI submitted comments arguing the NTSB is not an impartial arbiter of certificate cases. The former ASI urges the NTSB to implement a standard without the “assumption of truth” language; however, beyond this, he does not suggest any specific language or standard that should be used to evaluate the propriety of the FAA's emergency determinations.

Air Tahoma submitted comments containing various details regarding the FAA's emergency revocation of its air carrier certificate. Air Tahoma's submission contains attachments of sections entitled “FAA misconduct—corroborating facts,” “revocation report analysis,” “revocation analysis chart,” and “recent FAA operator violations.” Air Tahoma principally contends the FAA is unfair in taking action against some certificate holders, and chooses to utilize its authority to issue emergency orders in an inequitable manner.

Several commenters also addressed electronic filing in their responses to the ANPRM. The text of the ANPRM stated the NTSB is committed to creating an electronic filing system for certificate enforcement cases. All commenters who addressed electronic filing agreed the ability to file documents electronically in air safety enforcement actions would be helpful. The FAA's comments suggested electronic filing would not be an additional burden on pro se respondents, as other agencies that utilize electronic filing systems have made the method of electronic filing optional, and all that is required of a party for filing documents in an electronic system is registering to use the system. The FAA referred to the Merit Systems Protection Board and Equal Employment Opportunity Commission as examples of agencies that have successfully implemented electronic filing procedures, and opined that the vast majority of respondents will be familiar enough with electronic systems to utilize an electronic filing system. 3 The comment praised the Board for considering a new electronic filing system, but stated that the FAA understands implementing such a new system will likely be time-consuming; as a result, the FAA suggested allowing parties to submit documents via electronic mail in the interim.

HAI's comments proposed the NTSB implement an electronic filing and docketing system similar to the Federal courts' Public Access to Court Electronic Records (PACER) system. Other comments simply observed that electronic filing would be helpful, and suggested allowing parties the option of filing either electronically or in paper format for a certain period of time, such as 2 years, before requiring all parties to file documents electronically.

The FAA's comments also addressed pre-hearing orders by stating that the Board's rules sufficiently cover the parties' discovery obligations, and asserting that a specific requirement in the rules for each judge to issue a pre-hearing order is unnecessary. The FAA's submission further notes 49 CFR 821.19(d) already contains an adequate enforcement mechanism for failure to comply with discovery, as it provides noncompliance with a law judge's order compelling discovery may result in a negative inference, or other relief the law judge may deem appropriate. The FAA contends that no changes to the rules relating to discovery are necessary, but, if anything, the only change the FAA might support would be limited to an initial exchange of information among the parties. The FAA's submission states, as an example, “in an emergency case, the rule might specify that no later than 5 days after the answer to the complaint is served, the Complainant would provide the Respondent with copies of all non-privileged documents relied on to support the factual allegations in the complaint,” and the certificate holder would be required to provide it with all discoverable documents related to all affirmative defenses upon which the certificate holder expects to rely.

As has been noted above, many comments urge the NTSB to require the FAA to provide a copy of the EIR in tandem with the FAA's issuance of a certificate order, or soon thereafter. AOPA's comments advocate for a rule applicable to both emergency and non-emergency cases that would require the FAA to disclose the releasable portions of the EIR when the FAA issues a notice of proposed certificate action, which precedes the FAA's issuance of a certificate order. AOPA's submission includes its rationale for this suggestion: respondents who are not represented by experienced counsel may not know how to obtain a copy of the releasable portions of the FAA's EIR, and may attempt to obtain such information by filing a Freedom of Information Act request, which is unnecessarily burdensome to both parties.

TWU's comments indicate it favors a requirement that law judges issue prehearing orders, to provide sufficient clarity to parties concerning deadlines and discovery obligations. In discussing potential sanctions for failure to comply with a discovery requirement, TWU suggests the law judges should issue orders barring evidence or creating presumptions. Other commenters take the position that the current system of allowing law judges the discretion to issue prehearing orders should not change, as it accomplishes the necessary objectives.

With respect to the EAJA, many commenters suggest the standard for receiving an award of attorney's fees is too difficult to fulfill. The current standard is based upon a collection of several NTSB and Federal court cases, all of which have consistently held that a certificate holder is eligible for fees under the EAJA if the certificate holder prevailed in the underlying certificate action and can show the FAA was not substantially justified in pursuing it. The comments specifically discussing the part 826 EAJA rules did not distinguish the cases that form the basis for this standard, but instead opined that obtaining fees under the EAJA is sufficient to discourage the Administrator from pursuing meritless certificate actions.

A number of commenters ask the NTSB to adopt a bright-line standard in part 826 that a law judge's dismissal of a certificate action after the FAA voluntarily withdraws the complaint should be with prejudice. This suggestion is the result of a decision of the U.S. Court of Appeals for the District of Columbia Circuit in a case in which the Board determined two applicants were not “prevailing parties” for purposes of the EAJA when the FAA withdrew its case against them prior to hearing. Turner and Coonan v. NTSB, 608 F.3d 12 (2010). In Turner and Coonan, the D.C. Circuit applied a three-part test from District of Columbia v. Straus, 590 F.3d 898, 901 (D.C. Cir. 2010), for the purpose of determining whether a party has, for purposes of the EAJA, prevailed in an underlying proceeding: (1) There must be a “court-ordered change in the legal relationship” of the parties; (2) the judgment must be in favor of the party seeking the fees; and (3) the judicial pronouncement must be accompanied by judicial relief. In Turner and Coonan, the D.C. Circuit indicated a law judge's dismissal of a case “with prejudice” might have provided the applicants with judicial relief sufficient to fulfill the third prong of that test. As a result, some comments encourage the NTSB to implement a rule stating such dismissals will always occur “with prejudice.”

MMO's second set of comments specifically suggests how the NTSB should handle cases in which the FAA withdraws a complaint just prior to the hearing. The submission states:

With regard to other proposed amendments to part 826, the FAA's submission suggests changing the rule that contains outdated information as to where a successful applicant should seek payment after the Board issues a decision awarding fees and expenses under the EAJA. The FAA suggests the NTSB change 49 CFR 826.40 to “specify only that the applicant shall comply with all FAA administrative requirements for payment ( i.e., providing the FAA with bank routing and account numbers, tax identification numbers, address, etc. ) and that the FAA should pay promptly.” Further, the FAA suggests the NTSB delete from section 826.40 the language stating “the agency will pay the amount awarded to the applicant within 60 days,” and, instead, include the “pay promptly” language suggested above.

The FAA's submission also requests the NTSB make a “technical correction” to subpart B of 49 CFR part 821, in order to clarify the general rules of practice also apply to appeals in cases involving civil penalties. The FAA correctly notes section 821.2 (“Applicability and description of part”) states, “[t]he provisions of this part also govern all proceedings on appeal from an order of the Administrator imposing a civil penalty.” Subpart B, however, does not reference the statutory section under which the FAA may impose a civil penalty, and the FAA, therefore, suggests the NTSB clarify it applies to appeals of civil penalties.

As the NTSB stated in the ANPRM, we are committed to implementing an electronic filing system. The NTSB carefully considered the comments received concerning electronic filing, and determined the least costly and most effective manner of introducing the practice of electronic filing is to propose incremental changes, commencing with the acceptance of filings via electronic mail.

The NTSB proposes the addition of two new sentences at the end of section 821.7(a)(1), to provide parties the option to submit documents electronically. With this addition, section 821.7(a)(1) would read as follows: “(1) Except as provided in paragraph (2), documents are to be filed with the Office of Administrative Law Judges, National Transportation Safety Board, 490 L'Enfant Plaza East, SW., Room 4704, Washington, DC 20594, and addressed to the assigned law judge, if any. If the proceeding has not yet been assigned to a law judge, documents shall be addressed to the Case Manager. Filings may be made by paper (hard copy), including by facsimile at (202) 314-6158, or (except as otherwise provided in Subpart I) by electronic mail at alj@ntsb.gov . Filings made by facsimile or electronic mail are subject to additional requirements set forth in paragraphs (a)(3) and (4) of this section.”

The NTSB proposes to amend section 821.7(a)(2) as follows: “(2) Subsequent to the filing of a notice of appeal with the Office of Administrative Law Judges from a law judge's initial decision or appealable order, the issuance of a decision permitting an interlocutory appeal, or the expiration of the period within which an appeal from the law judge's initial decision or appealable order may be filed, all documents are to be filed with the Office of General Counsel, National Transportation Safety Board, 490 L'Enfant Plaza East, SW., Room 6401, Washington, DC 20594. Filings may be made by hard copy, including by facsimile at (202) 314-6090, or by electronic mail at enforcement@ntsb.gov . Filings made by facsimile or electronic mail are subject to additional requirements set forth in paragraphs (a)(3) and (4) of this section.”

As described above, the NTSB would like to accommodate parties who prefer to submit documents to the NTSB via facsimile and electronic mail. To do so, the NTSB proposes to amend section 821.7(a)(3) as follows: “(3) Except as otherwise provided in Subpart I (governing emergency proceedings), documents shall be filed: By personal delivery, by U.S. Postal Service first-class mail, by overnight delivery service, by facsimile or by electronic mail. Documents filed by electronic mail must be signed and transmitted in a commonly accepted format, such as Adobe Portable Document Format (PDF). ”

The NTSB proposes amending the language of section 821.7(a)(4) to reflect electronic service of documents, as follows: “(4) Documents shall be deemed filed: On the date of personal delivery; on the send date shown on the facsimile or the item of electronic mail; and, for mail delivery service, on the mailing date shown on the certificate of service, on the date shown on the postmark if there is no certificate of service, or on the mailing date shown by other evidence if there is no certificate of service and no postmark. Where the document bears a postmark that cannot reasonably be reconciled with the mailing date shown on the certificate of service, the document will be deemed filed on the date of the postmark.”

The NTSB proposes adding the option for parties to receive documents only by electronic mail to subsection (1) of § 821.8(b) with the following language: “(1) Service of documents by any party on any other party shall be accomplished by any method prescribed in § 821.7(a)(3) for the filing of documents with the Board. A party may waive the applicability of this paragraph, and elect to be served with documents by the other parties to the proceeding solely by electronic mail, without also receiving a hard copy of the original by personal delivery, first-class mail or overnight delivery service, by filing a written document with the Board (with copies to the other parties) expressly stating such a preference.”

The NTSB also proposes to amend this section to provide electronic mail transmission as an option to parties submitting briefs in emergency cases. The NTSB proposes the following addition: “* * * Unless otherwise authorized by the Board, all briefs in connection with appeals governed by this subpart must be filed and served by overnight delivery service, or by facsimile or electronic mail. Aside from the time limits and methods of filing and service specifically mandated by this paragraph, the provisions of § 821.48 shall apply.”

As noted above, many comments we received in response to the ANPRM encouraged the NTSB to change the standard of review for emergency determinations (found at section 821.54(e)), and to allow certificate holders to obtain certain evidence from the FAA and submit their own evidence into the record in support of petitions for review of FAA emergency determinations. We have carefully considered these comments, and acknowledge the FAA maintains the authority to take action affecting a certificate that is immediately effective “[w]hen the Administrator is of the opinion that an emergency exists related to safety in air commerce and requires immediate action.” 49 U.S.C. 46105(c). The NTSB is also mindful of the viewpoints expressed in some comments that the standard of review is unfair and may result in irrevocable harm to certificate holders, and in other comments urging the NTSB to treat reviews of emergency determinations like requests for temporary restraining orders or preliminary injunctions. We do not believe reviews of emergency determinations made by an administrative agency such as the FAA in consideration of the public interest in aviation safety raise questions of a similar nature to civil proceedings in which injunctive relief is sought.

Although the rules provide the facts alleged in the order are assumed as true for the limited, preliminary purpose of determining whether the Administrator's emergency determination was warranted in the interest of aviation safety, the law judges have always considered evidence submissions relevant to the propriety of the emergency determination itself. For example, in a recent case involving revocation of a respondent's pilot and airman medical certificates based on an alleged “refusal” to submit to a random drug test by allegedly leaving the testing facility before the testing process was completed, the respondent submitted evidence showing he had passed a breath test and passed a drug test taken at his own expense and at the same facility within approximately 3 hours of furnishing the insufficient sample. Such evidence was offered to show the respondent did not present an immediate threat to aviation safety related to alcohol or drug use. The law judge considered it favorably in granting the respondent's petition. Nevertheless, the number of comments requesting the rules permit the submission of evidence relevant to the FAA's emergency determination suggests clarification of this point would be useful.

The NTSB therefore proposes including explicit language in the rules permitting the attachment of such evidence to petitions for review of emergency determinations. Finally, we propose adding a requirement for the FAA to provide certificate holders with certain releasable information many commenters believe necessary for a certificate holder to obtain a full understanding of the basis for a certificate action and/or an emergency determination as soon as possible. We note some commenters believe such information will significantly reduce the need for discovery, especially in the compressed time frame environment of emergency cases.

As explained above, the NTSB currently does not intend to remove the “assuming the truth of the allegations” language from section 821.54(e), but proposes including explicit language permitting the respondent to present evidence challenging the emergency nature of the proceedings in the form of affidavits or other records. However, the NTSB reminds parties that a law judge's review of an emergency determination is separate and distinct from a review of the underlying certificate action on the merits. Parties should be mindful of this distinction in submitting evidence under this provision, and should only provide evidence helpful in resolving the issue of whether the FAA's decision to take immediately effective action was appropriate, and avoid presenting evidence that goes to the merits of the underlying certificate action.

The NTSB proposes changing section 821.54(e) as follows: “(e) Disposition. Within 5 days after the Board's receipt of the petition, the chief law judge (or, if the case has been assigned to a law judge other than the chief law judge, the law judge to whom the case is assigned) shall dispose of the petition by written order, and, in so doing, shall consider whether, based on the acts and omissions alleged in the Administrator's order, and assuming the truth of such factual allegations, the Administrator's emergency determination was appropriate under the circumstances, in that it supports a finding that aviation safety would likely be compromised by a stay of the effectiveness of the order during the pendency of the respondent's appeal. In making this determination, however, the law judge is not so limited to the order's factual allegations themselves, but also should permit evidence, if appropriate, pertaining to the propriety of the emergency determination presented by the respondent with the petition and the Administrator with the reply to the petition. This evidence can include affidavits or other such records.”

The NTSB proposes adding a new subsection, replacing current subsection (d), to section 821.55 that will make a complaint subject to dismissal if the FAA, without good cause, failed to provide a certificate holder against whom an emergency order was issued with the releasable portions of its enforcement investigation report (EIR) by the date on which the emergency order was issued. Additionally, subsection (c) will be amended to permit the filing of such a motion to dismiss, and current subsection (d) will be redesignated as subsection (e). The NTSB proposes the following language: “(c) Motion to dismiss and motion for more definite statement. Except as provided in paragraph (d) of this section, in proceedings governed by this subpart, no motion to dismiss the complaint or for a more definite statement of the complaint's allegations shall be made, but the substance thereof may be stated in the respondent's answer. The law judge may permit or require a more definite statement or other amendment to any pleading at the hearing, upon good cause shown and upon just and reasonable terms.

(d) Motion to dismiss for failure to include copy of releasable portion of Enforcement Investigative Report (EIR) with emergency or other immediately effective order. (1) Where the Administrator has failed to include a copy of the releasable portion of the FAA's EIR with an emergency or other immediately effective order, or to provide the respondent with a copy of the releasable portion of the EIR prior to the issuance of such an order, the respondent may move to dismiss the complaint and, unless the Administrator establishes good cause for that failure, the law judge shall dismiss the complaint. The law judge may accept arguments from the parties on the issue of whether a dismissal resulting from failure to provide the releasable portions of the EIR should be deemed to occur with or without prejudice.

(2) The releasable portion of the EIR shall include all information in the EIR, except for the following: (i) information that is privileged; (ii) information that is an internal memorandum, note or writing prepared by a person employed by the FAA or another government agency; (iii) information that would disclose the identity of a confidential source; (iv) information of which applicable law prohibits disclosure; (v) information about which the law judge grants leave to withhold as not relevant to the subject matter of the proceeding or otherwise, for good cause shown; or (vi) sensitive security information, as defined at 49 U.S.C. 40119 and 49 CFR § 15.5.

(3) Nothing in this section shall be interpreted as preventing the Administrator from releasing to the respondent information in addition to that which is contained in the releasable portion of the EIR.”

In rare cases, the Board may determine it necessary to remand an emergency case to a law judge. Therefore, the NTSB proposes changing section 821.57(c) to clarify that both subsections (a) and (b) of section 821.49 apply to emergency cases. The NTSB proposes amending subsection 821.57(c) to read: “(c) Issues on appeal. The provisions of § 821.49 (a) and (b) shall apply in proceedings governed by this subpart.”

Several commenters who responded to the ANPRM suggested the NTSB implement changes with regard to 49 CFR part 826. The NTSB has reviewed part 826 and proposes the changes discussed below, in order to ensure the rules are updated and consistent with 49 CFR part 821.

In order to make 49 CFR part 826 consistent with the terminology used in 49 CFR part 821, the NTSB proposes replacing each reference to “the Agency” with the term “the Administrator.” This will necessitate a minor change to section 826.1, and the NTSB proposes that it read: “The Equal Access to Justice Act, 5 U.S.C. 504 (the Act), provides for the award of attorney fees and other expenses to eligible individuals and entities who are parties to certain administrative proceedings (adversary adjudications) before the National Transportation Safety Board. An eligible party may receive an award when it prevails over the Federal Aviation Administration (FAA), unless the FAA's position in the proceeding was substantially justified or special circumstances make an award unjust. The rules in this part describe the parties eligible for awards and the proceedings that are covered. They also explain how to apply for awards, and the procedures and standards this Board will use to make them. As used hereinafter, the term “Administrator” refers to the Administrator of the FAA.

In addition to the change to section 826.1, the NTSB proposes additional changes to sections 821 and 826 as follows.

As discussed above, the NTSB received several comments in response to the ANPRM concerning the EAJA, which specifically suggested the NTSB's rules should address the status of cases the FAA withdraws immediately prior to hearing. In a recent opinion involving an issue concerning whether the certificate holder was the “prevailing party” when the FAA withdrew its order just before the hearing, the Board stated it would not adopt a bright-line rule to determine when such a withdrawal should result in a dismissal with or without prejudice. Administrator v. Koch, NTSB Order No. EA-5571 (2011) (available at: http://www.ntsb.gov/legal/o_n_o/docs/Aviation/5571.pdf ). The NTSB believes it best to allow its law judges to assess the facts of each case and determine whether the withdrawal was with or without prejudice. The Board will review such a determination de novo, as it does with most other issues parties present on appeal. Based on this reasoning, the NTSB proposes changing section 821.12(b) as follows: “(b) Withdrawal. Except in the case of a petition for review, an appeal to the Board, a complaint, or an appeal from a law judge's initial decision or appealable order, pleadings may be withdrawn only upon approval of the law judge or the Board. The law judge may accept arguments from the parties on the issue of whether a dismissal resulting from the withdrawal of a complaint should be deemed to occur with or without prejudice.”

As was stated in the ANPRM, the address listed for sending applications for EAJA award grants in section 826.40 is outdated. The FAA's comment in response to the ANPRM recommends section 826.40 simply state the FAA will pay funds via electronic fund transfer, because this is the only manner in which the FAA now provides funds. The NTSB believes this change will provide sufficient flexibility to allow for the FAA to change its payment process in the future. In each case, the FAA's provision of detailed instructions to each applicant will ensure the applicant has the updated, relevant information needed to obtain payment.

Therefore, the NTSB proposes the following change to section 826.40: “Within 5 days of the Board's service of a final decision granting an award of fees and expenses to an applicant, the Administrator shall transmit to the applicant instructions explaining how the applicant may obtain the award. These instructions may require, but are not limited to, the submission of the following information to the Administrator: a statement that the applicant will not seek review of the decision in the United States courts, bank routing numbers to which the Administrator may transmit payment, and the applicant's tax identification or Social Security number. The Administrator will pay the applicant the amount awarded within 60 days of receiving the necessary information from the applicant, unless judicial review of the award or of the underlying decision of the adversary adjudication has been sought by the applicant or any other party to the proceeding.”

In undertaking a detailed review of both parts 821 and 826, the NTSB has identified several sections of the rules we believe should be updated. Many of the provisions in question are either no longer practical or simply out-of-date. Some contain ambiguities the NTSB has recently identified in encountering unique situations. Therefore, this NPRM proposes to amend those sections of the rules to resolve the identified issues. Below are summaries of the proposed changes.

The NTSB proposes to delete the phrase, “in person,” because some matters, including rulings on motions and, where the parties consent, hearings (or sessions thereof), are conducted telephonically. The NTSB proposes deleting the phrase, “in person,” to clarify the rule and make it consistent with such case practice. With this change, section 821.6(b) would read, “(b) Any person appearing in any proceeding governed by this part may be accompanied, represented and advised, and may be examined by, his or her own counsel or representative.”

In a recent case, the NTSB granted reconsideration of a previous order due to a misunderstanding regarding which attorney was representing the respondent. Administrator v. Ricotta, NTSB Order No. EA-5569 (2011)(available at: http://www.ntsb.gov/legal/o_n_o/docs/Aviation/5569.pdf ). Therefore, to make entrances of appearance clear and assure the attorney's or representative's contact information is current and more easily located within the record, the NTSB proposes adding the phrase, “in a separate written document” to the first sentence of section 821.6(d). The FAA already regularly submits separate filings with the relevant information, and many respondents' attorneys do so, as well. However, the NTSB believes it best to require such a filing in section 821.6, and to keep the attorney's or representative's contact information current. A provision has also been added to require immediate written notification when any attorney or representative withdraws from representation in a case. With these changes, section 821.6(d) would read, “(d) Any party to a proceeding who is represented by an attorney or representative shall, in a separate written document, notify the Board of the name, address and telephone number of that attorney or representative. In the event of a change in representation or a withdrawal of representation, the party shall immediately, in a separate written document, notify the Board (in the manner provided in § 821.7) and the other parties to the proceeding (pursuant to § 821.8), before the new attorney or representative may participate in the proceeding in any way. Parties, and their attorneys and representatives, must notify the Board immediately of any changes in their contact information.”

The NTSB proposes deleting the word “other” immediately preceding the word “representative” in current § 821.7(e). This word is unnecessary. With this change, § 821.7(e) will read as follows: “(e) Subscription. The original of every document filed shall be signed by the filing party, or by that party's attorney or representative.”

Consistent with the change to section 821.6(d) suggested above, the NTSB proposes adding the phrase “and any subsequent document advising the Board of any representation or change in representation of a party pursuant to § 821.6(d)” to section 821.7(f). With this change, section 821.7(f) would read, “(f) Designation of person to receive service. The initial document filed by a party in a proceeding governed by this part, and any subsequent document advising the Board of any representation or change in representation of a party that is filed pursuant to § 821.6(d), shall show on the first page the name, address and telephone number of the person or persons who may be served with documents on that party's behalf.”

The NTSB proposes adding the word “simultaneously” to subsection (a) of § 821.8, to state as follows: “(a) Who must be served. (1) Copies of all documents filed with the Board must be simultaneously served on ( i.e., sent to) all other parties to the proceeding, on the date of filing, by the person filing them.” The remainder of § 821.8(a) shall remain unchanged.

The NTSB proposes deleting parts of this section to ensure consistency with the changes proposed to § 821.7(f). We propose § 821.8(c) should include only the following language: “(c) Where service shall be made. Except for personal service, parties shall be served at the address appearing in the official record, which the Board must receive under §§ 821.6(d) and 821.7(f). In the case of an agent designated by an air carrier under 49 U.S.C. 46103, service may be accomplished only at the agent's office or usual place of residence.”

The NTSB proposes adding a subsection (3) to § 821.8(d), to ensure consistency with other sections in part 821 that will provide for transmission of documents via electronic mail. With the new subsection (3), § 821.8(d) will read as follows: (d) Presumption of service. There shall be a presumption of lawful service:

(1) When receipt has been acknowledged by a person who customarily or in the ordinary course of business receives mail at the residence or principal place of business of the party or of the person designated under § 821.7(f);

(2) When a properly addressed envelope, sent to the most current address in the official record, by regular, registered or certified mail, has been returned as unclaimed or refused; or

(3) When a document is transmitted by facsimile or electronic mail and there is evidence to confirm its successful transmission to the intended recipient.

In addition to initial decisions, law judges may dispose of cases by dispositional order, where appropriate. Therefore, the NTSB proposes adding the phrase “and dispositional orders” to this subsection, to state as follows: “(b) Powers of law judge. Law judges shall have the following powers: * * * (10) To issue initial decisions and dispositional orders.”

Recently, the NTSB has received an increased number of petitions for reconsideration. Most of these petitions do not contain “new matter” under the rule, but instead challenge the Board's legal reasoning and may contain legal arguments the parties could have made in their appeal briefs. The NTSB proposes clearly addressing this issue by adding the following to the end of Section 821.50(c): “To the extent the petition is not based upon new matter, the Board will not consider arguments that could have been made in the appeal or reply briefs received prior to the Board's decision.”

The NTSB recently encountered a situation in which the respondent filed a motion for a stay pending judicial review on the 29th day following the date of service of the Board's decision, and this circumstance highlighted the ambiguity of the current language in this subsection. To ensure the deadline is clear, the NTSB proposes amending this subsection to give the respondent 20 days to file a motion for a stay, and the FAA 2 days to reply to the motion, as follows: “(b) Stay pending judicial review. No request for a stay pending judicial review will be entertained unless it is served on the Board within 20 days after the date of service of the Board's order. The Administrator may, within 2 days after the date of service of such a motion, file a reply thereto.”

The changes proposed below do not include any changes indicating the rules of subpart B apply to civil penalty actions. The NTSB declines to propose any such change because it believes that the language of section 821.2 sufficiently indicates that 49 CFR part 821 applies to civil penalty cases. In addition, we note that, in the definitions section of subpart A (section 821.1), the term “complaint” is defined as “an order of the Administrator * * * from which an appeal to the Board has been taken pursuant to sections 49 U.S.C. 44106, 44709, 46301.” This last cited provision, section 46301 of title 49, United States Code, concerns civil penalties for violations of various provisions in subtitle VII (Aviation Programs) of that title.

This notice of proposed rulemaking is not a significant regulatory action under Executive Order 12866. Therefore, Executive Order 12866 does not require a Regulatory Assessment. As such, the Office of Management and Budget (OMB) has not reviewed this proposed rule under Executive Order 12866. In addition, on July 11, 2011, the President issued Executive Order 13579, “Regulation and Independent Regulatory Agencies,” 76 FR 41587, July 14, 2011. Section 2(a) of the Executive Order states:

Consistent with Executive Order 13579, the NTSB's proposed amendments to 49 CFR parts 821 and 826 reflect its judgment that these rules should be updated and streamlined.

This rule does not require an analysis under the Unfunded Mandates Reform Act, 2 United States Code (U.S.C.) 1501-1571, or the National Environmental Policy Act, 42 U.S.C. 4321-4347.

The NTSB has analyzed this NPRM in accordance with the principles and criteria contained in Executive Order 13132. Any rulemaking proposal resulting from this notice would not propose any regulations that would: (1) Have a substantial direct effect on the states, the relationship between the national government and the states, or the distribution of power and responsibilities among the various levels of government; (2) impose substantial direct compliance costs on state and local governments; or (3) preempt state law. Therefore, the consultation and funding requirements of Executive Order 13132 do not apply.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq. ) requires each agency to review its rulemaking to assess the potential impact on small entities, unless the agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities. The NTSB certifies this NPRM will not have a significant economic impact on a substantial number of small entities. However, the NTSB will consider comments to facilitate any further analysis on this issue, should commenters believe otherwise.

This NPRM also complies with all applicable standards in sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. In addition, the NTSB has evaluated this rule under: Executive Order 12630, Governmental Actions and Interference with Constitutionally Protected Property Rights; Executive Order 13045, Protection of Children from Environmental Health Risks and Safety Risks; Executive Order 13175, Consultation and Coordination with Indian Tribal Governments; Executive Order 13211, Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use; and the National Technology Transfer and Advancement Act, 15 U.S.C. 272 note. The NTSB has concluded that this rule does not contravene any of the requirements set forth in these Executive Orders or statutes, nor does this rule prompt further consideration with regard to such requirements.

For the reasons discussed in the preamble, the NTSB proposes to amend 49 CFR parts 821 and 826 as follows:

(2) Service shall be made on the person designated in accordance with § 821.7(f) to receive service. If no such person has been designated, service shall be made directly on the party.

(b) Method of Service.

(1) Service of documents by any party on any other party shall be accomplished by any method prescribed in § 821.7(a)(3) for the filing of documents with the Board. A party may waive the applicability of this paragraph, and elect to be served with documents by the other parties to the proceeding solely by electronic mail, without also receiving a hard copy of the original by personal delivery, first-class mail or overnight delivery service, by filing a written document with the Board (with copies to the other parties) expressly stating such a preference.

NMFS refers the reader to the January 6, 2012, Federal Register notice (77 FR 842) for background information concerning the proposed regulations. The information in the notice of proposed rulemaking is not repeated here. For additional information regarding the Navy's associated draft Supplemental Environmental Impact Statement/Supplemental Overseas Environmental Impact Statement (DSEIS/SOEIS) for employment of SURTASS LFA sonar, please visit http://www.surtass-lfa-eis.com.