[Federal Register Volume 68, Number 65 (Friday, April 4, 2003)]
[Proposed Rules]
[Pages 16644-16650]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-8152]



[[Page 16643]]

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Part III





Environmental Protection Agency





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40 CFR Part 52



Section 126 Rule: Withdrawal Provision; Proposed Rule

  Federal Register / Vol. 68, No. 65 / Friday, April 4, 2003 / Proposed 
Rules  

[[Page 16644]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 52

[FRL-7476-3]
RIN 2060-AK41


Section 126 Rule: Withdrawal Provision

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule.

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SUMMARY: In today's action, EPA is proposing to revise one narrow 
aspect of a final rule published on January 18, 2000, known as the 
Section 126 Rule. The EPA promulgated the rule in response to petitions 
submitted by four Northeastern States under section 126 of the Clean 
Air Act (CAA) for the purpose of mitigating interstate transport of 
nitrogen oxides (NOX) and ozone. Nitrogen oxides are one of 
the main precursors of ground-level ozone pollution. The Section 126 
Rule requires electric generating units (EGUs) and non-electric 
generating units (non-EGUs) located in 12 eastern States and the 
District of Columbia to reduce their NOX emissions through a 
NOX cap-and-trade program.
    Originally, EPA harmonized the Section 126 Rule with a related 
ozone transport rule, known as the NOX State implementation 
plan call (NOX SIP Call), which also addresses 
NOX and ozone transport in the eastern United States. The 
EPA established the same compliance date for both rules, May 1, 2003. 
Where States adopted, and EPA approved, SIPs meeting the NOX 
SIP Call, and with a May 1, 2003 compliance date, EPA would withdraw 
the Section 126 requirements for sources in that State. This was a 
practical way to address the overlap between the two rules. As a result 
of court actions, the compliance dates for the Section 126 Rule and the 
NOX SIP Call have now been delayed until May 31, 2004. In 
addition, the NOX SIP Call has been divided into two phases. 
Therefore, EPA is proposing to revise the Section 126 withdrawal 
provision so that it will operate under these new circumstances. In 
today's action, EPA is proposing to withdraw the Section 126 Rule if a 
State adopts, and EPA approves, a SIP with a May 31, 2004 compliance 
date that meets either the full NOX SIP Call or Phase 1 
where the State is regulating the Section 126 sources to the same 
stringency as the Section 126 Rule.

DATES: The comment period on this proposal ends on May 24, 2003. 
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 April 24, 2003 in 
Washington, DC, if one is requested by April 10, 2003. Please refer to 
SUPPLEMENTARY INFORMATION for additional information on the comment 
period and hearing.

ADDRESSES: Comments may be submitted through the U.S. Postal Service to 
the following address: U.S. Environmental Protection Agency, EPA West 
(Air Docket), 1200 Pennsylvania Avenue, NW., Room B108, Mail Code 
6102T, Washington, DC 20460, Attention: Docket No. A-97-43. To mail 
comments or documents through Federal Express, UPS, or other courier 
services, the mailing address is: U.S. Environmental Protection Agency, 
EPA Docket Center (Air Docket), 1301 Constitution Avenue, NW., Room 
B108, Mail Code 6102T, Washington, DC 20004. The telephone number for 
the Air Docket is (202) 566-1742 and the fax number is 202-566-1741. 
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 public 
inspection at the EPA Docket Center, located at 1301 Constitution 
Avenue, NW., Room B102, Washington, DC between 8:30 a.m. and 4:30 p.m., 
Monday through Friday, excluding legal holidays. A reasonable fee may 
be charged for copying.
    The public hearing, if requested, will be held at Ariel Rios North, 
Room 1332, 1200 Pennsylvania Avenue, NW., Washington, DC 20460.

FOR FURTHER INFORMATION CONTACT: Questions concerning today's action 
should be addressed to Carla Oldham, EPA, Office of Air Quality 
Planning and Standards, Air Quality Strategies and Standards Division, 
C539-02, 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 April 24, 
2003 beginning at 9 a.m., if requested on or before April 10, 2003. The 
EPA will not hold a hearing if one is not requested. Please check EPA's 
Web page at http://www.epa.gov/ttn/naaqs/ozone/rto/rto_whatsnew.html 
on April 11, 2003 for the announcement of whether the hearing will be 
held. If there is a public hearing, it will be held at Ariel Rios 
North, Room 1332, 1200 Pennsylvania Avenue, NW., Washington, DC 20460. 
The Metro stop is Federal Triangle. If you want to request a hearing 
and present oral testimony at the hearing, you should notify, on or 
before April 10, 2003, JoAnn Allman, EPA, Office of Air Quality 
Planning and Standards, Air Quality Strategies and Standards Division, 
C539-02, 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 addresses given above for submittal of 
comments. The hearing schedule, including the list of speakers, will be 
posted on EPA's Web page at http://www.epa.gov/ttn/naaqs/ozone/rto/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 EPA Docket 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 
8:30 a.m. to 4:30 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/naaqs/ozone/rto/126/index.html.
    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

[[Page 16645]]

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 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. What is the Relationship Between the Section 126 Rule and the 
NOX SIP Call?
II. What is the History of the Section 126 Rule Withdrawal 
Provision?
III. Why Does the Section 126 Rule Withdrawal Provision Need to be 
Revised?
    A. Under What Circumstances Does the Section 126 Rule Withdrawal 
Provision Currently Operate?
    B. How Have Court Actions Affected the Circumstances Upon Which 
the Section 126 Rule Withdrawal Provision Was Based?
    1. Court Actions on the NOX SIP Call.
    2. Court Actions on the Section 126 Rule.
IV. What is EPA's Proposal to Revise the Section 126 Rule Withdrawal 
Provision?
    A. What is EPA's Proposal Related to the SIP Compliance Date?
    B. What is EPA's Proposal Related to Withdrawing the Section 126 
Rule Based on a Phase 1 SIP?
V. What is the Current Status of the NOX SIPs Under the 
NOX SIP Call and EPA's Proposed Action to Withdraw the 
Section 126 Rule in a State?
VI. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: Federalism
    F. Executive Order 13175: Consultation and Coordination with 
Indian Tribal Governments
    G. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Actions that Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer Advancement Act

I. What Is the Relationship Between the Section 126 Rule and the 
NOX SIP Call?

    In the past several years, EPA has been engaged in two separate 
rulemakings to address the interstate ozone transport problem in the 
eastern half of the United States. These rules, known as the 
NOX SIP Call and the Section 126 Rule, both require 
reductions in NOX emissions, which are precursors to ground-
level ozone formation.
    On October 27, 1998 (63 FR 57356), EPA promulgated the 
NOX SIP Call thereby requiring 22 Eastern States and the 
District of Columbia to reduce statewide NOX emissions to a 
specified level (NOX budget).\1\ The States have the 
flexibility to choose the particular mix of control measures necessary 
to meet the NOX budget. The primary statutory provision for 
the NOX SIP Call is CAA section 110(a)(2)(D)(i), under 
which, in general, each SIP is required to include provisions to assure 
that sources within the State do not emit pollutants in amounts that 
significantly contribute to nonattainment or interfere with maintenance 
problems downwind.
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    \1\ As a result of a court decision, EPA will now only be 
including 21 States and the District of Columbia in the SIP Call.
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    In 1997, while EPA was in the process of developing the 
NOX SIP Call, eight Northeastern States submitted petitions 
under section 126 of the CAA seeking to mitigate significant interstate 
transport of NOX and ozone. Section 126 refers to State 
obligations under CAA section 110(a)(2)(D)(i) as does the 
NOX SIP Call. Section 126 authorizes a State to petition EPA 
to make a finding that any major source or group of stationary sources 
in upwind States are significantly contributing to nonattainment, or 
interfering with maintenance, in the petitioning State. If EPA makes 
such a finding, EPA is authorized to establish Federal emission limits 
for the affected sources. The petitions requested that EPA make such 
findings and establish control requirements for certain sources in 
about 30 States.
    The EPA took action on the Section 126 petitions in final rules 
issued on May 25, 1999 and January 18, 2000 (together known as the 
Section 126 Rule) (64 FR 28250 and 65 FR 2674). In acting on the 
section 126 petitions, EPA relied on analyses and information used in 
the NOX SIP Call rulemaking, including the linkages it drew 
between specific upwind States and nonattainment and maintenance 
problems in specific downwind States. The EPA determined that large 
EGUs and large industrial boilers and turbines (non-EGUs) in 12 States 
and the District of Columbia were significantly contributing to 
nonattainment problems in four of the petitioning States under the 1-
hour ozone national ambient air quality standard.\2\ The EPA required 
these sources to reduce their NOX emissions through a 
Federal NOX cap-and-trade program.
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    \2\ Several of the petitions also requested that EPA also make 
findings under the 8-hour ozone standard. The EPA made technical 
determinations under the 8-hour standard in the May 25, 1999 rule 
but later stayed that portion of the rule in light of litigation on 
the 8-hour standard (65 FR 2674; January 18, 2000).
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    The Section 126 Rule overlaps considerably with the NOX 
SIP Call. Both the Section 126 Rule and the NOX SIP Call are 
based on much the same set of facts regarding the same pollutants. Both 
rely on section 110(a)(2)(D)(i) of the CAA. All of the sources affected 
by the Section 126 Rule are located in States that are covered by the 
NOX SIP Call. Therefore, as discussed below, EPA coordinated 
its actions under the two transport rules. (See the May 25, 1999 and 
January 18, 2000 Section 126 Rules for a detailed history of the 
relationship between the NOX SIP Call and the Section 126 
Rule.)

II. What Is the History of the Section 126 Rule Withdrawal Provision?

    When EPA issued the May 25, 1999 Section 126 Rule, there was an 
existing requirement under the NOX SIP Call for States to 
reduce their NOX emissions and an explicit and expeditious 
schedule to do so. Therefore, EPA was able to coordinate, or harmonize, 
the Section 126 Rule with the NOX SIP Call. The EPA 
established the same compliance date, May 1, 2003 for both rules. Then, 
EPA structured its action on the section 126 petitions to give a State 
the opportunity to address its NOX transport first under the 
NOX SIP Call before EPA would directly regulate sources in 
the State under the Section 126 Rule. Thus, in the May 25, 1999 Section 
126 Rule, EPA made technical determinations as to which sources were 
significantly contributing to the petitioning States but deferred 
making the Section 126 findings, which would trigger the control 
requirements, as long as States and EPA stayed on track to meet the 
NOX SIP Call obligations. The EPA included a withdrawal 
provision in the Section 126 Rule under which the Section 126 Rule for 
sources in a State would be automatically withdrawn if that State 
submitted and EPA approved a NOX SIP fully meeting the 
NOX SIP Call (see 64 FR 28271-28274; May 25, 1999). Thus, 
the section 126 control requirements would not go into place if

[[Page 16646]]

a State took timely action under the NOX SIP Call. This gave 
upwind States the flexibility to address the ozone transport problem 
themselves, but would not delay implementation of the NOX 
transport remedy beyond the May 1, 2003 Section 126 Rule compliance 
date.\3\ This was a practical way to address the overlap between the 
actions that would be required under the NOX SIP Call and 
under the rulemaking on the section 126 petitions. (The basis for the 
withdrawal provision is discussed below in section III.A. For a more 
detailed discussion of the basis for harmonizing the two rules and the 
interplay of the underlying statutory provisions, see the May 25, 1999 
final rule.)
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    \3\ This approach of ``harmonizing'' the Section 126 Rule and 
the NOX SIP Call was provided as a rulemaking option in a 
consent decree developed by the petitioning States and EPA.
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    The NOX SIP Call originally required States to submit 
their NOX SIPs to EPA by September 30, 1999. On May 25, 
1999, in response to a request by States challenging the NOX 
SIP Call, the U.S. Court of Appeals for the District of Columbia 
Circuit (D.C. Circuit or the court) 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), cert. denied, 121 S. Ct. 1225 (2001) (order 
granting stay in part). Inasmuch as the compliance date is linked with 
the SIP submission date, the stay created uncertainty regarding the 
compliance date. Because there was no longer a schedule for the 
NOX SIP Call, and therefore, no assurance that transport 
would be addressed by May 1, 2003, EPA no longer had a basis for 
deferring action under the Section 126 Rule. Therefore, in a final rule 
published on January 18, 2000, EPA moved forward to make the findings 
with respect to the 1-hour ozone standard and activate the control 
requirements under the Section 126 Rule (65 FR 2674).\4\ However, the 
Section 126 Rule continued to contain a provision (Sec.  53.34(i)) 
whereby the section 126 requirements would be automatically withdrawn 
for sources in a State if EPA approved a State's SIP that provided for 
the NOX SIP Call emission reduction requirements by May 1, 
2003.
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    \4\ Because of the stay on the Section 126 Rule with respect to 
the 8-hour standard, EPA did not make findings under the 8-hour 
standard at that time. EPA plans to complete it's actions on the 8-
hour petitions in a future rulemaking.
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III. Why Does the Section 126 Rule Withdrawal Provision Need To Be 
Revised?

A. Under What Circumstances Does the Section 126 Rule Withdrawal 
Provision Currently Operate?

    Section 52.34(i) of the Section 126 Rule currently provides that:

    * * * a finding [under the Section 126 Rule] as to a particular 
major source or group of stationary sources in a particular State 
will be deemed to be withdrawn, and the corresponding part of the 
relevant petition(s) denied, if the Administrator issues a final 
action putting in place implementation plans that comply with the 
requirements of Sec. Sec.  51.121 and 51.122 [the NOX SIP 
Call] of this chapter for such State.

    As discussed in the Section 126 Rule (65 FR 2682-2684), the premise 
for the automatic withdrawal provision was that once a SIP (or Federal 
implementation plan (FIP)) controls the full amount of significant 
contribution from a State, the section 126 sources in that State could 
no longer be significantly contributing to downwind nonattainment, and 
hence the basis for the section 126 findings would no longer be 
present. Further, the provision would ensure that the downwind 
petitioning States receive the emission reduction benefits they are 
entitled to under section 126 by May 1, 2003, which was then the 
compliance date, either under the Section 126 Rule or under a Federally 
enforceable SIP or FIP (65 FR 2684). Thus, EPA's rationale for adopting 
the automatic withdrawal provision depended upon a May 1, 2003 
compliance date for sources under the SIP that would substitute for the 
control remedy under the Section 126 Rule. Accordingly, EPA interpreted 
section 52.34(i) to apply only where EPA approves a SIP revision (or 
promulgates a FIP) meeting the full requirements of the NOX 
SIP Call and including a May 1, 2003 compliance date for sources (See 
65 FR 2683). The automatic withdrawal provision does not address any 
other circumstances.

B. How Have Court Actions Affected the Circumstances Upon Which the 
Section 126 Rule Withdrawal Provision Was Based?

    Both the NOX SIP Call and the Section 126 Rule were 
challenged in court. As a result of court actions, certain 
circumstances upon which the Section 126 withdrawal provision was based 
have changed--the deadlines for the NOX SIP Call and the 
Section 126 Rule have been delayed and the SIP Call has been divided 
into 2 phases (known as Phase 1 and Phase 2).
1. Court Actions on the NOX SIP Call
    On March 3, 2000, a panel of the D.C. Circuit largely upheld the 
NOX SIP Call but remanded a few issues to EPA for further 
consideration. (See Michigan v. EPA, 213 F.3d 663 (D.C. Cir., 2000), 
cert. denied, 121 S. Ct. 1225 (2001).) As discussed in section II 
above, during the litigation, the court issued a stay of the SIP 
submission deadline. On June 22, 2000, in response to a motion by EPA, 
the court lifted the stay and established a new SIP submission date of 
October 30, 2000. On August 30, 2000, the D.C. Circuit ordered that the 
deadline for implementation of the NOX SIP Call be extended 
from May 1, 2003 to May 31, 2004. The NOX SIP Call then had 
a later compliance date and was no longer harmonized with the Section 
126 Rule.
    As a result of the court decision, EPA divided the NOX 
SIP Call into two phases. Phase 1 represents the portion of the rule 
that was upheld by the court and accounts for approximately 90 percent 
of the total emissions reductions called for by the original 
NOX SIP Call. The court-established SIP submission date and 
compliance date apply to Phase 1. Phase 2 of the NOX SIP 
Call is addressing issues remanded by the court. The EPA proposed the 
Phase 2 requirements on February 22, 2002 (67 FR 8396). The SIP 
submission date and compliance date for the Phase 2 will be established 
through that rulemaking action.
    The EPA promulgated the January 2000 Section 126 Rule at the time 
when the NOX SIP Call stay was in place. In the preamble to 
the rule, EPA noted that if EPA prevailed in the NOX SIP 
Call litigation, the court or EPA would need to establish a new 
deadline for SIP submission and the delay from the original September 
1999 SIP deadline could require a shift in the date for achieving the 
NOX SIP Call emissions reductions beyond May 1, 2003 (65 FR 
2683). The EPA indicated that when and if such a situation were to 
arise, EPA would address through rulemaking the effects of the new 
NOX SIP Call deadline on the Section 126 withdrawal 
provision.
2. Court Actions on the Section 126 Rule
    On May 15, 2001, the court ruled on a number of challenges to EPA's 
Section 126 Rule. See Appalachian Power v. EPA, 249 F.3d 1032 (D.C. 
Cir. 2001). The court largely upheld the Section 126 Rule, but remanded 
two issues to EPA. The court directed EPA to: (1) Properly justify 
either the current or a new set of EGU heat input growth rates to be 
used in estimating State heat input

[[Page 16647]]

in 2007, and (2) either properly justify or alter its categorization of 
cogenerators that sell electricity to the electric grid as EGUs.\5\
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    \5\ The EPA is responding to the remand related to the 
categorization of cogenerators in a rulemaking that was proposed on 
February 22, 2002 (67 FR 8396).
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    On August 24, 2001, the D.C. Circuit Court tolled (suspended) the 
compliance period for EGUs under the Section 126 Rule as of the May 15, 
2001 decision pending EPA's response to the remand related to EGU 
growth rates. Appalachian Power v. EPA, 249 F.3d 1052 (D.C. Cir 2001), 
Order (August 24, 2001). The EPA issued its response in a notice 
published on May 1, 2002 (67 FR 21868). Because of the time needed to 
fully respond to the growth factor remand, the tolling of the 
compliance period resulted in a delay in the implementation of the 
Section 126 Rule until the 2004 ozone season. This created a need for 
EPA to once again harmonize the Section 126 Rule with the 
NOX SIP Call. Therefore, on April 30, 2002, EPA issued a 
final rulemaking to revise the Section 126 Rule compliance date and 
other related dates (67 FR 21522). The new compliance date is May 31, 
2004, which is the same compliance date for Phase 1 of the 
NOX SIP Call, but slightly more than a year later than the 
compliance date upon which the Section 126 Rule withdrawal provision 
was based.

IV. What Is EPA's Proposal To Revise the Section 126 Rule Withdrawal 
Provision?

    A number of reasons supported structuring the May 25, 1999 Section 
126 Rule to provide for an automatic withdrawal of the section 126 
findings upon approval of a SIP revision complying with the 
NOX SIP Call. As discussed above, EPA believes it is 
appropriate, when consistent with the relevant statutory provisions, to 
structure the Section 126 Rule to allow for State rather than Federal 
regulation when either would be equally effective in implementing the 
statutory goal of producing timely emissions reductions. The withdrawal 
provision also avoids the overlap of the Federal requirements under 
section 126 and State measures in response to the NOX SIP 
Call. However, due to the changes that have occurred to the Section 126 
Rule and the NOX SIP Call as a result of court actions, the 
Section 126 Rule withdrawal provision is now out of date. Therefore, it 
is necessary to revise and update the withdrawal provision so that it 
will function as originally intended.

A. What Is EPA's Proposal Related to the SIP Compliance Date?

    As discussed in Section III.A. above, EPA interprets the current 
Section 126 Rule withdrawal provision to operate only when the SIP has 
a May 1, 2003 compliance date. Because the Section 126 Rule compliance 
deadline is now May 31, 2004, a NOX SIP to pre-empt or 
replace the Section 126 Rule requirements would not need to be 
implemented until May 31, 2004. Therefore, in today's action, EPA is 
proposing that the section 126 findings for sources in a State will be 
deemed to be withdrawn, and the corresponding portion of the relevant 
petition will be denied, if EPA approves a NOX SIP that 
meets the NOX SIP Call requirements of 40 CFR 51.121 and 
51.122 (or Phase 1 requirements under the circumstances discussed 
below) by May 31, 2004 rather than by May 1, 2003.

B. What Is EPA's Proposal Related to Withdrawing the Section 126 Rule 
Based on a Phase 1 SIP?

    The current withdrawal provision requires a State to meet the full 
NOX SIP Call. If a State controls its statewide significant 
contribution under the NOX SIP Call, it necessarily must 
have addressed the significant contribution from the section 126 
sources in that State. This provided the basis for EPA to revoke the 
section 126 findings and requirements as to those sources.
    At the time EPA promulgated the Section 126 Rule, the 
NOX SIP Call had not yet been divided into two phases. 
Therefore, EPA did not address the question of whether something less 
than a full NOX SIP, that is, a Phase 1 SIP, could 
adequately substitute for the section 126 requirements. Phase 1 of the 
NOX SIP Call provides around 90 percent of the SIP Call 
reductions. States are required to achieve the Phase 1 reductions by 
May 31, 2004, the same compliance date as the Section 126 Rule. In 
February of this year, EPA proposed the Phase 2 requirements. The Phase 
2 compliance date will be established in a future final rule. Because 
EPA expects that the Phase 2 compliance date will be later than the 
2004 ozone season, States will be required to achieve only the Phase 1 
reductions in 2004 and not the full NOX SIP Call reductions. 
Therefore, in order to avoid having sources be subject to two different 
sets of transport requirements in 2004 under the NOX SIP 
Call and the Section 126 Rule, EPA is proposing criteria for 
withdrawing the Section 126 Rule based on a Phase 1 SIP.
    Although the Phase 1 SIP would achieve the vast majority of the SIP 
Call reductions, there is no guarantee that a Phase 1 SIP would, in all 
cases, control at least the same amount of emissions as the Section 126 
Rule in a State or that the State would choose to regulate all the 
identified Section 126 sources. Therefore, EPA is not proposing that 
simply meeting the Phase 1 reductions would provide a basis for 
automatic withdrawal of the Section 126 requirements. Instead, EPA is 
proposing that the Section 126 Rule be withdrawn in a State under the 
more limited circumstances where EPA determines that an approved Phase 
1 SIP is requiring at least the same total quantity of emissions 
reductions from the same group of sources as controlled under the 
Section 126 Rule by May 31, 2004. In this situation, the SIP would 
retain the environmental benefits that section 126 would have provided 
and the section 126 sources would no longer be significantly 
contributing to downwind nonattainment problems.
    The process for withdrawing the Section 126 Rule based on a Phase 1 
SIP would differ slightly from the situation where a State adopts a SIP 
meeting the full NOX SIP Call requirements in that a second 
step would be involved. In the latter case, the Section 126 Rule would 
be automatically withdrawn upon SIP approval. In the case of the Phase 
1 SIP, the Section 126 Rule would be withdrawn upon EPA's determination 
that the approved Phase 1 SIP regulates the group of section 126 
sources to the same or greater stringency as the Section 126 Rule.
    Based on the review of SIPs to date, EPA believes it is likely that 
all of the Phase 1 SIPs from States affected by the Section 126 Rule 
will regulate all of the section 126 sources to the same stringency as 
the Section 126 Rule. However, not all of the Phase 1 SIPs have been 
fully approved yet and one affected State has not yet submitted its 
SIP. Therefore, EPA is still considering whether there are other 
circumstances under which it would be appropriate to withdraw the 
Section 126 Rule. The EPA is soliciting comments on alternative 
approaches for withdrawing the Section 126 Rule based on an approved 
Phase 1 SIP.

V. What Is the Current Status of the NOX SIPs Under the 
NOX SIP Call and EPA's Proposed Action To Withdraw the 
Section 126 Rule in a State?

    The January 2000 Section 126 Rule affected sources located in the 
District of Columbia and the following 12 States: Delaware, Indiana, 
Kentucky, Maryland, Michigan, New Jersey, New York, North

[[Page 16648]]

Carolina, Pennsylvania, Ohio, Virginia, and West Virginia.\6\ All of 
these States are required to submit Phase 1 SIPs under the 
NOX SIP Call. To date, EPA has given final approval to 
NOX SIPs from ten of the thirteen jurisdictions (all but 
Michigan, Ohio, and Virginia).
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    \6\ Indiana, Kentucky, Michigan, and New York were only 
partially covered by the Section 126 Rule.
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    The District of Columbia, Maryland, New Jersey, and New York 
voluntarily adopted SIPs that meet the original full NOX SIP 
Call budgets (65 FR 11222; March 2, 2000) and include a May 1, 2003 
compliance date. Therefore, these SIPs meet the criteria for the 
current Section 126 withdrawal provision and the Section 126 Rule 
already has been automatically withdrawn for sources in those four 
jurisdictions.\7\
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    \7\ The EPA is currently revising certain portions of the 
NOX SIP Call in response to a March 3, 2000 decision by 
the U.S. Court of Appeals for the D.C. Circuit. See Michigan v. EPA, 
213 F.3d 663 (D.C. Cir. 2000). In this decision, the court upheld 
the NOX SIP Call on all major issues, but remanded four 
narrow issues to EPA for further rulemaking. The EPA expects to 
complete the rulemaking by the end of the year, which will slightly 
modify the NOX SIP budgets based on the court's holding. 
In light of the changes necessary to respond to the court decision, 
EPA anticipates that the final NOX SIP budgets would be 
no more stringent than the original SIP budgets as modified by the 
March 2, 2000 technical amendment (65 FR 11222). Therefore, a SIP 
meeting the March 2, 2000 budgets and providing for reductions by 
May 1, 2003, should fully address the significant NOX 
transport from that State, and the current section 52.34(i) 
withdrawal provision applies to automatically withdraw the section 
126 requirements for sources in that State.
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    North Carolina adopted a SIP meeting the original full 
NOX SIP Call budget with a May 31, 2004 compliance date. If 
EPA finalizes today's action as proposed, the Section 126 Rule under 
the 1-hour standard will be automatically withdrawn for sources in that 
State upon the effective date of the final rule.
    The EPA is today proposing that the approved Phase 1 SIPs from 
Delaware, Indiana, Kentucky, Pennsylvania, and West Virginia regulate 
the total group of section 126 sources in the respective States to the 
same stringency as the Section 126 Rule and include a compliance date 
no later than May 31, 2004. If EPA finalizes today's rule revision as 
proposed, the Section 126 Rule under the 1-hour standard will be 
withdrawn for sources in those States upon the effective date of the 
final rule.
    The EPA proposed to conditionally approve the Virginia and Ohio 
SIPs. In today's action, EPA is proposing that once Virginia and Ohio 
satisfy the conditions identified in their respective SIP proposal 
actions and EPA fully approves the SIPs, each SIP would regulate the 
total group of section 126 sources in the respective State to the same 
stringency as the Section 126 Rule. If EPA finalizes today's rule 
revision as proposed and fully approves the Virginia and Ohio SIPs, the 
Section 126 Rule under the 1-hour standard will be withdrawn for 
sources in those States upon the later of the effective date for the 
final rule based on today's proposal and the effective date for final 
SIP approval.
    We expect Michigan to submit a Phase 1 SIP shortly. The EPA will 
address the removal of the Section 126 Rule in Michigan in a separate 
rulemaking action once EPA receives and proposes action on the Michigan 
SIP.
    The EPA notes that this proposal to withdraw the Section 126 Rule 
only affects the portion of the Section 126 Rule based on the 1-hour 
ozone standard. In evaluating the section 126 petitions, EPA made 
separate determinations under the 1-hour and 8-hour standards. In light 
of the litigation on the 8-hour standard, EPA previously stayed the 8-
hour portion of the Section 126 Rule. Recently, EPA issued its final 
response to a U.S. Court of Appeals for the D.C. Circuit remand of the 
8-hour standard. After a careful review, EPA has reaffirmed the 8-hour 
ozone standard and is moving forward to implement the standard. 
Therefore, EPA will be initiating a rulemaking to lift the 8-hour stay 
on the Section 126 Rule. In that rulemaking, EPA will complete its 
action on the 8-hour petitions.

VI. Statutory and Executive Order Reviews

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. The January 2000 Section 126 Rule (65 FR 2674) 
establishes control requirements for certain sources in 12 States and 
the District of Columbia. The Section 126 Rule contains a provision 
under which EPA would withdraw the control requirements in a State if 
EPA approves a State plan to control the NOX transport in 
response to the NOX SIP Call. As the result of court 
actions, the compliance dates for the Section 126 Rule and the 
NOX SIP Call have now been delayed until May 31, 2004. In 
addition, the NOX SIP Call has been divided into two phases. 
Therefore, EPA is proposing to revise and update the Section 126 
withdrawal provision so that it will operate under these new 
circumstances.
    This proposed action would 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. Paperwork Reduction Act

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

C. 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.
    For purposes of assessing the impacts of the proposed rule on small 
entities, small entity is defined as: (1) A small business according to 
the U.S. Small Business Administration size standards for the NAICS 
codes listed in the following table; (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-

[[Page 16649]]

profit enterprise which is independently owned and operated and is not 
dominant in its field.

------------------------------------------------------------------------
                                                                 Size
                                                               standard
                                                              in number
                                                                  of
             NAICS code               Economic activity or    employees,
                                            industry         millions of
                                                              dollars of
                                                               revenues,
                                                              or output
------------------------------------------------------------------------
322121.............................  Pulp mills............          750
322122.............................
325211.............................  Plastics materials,             750
                                      synthetic resins, and
                                      nonvulcanized
                                      elastomers.
325188.............................  Industrial organic            1,000
325199.............................   chemicals.
324110.............................  Petroleum refining....        1,500
331111.............................  Steel works, blast            1,000
                                      furnaces, and rolling
                                      mills.
333611.............................  Steam, gas, and               1,000
                                      hydraulic turbines.
333618.............................  Stationary internal           1,000
                                      combustion engines.
333415.............................  Air-conditioning and            750
                                      warm-air heating
                                      equipment and
                                      commercial and
                                      industrial
                                      refrigeration
                                      equipment.
222111.............................  Electric utilities....        \1\ 4
222112.............................
486210.............................  Natural gas                    $6.0
                                      transmission.
221330.............................  Steam and air                $10.5
                                      conditioning supply.
------------------------------------------------------------------------
\1\ Million megawatt hrs.

    After considering the economic impacts of today's proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. Today's 
proposal, if promulgated, would not create new requirements for small 
entities or other sources. Instead, this action is proposing to revise 
the Section 126 Rule to withdraw the section 126 requirements under 
specified circumstances. We continue to be interested in the potential 
impacts of the proposed rule on small entities and welcome comments on 
issues related to such impacts.

D. 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 ``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 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.

E. 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 would 
not impose any 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.

F. 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

[[Page 16650]]

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. If 
promulgated, 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 would not impose any 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.

G. Executive Order 13045: Protection of Children From Environmental 
Health 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.

H. Executive Order 13211: Actions That Significantly Affect Energy 
Supply, Distribution, or Use

    This rule is not subject to Executive Order 13211, ``Actions 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.

I. 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.
    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 
specifying circumstances under which the Section 126 requirements would 
be withdrawn.

List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, trading, 
Intergovernmental Relations, Nitrogen dioxide, Ozone, Reporting and 
recordkeeping requirements.

    Dated: March 27, 2003.
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 paragraph (i) to read as 
follows:


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

* * * * *
    (i) Withdrawal of section 126 findings. Notwithstanding any other 
provision of this subpart, a finding under paragraphs (c), (e)(1) and 
(e)(2), (g), and (h)(1) and (h)(2) of this section as to a particular 
major source or group of stationary sources in a particular State will 
be deemed to be withdrawn, and the corresponding part of the relevant 
petition denied, if the Administrator issues a final action approving 
implementation plan provisions that:
    (1) Comply with the applicable requirements of Sec. Sec.  51.121 
and 51.122 of this chapter for such State, modified to require 
achievement of the emission reductions under Sec.  51.121 of this 
chapter starting no later than May 31, 2004; or
    (2)(i) Comply with the applicable requirements of Sec. Sec.  51.121 
and 51.122 of this chapter, except for Sec.  51.121(e) of this chapter, 
for such State, modified to require achievement of the emission 
reductions under Sec.  51.121 of this chapter starting no later than 
May 31, 2004, and
    (ii) Achieve emissions reductions, from the large EGUs and large 
non-EGUs subject to paragraph (j) of this section in such State, that 
equal or exceed the emissions reductions otherwise required under Part 
97 of this chapter for such State.
* * * * *
[FR Doc. 03-8152 Filed 4-3-03; 8:45 am]
BILLING CODE 6560-50-P