[Federal Register Volume 67, Number 36 (Friday, February 22, 2002)]
[Proposed Rules]
[Pages 8386-8394]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 02-3918]



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Part III





Environmental Protection Agency





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40 CFR Parts 52, 70, and 71



Rulemaking on Section 126 Petitions From New York and Connecticut 
Regarding Sources in Michigan; Revision of Definition of Applicable 
Requirement for Title V Operating Permit Programs; Proposed Rule

  Federal Register / Vol. 67, No. 36 / Friday, February 22, 2002 / 
Proposed Rules  

[[Page 8386]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 52, 70, and 71

[FRL-7147-5]
RIN 2060-AJ36


Rulemaking on Section 126 Petitions From New York and Connecticut 
Regarding Sources in Michigan; Revision of Definition of Applicable 
Requirement for Title V Operating Permit Programs

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: The EPA is proposing to revise one element of a final rule 
published on January 18, 2000, regarding petitions filed by four 
Northeastern States under section 126 of the Clean Air Act (CAA). The 
petitions seek to mitigate interstate transport of nitrogen oxides 
(NOX), one of the main precursors of ground-level ozone 
pollution. The final rule partially approved the four petitions under 
the 1-hour ozone national ambient air quality standard, thereby 
requiring certain types of sources located in 12 States and the 
District of Columbia to reduce their NOX emissions.
    Subsequently, on March 3, 2000, the U.S. Court of Appeals for the 
District of Columbia Circuit issued a decision on a related EPA 
regulatory action, the NOX State implementation plan call 
(NOX SIP call), that potentially affects the section 126 
Rule. Although the court decision did not directly address the State of 
Michigan, the reasoning of the court regarding the significance of 
NOX emissions from sources in two other States calls into 
question the inclusion of a portion of Michigan in the area covered by 
the NOX SIP call. The section 126 Rule is based on many of 
the same analyses and information used for the NOX SIP call 
and covers part of Michigan. Thus, in light of the court ruling, EPA is 
proposing to withdraw its section 126 findings and to deny the 
petitions under the 1-hour ozone standard with respect to sources 
located in the portion of Michigan that is at issue in the 
NOX SIP call, known as the ``coarse grid'' part of that 
State. Although EPA has not identified any existing section 126 sources 
located in the coarse grid, this proposal would affect new sources 
locating in the coarse grid.
    The EPA is also proposing to revise the definition of the 
``applicable requirement'' for title V operating permit programs by 
providing expressly that any standard or other requirement under 
section 126 is an applicable requirement and must be included in 
operating permits issued under title V of the CAA.

DATES: The comment period on this proposal ends on April 15, 2002. 
Comments must be postmarked by the last day of the comment period and 
sent directly to the Docket Office listed in ADDRESSES (in duplicate 
form if possible). A public hearing will be held on March 15, 2002 in 
Arlington, VA, if one is requested by March 7, 2002. Please refer to 
SUPPLEMENTARY INFORMATION for additional information on the comment 
period and hearing.

ADDRESSES: Comments may be submitted to the Office of Air and Radiation 
Docket and Information Center (6102), Attention: Docket No. A-97-43, 
U.S. Environmental Protection Agency, 1200 Pennsylvania Avenue NW., 
Washington, DC 20460, telephone (202) 260-7548. The EPA encourages 
electronic submission of comments and data following the instructions 
under SUPPLEMENTARY INFORMATION of this document. No confidential 
business information should be submitted through e-mail.
    Documents relevant to this action are available for inspection at 
the Docket Office, located at 401 M Street SW., Room M-1500, 
Washington, DC 20460, between 7:30 a.m. and 5:30 p.m., Monday though 
Friday, excluding legal holidays. A reasonable fee may be charged for 
copying.
    The public hearing, if requested, will be held at Crystal Mall 2 
(Room 1110 ``the fish bowl''), Crystal City, 1921 Jefferson Davis Hwy, 
Arlington, VA 22202.

FOR FURTHER INFORMATION CONTACT: Questions concerning today's action 
should be addressed to Carla Oldham, Office of Air Quality Planning and 
Standards, Air Quality Strategies and Standards Division, C539-02, 4930 
Old Page Road, Research Triangle Park, NC, 27711, telephone (919) 541-
3347, e-mail at [email protected]. 

SUPPLEMENTARY INFORMATION:

Public Hearing

    The EPA will conduct a public hearing on this proposal on March 15, 
2002 beginning at 9:00 a.m., if requested by March 7, 2002. The EPA 
will not hold a hearing if one is not requested. Please check EPA's 
webpage at http://www.epa.gov/ttn/rto/whatsnew.html on March 11, 2002 
for the announcement of whether the hearing will be held. If there is a 
public hearing, it will be held at Crystal Mall 2 (Room 1110 ``the fish 
bowl''), Crystal City, 1921 Jefferson Davis Hwy, Arlington, VA 22202. 
The Metro stop is Crystal City. If you want to request a hearing and 
present oral testimony at the hearing, you should notify, on or before 
March 7, 2002, JoAnn Allman, Office of Air Quality Planning and 
Standards, Air Quality Strategies and Standards Division, C539-02, 4930 
Old Page Road, Research Triangle Park, NC 27711, telephone (919) 541-
1815, e-mail [email protected]. Oral testimony will be limited to 5 
minutes each. The hearing will be strictly limited to the subject 
matter of the proposal, the scope of which is discussed below. Any 
member of the public may file a written statement by the close of the 
comment period. Written statements (duplicate copies preferred) should 
be submitted to Docket No. A-97-43 at the address given above for 
submittal of comments. The hearing schedule, including the list of 
speakers, will be posted on EPA's webpage at http://www.epa.gov/ttn/rto/whatsnew.html. A verbatim transcript of the hearing, if held, and 
written statements will be made available for copying during normal 
working hours at the Office of Air and Radiation Docket and Information 
Center address given above for inspection of documents.

Availability of Related Information

    The official record for this rulemaking, as well as the public 
version, has been established under docket number A-97-43 (including 
comments and data submitted electronically as described below). A 
public version of this record, including printed, paper versions of 
electronic comments, which does not include any information claimed as 
confidential business information, is available for inspection from 
7:30 a.m. to 5:30 p.m., Monday through Friday, excluding legal 
holidays. The official rulemaking record is located at the address in 
ADDRESSES at the beginning of this document. In addition, the Federal 
Register rulemaking actions and associated documents are located at 
http://www.epa.gov/ttn/rto/126. 
    The EPA has issued a separate rule on NOX transport 
entitled, ``Finding of Significant Contribution and Rulemaking for 
Certain States in the Ozone Transport Assessment Group Region for 
Purposes of Reducing Regional Transport of Ozone.'' The rulemaking 
docket for that rule (Docket No. A-96-56), hereafter referred to as the 
NOX SIP call, contains information and analyses that EPA has 
relied upon in the section 126 rulemaking, and hence documents in that 
docket are part of the rulemaking record for this rule. Documents 
related to the NOX SIP call

[[Page 8387]]

rulemaking are available for inspection in docket number A-96-56 at the 
address and times given above.

Submitting Electronic Comments

    Electronic comments are encouraged and can be sent directly to EPA 
at [email protected]. Electronic comments must be submitted as an 
ASCII file avoiding the use of special characters and any form of 
encryption. Comments and data will also be accepted on disks in 
WordPerfect 8.0 or ASCII file format. All comments and data in 
electronic form must be identified by the docket number A-97-43. 
Electronic comments may be filed online at many Federal Depository 
Libraries.

Outline

I. Background
    A. What Does the May 1999 Section 126 Rule Do?
    B. How Did the January 2000 Rule Revise the May 1999 Rule?
    1. How Did the Court Ruling on the 8-Hour Standard Affect the 
May 1999 Section 126 Rule?
    2. How Did the Court Stay of the NOX SIP Call Affect 
the Section 126 Rule?
    C. March 3, 2000 Court Decision on the NOX SIP Call
    1. What is the Relevance of the NOX SIP Call Court 
Decision to the Section 126 Rule?
    2. What is the NOX SIP Call Litigation Regarding 
Coarse Grid Sources?
    3. What is EPA's Response to the NOX SIP Call Court 
Decision?
II. Section 126 Proposal
    A. What is the Geographic Scope of the 1-Hour Findings for 
Michigan Sources?
    B. What is Today's Proposal on the Michigan Coarse Grid Sources 
Under the 1-Hour Standard?
    C. Is EPA Proposing Action Under the 8-Hour Standard on the 
Affirmative Technical Determinations that Affect Coarse Grid 
Sources?
    D. Does Today's Proposal Affect the Section 126 Requirements for 
Michigan Fine Grid Sources or Sources Located in Other States?
III. What is the Revision to the Definition of ``Applicable 
Requirement'' for Title V Operating Permit Programs?
IV. Administrative Requirements
    A. Executive Order 12866: Regulatory Planning and Review
    B. Unfunded Mandates Reform Act
    C. Executive Order 13132: Federalism
    D. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    E. Regulatory Flexibility Act
    F. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    G. National Technology Transfer and Advancement Act
    H. Paperwork Reduction Act
    I. Executive Order 13211: Actions Concerning Regulations that 
Significantly Affect Energy Supply, Distribution, or Use

I. Background

    In final rules published on May 25, 1999 (64 FR 28250) (May 1999 
Rule) and January 18, 2000 (65 FR 2674) (January 2000 Rule), EPA took 
action on petitions filed separately by eight Northeastern States under 
section 126 of the CAA. Each petition requested that EPA make a finding 
that certain stationary sources located in other specified States are 
emitting NOX in amounts that significantly contribute to 
ozone nonattainment and maintenance problems in the petitioning State. 
All of the States directed their petitions at the 1-hour ozone 
standard. Five of the States also directed their petitions at the 8-
hour ozone standard. The petitions targeted electric utilities, 
industrial boilers and turbines, and certain other stationary sources 
of NOX. The States that submitted petitions are Connecticut, 
Maine, Massachusetts, New Hampshire, New York, Rhode Island, 
Pennsylvania, and Vermont.
    Section 126 of the Clean Air Act (CAA) authorizes a downwind State 
to petition EPA for a finding that any new (or modified) or existing 
major stationary source or group of stationary sources upwind of the 
State emits or would emit in violation of the prohibition of section 
110(a)(2)(D)(i) because their emissions contribute significantly to 
nonattainment, or interfere with maintenance, of a national ambient air 
quality standard in the State. Sections 110(a)(2)(D)(i), 126(b)-(c). If 
EPA makes the requested finding, the sources must shut down within 3 
months from the finding unless EPA directly regulates the sources by 
establishing emissions limitations and a compliance schedule, extending 
no later than 3 years from the date of the finding, to eliminate the 
prohibited interstate transport of pollutants as expeditiously as 
possible. See sections 110(a)(2)(D)(i) and 126(c).

A. What Does the May 1999 Section 126 Rule Do?

    In the May 1999 Rule, EPA determined which petitions were 
approvable based on their technical merit. The EPA made affirmative 
technical determinations that NOX emissions from existing 
and new large electric generating units (EGUs) and large industrial 
boilers and turbines (non-EGUs) located in certain States identified in 
the petitions are significantly contributing to nonattainment in, or 
interfering with maintenance by, one or more of the petitioning States 
with respect to the 1-hour and/or 8-hour ozone standard. Separate 
determinations were made under the 1-hour and 8-hour standards.
    The EPA deferred making the section 126 findings based on the 
affirmative technical determinations pending certain actions by EPA and 
the States with respect to the NOX SIP call. Instead, 
according to the rule, the section 126 findings and associated control 
requirements would be automatically triggered at specific future dates 
if States and EPA failed to stay on track to meet the SIP call 
obligations. In the May 1999 Rule, EPA also denied the portions of the 
petitions that did not have technical merit.
    In evaluating the petitions, EPA relied on the analyses and 
information from the NOX SIP call.

B. How Did the January 2000 Rule Revise the May 1999 Rule?

    Shortly after EPA issued the May 1999 Rule (which was signed by the 
Administrator on April 30, 1999), two separate rulings by the U.S. 
Court of Appeals for the District of Columbia Circuit (D.C. Circuit) 
affected the Rule. In light of the court rulings, on January 18, 2000 
EPA published a final rule (January 2000 Rule) which modified two 
aspects of the May 1999 Rule.
1. How Did the Court Ruling on the 8-Hour Standard Affect the May 1999 
Section 126 Rule?
    In one of the court rulings, issued on May 14, 1999, the D.C. 
Circuit questioned the constitutionality of the CAA authority to review 
and revise the national ambient air quality standards (NAAQS), as 
applied by EPA in its promulgation of the 8-hour ozone standard (as 
well as the particulate matter NAAQS). See American Trucking Ass'ns v. 
EPA, 175 F.3rd 1027 (D.C. Cir.), modified, 195 F.3rd 4 (D.C. Cir. 
1999), cert. granted, 68 U.S.C.W. 3724 (May 22, 2000), 68 U.S.C.W. 3739 
(May 30, 2000). The court's ruling curtailed EPA's ability to require 
States to comply with a more stringent ozone NAAQS. On October 29, 
1999, the D.C. Circuit granted in part and denied in part EPA's 
rehearing request.
    On January 27, 2000, the Administration filed a petition of 
certiorari with the Supreme Court seeking review of this opinion. 
Several of the parties who challenged the NAAQS filed conditional 
cross-petitions for certiorari on the issue of whether the CAA 
precludes the consideration of costs in establishing NAAQS. In May 
2000, the Supreme Court granted EPA's petition and the petitioners' 
cross-petitions, and the parties have filed their briefs with the 
Court. The ongoing litigation continues to create uncertainty

[[Page 8388]]

with respect to EPA's ability to rely upon the 8-hour ozone standard as 
a basis for making findings under section 126 at this time.
    In the January 2000 section 126 Rule, EPA explained that it 
believed it should not continue implementation efforts under section 
126 with respect to the 8-hour standard that could be construed as 
inconsistent with the Court ruling in American Trucking. Therefore, in 
the January 2000 Rule, EPA voluntarily stayed the 8-hour affirmative 
technical determinations set forth in the May 1999 Rule. The EPA will 
address the 8-hour portion of the section 126 Rule through additional 
notice-and-comment rulemaking if and when EPA is able to implement the 
8-hour standard.
2. How Did the Court Stay of the NOX SIP Call Affect the 
Section 126 Rule?
    The NOX SIP Call required submission of the SIP 
revisions by September 30, 1999. State Petitioners challenging the 
NOX SIP Call filed a motion requesting the Court to stay the 
submission schedule until April 27, 2000. In response, on May 25, 1999, 
the D.C. Circuit issued a stay of the SIP submission deadline pending 
further order of the Court. Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 
2000) (May 25, 1999 order granting stay in part).
    Because the court had stayed the NOX SIP call schedule, 
and there was no explicit and expeditious deadline for compliance with 
that rule, EPA believed there was no longer a basis for deferring 
making the section 126 findings based on a failure to meet the SIP call 
submission requirements. Therefore, in the January 2000 Rule, EPA 
deleted the automatic trigger mechanism for making findings and instead 
simply made final findings under the 1-hour standard based on the 
affirmative technical determinations in the May 1999 Rule. The 1-hour 
findings were made with respect to the section 126 petitions from 
Connecticut, Massachusetts, New York, and Pennsylvania. The findings 
affected large EGUs and large non-EGUs located in the District of 
Columbia and 12 States, including Michigan. EPA promulgated the Federal 
NOX Budget Trading Program as the control remedy and issued 
NOX allowance allocations to each source. The rule required 
sources affected by the 1-hour findings to reduce NOX 
emissions by May 1, 2003.\1\ (On August 24, 2001, the D.C. Circuit 
temporarily suspended the section 126 Rule compliance date for EGUs 
while EPA resolves a remanded issue related to EGU growth factors. The 
EPA is currently developing its response to the remand. In a January 
16, 2002 memorandum from John Seitz, Director of EPA's Office of Air 
Quality Planning and Standards, to Regional Air Division Directors 
entitled, ``Deadlines for Electric Generating Units (EGUs) and Non-
Electric Generating Units (non-EGUs) under the Section 126 Rule,'' EPA 
has indicated its intent to reset the compliance date for EGUs and non-
EGUs to May 31, 2004, subject to EPA's response to the growth factor 
remand.)
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    \1\ The EPA notes that on June 22, 2000, the Court lifted the 
stay of the SIP submittal date for the NOX SIP call and 
ordered that the SIP submissions be due 128 days from the June 22, 
2000 date of the order. At the time of the May 25, 1999 stay of the 
SIP submittal date, States had 128 days left to submit their SIPs. 
Thus, the new SIP submittal date became October 30, 2000. The EPA 
has established a two-phased process for submitting the 
NOX SIPs; the October 30, 2000 date is for the phase I 
SIP. The EPA will be establishing the due date for the phase II 
NOX SIP through notice-and-comment rulemaking. Therefore, 
the deadline for States to meet their full NOX SIP call 
obligation has not yet been set. For further details, see the 
proposal on the NOX SIP call that is being issued in the 
same general timeframe as today's proposal. Because EPA delinked the 
making of the section 126 findings from the NOX SIP call 
SIP submittal date, the lifting of the stay of the SIP submittal 
date did not affect the section 126 action.
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C. March 3, 2000 Court Decision on the NOX SIP Call

1. What Is the Relevance of the NOX SIP Call Court Decision 
to the Section 126 Rule?
    On March 3, 2000, the United States Court of Appeals for the 
District of Columbia Circuit Court issued its decision on the 
NOX SIP call, ruling in favor of EPA on all major issues. 
Michigan v. EPA, 213 F.3d 663 (D.C. Cir. 2000).
    However, the Court ruled against EPA on several points, one of 
which is relevant to today's proposal on the section 126 Rule. 
Specifically, the court vacated the inclusion of Georgia and Missouri 
in the NOX SIP call in light of the Ozone Transport 
Assessment Group (OTAG) conclusions that emissions from coarse grid 
portions of States did not merit controls. The court remanded this 
issue concerning Georgia and Missouri to EPA for further consideration. 
The section 126 Rule is based on NOX SIP call analyses and 
also affects sources located in the coarse grid. (See section II.C.2 
below for an explanation of coarse versus fine grid areas of States.)
What Is the NOX SIP Call Litigation Decision Regarding 
Coarse Grid Sources?
    In the NOX SIP call, Georgia and Missouri industry 
petitioners challenged EPA's decision to calculate NOX 
budgets for these two States based on NOX emissions 
throughout the entirety of each State. The petitioners maintained that 
the record supports including only eastern Missouri and northern 
Georgia as contributing to downwind ozone problems.
    The challenge from these petitioners generally stems from the OTAG 
recommendations. The OTAG recommended NOX controls to reduce 
transport for areas within the ``fine grid'' of the air quality 
modeling domain, but recommended that areas within the ``coarse grid'' 
not be subject to additional controls, other than those required by the 
CAA.\2\
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    \2\ The OTAG recommendation on Utility NOX Controls 
approved by the Policy Group, June 3, 1997 (62 FR 60318, Appendix B, 
November 7, 1997).
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    In its modeling, OTAG used grids drawn across most of the eastern 
half of the United States. The ``fine grid'' has grid cells of 
approximately 12 kilometers on each side (144 square kilometers). The 
``coarse grid'' extends beyond the perimeter of the fine grid and has 
cells with 36 kilometer resolution. As shown in Figure F-10, Appendix F 
of part 52.34, the fine grid includes the area encompassed by a box 
with the following geographic coordinates: Southwest Corner: 92 degrees 
West longitude, 32 degrees North latitude; Northeast Corner: 69.5 
degrees West longitude, 44 degrees North latitude (OTAG Final Report 
Chapter 2). The OTAG could not include the entire Eastern U.S. within 
the fine grid because of computer hardware constraints.
    It is important to note that there were two key factors directly 
related to air quality that OTAG considered in determining the location 
of the fine grid-coarse grid line.\3\ (See OTAG Technical Supporting 
Document, Chapter 2, page 6; www.epa.gov/ttn/otag/finalrpt/.) 
Specifically, the fine grid-coarse grid line was drawn to: (1) Include 
within the fine grid as many of the 1-hour ozone nonattainment problem 
areas as possible and still stay within the computer and model run time 
constraints, (2) avoid dividing any individual major urban area between 
the fine grid and coarse grid, and (3) be located along an area of 
relatively low emissions density. As a result, the fine grid-coarse 
grid line did not track State boundaries, and Missouri and Georgia were 
among several States that were split between the fine and coarse grids.

[[Page 8389]]

Eastern Missouri and northern Georgia were in the fine grid while 
western Missouri and southern Georgia were in the coarse grid.
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    \3\ In addition to these two factors, OTAG considered three 
other factors in establishing the geographic resolution, overall 
size, and the extent of the fine grid. These other factors dealt 
with the computer limitations and the resolution of available model 
inputs.
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    The analysis OTAG conducted found that emissions controls examined 
by OTAG, when modeled in the entire coarse grid (i.e., all States and 
portions of States in the OTAG region that are in the coarse grid) had 
little impact on high 1-hour ozone levels in the downwind ozone problem 
areas of the fine grid.\4\
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    \4\ OTAG recommendation on Major Modeling/Air Quality 
Conclusions approved by the Policy Group, June 3, 1997 (62 FR 60318, 
Appendix B, November 7, 1997).
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    The Court vacated EPA's determination of significant contribution 
for all of Georgia and Missouri. Michigan v. EPA, 213 F.3d at 685. The 
Court did not seem to call into question the proposition that the fine 
grid portion of each State should be considered to make a significant 
contribution downwind. However, the Court emphasized that ``EPA must 
first establish that there is a measurable contribution,'' id. at 684, 
from the coarse grid portion of the State before determining that the 
coarse grid portion of the State significantly contributes to ozone 
nonattainment downwind.
    Based on OTAG's modeling and recommendations, the technical record 
for the EPA's final NOX SIP Call rulemaking, and emissions 
data, EPA believes that emissions in the fine grid portions of Georgia 
and Missouri comprise a measurable portion of the entire State's 
significant contribution to downwind nonattainment. Specifically, 
OTAG's technical findings and recommendations state that areas located 
in the fine grid should receive additional controls because they 
contribute to ozone in other areas within the fine grid. In addition, 
EPA performed State-by-State modeling for Georgia and Missouri as part 
of the final NOX SIP Call rulemaking. The results of this 
modeling show that emissions in both Georgia and Missouri make a 
significant contribution to nonattainment in other States. The EPA's 
finding of significant contribution for Missouri and Georgia was not 
disturbed by the Court, and the Georgia and Missouri industry 
petitioners challenging the rule did not challenge this part of the 
decision. Id. at 681.
3. What Is EPA's Response to the NOX SIP Call Court 
Decision?
    The EPA is preparing a rulemaking on the NOX SIP call to 
address issues remanded by the court in the March 3, 2000 decision. 
Among other issues, the proposal addresses the geographic applicability 
of the NOX SIP call for States located partially in the 
coarse grid. With regard to Georgia and Missouri, which the Court 
remanded to EPA for further consideration, EPA is proposing that the 
SIP call only cover the fine grid portions at this time. The EPA also 
explains that although this aspect of the court decision did not 
directly address the States of Michigan and Alabama, the reasoning of 
the court regarding control requirements for Georgia and Missouri calls 
into question the inclusion of the coarse grid portions of Michigan and 
Alabama in the NOX SIP call. Therefore, EPA is proposing to 
only cover the fine grid portions of Michigan and Alabama as well. The 
EPA intends to address the emissions from the coarse grid portions of 
these States at such time as it evaluates transport from 15 other 
States in the OTAG region that were not included in the final 
NOX SIP call.

II. Section 126 Proposal

    The section 126 Rule is based on technical analyses and information 
from the NOX SIP call and covers certain sources located in 
the coarse grid of the OTAG modeling domain. Thus, the court ruling in 
the NOX SIP call litigation regarding whether coarse grid 
portions of States should be included in the NOX SIP call is 
relevant to the section 126 action as well.
    In light of the court ruling, EPA is proposing to withdraw its 
section 126 findings and to deny the Connecticut and New York petitions 
under the 1-hour ozone standard with respect to sources that are or 
will be located in the coarse grid portion of Michigan. There are no 
other coarse grid areas covered by the section 126 Rule under the 1-
hour standard. The EPA emphasizes that it is not reopening any other 
part of the section 126 final rule for public comment and 
reconsideration.

A. What Is the Geographic Scope of the 1-Hour Findings for Michigan 
Sources?

    The section 126 petitions identified sources in different 
geographic areas. Both the Connecticut and New York petitions 
identified sources in specific OTAG Subregions. These Subregions were 
delineated by OTAG for use in some of the early air quality modeling 
analyses to determine the spatial scale of transport. The Subregional 
divisions were not used for the purpose of evaluating various control 
strategies. (See 62 FR 60318; November 7, 1997.) The Connecticut 
petition targeted sources located in OTAG Subregions 2, 6, and 7 and 
the portion of the Ozone Transport Region extending west and south of 
Connecticut. The New York petition targeted sources located in OTAG 
Subregions 2, 6, and 7 and the portion of the Ozone Transport Region 
extending west and south of New York. Part of Michigan is included in 
OTAG Subregion 2 (see Figure 1 below). In the January 2000 Rule, EPA 
made findings that large EGUs and large non-EGUs located in that 
portion of Michigan are significantly contributing to both Connecticut 
and New York under the 1-hour ozone standard. (Other portions of the 
Michigan fine and coarse grids were not covered by section 126 findings 
because the Connecticut and New York petitions did not target those 
areas.)


[[Page 8390]]


[GRAPHIC] [TIFF OMITTED] TP22FE02.001

B. What Is Today's Proposal on the Michigan Coarse Grid Sources Under 
the 1-Hour Standard?

    The Subregion 2 portion of Michigan, for which EPA made 1-hour 
section 126 findings, covers the area south of 45 degrees latitude and 
east of 86 degrees longitude. The fine-coarse grid line cuts through 
Michigan at 44 degrees latitude. Thus, a strip at the northern end of 
Subregion 2 is located in the coarse grid. In today's action, EPA is 
proposing to withdraw the section 126 findings made in response to the 
petitions from Connecticut and New York under the 1-hour standard for 
sources that are or will be located in the coarse grid portion of 
Michigan. The EPA has not identified any existing section 126 sources 
located in that area of the coarse grid. As discussed above in section 
I.C.2, in the Michigan v. EPA decision on the NOX SIP call, 
the court indicated that ``EPA must first establish that there is a 
measurable contribution'' from the coarse grid portion of the State 
before holding the coarse grid portion of the State partly responsible 
for the significant contribution of downwind ozone nonattainment in 
another State. Michigan v. EPA, 213 F.3d at 684. Elsewhere, the Court 
seemed to identify the standard as ``material contribution []''. Id. In 
response to the court opinion, EPA is proposing to include only the 
fine grid portion of Michigan in the NOX SIP call at this 
time. The EPA is applying the same reasoning to the Section 126 Rule. 
The EPA does not have analyses specific to the coarse grid to 
demonstrate that emissions from that area measurably or materially 
contribute to nonattainment in the petitioning States. Therefore, EPA 
is proposing to deny the New York and Connecticut petitions with 
respect to the Michigan coarse grid sources. Under today's proposal, 
any existing or new sources located in that affected segment of the 
coarse grid (north of 44 degrees latitude, south of 45.0 degrees 
latitude, and east of 86.0 degrees latitude) would no longer be subject 
to the control requirements of the section 126 Rule.\5\
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    \5\ The EPA is taking a different approach to interpreting the 
fine-coarse grid split for purposes of a new NOX SIP call 
proposal. Under the NOX SIP call, with respect to 
Michigan, EPA is proposing findings only for the fine grid. Thus, 
the coarse grid portion, which was covered under the October 27, 
1998 NOX SIP call, would no longer be affected. The 
NOX SIP call establishes State emissions budgets rather 
than regulating individual sources. Because of the uncertainties 
with accurately dividing emissions between the fine and coarse grid 
portions of individual counties, EPA is proposing that the 
NOX SIP call emissions budgets be based on all counties 
that are wholly contained within the fine grid. That is, counties 
that are in the coarse grid or that straddle the fine-coarse grid 
line would be excluded. Because the section 126 action regulates 
specific stationary sources, the issue of how to apportion a full 
NOX inventory on a partial-county basis does not arise. 
Therefore, the section 126 proposal follows the fine-coarse grid 
line exactly. The EPA notes that the Section 126 Rule has already 
covered partial counties for Michigan in its January 2000 Rule. In 
that rule, only sources east of 86 degrees longitude and south of 45 
degrees latitude were affected.
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C. Is EPA Proposing Action Under the 8-Hour Standard on the Affirmative 
Technical Determinations That Affect Coarse Grid Sources?

    As discussed above in section I.B.1, as a result of the court 
decision on the 8-hour ozone standard, EPA voluntarily stayed the 8-
hour affirmative technical determinations in the May 1999 Rule (65 FR 
2674, January 18, 2000). Thus, EPA has not moved forward to make any 
section 126 findings or establish any control requirements based on the 
8-hour portion of the May 1999 Rule. However, the affirmative technical 
determinations are final EPA actions specifying which portions of the 
8-hour petitions are approvable and could provide a basis for future 
required control measures. The 8-hour affirmative technical 
determinations affect sources located in 19 States and the District of 
Columbia, including the coarse grid portions of Alabama, Michigan, 
Missouri, and New York. Because EPA has indefinitely stayed the section 
126 Rule with respect to the 8-hour standard, EPA is not at this time 
proposing to revise the 8-hour affirmative technical determinations for 
coarse grid sources. The EPA intends to address these sources through 
notice-and-comment rulemaking if and when EPA is able to implement the 
8-hour standard.

[[Page 8391]]

D. Does Today's Proposal Affect the Section 126 Requirements for 
Michigan Fine Grid Sources or Sources Located in Other States?

    Today's proposal does not affect the NOX allowance 
allocations for Michigan sources located in the fine grid that were 
established in the January 2000 Rule. In addition, today's proposal 
does not affect the section 126 trading budget for Michigan or the 
compliance supplement pool. The EPA has not identified any existing 
large EGUs and large non-EGUs in the coarse grid portion of Michigan 
affected by today's proposal. Therefore, the NOX allowance 
calculations in the January 2000 Rule were already based only on fine 
grid emissions. This proposal does not affect any of the section 126 
Rule requirements for sources located in other States. Therefore, 
today's proposal does not affect the ability of any sources located in 
the fine grid to comply with the section 126 requirements by the 
compliance deadline.

III. What Is the Revision to the Definition of ``Applicable 
Requirement'' for Title V Operating Permit Programs?

    The EPA is proposing to revise the definitions of the ``applicable 
requirement'' in 40 CFR 70.2 and 71.2 by providing expressly that any 
standard or other requirement under section 126 of the CAA is an 
applicable requirement and must be included in operating permits issued 
under title V of the CAA. Section 504(a) of the CAA explicitly requires 
that each permit include ``enforceable emission limitations and 
standards, a schedule of compliance, * * * and such other conditions as 
are necessary to assure compliance with applicable requirements of this 
Act, including the requirements of the applicable implementation 
plan.'' 42 U.S.C. 7661c(a). The current Sec. 70.2 and Sec. 71.2 
definitions of ``applicable requirement'' do not include requirements 
that are imposed under section 126, even though section 126 authorizes 
the Administrator to adopt standards and requirements under certain 
circumstances as discussed above. Our proposed revision remedies this 
omission and clarifies the treatment, in title V operating permits, of 
section 126 requirements promulgated by the Administrator.
    Emission limitations, compliance schedules, and other regulatory 
requirements adopted under section 126 are, on their face, requirements 
of the CAA and therefore should be included in the definitions of 
``applicable requirement'' in Sec. 70.2 and Sec. 71.2. Indeed, in the 
preamble of the January 18, 2000 final rule establishing the 
NOX Budget Trading Program under section 126, EPA stated 
that the requirements of the final rule ``are applicable requirements 
under Sec. 70.2 and must be reflected in the title V operating permit'' 
of sources that are subject to the program and required to have such a 
permit (65 FR 2688). However, this statement was based on an erroneous 
reading that paragraph (1) of the definition of ``applicable 
requirement'' in Sec. 70.2 (which is identical to the definition of the 
same term in Sec. 71.2) is written broadly enough to include section 
126 requirements as an ``applicable requirement.'' \6\
---------------------------------------------------------------------------

    \6\ The conclusion that the requirements of the NOX 
Budget Trading Program under section 126 are an ``applicable 
requirement'' under Sec. 70.2 was based on the assumption that, 
since section 126 is part of title I, these section 126 requirements 
are ``provided for in the applicable implementation plan approved or 
promulgated by EPA through a rulemaking under title I.'' 40 CFR 70.2 
(definition of ``applicable requirement'', paragraph (1)). In fact, 
however, section 126 requirements promulgated by EPA are not part of 
an implementation plan under section 110. See CAA section 302(q), 42 
U.S.C. 7603(q) (definition of ``applicable implementation plan'').
---------------------------------------------------------------------------

    Despite the erroneous discussion in the preamble of the January 18, 
2000 section 126 Rule, that rule expressly requires that title V 
operating permits include the requirements of the NOX Budget 
Trading Program. Specifically, the rule states that, for each source 
required to have a ``federally enforceable permit'' (e.g., a title V 
operating permit), such permit must include the requirements of the 
NOX Budget Trading Program for units subject to that 
program. See 40 CFR 97.20(a).
    In order to clarify that section 126 requirements are indeed an 
applicable requirement under the CAA and must be included in title V 
operating permits, EPA is proposing to revise the definition of 
``applicable requirement'' in Sec. 70.2 and Sec. 71.2 to expressly 
include standards and other requirements promulgated under section 126. 
The requirements of the NOX Budget Trading Program 
promulgated on January 18, 2000 are an example of requirements that 
would be covered this proposed revision to Sec. 70.2 and Sec. 71.2.

IV. Administrative Requirements

A. Executive Order 12866: Regulatory Planning and Review

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), the 
Agency must determine whether the regulatory action is ``significant'' 
and, therefore, subject to Office of Management and Budget (OMB) review 
and the requirements of the Executive Order. The Order defines 
``significant regulatory action'' as one that is likely to result in a 
rule that may:
    1. Have 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. Create a serious inconsistency or otherwise interfere with an 
action taken or planned by another agency;
    3. Materially alter the budgetary impact of entitlements, grants, 
user fees, or loan programs or the rights and obligations of recipients 
thereof; or
    4. Raise novel legal or policy issues arising out of legal 
mandates, the President's priorities, or the principles set forth in 
the Executive Order.
    Under Executive Order 12866, this proposed action is not a 
``significant regulatory action'' and is therefore not subject to 
review by OMB. In the January 2000 Rule titled ``Findings of 
Significant Contribution and Rulemaking on section 126 Petitions for 
Purposes of Reducing Interstate Ozone Transport,'' (65 FR 2674), EPA 
partially approved four section 126 petitions under the 1-hour ozone 
standard. Today's action proposes to withdraw its section 126 findings 
and deny petitions under the 1-hour ozone standard with respect to 
sources located in a portion of Michigan.
    This proposed action does not create any additional impacts beyond 
what was promulgated in the January 2000 Rule. This proposed rule also 
does not raise novel legal or policy issues. Therefore, EPA believes 
that this action is not a ``significant regulatory action.''

B. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public 
Law 104-4, establishes requirements for Federal agencies to assess the 
effects of their regulatory actions on State, local, and tribal 
governments and the private sector. Under section 202 of the UMRA, 2 
U.S.C. 1532, EPA generally must prepare a written statement, including 
a cost-benefit analysis, for any proposed or final rules with ``Federal 
mandates'' that may result in the expenditure by State, local, and 
tribal governments, in the aggregate, or by the private sector, of $100 
million or more in any 1 year. A ``Federal mandate'' is defined to 
include a ``Federal intergovernmental mandate'' and a ``Federal private 
sector mandate'' (2 U.S.C. 658(6)). A ``Federal intergovernmental 
mandate,'' in turn, is defined to include a regulation that

[[Page 8392]]

``would impose an enforceable duty upon State, local, or tribal 
governments,'' (2 U.S.C. 658(5)(A)(i)), except for, among other things, 
a duty that is ``a condition of Federal assistance'' (2 U.S.C. 
658(5)(A)(I)). A ``Federal private sector mandate'' includes a 
regulation that ``would impose an enforceable duty upon the private 
sector,'' with certain exceptions (2 U.S.C. 658(7)(A)).
    The EPA has determined that this proposed action does not include a 
Federal mandate that may result in estimated costs of $100 million or 
more for either State, local, or tribal governments in the aggregate, 
or for the private sector. This proposed Federal action does not 
propose any new requirements, as discussed above. Accordingly, no 
additional costs to State, local, or tribal governments, or to the 
private sector, would result from this action.

C. Executive Order 13132: Federalism

    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.''
    Under section 6 of Executive Order 13132, EPA may not issue a 
regulation that has federalism implications, that imposes substantial 
direct compliance costs, and that is not required by statute, unless 
the Federal government provides the funds necessary to pay the direct 
compliance costs incurred by State and local governments, or EPA 
consults with State and local officials early in the process of 
developing the proposed regulation. The EPA also may not issue a 
regulation that has federalism implications and that preempts State 
law, unless the Agency consults with State and local officials early in 
the process of developing the proposed regulation.
    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. Today's proposed action imposes 
no additional burdens beyond those imposed by the January 2000 Rule. 
Thus, the requirements of section 6 of the Executive Order do not apply 
to this rulemaking action.

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

    Executive Order 13175, entitled ``Consultation and Coordination 
with Indian Tribal Governments'' (65 FR 67249, November 6, 2000), 
requires EPA to develop an accountable process to ensure ``meaningful 
and timely input by tribal officials in the development of regulatory 
policies that have tribal implications.'' ``Policies that have tribal 
implications'' is defined in the Executive Order to include regulations 
that have ``substantial direct effects on one or more Indian tribes, on 
the relationship between the Federal government and the Indian tribes, 
or on the distribution of power and responsibilities between the 
Federal government and Indian tribes.''
    This proposed rule does not have tribal implications. It will not 
have substantial direct effects on tribal governments, 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, as specified in Executive Order 13175. 
Today's action does not significantly or uniquely affect the 
communities of Indian tribal governments. As discussed above, today's 
proposed action imposes no new requirements that would impose 
compliance burdens beyond those that would already apply under the 
January 2000 rule. Accordingly, the requirements of Executive Order 
13175 do not apply to this rule.
    In the spirit of Executive Order 13175, and consistent with EPA 
policy to promote communications between EPA and tribal governments, 
EPA specifically solicits additional comment on this proposed rule from 
tribal officials.

E. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute 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 organizations, and small governmental jurisdictions.
    Today's proposal, if promulgated, would not create new requirements 
for small entities or other sources. Instead, this action is proposing 
to withdraw the section 126 requirements for sources that are or would 
be located in a specified portion of Michigan. Therefore, I certify 
that this action will not have a significant economic impact on a 
substantial number of small entities.

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

    Executive Order 13045: ``Protection of Children from Environmental 
Health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that (1) is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the agency.
    The EPA interprets Executive Order 13045 as applying only to those 
regulatory actions that are based on health or safety risks, such that 
the analysis required under section 5-501 of the Order has the 
potential to influence the regulation. This rule is not subject to 
Executive Order 13045, because this action is not ``economically 
significant'' as defined under Executive Order 12866 and the Agency 
does not have reason to believe the environmental health risks or 
safety risks addressed by this action present a disproportionate risk 
to children.

G. National Technology Transfer and Advancement Act

    Section 12(d) of the National Transfer and Advancement Act of 1995 
(``NTTAA'', Pub. L. 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. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards.

[[Page 8393]]

    The National Technology Transfer and Advancement Act of 1997 does 
not apply because today's action does not propose any new technical 
standards. This action is proposing to amend the January 2000 Rule by 
reducing the portion of Michigan that is covered by the rule.

H. Paperwork Reduction Act

    Today's action does not propose any new information collection 
request requirements. Therefore, an information collection request 
document is not required.

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

    This rule is not subject to Executive Order 13211, ``Actions 
Concerning Regulations That Significantly Affect Energy Supply, 
Distribution, or Use'' (66 FR 28355; May 22, 2001) because it is not a 
significant regulatory action under Executive Order 12866. Today's 
action does not propose any new regulatory requirements.

List of Subjects

40 CFR Part 52

    Environmental protection, Air pollution control, Emissions trading, 
Intergovernmental relations, Nitrogen oxides, Ozone, Ozone transport, 
Reporting and recordkeeping requirements.

40 CFR Part 70

    Administrative practice and procedure, Air pollution control, 
Intergovernmental relations, Reporting and recordkeeping requirements.

40 CFR Part 71

    Administrative practice and procedure, Air pollution control, 
Reporting and recordkeeping requirements.

    Dated: February 12, 2002.
Christine Todd Whitman,
Administrator.
    For the reasons set forth in the preamble, chapter I of title 40 of 
the Code of Federal Regulations is proposed to be amended as follows:

PART 52--APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS

    1. The authority citation for part 52 continues to read as follows:

    Authority: 42 U.S.C. 7401 et seq.

Subpart A--General Provisions

    2. Section 52.34 is amended by revising paragraphs (c)(2)(vi) and 
(g)(2)(vi) to read as follows:


Sec. 52.34  Action on petitions submitted under section 126 relating to 
emissions of nitrogen oxides.

* * * * *
    (c) * * *
    (2) * * *
    (vi) Portion of Michigan located south of 44 degrees latitude in 
OTAG Subregion 2, as shown in appendix F, Figure F-2, of this part.
* * * * *
    (g) * * *
    (2) * * *
    (vi) Portion of Michigan located south of 44 degrees latitude in 
OTAG Subregion 2, as shown in appendix F, Figure F-6, of this part.
* * * * *

Appendix F--[Amended]

    3. Appendix F is amended by adding a new figure F-10 in numerical 
order to read as follows:

Appendix F to Part 52--Clean Air Act Section 126 Petitions From Eight 
Northeastern States: Named Source Categories and Geographic Coverage

* * * * *

[[Page 8394]]

[GRAPHIC] [TIFF OMITTED] TP22FE02.002

PART 70--STATE OPERATING PERMIT PROGRAMS

    4. The authority citation for part 70 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

    5. Section 70.2 is amended by redesignating paragraphs (7) through 
(12) of the definition of ``Applicable requirement'' as paragraphs (8) 
through (13) and adding a new paragraph (7) to read as follows:


Sec. 70.2  Definitions.

* * * * *
    Applicable requirement * * *
    (7) Any standard or other requirement under section 126(a)(1) and 
(c) of the Act;
* * * * *

PART 71--FEDERAL OPERATING PERMIT PROGRAMS

    6. The authority citation for part 71 continues to read as follows:

    Authority: 42 U.S.C. 7401, et seq.

    7. Section 71.2 is amended by redesignating paragraphs (7) through 
(12) of the definition of ``applicable requirement'' as paragraphs (8) 
through (13) and adding a new paragraph (7) to read as follows:


Sec. 71.2  Definitions.

* * * * *
    Applicable requirement * * *
    (7) Any standard or other requirement under section 126(a)(1) and 
(c) of the Act;
* * * * *

[FR Doc. 02-3918 Filed 2-21-02; 8:45 am]
BILLING CODE 6560-50-P