[Federal Register Volume 68, Number 105 (Monday, June 2, 2003)]
[Proposed Rules]
[Pages 32802-32870]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-13240]



[[Page 32801]]

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Part II





Environmental Protection Agency





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40 CFR Part 51



Proposed Rule To Implement the 8-Hour Ozone National Ambient Air 
Quality Standard; Proposed Rule

  Federal Register / Vol. 68, No. 105 / Monday, June 2, 2003 / Proposed 
Rules  

[[Page 32802]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[FRL-7504-2]
RIN: 2060-AJ99


Proposed Rule To Implement the 8-Hour Ozone National Ambient Air 
Quality Standard

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rulemaking.

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SUMMARY: In this document, EPA is proposing two discrete frameworks to 
implement the 8-hour ozone national ambient air quality standard (NAAQS 
or standard). We are proposing this rule so that States may know which 
statutory requirements apply for purposes of developing State 
implementation plans (SIPs) under the Clean Air Act (CAA) to implement 
the 8-hour ozone NAAQS. The intended effect of the rule is to provide 
certainty to States regarding their planning obligations such that 
States may begin SIP development upon designation and classification 
for the 8-hour standard. Following are the principles that guided us in 
the development of these frameworks to implement the 8-hour ozone 
standard: To protect public health, provide incentives for expeditious 
attainment of the 8-hour ozone standard and avoid incentives for delay; 
to provide reasonable but expeditious attainment deadlines; to have a 
basic, straightforward structure that can be communicated easily; to 
provide flexibility to States and EPA on implementation approaches and 
control measures while ensuring that the implementation strategy is 
supported by the CAA; to emphasize national and regional measures to 
help areas come into attainment and, where possible, reduce the need 
for those local controls that are more expensive than national and 
regional measures; and to provide a smooth transition from 
implementation of the 1-hour ozone NAAQS to implementation of the 8-
hour ozone NAAQS. In addition, we intend to clarify the role of Tribes 
in implementing the 8-hour ozone NAAQS.
    The two frameworks we are proposing are based on two different 
classification options, which affect the requirements that would apply 
to individual nonattainment areas. We prefer classification option 2 
because it provides more flexibility to States and Tribes as they 
address their unique air quality problems. This is likely to allow some 
areas to attain the standard at a lower cost. However, we are also 
soliciting comments on option 1, in part because it is less complex and 
may be easier to communicate, as well as on other ways to classify 
nonattainment areas.[FEDREG][VOL]*[/VOL][NO]*[/NO][DATE]*[/
DATE][PRORULES][PRORULE][PREAMB][AGENCY]*[/AGENCY][SUBJECT]*[/SUBJECT]
    This proposed rulemaking does not propose to establish attainment/
nonattainment designations nor does it address the principles that will 
be considered in the designation process; we have already issued 
guidance on the principles that States should consider in making 
designation recommendations, and we will issue further guidance 
separate from this rulemaking if appropriate. Finally, we are not 
taking comment at this time on appropriate tests under the 8-hour 
standard for demonstrating conformity of Federal actions to SIPs. We 
intend to conduct a separate rulemaking on this issue prior to 
designating areas under the 8-hour ozone standard.
    In this proposal, we do not yet propose regulatory text, primarily 
because a number of options are being proposed for many of the 
implementation elements, and we believe it would be better to obtain 
public comment on the options conceptually first. After we receive and 
consider comment on the proposed options, but before publishing a final 
rule, we will issue proposed regulatory text.

DATES: Comments must be received on or before August 1, 2003. We have 
scheduled public hearings on this proposal for June 17, 2003, June 19, 
2003, and June 27, 2003.

ADDRESSES: All comments should be submitted to Docket OAR 
2003-0079. When mailing documents, comments, or requests to the EPA 
Docket Center through the U.S. Postal Service, please use the following 
address: U.S. Environmental Protection Agency, EPA West (Air Docket), 
1200 Pennsylvania Avenue, NW., Room: B108; Mail Code: 6102T, 
Washington, DC 20460. To mail comments or documents through a courier 
service, the mailing address is: EPA Docket Center (Air Docket), U.S. 
Environmental Protection Agency, 1301 Constitution Avenue, NW., Room: 
B108; Mail Code: 6102T, Washington, DC 20460. The normal business hours 
are 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding Federal 
holidays. Comments can be submitted to the address above, by fax (202) 
566-1741, or by e-mail to [email protected]. The voice telephone 
number is (202) 566-1742. In addition, we have placed a variety of 
materials regarding implementation options on the Web site: http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr. While this Web site is not an 
exact duplicate of the Air Docket, we have placed materials that we 
have generated and materials that have been submitted in an electronic 
format on the Web site. We request that comments be submitted by e-mail 
to facilitate expeditious distribution within EPA and placement on the 
Web site.
    The public hearings will be held from 8:30 a.m. to 5 p.m. at the 
following locations: Marriott Dallas/Ft. Worth Airport North, 8440 
Freeport Parkway, Irving, Texas, 75063, on June 17, 2003; Palace Hotel, 
2 New Montgomery Street, San Francisco, California 94105, on June 19, 
2003; and Holiday Inn Select Old Town Alexandria, 480 King Street, 
Alexandria, Virginia 22314, on June 27, 2003. Persons wishing to speak 
at the public hearings should contact: Ms. Barbara Bauer, E. H. Pechan, 
at phone number (919) 493-3144 ext. 188 or by e-mail at 
[email protected]. Oral testimony may be limited to 3 to 5 
minutes depending on the number of people who sign up to speak. 
Commenters may also supplement their oral testimony with written 
comments. The hearing will be limited to the subject matter of the 
proposal, the scope of which is discussed below. The public hearing 
schedule, including lists of speakers, will be posted on EPA's Web site 
at http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr. A verbatim transcript 
of the hearing and written statements will be made available for 
copying during normal working hours at the Office of Air and Radiation 
Docket and Information Center at the above address listed for 
inspection of documents.

FOR FURTHER INFORMATION CONTACT: Mr. John Silvasi, Office of Air 
Quality Planning and Standards, U.S. Environmental Protection Agency, 
Mail Code C539-02, Research Triangle Park, NC 27711, phone number (919) 
541-5666 or by e-mail at: [email protected] or Ms. Denise Gerth, 
Office of Air Quality Planning and Standards, U.S. Environmental 
Protection Agency, Mail Code C539-02, Research Triangle Park, NC 27711, 
phone number (919) 541-5550 or by e-mail at: [email protected].

SUPPLEMENTARY INFORMATION: This notice uses a number of acronyms and 
terms that are defined when first used. A list appears in appendix D 
for convenience.
    In a number of places, this document refers to time periods (e.g., 
so many years) after designation or after the designation date. By 
this, we mean the effective date of designation by EPA.

[[Page 32803]]

Outline

I. What is the 8-hour ozone problem and EPA's strategy for 
addressing it?
    A. What is the ozone standard and the health problem?
    B. What is the geographic extent of the 8-hour ozone problem?
    C. What is EPA's overall strategy for reducing ozone pollution?
    1. The SIP system
    2. National rule
    D. What is the relationship between the SIP system proposed and 
the proposed Clear Skies legislation?
II. What is the background on the 8-hour ozone standard?
    A. What is the legal background?
    B. What technical work influenced EPA's implementation approach?
III. How did EPA obtain stakeholder input for this effort?
IV. What is EPA's schedule for issuing an 8-hour ozone 
implementation rule?
V. In short, what does this proposed rulemaking contain?
    A. Classification of areas
    B. Attainment deadlines
    C. Transition from the 1-hour to the 8-hour standard
    D. Mandatory measures
    E. Consequences of failure to attain
    F. Interstate transport
    G. Modeling and attainment demonstration
    H. Reasonable Further Progress (RFP)
    1. Requirement for 15 percent VOC reductions for moderate and 
above areas during the first 6 years after the base year
    2. Base year
    I. Reasonably available control measures/Reasonably available 
control technology (RACM/RACT)
    J. Conformity
    K. New Source Review
VI. What are EPA's proposed frameworks for implementing the 8-hour 
ozone standard?
    A. How will EPA reconcile subparts 1 and 2? How will EPA 
classify nonattainment areas for the 8-hour standard? What 
attainment dates would apply?
    1. Statutory framework and Supreme Court decision
    2. EPA's development of options
    3. Options for classification
    4. Under classification option 2, how would EPA classify subpart 
1 areas?
    5. Rationale for regulating all ``gap'' areas under subpart 1 
only
    6. Proposed incentive feature
    7. Other options EPA considered
    8. Implications for the options
    9. Other considerations
    B. How will EPA treat attainment dates and other dates including 
SIP submittal dates for the 8-hour ozone standard?
    1. Background
    2. How will EPA address the provision regarding 1-year 
extensions?
    3. How do attainment dates apply to Indian country?
    4. How will EPA establish attainment dates for areas classified 
as marginal under the ``incentive'' feature proposed under the 
classification section or areas covered under subpart 1 with a 
requested attainment date of 3 years or less after the designation 
date?
    C. How will EPA implement the transition from the 1-hour to the 
8-hour standard in a way to ensure continued momentum in States' 
efforts toward cleaner air?
    1. Background
    2. When will EPA revoke the 1-hour standard?
    3. What obligations should continue to apply as an area begins 
to implement the 8-hour ozone NAAQS and what obligations should no 
longer apply?
    4. Does the requirement for continued implementation of the 
obligations addressed above expire at some point?
    5. How will EPA ensure that the public knows which areas must 
continue provisions under the 1-hour SIPs if EPA revokes the 1-hour 
standard?
    D. Should prescribed requirements of subpart 2 apply in all 8-
hour nonattainment areas classified under subpart 2, or is there 
flexibility in application in certain narrowly defined 
circumstances?
    1. Background
    2. Approach being proposed
    3. Other approaches considered
    E. What is the required timeframe for obtaining emissions 
reductions to ensure attainment by the attainment date?
    F. How will EPA address long-range transport of ground-level 
ozone and its precursors when implementing the 8-hour ozone 
standard?
    1. Background
    2. EPA's anticipated approach
    3. Other concerns about transport
    4. Other options considered
    G. How will EPA address transport of ground-level ozone and its 
precursors for rural nonattainment areas, multi-State nonattainment 
areas, areas affected by intrastate transport, and international 
transport?
    1. Rural transport nonattainment areas
    2. Multi-state nonattainment areas
    3. Intrastate transport
    4. International transport
    5. Additional ways of addressing transport
    6. State-Tribal transport
    H. How will EPA address requirements for modeling and attainment 
demonstration SIPs when implementing the 8-hour ozone standard?
    1. Multi-pollutant assessments (one-atmosphere modeling)
    2. Areas with early attainment dates
    3. Areas with later attainment dates
    4. Modeling guidance
    5. Mid-Course review
    I. What requirements for RFP should apply under the 8-hour ozone 
standard?
    1. Background
    2. Proposed features in general
    3. For subpart 2 areas, should the initial 15 percent RFP 
requirement be limited to VOC emissions?
    4. What baseline year should be required for the emission 
inventory for the RFP requirement?
    5. Should moderate areas be subject to prescribed additional RFP 
requirements prior to their attainment date?
    6. What is the timing of the submission of the ROP plan?
    7. How should CAA restrictions on creditable measures be 
interpreted? Which national measures should count as generating 
emissions reductions credit toward RFP requirements?
    8. For areas covered by subpart 1 instead of subpart 2, how 
should the RFP requirement be structured?
    9. How should the RFP requirements be implemented for areas 
designated for the 8-hour ozone standard that entirely or in part 
encompass an area that was designated nonattainment for the 1-hour 
ozone standard?
    10. Will EPA's ``Clean Data Policy'' continue to apply under the 
8-hour standard for RFP?
    11. How will RFP be addressed in Tribal areas?
    12. How will RFP targets be calculated?
    J. Are contingency measures required in the event of failure to 
meet a milestone or attain the 8-hour ozone NAAQS?
    1. Background
    2. Proposal
    K. What requirements should apply for RACM and RACT for 8-hour 
ozone nonattainment areas?
    1. Background
    2. Proposed approach for RACT in general for areas covered under 
subpart 2
    3. Proposed approach for RACT in general for areas covered under 
subpart 1
    4. Proposed approach for previous source-specific major source 
RACT determinations
    5. Proposed approach for NOX RACT determinations in 
areas affected by the NOX SIP Call
    6. Proposed approach for NOX as an ozone precursor
    7. Proposed approach for RACM
    8. Proposed submission date for RACT and RACM requirements
    L. How will the section 182(f) NOX provisions be 
handled under the 8-hour ozone standard?
    M. What aspects of transportation conformity and the 8-hour 
ozone standard are addressed in this proposal?
    1. What is transportation conformity?
    2. Why is EPA discussing transportation conformity in this 
proposed rulemaking?
    3. Are any changes being made to transportation conformity in 
this proposed rulemaking?
    4. When does transportation conformity apply to 8-hour ozone 
nonattainment areas?
    5. How does the 1-year grace period apply in metropolitan areas?
    6. How does the 1-year grace period apply in ``donut'' areas?
    7. How does the 1-year grace period apply in isolated rural 
areas?
    8. Does conformity apply for the 1-hour ozone standard once the 
1-hour ozone standard is revoked?
    9. What are EPA's plans for amending the conformity rule to 
address the 8-hour ozone standard?
    10. What impact will the implementation of the 8-hour ozone 
standard have on a State's Transportation Conformity SIP?
    11. What other parts of this proposal could affect 
transportation conformity determinations?

[[Page 32804]]

    N. What requirements for General Conformity should apply to the 
8-hour ozone standard?
    1. What is the purpose of the General Conformity regulations?
    2. How is the General Conformity program currently structured?
    3. Who runs the General Conformity program?
    4. How does an agency demonstrate conformity?
    5. General Conformity regulation revisions for the 8-hour ozone 
standard
    6. How does the 1-year grace period apply to General Conformity 
determinations?
    O. How should the NSR Program be implemented under the 8-hour 
ozone NAAQS?
    1. Background
    2. Nonattainment NSR under the 8-hour ozone standard
    3. Under what circumstances is a transitional program needed 
during the interim period?
    4. Elements of the Appendix S transitional program
    5. Will a State be required to assure that the increased 
emissions from a new major source do not cause or contribute to a 
violation in a nearby nonattainment area before it issues a 
preconstruction permit under Appendix S?
    6. What happens at the end of the interim period?
    7. What is the legal basis for providing this transitional 
program?
    8. How should the NSR requirements be implemented for new 8-hour 
ozone areas that encompass the old 1-hour ozone nonattainment areas 
after EPA revokes the 1-hour ozone standard?
    9. NSR option to encourage development patterns that reduce 
overall emissions--Clean Air Development Communities
    10. Tribal concerns
    P. How will EPA ensure that the 8-hour ozone standard will be 
implemented in a way which allows an optimal mix of controls for 
ozone, PM2.5, and regional haze?
    1. Could an area's 8-hour ozone strategy affect its 
PM2.5 and/or regional haze strategy?
    2. What guidance has EPA provided regarding ozone, 
PM2.5 and regional haze interaction?
    3. What is EPA proposing?
    Q. What emission inventory requirements should apply under the 
8-hour ozone NAAQS?
    R. What guidance should be provided that is specific to Tribes?
    S. What are the requirements for Ozone Transport Regions (OTRs) 
under the 8-hour ozone standard?
    T. Are there any additional requirements related to enforcement 
and compliance?
    U. What requirements should apply to emergency episodes?
    V. What ambient monitoring requirements will apply under the 8-
hour ozone NAAQS?
    W. When will EPA require 8-hour attainment demonstration SIP 
submissions?
    1. Background
    2. Option being proposed
VII. Proposal of integrated frameworks using various options
VIII. Other Considerations
    A. Will EPA be contemplating incentives for areas that want to 
take early action for reducing ozone under the 8-hour standard?
    1. What are the Ozone Flex Guidelines for the 1-hour ozone 
NAAQS?
    2. What is the ``Early Action Compact'' for implementing the 8-
hour ozone NAAQS?
    3. What is EPA's response to the Texas ``Early Action Compact?''
    4. Did EPA consider other options for incentives for areas that 
take early actions for reducing ozone?
    5. What is the difference between the early action compact 
program and the transitional NSR program?
    B. Clarification of how transition from 1-hour to 8-hour 
standard will work for early action compact areas, for conformity, 
and for NSR and PSD.
    C. How will EPA's proposal affect funding under the Congestion 
Mitigation and Air Quality Improvement (CMAQ) Program?
    D. Are there any environmental impact differences between the 
two major classification options being proposed?
IX. 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 and Safety Risks
    H. Executive Order 13211: Actions That Significantly Affect 
Energy Supply, Distribution, or Use
    I. National Technology Transfer Advancement Act
    J. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
X. Appendices
    Appendix A--Comparison of Subpart 1 & 2 Requirements
    Appendix B--``Applicable Requirements'' under Subpart 2
    Appendix C--Comparison of Transitional NSR and Early Action 
Compact Programs
    Appendix D--Glossary of Terms and Acronyms
    Appendix E--Application of Conformity, New Source Review and 
Prevention of Significant Deterioration under Various Transition 
Cases

I. What Is the 8-Hour Ozone Problem and EPA's Strategy for Addressing 
it?

A. What Is the Ozone Standard and the Health Problem?

    Ground-level ozone pollution is formed by the reaction of volatile 
organic compounds (VOC) and nitrogen oxides (NOX) in the 
atmosphere in the presence of sunlight. These two pollutants, often 
referred to as ozone precursors, are emitted by many types of pollution 
sources, including on-road and off-road motor vehicles and engines, 
power plants and industrial facilities, and smaller ``area'' sources.
    In 1979, we promulgated the 0.12 ppm, 1-hour ozone standard, (44 FR 
8202, February 8, 1979). On July 18, 1997, we promulgated a revised 
standard of 0.08 ppm, measured over an 8-hour period (i.e., the 8-hour 
standard). In general, the 8-hour standard is more protective of public 
health and more stringent than the 1-hour standard, and there are more 
areas that do not meet the 8-hour standard than there are areas that do 
not meet the 1-hour standard. At the time that we promulgated the 
revised 8-hour standard, we also promulgated a rule providing for the 
phase-out of the 1-hour standard, (62 FR 38856 (codified at 50.9(b)). 
That rule provided that the 1-hour standard would no longer apply to an 
area once we determined that the area had attained the 1-hour 
standard.\1\
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    \1\ Due to the continued litigation over the 8-hour standard, 
EPA revised 40 CFR 50.9(b) in July 2000, to limit its authority to 
revoke the 1-hour standard until such time as the 8-hour standard 
became fully enforceable and no longer subject to legal challenge. 
(65 FR 45182, July 20, 2000).
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    Ozone can irritate the respiratory system, causing coughing, throat 
irritation, and/or uncomfortable sensation in the chest. Ozone can 
reduce lung function and make it more difficult to breathe deeply, and 
breathing may become more rapid and shallow than normal, thereby 
limiting a person's normal activity. Ozone also can aggravate asthma, 
leading to more asthma attacks that require a doctor's attention and/or 
the use of additional medication. In addition, ozone can inflame and 
damage the lining of the lungs, which may lead to permanent changes in 
lung tissue, irreversible reductions in lung function, and a lower 
quality of life if the inflammation occurs repeatedly over a long time 
period (months, years, a lifetime). People who are particularly 
susceptible to the effects of ozone include children and adults who are 
active outdoors, people with respiratory disease, such as asthma, and 
people with unusual sensitivity to ozone.
    More detailed information on health effects of ozone can be found 
at the following Web site: http://www.epa.gov/ttn/naaqs/standards/ozone/s_o3_index.html.
    The focus of today's proposed rule is implementation of the revised 
8-hour ozone air quality standard issued by EPA in 1997, including the 
transition from implementation of the 1-hour

[[Page 32805]]

standard to implementation of the 8-hour standard.

B. What Is the Geographic Extent of the 8-hour Ozone Problem?

    Although the nation as a whole has made significant progress since 
1970 in reducing ground-level ozone pollution (sometimes called 
``smog''), ozone remains a significant public health concern. At 
present, unhealthy ozone levels--exceeding the 8-hour standard--occur 
over wide geographic areas including most of the nation's major 
population centers. These areas include much of the eastern half of the 
United States and large areas of California.
    The geographic extent of the 8-hour ozone problem is expected to 
shrink between now and 2020 due to existing regulatory requirements. We 
estimate that existing control measures (e.g., Federal motor vehicle 
standards, EPA's regional NOX rule known as the 
NOX SIP Call, and local measures already adopted under the 
CAA) will dramatically reduce the number of areas \2\ not attaining the 
8-hour ozone standard--from 122 in 2000 (using data from 1998, 1999, 
and 2000), to 51 in 2007, to 30 in 2010 and 13 in 2020. See Table 1 
below.
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    \2\ See discussion below on how EPA has developed hypothetical 
nonattainment areas for purposes of analysis of this proposed 
rulemaking and options. Modeling analyses for projections to 2007 
are found in: U.S. Environmental Protection Agency, Office of Air 
and Radiation, Technical Support Document for the Heavy-Duty Engine 
and Vehicle Standards and Highway Diesel Fuel Sulfur Control 
Requirements: Air Quality Modeling Analyses. EPA420-R-00-028. 
December 2000. Located at: http://www.epa.gov/otaq/regs/hd2007/frm/r00028.pdf.
    Information on the modeling analyses for projections to 2010 and 
2020 are found in ``Technical Addendum: Methodologies for the 
Benefit Analysis of the Clear Skies Initiative.'' September 2002. 
This can be found at the following Web site: http://www.epa.gov/clearskies/Tech_adden.PDF. Results are summarized in ``Human Health 
and Environmental Benefits Achieved by the Clear Skies Initiative.'' 
July 1, 2002. http://www.epa.gov/clearskies/CSIhealth_env_benefits7-01.ppt.
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    The total population living in areas that we have hypothesized may 
be designated nonattainment is also projected to decline over time--
from 178 million in 2000, to 143 million in 2007, to 116 million in 
2010, to 82 million in 2020. However, the number of people living in 
areas with excessive ozone levels remains high for the foreseeable 
future because existing control programs alone will not eliminate 
unhealthy ozone levels in some of the nation's largest population 
centers.
    Based on information in EPA's Trends Report issued in 2002,\3\ over 
the past 20 years, national ambient ozone levels decreased 18 percent 
based on 1-hour data and 11 percent based on 8-hour data. Between 1982 
and 2001, emissions of VOCs decreased 16 percent. During that same time 
period, emissions of NOX increased 9 percent. For the period 
1982 to 2001, the downward trend in 1-hour ozone levels seen nationally 
is reflected in every broad geographic area in the country. The 
Northeast and West exhibited the most substantial improvement over the 
last 20 years, while the South and North Central regions experienced 
the least rapid progress in lowering ozone concentrations. Similar to 
the 1-hour ozone trends, all regions experienced improvements in 8-hour 
ozone levels between 1982 and 2001 except the North Central region, 
which showed little change during this period.
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    \3\ Latest Findings on National Air Quality--2001 Status and 
Trends. U.S. EPA; Office of Air Quality Planning and Standards; 
Emissions, Monitoring and Analysis Division; Research Triangle Park, 
NC. September 2002. EPA 454/K-02-001. Found at: http://www.epa.gov/airtrends/ozone.html.

 Table 1.--8-Hour Ozone Hypothetical Nonattainment Areas and Population
                         [Projected by modeling]
------------------------------------------------------------------------
                                 2000       2007       2010       2020
------------------------------------------------------------------------
Number of areas--base case          122         51         30         13
 (without Clear Skies Act
 controls)..................
Number of areas with Clear          122         51         24         12
 Skies Act controls.........
Population (millions)--base         178        143        116       82.4
 case (without Clear Skies
 Act controls)..............
Population (millions)--with         178        143        103       82.1
 Clear Skies Act controls...
------------------------------------------------------------------------
Note: The number of areas \1\ projected to each future year is based on
  modeled projections without consideration of application of new
  emission control measures that would be required under the SIP process
  for areas designated nonattainment for the 8-hour NAAQS.
\1\ See discussion below on how we have developed hypothetical
  nonattainment areas for purposes of analysis of this proposed
  rulemaking and options.

C. What Is EPA's Overall Strategy for Reducing Ozone Pollution?

    Our overall strategy for achieving the 8-hour ozone standard is 
based on the structure outlined in the CAA. The CAA gives both the 
States and EPA important roles in implementing national air quality 
standards.
    States have primary responsibility for developing and implementing 
SIPs that contain local and in-State measures needed to achieve the air 
quality standards in each area. We assist States by providing technical 
assistance and guidance, including guidance on control measures. In 
addition, we set national emissions limits for sources such as motor 
vehicles. Where upwind sources contribute to downwind problems in other 
States, we can also ensure that the upwind States address these 
contributing emissions or regulate them federally, where a State fails 
to act to address them.
    We intend to work closely with States and Tribes to use an 
appropriate combination of national, regional and local pollution 
reduction measures to meet the standard expeditiously and in a cost-
effective manner.
1. The SIP System
    States use the SIP process to identify the emissions sources that 
contribute to the nonattainment problem in a particular area, and to 
select the emissions reductions measures most appropriate for that 
area, considering costs and a variety of local factors. Under the CAA, 
SIPs must ensure that areas reach attainment as expeditiously as 
practicable. However, other programs, such as Federal controls, also 
provide reductions, and States may rely on those reductions when 
developing their attainment plans.
    The SIP system for nonattainment areas is an important component of 
the CAA's overall strategy for meeting the 8-hour ozone standard, but 
it is not the only component. As noted below, the CAA also requires or 
anticipates the use of national rules that will reduce emissions and 
help achieve cleaner air.
2. National Rules
    For the States to be successful in developing local plans showing 
attainment of standards, EPA must do its part to control the sources 
that are

[[Page 32806]]

more effectively and efficiently controlled at the national level and 
to ensure that interstate transport is addressed through SIPs or other 
means. We already have issued key national and regional control 
requirements for motor vehicles, power plants and other sources that 
will enable many areas to meet the 8-hour standard in the near term.
    Current emissions standards for new cars, trucks and buses are 
reducing motor vehicle emissions of VOCs (sometimes referred to as 
hydrocarbons) and NOX as older vehicles are retired. Other 
rules are reducing emissions from several categories of non-road 
engines. EPA's Tier 2 motor vehicle emission standards, together with 
the associated sulfur in gasoline requirements, will provide additional 
benefits nationally within the time period of many 8-hour ozone 
nonattainment areas' anticipated attainment dates (65 FR 6698, February 
10, 2000). Also, we published the heavy duty diesel rule on January 18, 
2001 (66 FR 5002), which will contribute to reductions needed to meet 
the 8-hour ozone standard in areas with later attainment dates.
    In the eastern U.S., dramatic reductions in NOX 
emissions from power plants and large industrial sources will occur by 
May 2004 under our rules to reduce interstate transport of ozone 
pollution in the East. These rules are the NOX SIP Call, 
published October 27, 1998 (63 FR 57356), and the Section 126 Rule, 
published January 18, 2000 (65 FR 2674).
    Also, under the requirements of section 183(e) of the CAA, we are 
contemplating either Federal rules or control techniques guidelines 
(CTGs) for controlling VOCs from 15 additional categories of consumer 
and commercial products. The CTGs assist States in determining required 
controls for facilities in nonattainment areas. The 15 categories are 
in addition to 6 CTGs already published under this provision of the CAA 
(consumer products, architectural coatings, automobile refinishing 
coatings, aerospace coatings, wood furniture coatings, and shipbuilding 
and ship repair coatings). These additional rules or CTGs are expected 
to be completed over the next few years.
    Control measures targeting hazardous air pollutants (HAPs) also 
result in control of VOCs and, in some cases, NOX. Under 
section 112 of the CAA, EPA was required to identify and list 
categories of industrial facilities that emit significant quantities of 
one or more of 188 HAPs and establish maximum achievable control 
technology (MACT) standards for each category of sources. Because most 
of the organic HAPs are also VOCs, in many cases, control of organic 
HAP emissions also achieves reductions in VOC emissions.
    Rules for most of the listed MACT categories have been promulgated. 
Although many of the earlier promulgated rules have already resulted in 
emissions reductions of VOCs, the more recent rules will not begin 
achieving reductions until the compliance date, which is generally 3 
years following promulgation. Therefore, the amount of reductions 
achieved through control of HAPs that are VOCs will continue to grow 
over the next several years.
    We see the potential for significant further emissions reductions 
from power plants and non-road engines at the national level. The 
Administration has proposed nationwide legislation, the ``Clear Skies 
Act'' (CSA), to reduce power plant emissions of NOX 
nationwide, as well as sulfur dioxide and mercury. We are also 
proposing a national rule that would significantly reduce 
NOX emissions from non-road diesel-powered equipment. These 
non-road sources constitute an important fraction of the NOX 
emissions inventory.

D. What Is the Relationship Between the SIP System Proposed and the 
Proposed Clear Skies Legislation?

    A basic issue for implementation of the 8-hour ozone standard is 
how to treat areas projected to attain the standard based on existing 
controls. We believe that an appropriate balance should be struck 
between two goals: Avoiding requirements for unnecessary additional 
controls that increase cost, and ensuring expeditious attainment to 
protect public health.
    Today's proposal contains options that strive to balance these two 
goals under the authority of current law. The proposal contains two 
options for classifying areas under the 8-hour ozone standard. Both 
options contain features to ensure that areas projected to attain 
compliance in the near term based on existing requirements are not 
subject to additional prescribed control obligations. Of course, these 
areas would be subject to the same requirements that apply to all areas 
designated nonattainment, such as new source review (NSR) and 
conformity. However, we are considering options for providing for more 
flexible implementation of these requirements, as described elsewhere 
in this proposed rulemaking, and are actually proposing an option 
related to NSR in this proposed rulemaking.
    The proposed Clear Skies legislation takes a different approach to 
requirements for areas projected to attain through controls that are 
already mandated. The proposed CSA includes a provision that would 
create a new designation of ``transitional'' for areas that are 
projected to attain compliance by 2015 based on existing controls, or 
with the aid of additional SIP controls approved by December 31, 2004. 
The proposed CSA provides that areas designated transitional would be 
subject to the requirements of the prevention of significant 
deterioration (PSD) program for new sources, which applies in 
attainment areas. Because ``transitional'' would be the designation for 
such areas, they would not be required to adopt additional control 
measures that would be required for areas designated nonattainment, nor 
would they be subject to conformity provisions. The provision includes 
a mid-course check to ensure that the area remains on-track toward 
attainment. In case of failure to attain by 2015, the area would be re-
designated as a nonattainment area and would be subject to the 
nonattainment area requirements. We expect that most areas currently 
exceeding the 8-hour ozone standard could qualify for this designation, 
in many cases, without further local controls.
    However, because the Clear Skies legislation has not been enacted, 
we have not considered it in this proposed rulemaking. Should the Clear 
Skies legislation be enacted into law, we would conduct further 
rulemaking on implementation of the 8-hour ozone standard under such 
law, if necessary.

II. What Is the Background on the 8-Hour Ozone Standard?

A. What Is the Legal Background?

    On July 18, 1997, we revised the ozone NAAQS (62 FR 38856) by 
promulgating an ozone standard of 0.08 parts per million (ppm) as 
measured over an 8-hour period. At that time, we indicated that we 
believed that the 8-hour ozone NAAQS should be implemented under the 
less detailed requirements of subpart 1 of part D of title I of the CAA 
rather than the more detailed requirements of subpart 2. Various 
industry groups and States challenged EPA's final rule promulgating the 
8-hour ozone NAAQS in the U.S. Court of Appeals for the District of 
Columbia Circuit.\4\ In May

[[Page 32807]]

1999, the Appeals Court remanded the ozone standard to EPA on the basis 
that our interpretation of its authority under the standard-setting 
provisions of the CAA resulted in an unconstitutional delegation of 
authority. American Trucking Assns., Inc. v. EPA, 175 F.3d 1027, 1034-
1040 (ATA I) aff'd, 195 F.3d 4 (D.C. Cir., 1999) (ATA II). In addition, 
the Court held that the CAA clearly provided for implementation of a 
revised ozone standard under subpart 2, not subpart 1. Id. at 1048-
1050.\5\ We sought review of these two issues in the U.S. Supreme 
Court. In February 2001, the Supreme Court held that EPA's action in 
setting the NAAQS was not an unconstitutional delegation of authority. 
Whitman v. American Trucking Assoc., 121 S.Ct. 903, 911-914 (2001) 
(Whitman). In addition, the Supreme Court held that the D.C. Circuit 
incorrectly determined that the CAA was clear in requiring 
implementation only under subpart 2, but determined that our 
implementation approach, which did not provide a role for subpart 2 in 
implementing the 8-hour NAAQS, was unreasonable. Id. at 916-919. 
Specifically, the Court noted we could not ignore the provisions of 
subpart 2 that ``eliminate[] regulatory discretion'' allowed by subpart 
1. Id. at 918. The Court also identified several portions of the CAA's 
classification scheme under subpart 2 that are ``ill-fitted'' to the 
revised standard and remanded the implementation strategy to EPA to 
develop a reasonable approach for implementation. Id. Because the D.C. 
Circuit had not addressed all of the issues raised in the underlying 
case, the court remanded the case to the D.C. Circuit for disposition 
of those issues. Id. at 919. On March 26, 2002, the D.C. Circuit Court 
rejected all remaining challenges to the ozone and fine particle 
(PM2.5) standards. American Trucking Assoc. v. EPA, 283 F.3d 
355 (D.C. Cir. 2002) (ATA III). With that ruling, EPA began to move 
forward with programs to protect Americans from the wide variety of 
health problems that these air pollutants can cause, such as 
respiratory illnesses and premature death.
---------------------------------------------------------------------------

    \4\ On July 18, 1997, we also promulgated a revised particulate 
matter (PM) standard (62 FR 38652). Litigation on the PM standard 
paralleled the litigation on the ozone standard and the court issued 
one opinion addressing both challenges. However, issues regarding 
implementation of the revised PM NAAQS were not litigated.
    \5\ The Court addressed a number of other issues, which are not 
relevant here.
---------------------------------------------------------------------------

    The implementation rule proposed herein will provide specific 
requirements for State, local, and Tribal air pollution control 
agencies to address as they prepare implementation plans to attain and 
maintain the 8-hour NAAQS. Each State with an area that is not 
attaining the 8-hour ozone NAAQS will have to develop--as part of its 
SIP--emission limits and other requirements to attain the NAAQS within 
the timeframes set forth in the CAA.\6\ Tribes with jurisdiction over 
Tribal lands that are not attaining the 8-hour ozone standard could 
voluntarily submit a Tribal implementation plan (TIP) but would not be 
required to do so. However, in cases where a TIP is not submitted, EPA, 
working with the Tribes, would have the responsibility for planning in 
those areas.
---------------------------------------------------------------------------

    \6\ The CAA requires EPA to set ambient air quality standards 
and requires States to submit SIPs to implement those standards.
---------------------------------------------------------------------------

B. What Technical Work Influenced EPA's Implementation Approach?

    In developing our original approach for implementation of the 8-
hour standard, we considered input from a variety of technical 
information sources and experts. We originally described the technical 
information of the physical processes that produce ozone, fine 
particles, and regional haze and relied on that in developing a 
proposed implementation approach. See ``Implementation of New or 
Revised Ozone and Particulate Matter (PM) National Ambient Air Quality 
Standards (NAAQS) and Regional Haze Regulations; Proposed Rule'' 
(December 13, 1996, 61 FR 65764). We also participated with States in 
the eastern United States in the Ozone Transport Assessment Group 
(OTAG), which documented that long-distance transport of nitrogen 
oxides across much of the OTAG study area contributed to high levels of 
ozone. For background on OTAG and the results from the study, see the 
following Web site: http://www.epa.gov/ttn/naaqs/ozone/rto/otag/index.html.
    That OTAG process resulted in a report to EPA with the conclusions 
that included the following:

    --Regional NOX reductions are effective in producing 
ozone benefits; the more NOX reduced, the greater the 
benefit.
    --Ozone benefits are greatest where emissions reductions are made; 
benefits decrease with distance.
    --Elevated and low-level NOX reductions are both 
effective.
    --Volatile organic compound controls are effective in reducing 
ozone locally and are most advantageous to urban nonattainment areas.
    --Air quality data indicate that ozone is pervasive, that ozone is 
transported, and that ozone aloft is carried over and transported from 
one day to the next.

    As a result of these recommendations, EPA called for SIP revisions 
from 22 States and the District of Columbia and established Statewide 
budgets on NOX emissions that those jurisdictions would have 
to meet by 2007. Stationary source emissions reductions to meet the 
budgets were required to be implemented by May 2004.\7\ The purpose of 
the rule was to address long-range transport by eliminating the 
significant contribution that each State's NOX emissions 
made to both 1-hour and 8-hour ozone nonattainment problems in downwind 
areas. The call for SIP revisions was challenged by a number of States, 
industry and interest groups but was largely upheld by the court and 
has remained a viable means for obtaining significant NOX 
emissions reductions.
---------------------------------------------------------------------------

    \7\ The EPA's NOX SIP Call mandated reductions by May 
2003. However, the Court's stay of the rule pending litigation 
resulted in a 1-year delay to May 2004.
---------------------------------------------------------------------------

    The OTAG report also recognized that VOC emissions reductions do 
not play much of a role in long-range transport, and concluded that VOC 
reductions are effective in reducing ozone locally and are most 
advantageous to urban nonattainment areas.
    Under the Federal Advisory Committee Act (FACA), we also formed a 
Subcommittee for Development of Ozone, Particulate Matter and Regional 
Haze Implementation Programs that provided recommendations and ideas to 
assist us in developing implementation approaches for these programs. 
We have incorporated ideas from the FACA process for a number of SIP 
elements, particularly those related to transport of ozone, the process 
for demonstrating attainment of the ozone standard, and requirements 
for ensuring reasonable further progress. Further information on the 
FACA process and its reports is found at the following Web site: http://www.epa.gov/ttn/faca/.
    As noted above, we have also promulgated national rules that reduce 
VOC and NOX emissions (ozone precursors) from mobile and 
stationary sources, which also help address ozone nonattainment 
problems. A number of commenters recommended that we set additional 
national standards for more source categories such that States and 
Tribes do not have to control these sources locally. They suggest that 
such standards would eliminate the inconsistent regulation that occurs 
when each nonattainment area chooses how to regulate sources within its 
jurisdiction. We continue to review source categories for possible 
Federal measure development.
    This technical backdrop led us to be guided by the principle of 
emphasizing national and regional measures to help areas come into 
attainment and, where possible, reducing the need for those

[[Page 32808]]

local controls that are more expensive than national and regional 
measures. However, as noted below, national and regional measures alone 
are not anticipated to bring all areas into attainment. Thus, some 
areas will need to adopt local controls through the SIP process.

III. How Did EPA Obtain Stakeholder Input for This Effort?

    We initiated a process to obtain stakeholder feedback on options 
the Agency developed for implementation of the 8-hour ozone NAAQS. We 
held three public meetings in addition to a number of conference calls 
and meetings with State, local and Tribal governments, environmental 
groups and industry representatives. (The lists of the organizations 
with whom we had discussions are in the docket, in addition to meeting 
and conference call summaries.) The purpose of the meetings and 
conference calls was to obtain stakeholder feedback regarding the 
options that we had developed as well as to listen to any new or 
different ideas that stakeholders were interested in presenting.
    We received comments in response to the meetings and conference 
calls. The comments from the public meetings addressed a number of 
issues related to the implementation approach.
    In addition to comments received at the public meetings, we 
received a number of written comments on how to implement the 8-hour 
ozone NAAQS. We have considered these comments in the implementation 
approach proposed below.

IV. What Is EPA's Schedule for Issuing an 8-Hour Ozone Implementation 
Rule?

    We plan to issue a final rule on an implementation approach by the 
end of 2003. While there is not a CAA deadline for promulgating a 
strategy to implement the 8-hour ozone NAAQS, the CAA does establish a 
deadline for EPA to promulgate designations of nonattainment areas 
under section 107 of the CAA.\8\ We have entered into a consent decree 
that requires us to promulgate designations by April 15, 2004.\9\
---------------------------------------------------------------------------

    \8\ Section 107(d) of the CAA sets forth a schedule for 
designations following the promulgation of a new or revised NAAQS. 
The Transportation Equity Act for the Twenty-first Century (TEA-21) 
revised the deadline to publish nonattainment designations to 
provide an additional year (to July 2000), but HR3645 (EPA's 
appropriation bill in 2000) restricted EPA's authority to spend 
money to designate areas until June 2001 or the date of the Supreme 
Court ruling on the standard, whichever came first.
    \9\ American Lung Association v. EPA (D.D.C. No. 1:02CV02239).
---------------------------------------------------------------------------

    The nonattainment designation for an area starts the process 
whereby a State must develop a SIP that demonstrates how the air 
quality standard will be attained by the attainment dates required in 
the CAA. We plan to have an implementation strategy in place prior to 
designating areas for the 8-hour ozone standard. This will enable areas 
that are designated nonattainment for the 8-hour ozone standard to 
understand the obligations that attach to nonattainment designations 
and associated classifications.

V. In Short, What Does This Proposed Rulemaking Contain?

    This summary is intended to give an overview of our proposed rule. 
It should not be relied on for the details of the actual proposal. The 
proposed rule described in Section VI. below should be consulted 
directly. The order in which issues are described in this summary does 
not match exactly the order these issues are discussed in the actual 
proposal.

A. Classification of Areas

    Under the CAA, an ozone nonattainment area's classification 
determines the minimum measures that must be included in the area's SIP 
for meeting the 8-hour standard and the maximum time period allowed for 
the area to meet the standard. We are proposing two options for 
classifying areas.
    Under option 1, all areas would be classified under subpart 2 
according to 8-hour ozone levels. As a result, all areas would be 
classified as marginal, moderate, serious, or severe or extreme (based 
on the most recent air quality data, no areas would fall in the 
``extreme'' classification), and would be subject to control 
requirements specified in the CAA for each classification.
    Under option 2, more than half the nonattainment areas would likely 
be regulated under subpart 1. All of these would be areas meeting the 
1-hour ozone standard. The rest of the areas--those exceeding, and a 
few that may be meeting the 1-hour standard--would be classified under 
subpart 2 in the same manner as option 1.
    We are also proposing an ``incentive feature'' that would allow 
areas to qualify for a lower classification under subpart 2 than their 
air quality would dictate if they demonstrate they will attain by the 
earlier attainment date of a lower classification. For example, an area 
that would be classified ``moderate'' could qualify for a ``marginal'' 
classification by showing it will attain within 3 years of designation. 
The ``incentive feature'' is proposed for use in conjunction with 
either classification option.

B. Attainment Deadlines

    We are proposing that for areas classified under subpart 2, the 
periods for attainment (running from the date of designation/
classification) would be 3 years for marginal areas, 6 years for 
moderate areas, 9 years for serious areas, and 15 years for severe-15 
areas, and 17 years for severe-17 areas.
    If classification option 2 were selected, some areas would be 
classified under subpart 1. Attainment dates for these areas would be 
no later than 5 years after designation, although they could be 
extended up to 10 years after designation depending on the severity of 
the area's air pollution and the availability and feasibility of 
pollution control measures.
    For all areas, the CAA requires each plan to be designed to meet 
the standard as expeditiously as practicable, regardless of the maximum 
statutory period specified for attainment.

C. How Will EPA Implement the Transition From the 1-Hour to the 8-Hour 
Standard in a Way To Ensure Continued Momentum in States' Efforts 
Toward Cleaner Air?

    This section discusses which obligations would remain in effect for 
areas that were designated nonattainment under the 1-hour ozone NAAQS 
on or after November 15, 1990, as areas begin to implement the 8-hour 
standard. It also proposes two alternatives for revoking the 1-hour 
ozone standard: revocation in whole and revocation in part.
    1. Areas designated nonattainment under the 8-hour standard. We are 
proposing that all areas designated nonattainment for the 8-hour ozone 
NAAQS remain subject to certain obligations that applied by virtue of 
the area's classification for the 1-hour standard where the area's 1-
hour classification was higher than the area's classification for the 
8-hour standard. These obligations include major source thresholds, 
inspection and maintenance (I/M) programs and fuel programs. However, 
these obligations would not apply to portions of an 8-hour ozone 
nonattainment area that was not a part of a 1-hour ozone nonattainment 
area. We believe that Congress intended these requirements to continue 
to apply to areas as they move forward to address an ozone NAAQS. We 
are soliciting comment whether areas that have not yet met the 
attainment demonstration obligation for the 1-hour standard

[[Page 32809]]

should remain obligated to submit a 1-hour ozone attainment 
demonstration.
    2. Areas designated attainment under the 8-hour standard. Since 
attainment areas are subject to PSD, not nonattainment NSR, we propose 
that these areas would not remain subject to the nonattainment NSR 
offset and major source thresholds that might otherwise apply due to 
their classification for the 1-hour standard. However, we are proposing 
that control obligations that applied based on an area's 1-hour 
classification would remain. We are proposing that these areas are 
obligated to submit a maintenance plan under section 110(a)(1). 
Consistent with EPA's ``Clean Data Policy,'' we are proposing that 
these areas not be required to meet outstanding attainment 
demonstration and rate-of-progress (ROP) requirements, so long as they 
remain in attainment. However, if the area violates the 8-hour standard 
and does not have an approved maintenance plan for the 8-hour standard 
under section 110(a)(1), those obligations will once again apply. We 
are proposing that these areas would need contingency measures in their 
section 110(a)(1) maintenance plans. However, unlike contingency 
measures under section 175A, these contingency measures need not 
include an obligation to implement all control obligations in the 
previously approved SIP. For all areas designated attainment for the 8-
hour ozone NAAQS the requirement to demonstrate conformity to the 1-
hour standard would no longer apply once the 1-hour standard is revoked 
or determined not to apply for that purpose.
    3. Concerning the NOX SIP Call. We are proposing that 
States must continue to adhere to the emission budgets established by 
the NOX SIP Call after the 1-hour standard is revoked in 
whole or in part. Similarly, we are not proposing to revoke or modify 
the section 126 regulation.
    4. Obligations under part D of title I of the CAA that would not 
continue to apply. We are proposing that areas would not be obligated 
to continue to demonstrate conformity for the 1-hour standard once the 
1-year grace period for application of conformity for the 8-hour 
standard has elapsed. We are also proposing that we would no longer 
make findings of failure to attain the 1-hour standard and, therefore, 
also would not reclassify areas to a higher classification for the 1-
hour standard based on a failure to meet the 1-hour standard.
    5. How long would the obligations discussed under the 1-hour 
standard last? We are proposing that these measures would not expire. 
However, we are proposing two options for when the State may relegate 
these measures to contingency measures: Option 1. When the area 
achieves the level of the 1-hour ozone standard (even if the area has 
not yet attained the 8-hour standard). Option 2. When the area attains 
the 8-hour standard and is designated attainment (regardless of when, 
if ever, the area attains the 1-hour standard).
    6. Mechanism to effect the transition from the 1-hour to the 8-hour 
standard. We are proposing 2 mechanisms. For both of these mechanisms, 
we are proposing that the revocation of the 1-hour standard would occur 
1 year following designations for the 8-hour NAAQS. Option 1: Complete 
revocation of the 1-hour standard. Option 2: Partial revocation of 1-
hour standard.

D. Mandatory Measures

    We believe that the CAA is clear that once an area is classified 
under subpart 1 or subpart 2, the area's State implementation plan must 
contain the measures enumerated in the CAA for its classification. 
However, today's proposal contains several features intended to provide 
States with flexibility on the measures included in SIPs for 8-hour 
areas. In addition, we are proposing to consider case-by-case waivers 
if the applicant can show, consistent with case law on this issue, that 
implementing a requirement in a particular area would cause ``absurd 
results.''

E. Consequences of Failure To Attain

    The consequences of failure to attain the standard on time are 
specified by the CAA. If an area classified under subpart 2 fails to 
meet the standard by its deadline, the CAA requires that the area be 
bumped up to a higher classification and adopt a revised plan 
containing the additional measures specified by the CAA for that 
classification. If an area classified under subpart 1 fails to meet the 
standard by its deadline, the area would be required to adopt a new 
plan demonstrating attainment, including any requirement mandated by 
the Administrator.

F. Interstate Transport

    EPA recognizes that ozone and ozone precursors are often 
transported across State boundaries, and that interstate transport can 
make it difficult--or impossible--for some States to meet their 
attainment deadlines solely by regulating sources within their own 
boundaries. To address this concern, the Agency recently adopted two 
rules (the NOX SIP Call and the Section 126 Rule) to reduce 
interstate ozone transport in the eastern U.S. These rules were 
developed based on the level of reductions needed to address transport 
for both the 1-hour and 8-hour standards. For both rules, the 
compliance date for achieving the required emissions reductions is May 
31, 2004. Thus, unlike in the past, States affected by transport can 
develop their local ozone implementation plans with the knowledge that 
the issue of interstate transport has already been addressed ``up 
front.''
    The President recently proposed legislation known as the Clear 
Skies Act that, among other things, would further reduce interstate 
transport of ozone and NOX (an ozone precursor) from the 
power sector through a cap-and-trade program similar to the acid rain 
program. These reductions are beyond the levels required under the 
NOX SIP Call and the Section 126 Rule. The Clear Skies 
reductions would enable several additional areas to meet the 8-hour 
standard without imposing any additional local controls. A number of 
other areas would find it easier to meet the 8-hour standard because of 
the additional reductions in power plant emissions that would be 
required under Clear Skies. However, the Agency has not made a 
determination that such reductions are warranted under the transport 
provisions of the CAA. In order to evaluate this issue, the Agency 
intends to investigate the extent, severity and sources of interstate 
ozone transport that will exist after the existing transport rules are 
implemented in 2004.

G. Modeling and Attainment Demonstration

    An attainment demonstration SIP includes technical analyses to 
locate and regulate sources of emissions that are contributing to 
violations within nonattainment areas. Section 182(a) does not require 
marginal areas, which have an attainment date only 3 years following 
designation to perform any photochemical grid modeling. We are 
proposing to allow areas with attainment dates within 3 years after 
designation--regardless of whether they are covered under subpart 1 or 
2--to rely on existing modeling. Areas with later attainment dates 
(more than 3 years after designation) would be required to do an 
attainment demonstration SIP. Modeling developed to support Federal or 
local controls may be used if the application of that modeling is 
consistent with our modeling guidance.

H. Reasonable Further Progress (RFP)

    There are several issues related to the Act's RFP requirements.

[[Page 32810]]

1. Requirement for 15 Percent VOC Reductions for Moderate and Above 
Areas During the First 6 Years After the Base Year
    We are proposing two ways to implement the 15 percent requirements 
for moderate-and-above areas to meet numerical emissions reductions 
milestones (also known as rate-of-progress, or ROP, requirements).
    Under the first option, all such areas would be required to reduce 
baseline VOC emissions by 15 percent over the first 6 years after a 
baseline year.
    Under the second option, areas that previously reduced VOC 
emissions by 15 percent as part of implementing the 1-hour standard 
would be viewed as having already met the requirement. Moderate areas 
meeting this criterion would comply with the general subpart 1 
requirement to demonstrate ``reasonable further progress'' toward 
meeting the standard. Serious-and-above areas meeting the criterion 
would be required to achieve an 18 percent reduction in VOC and/or 
NOX over the first 6 years and 9 percent over subsequent 3-
year periods until the area's attainment date.
2. Base Year
    We are proposing 2002 as the baseline year, and that the 6-year 
period for reductions would run from January 1, 2003 until December 31, 
2008. We propose that States be allowed credit toward meeting the ROP 
requirements for all emissions reductions that occur after the 2002 
base year--including reductions from all post-1990 Federal or other 
measures (except those specifically excluded under section 182(b)(1)) 
of the CAA. We have also recently issued a memorandum that sets forth 
2002 as the baseline year for planning purposes.
    We are also proposing options for other RFP issues, including:
    [sbull] The timing of ROP reductions relative to attainment date 
for moderate areas.
    [sbull] Timing of submission of ROP plan.
    [sbull] CAA requirements for creditability of control measures.
    [sbull] Subpart 1 RFP.
    [sbull] Cases where 8-hr NA area encompasses and is larger than 
current 1-hr NA area.

I. RACM/RACT

    In the event classification option 2 is selected, we are proposing 
an interpretation of the requirements for reasonably available control 
measures (RACM) and reasonably available control technology (RACT) for 
areas covered by subpart 1.
    For RACT, for areas with 8-hour ozone levels that would place them 
in a moderate or above classification under subpart 2, we are proposing 
two options. Under the first option, these areas would be required to 
meet the traditional technology-based RACT control requirement that are 
applicable to moderate and above areas under subpart 2. Under the 
second option, if the area is able to demonstrate attainment of the 
standard as expeditiously as practicable with emission control measures 
in the SIP, then RACT will be met, and additional measures would not be 
required as being reasonably available.
    For subpart 1 areas with 8-hour ozone levels that would place them 
in a marginal classification if classified under subpart 2, the RACT 
requirement would be similar to that for marginal areas covered under 
subpart 2. This RACT approach also would be available to areas that 
qualified for marginal status via the incentive feature.
    The RACT requirements for areas under subpart 1 would have to be 
submitted within 2 years after an area's nonattainment designation.
    We are proposing that the State does not need to perform a RACT 
analysis for sources subject to the State's emission cap-and-trade 
program where we have approved the cap-and-trade program as meeting the 
NOX SIP Call requirements and it does not need to submit a 
new NOX RACT SIP for those sources.
    We propose to formally recognize NOX, as well as VOC, as 
an ozone precursor, so that RACT for NOX would be required 
for areas classified under either subpart 1 or subpart 2 for the same 
kinds of sources covered under the 1-hour ozone standard.
    For RACM, we propose to continue with the same interpretation that 
we have used for implementing the 1-hour ozone standard. To show that 
all RACM have been included in the plan, the State must show that there 
are no additional measures that are technically and economically 
feasible that will advance the attainment date.

J. Conformity

    No changes to the transportation conformity rule are proposed in 
this rulemaking. Transportation conformity is discussed in this 
proposal for informational purposes. By statute, transportation 
conformity applies to 8-hour nonattainment areas 1 year after the 
effective date of an area's designation. Our proposal to revoke the 1-
hour standard 1 year after 8-hour ozone area designations means that 
transportation conformity requirements under the 1-hour standard would 
end at the same time 8-hour transportation conformity requirements 
begin. We are proposing that conformity would not apply in 1-hour ozone 
standard maintenance areas after we revoke the 1-hour ozone standard.
    For the general conformity program, which ensures that federal 
actions will not interfere with an area's air quality plan, we are not 
proposing to revise its General Conformity Regulations in this 
rulemaking. We plan to retain the existing de minimis emissions levels 
for actions exempt from the rule. Our proposal to revoke the 1-hour 
standard one year after 8-hour ozone area designations means that 
general conformity requirements under the 1-hour standard would end at 
the same time 8-hour general conformity requirements begin. We are 
proposing that general conformity would not apply in 1-hour ozone 
standard maintenance areas after we revoke the 1-hour ozone standard.

K. New Source Review

    We are proposing three options for NSR, which could be implemented 
in conjunction with each other:
    1. A ``status quo'' NSR program under which subpart 1 areas would 
be covered by subpart 1 NSR, while subpart 2 areas would be covered by 
subpart 2 NSR.
    2. A more flexible ``Transitional'' NSR program for areas that 
submit early SIPs and that attain early. This program would be 
available to areas covered under subpart 1 and that are attaining the 
1-hour ozone standard.
    3. A ``Clean Air Development Community'' program that would allow a 
more flexible NSR program for areas that manage growth in emissions-
producing activities.

VI. What Are EPA's Proposed Frameworks for Implementing the 8-Hour 
Ozone Standard?

    As noted above, we originally intended to implement the 8-hour 
ozone standard under subpart 1 of part D, title I of the CAA. This 
would have allowed areas more flexibility to determine whether to 
regulate NOX, VOC or both to address ozone nonattainment.
    As also noted above, however, the Supreme Court determined that an 
approach that did not provide for classifying areas under subpart 2--
and thus subjecting those areas to the subpart 2 control requirements--
in implementing the 8-hour standard was unreasonable. In structuring a 
proposed implementation rule, we have tried to stay as close as 
possible to the principles noted above, particularly with regard to 
seeking flexible ways for States to address their 8-hour ozone

[[Page 32811]]

problems by avoiding measures that may be unreasonable for an area. We 
have spent a large amount of time investigating possible legal theories 
and policy options to find flexibility within the statute, as 
interpreted by the Supreme Court. We have also had the benefit of ideas 
and recommendations from many interested stakeholders, who also have 
spent much time developing their own theories and ideas. Based on these 
efforts, we believe that we have developed options for an 
implementation program that are workable under the constraints of the 
CAA. Nonetheless, we recognize that those constraints will still 
require a number of areas to adopt certain control measures that may 
not be as effective as others in achieving the 8-hour ozone standard. 
We are soliciting any further ideas for addressing this situation.
    To describe our proposed frameworks for implementing the 8-hour 
ozone standard, it is necessary to examine all the components or 
elements of the process used to implement the standard. Therefore, the 
issues and options that we are proposing that deal with the aspects of 
preparing SIPs for the standard are presented below individually. 
Following that, we present two possible alternative frameworks that 
blend one or more options from each of the elements to illustrate how 
they may work in conjunction with each other. We are soliciting comment 
on the options presented for the individual elements, and also on how 
the options can be grouped into a consolidated implementation 
framework.
    The proposal below describes only those options or approaches we 
are proposing. We considered a number of other options and approaches 
for the elements discussed below. These other options that were 
considered but are not being proposed are described in a separate 
document available in the docket.\10\
---------------------------------------------------------------------------

    \10\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
---------------------------------------------------------------------------

A. How Will EPA Reconcile Subparts 1 and 2? How Will EPA Classify 
Nonattainment Areas for the 8-hour Standard? What Attainment Dates 
Would Apply?

1. Statutory Framework and Supreme Court Decision
    The CAA contains two sets of requirements--subpart 1 and subpart 
2--that establish requirements for State plans implementing the 
national ozone air quality standards in nonattainment areas. (Both are 
found in title I, part D.) Subpart 1 contains general requirements for 
SIPs for nonattainment areas for any pollutant--including ozone--
governed by a NAAQS. Subpart 2 provides more specific requirements for 
ozone nonattainment SIPs.
    Throughout this proposed rulemaking, we repeatedly discuss whether 
an area is subject to the planning requirements of subpart 1 or subpart 
2. This language is convenient shorthand for purposes of this proposal. 
Actually, if an area is subject to subpart 2 requirements, it is also 
subject to subpart 1 requirements. In some cases, subpart 1 and subpart 
2 requirements are inconsistent or overlap. To the extent that subpart 
2 addresses a specific planning obligation, the provisions in subpart 2 
control. For example, under section 182(b), moderate areas are subject 
to 15 percent ROP requirements rather than the more general RFP 
requirements of section 172(c)(2). However, moderate areas remain 
subject to the contingency measure requirement of section 172(c)(9), as 
that requirement is not addressed for moderate areas in subpart 2. \11\
---------------------------------------------------------------------------

    \11\ State Implementation Plans; General Preamble for the 
Implementation of Title I of the Clean Air Act Amendments of 1990; 
Proposed Rule.'' April 16, 1992 (57 FR 13498 at 13501 and 13510).
---------------------------------------------------------------------------

    When we published the 8-hour ozone standard on July 18, 1997, we 
indicated that we anticipated that States would implement that standard 
under the less prescriptive subpart 1 requirements. More specifically, 
we provided that areas designated nonattainment for the 1-hour ozone 
standard would remain subject to the subpart 2 planning requirements 
for purposes of the 1-hour standard until such time as they met that 
standard. But those areas and all other areas would only be subject to 
subpart 1 for purposes of planning for the 8-hour ozone standard.
    As noted above, in February 2001, the Supreme Court ruled that the 
statute was ambiguous as to the relationship of subparts 1 and 2 for 
purposes of implementing the 8-hour NAAQS. However, the Court also 
ruled that our implementation approach, which provided no role for 
subpart 2 in implementing the 8-hour NAAQS, was unreasonable. Id. 
Specifically, with respect to classifying areas, the Supreme Court 
stated:

    [D]oes subpart 2 provide for classifying nonattainment ozone 
areas under the revised standard? It unquestionably does.

    Whitman, 121 S.Ct. at 917.
    However, despite recognizing that subpart 2 does provide 
classifications applicable for the 8-hour standard, the Supreme Court 
also recognized that the subpart 2 classification scheme, specified in 
section 181, did not entirely fit with the revised 8-hour standard and 
left it to EPA to develop a reasonable resolution of the roles of 
subparts 1 and 2 in implementing a revised ozone standard. Id. at 482-
486.
    In particular, the Court noted three portions of section 181--the 
classification provision in subpart 2--that it indicated were ``ill-
fitted to implementation of the revised standard.''
    [sbull] First, the Court recognized that 1-hour design values used 
for establishing the classifications in Table 1 in section 181 ``would 
produce at best an inexact estimate of the new 8-hour averages * * *'' 
121 S.Ct. at 918.
    [sbull] Second, the Court recognized that the design values in 
Table 1 start at the level of the 1-hour NAAQS--0.12 ppm. The Court 
noted that ``to the extent the new ozone standard is stricter than the 
old one, * * * the classification system of Subpart 2 contains a gap, 
because it fails to classify areas whose ozone levels are greater than 
the new standard (and thus nonattaining) but less than the 
approximation of the old standard codified by Table 1.'' Id.
    [sbull] Third, the Court recognized that ``Subpart 2's method for 
calculating attainment dates--which is simply to count forward a 
certain number of years from November 15, 1990 * * * seems to make no 
sense for areas that are first classified under a new standard after 
November 15, 1990.'' More specifically, the Court recognized that 
attainment dates for marginal (1993), moderate (1996), and serious 
(1999) areas had passed. Id. at 483-484.
2. EPA's Development of Options
    In light of the Supreme Court's ruling, we examined the statute to 
determine the manner in which the subpart 2 classifications should 
apply for purposes of the 8-hour ozone NAAQS. We paid particular 
attention to the three portions of section 181 that the Supreme Court 
noted were ill-fitted for implementation of the revised 8-hour 
standard. We examined those provisions in light of the legislative 
history and the overall structure of the CAA to determine what Congress 
intended for purposes of implementing a revised, more stringent ozone 
standard. We believe that we need to take a narrow reading consistent 
with what we believe Congress intended. Consistent with those 
principles, we developed several options.

[[Page 32812]]

3. Options for Classification
    We are proposing two options for comment. We prefer classification 
option 2 because it provides more flexibility to States and Tribes as 
they address their unique air quality problems. This is likely to allow 
some areas to attain the standard at a lower cost. However, we are also 
soliciting comments on option 1, in part, because it is less complex 
and may be easier to communicate, in addition to any other ideas on how 
to classify nonattainment areas.
    a. Option 1. Under the first option, we would classify 8-hour ozone 
nonattainment areas according to the severity of their ozone pollution 
based on 8-hour ozone levels.
    Under this option, all 8-hour nonattainment areas would be 
classified under subpart 2 as marginal, moderate, serious, severe-15, 
severe-17, or extreme. The CAA gives areas in higher classifications--
which are those with more serious ozone pollution problems--longer time 
periods for attaining the standard, but also requires these areas to 
meet a longer list of requirements than areas in lower classifications.
    A key feature of this option is the use of 8-hour ozone design 
values in determining the severity of an area's 8-hour ozone problem. 
However, the subpart 2 classification table (Table 1 of CAA section 
181) is based on 1-hour ozone design values (because it was designed 
for implementation of the standard in effect in 1990--the 1-hour ozone 
standard). Therefore, this option would require us to adapt the subpart 
2 classification scheme. Specifically, we would adopt by regulation a 
modified version of the subpart 2 classification table that contains 8-
hour design value thresholds for each classification, rather than the 
statutory 1-hour ozone design value thresholds. Using 8-hour design 
values for classifying areas for the 8-hour standard would reflect the 
magnitude of the 8-hour ozone problem more accurately than would the 1-
hour design values in Table 1.
    We are proposing to translate the classification thresholds in 
Table 1 of section 181 from 1-hour values to 8-hour values in the 
following manner: Determine the percentage by which each classification 
threshold in Table 1 of section 181 exceeds the 1-hour ozone standard 
and set the 8-hour threshold value at the same percentage above the 8-
hour ozone standard. For example, the threshold separating marginal and 
moderate areas in Table 1 is 15 percent above the 1-hour standard, so 
we would set the 8-hour moderate area lower threshold value at 15 
percent above the 8-hour standard.
    An examination of the percentages derived indicated that Congress 
set the classification thresholds at certain percentages or fractions 
above the level of the standard.\12\ These are the percentages above 
the standard that we used and applied to the level of the 8-hour 
standard to yield new threshold levels for the 8-hour standard. Table 2 
of this proposed rulemaking below depicts how the translation would be 
done and the results.
---------------------------------------------------------------------------

    \12\ The upper thresholds of the marginal, moderate, serious, 
severe-15, and severe-17 classifications are precise percentages or 
fractions above the level of the standard, namely 15.000 percent 
(\3/20\ths more than the standard), 33.333 percent (one-third more 
than the standard), 50.000 percent (one-half more than the 
standard), 58.333 percent (\7/12\ths more than the standard) and 
133.333 percent (one and one-third more than the standard).
---------------------------------------------------------------------------

    There are other ways of performing the translation as described 
further below, some of which have been suggested in public comment, but 
we believe that the translation described here is most consistent with 
the apparent intent of Congress in establishing the thresholds in the 
classification system in section 181.
    As mentioned above, under this option all 8-hour nonattainment 
areas would be classified under subpart 2 and receive attainment dates 
consistent with their classification. Elsewhere in this proposed rule, 
we discuss how it would interpret the attainment dates in Table 1 of 
section 181 for purposes of areas classified under subpart 2 for the 8-
hour standard. Areas that do not attain by their attainment date would 
be reclassified to a higher classification and be given a later 
attainment date and would be subject to the measures of the higher 
classification (section 181(b)(2)).

                        Table 2.--Table 1 of Subpart 2 1-Hour Ozone Classification Table
                                      [Translation to 8-Hour Design Values]
----------------------------------------------------------------------------------------------------------------
                                                                                                   Translated 8-
                                                                    CAA design     Percent above    hour design
              Area class                                               value       1-hour ozone        value
                                                                   thresholds 1-       NAAQS      thresholds ppm
                                                                  hour ozone ppm                       ozone
----------------------------------------------------------------------------------------------------------------
Marginal..............................  from....................           0.121           0.833       \1\ 0.085
                                        up to...................           0.138          15.000           0.092
Moderate..............................  from....................           0.138          15.000           0.092
                                        up to...................           0.160          33.333           0.107
Serious...............................  from....................           0.160          33.333           0.107
                                        up to...................           0.180          50.000           0.120
Severe-15.............................  from....................           0.180          50.000           0.120
                                        up to...................           0.190          58.333           0.127
Severe-17.............................  from....................           0.190          58.333           0.127
                                        up to...................           0.280         133.333           0.187
Extreme...............................  equal to or above.......           0.280         133.333           0.187
----------------------------------------------------------------------------------------------------------------
\1\ The percentages used were calculated based on the level of the 1-hour standard as it appears in 40 CFR 51.9,
  viz., 0.12 ppm. The percentages were applied to the 8-hour standard as it appears in 40 CFR 51.10, viz., 0.08
  ppm. Our guidance uses a rounding convention for 1-hour air quality data such that values less than 0.125
  round down to 0.12 and therefore represent attainment; values of 0.125 up to and including 0.129 round up to
  0.13, and therefore indicate nonattainment. An exact translation of the 0.121 1-hour threshold would have
  produced 0.081 ppm as the corresponding 8-hour threshold; however, since any value less than 0.085 ppm would
  indicate an area is attaining the 8-hour ozone standard, the table's lowest value reflects the lowest value
  representing nonattainment, viz., 0.085 ppm.

    b. Option 2--2-step approach. We are proposing a second option (our 
preferred option) under which some areas would implement the 8-hour 
standard under subpart 1, and other areas would implement the 8-hour

[[Page 32813]]

standard under subpart 2. This option relies on language in the Supreme 
Court decision, which is described in detail below.
    In brief, the option that we are proposing would work as follows:
    [sbull] First, we would determine which 8-hour areas must be 
classified under subpart 2. These would be areas with ozone levels that 
exceed the 1-hour ozone design values that Congress specified in Table 
1 of section 181. For the remaining areas, we would have discretion to 
place them under subpart 1 or subpart 2.
    [sbull] Second, we would classify all areas. Subpart 2 areas would 
be classified in the same manner described above under option 1. 
Options for classifying subpart 1 areas are described below.
    (i) Legal framework for 2-step approach. Under this approach, we 
first determine the universe of areas that must be subject to the 
provisions of subpart 2 and the universe of areas that fall into a 
``gap'' in subpart 2's classification scheme. Then, we proceed to 
determine how to classify the areas.
    (ii) Legal framework--Step 1--Which subpart applies for an area? 
With respect to the first step, the Supreme Court noted that ``to the 
extent that the new ozone standard is stricter than the old one, * * * 
the classification system of Subpart 2 contains a gap, because it fails 
to classify areas whose ozone levels are greater than the new standard 
* * * but less than the approximation of the old standard codified by 
Table 1 [in section 181(a)].'' 121 S.Ct. at 918. Thus, for those areas 
with a 1-hour ozone design value above the level identified in Table 1 
(i.e., 0.121 ppm), Table 1 ``specifies'' a classification for the area. 
For those areas, we would not have authority to establish 
classifications under subpart 1 because section 172(a)(1)(C) prohibits 
the use of the classification authority in section 172(a)(1)(A) for 
those areas.\13\ However, for areas with 1-hour ozone design values 
below 0.121 ppm, Table 1 does not specify a classification, and those 
areas fall into a gap in the statute. Thus, we must reasonably 
determine whether such areas should be subject to the planning 
obligations of subpart 1 or subpart 2. This issue is discussed more 
fully below under ``Rationale for regulating all ``gap'' areas under 
subpart 1 only.''
---------------------------------------------------------------------------

    \13\ Section 172(a)(1)(C) provides that the provisions of 
section 172(a) ``shall not apply with respect to nonattainment areas 
for which classifications are specifically provided'' in other 
sections of part D. Similarly, section 172(a)(2)(D) provides that 
the attainment date provisions in section 172(a)(2) do not apply 
``to nonattainment areas for which attainment dates are specifically 
provided'' elsewhere in part D.
---------------------------------------------------------------------------

    In summary, under the first step of this approach, we examine each 
nonattainment area's most recent 1-hour design value at the time of 
designation under the 8-hour NAAQS to determine whether the area must 
be subject to the classification under subpart 2. If an area's 1-hour 
design value is 0.121 or higher, then it must be subject to a subpart 2 
classification. If its 1-hour design value is lower than 0.121, it 
falls into a gap and we must determine a reasonable implementation 
scheme--either subpart 1 or subpart 2--for such area.
    (iii) Legal framework---Step 2--How should areas be classified 
under subparts 1 and 2? Under step 2 of this approach, we must 
determine how to classify areas subject to the classification 
provisions of subpart 2. For those areas subject to the classification 
provisions of subpart 2, we believe that it is most reasonable to use 
the area's 8-hour design value to determine the appropriate 
classification. This would be done in the same manner as option 1, 
proposed above, in which the Table 1 threshold design values are 
converted from 1-hour values to 8-hour values.
    Another option would have been to apply Table 1 as it is written. 
Some might argue that this approach is better because it is consistent 
with the design value EPA would use under this option to determine 
whether Congress mandated that the area be subject to subpart 2. We do 
not believe that Congress would have intended the use of 1-hour design 
values for determining the classification `` and therefore the control 
obligations and attainment dates--of 8-hour areas. While we believe it 
is reasonable to use the 1-hour design values as a barometer of 
Congress' intent as to which areas should be subject to the more 
prescriptive requirements of subpart 2, we do not believe it makes 
sense to use the 1-hour values to establish each area's classification 
under that subpart. The area's classification identifies the specific 
control requirements applicable to each area within that classification 
and the period of time the area has to attain. As enacted, the Table 
provides that areas having a more significant ozone pollution problem 
for the 1-hour standard and thus a higher classification are subject to 
more stringent controls and have a longer period to attain. Because of 
the different form and averaging times of the 1-hour and 8-hour 
standards, areas with significant 1-hour problems may not have as 
significant an 8-hour problem and vice versa. Using the 1-hour design 
values to classify areas, therefore, could result in areas with less 
significant ozone problems being subject to stricter planning 
obligations (and later attainment dates) than those with a more 
significant problem. Thus, we believe it is more consistent with 
Congressional intent to use 8-hour design values as the means for 
specifying the stringency of controls needed to attain the 8-hour ozone 
standard and the associated attainment dates. We also believe that this 
is consistent with the Supreme Court decision, in which the Court 
recognized that the ``1-hour averages'' in Table 1 ``produce at best an 
inexact estimate of the new 8-hour averages.'' See 121 S.Ct. at 918.
    As discussed in the following section, for areas that EPA 
determines would be subject only to subpart 1, section 172(a)(1)(A) 
grants EPA discretion to develop a classification scheme.
4. Under Classification Option 2, How Would EPA Classify Subpart 1 
Areas?
    a. Background. As noted above, classification option 2 above could 
result in a number of areas not being classified under subpart 2. 
Section 172(a)(1)(A) grants EPA discretion to establish a 
classification system for areas covered under subpart 1 but does not 
mandate classifications. Section 172(a)(1)(A) provides that

on or after [the date of designation], the Administrator may 
classify the area for the purpose of applying an attainment date 
pursuant to paragraph (2), and for other purposes. In determining 
the appropriate classification, if any, for a nonattainment area, 
the Administrator may consider such factors as the severity of 
nonattainment in such area and the availability and feasibility of 
the pollution control measures that the Administrator believes may 
be necessary to provide for attainment of such standard in such 
area.

    Prior to the Supreme Court's remand of our implementation approach, 
we had proposed that all 8-hour ozone nonattainment areas be subject 
only to subpart 1 for purposes of the 8-hour standard, and that areas 
would be classified as traditional, transitional, or international 
transport. These classifications were described in our November 17, 
1998 draft implementation guidance.\14\
---------------------------------------------------------------------------

    \14\ Proposed Implementation Guidance for the Revised Ozone and 
Particulate Matter (PM) National Ambient Air Quality Standards 
(NAAQS) and the Regional Haze Program. November 17, 1998. Found at: 
http://www.epa.gov/ttn/oarpg/t1pgm.html.
---------------------------------------------------------------------------

    Because we are no longer considering an option where all areas 
would be

[[Page 32814]]

classified under subpart 1, we have determined the classification 
scheme it proposed earlier is not appropriate. We are now proposing, as 
described below, two new options for classifying subpart 1 areas for 
the 8-hour standard.
    b. Options for classifying subpart 1 areas (i) Option 1--no 
classifications. Under this option, subpart 1 areas would not have 
different classifications. When submitting an attainment demonstration, 
each area would need to establish an attainment date consistent with 
section 172(a)(2)(A), i.e., demonstrating attainment as expeditiously 
as practicable, but no later than 5 years after designation or 10 years 
after designation if the severity of the area's air pollution and the 
availability and feasibility of pollution control measures indicate 
more time is needed.
    (ii) Option 2--create an overwhelming interstate transport 
classification. This option could be implemented in addition to option 
1 (no classifications) for areas that qualify; in other words, we would 
not classify areas that do not qualify for this transport 
classification. Under this option, an area could be classified as a 
``Transport Area'' upon submission of a SIP that demonstrates, using 
modeling, that the nonattainment problem in the area is due to 
``overwhelming transport'' emissions.
    We are proposing that for subpart 1 areas to qualify for an 
overwhelming transport classification, the area would have to meet the 
same criteria as specified for rural transport areas under section 
182(h) (of subpart 2). This section restricts treatment as a rural 
transport area to an area that does not include, and is not adjacent 
to, any part of a Metropolitan Statistical Area or, where one exists, a 
Consolidated Metropolitan Statistical Area (as defined by the United 
States Bureau of the Census). The area may be treated as a rural 
transport area if we find that sources of VOC (and, where we determine 
relevant, NOX) emissions within the area do not make a 
significant contribution to the ozone concentrations measured in the 
area or in other areas.\15\ Since this classification would only apply 
to subpart 1 areas, areas classified under subpart 2 would not qualify 
for this classification.
---------------------------------------------------------------------------

    \15\ EPA's guidance on such determinations appears in ``Criteria 
for Assessing the Role of Transport of Ozone/Precursors in Ozone 
Nonattainment Areas,'' May 1991. U.S. Environmental Protection 
Agency, Office of Air Quality Planning and Standards, Technical 
Support Division, Research Triangle Park, NC 27711. Available at: 
http://www.epa.gov/scram001/tt25.htm. Look for zip file name 
UAMIVGUIDE. Unzip to access file name UAMCRIT.
---------------------------------------------------------------------------

    The following are features of this option:
    [sbull] The area would be treated similar to areas classified 
marginal under subpart 2 for purposes of emission control requirements.
    [sbull] Less restrictive NSR and conformity requirements could be 
proposed for the area. If we include the transport classification 
option in the final implementation rule, we would consider proposing a 
separate rulemaking on the details of NSR and conformity requirements.
    [sbull] The area would receive an attainment date that is 
consistent with section 172(a)(2)(A), but that takes into consideration 
the following:
    [sbull] The attainment date of upwind nonattainment areas that 
contribute to the downwind area's problem; and
    [sbull] The implementation schedule for upwind area controls, 
regardless of their geographic scope (e.g., national, regional, 
statewide, local).
    This option would partially address Tribal concerns about 
designations where a Tribal area designated nonattainment does not 
contribute significantly to its own problem. This is one of the key 
issues for the Tribes who seek to have economic growth from new sources 
within their jurisdiction but that have difficulty obtaining emission 
reduction offsets from sources located either inside or outside Tribal 
areas.
    Interstate, intrastate, and international transport are also 
discussed elsewhere in this proposed rulemaking.
5. Rationale for Regulating All ``Gap'' Areas Under Subpart 1 Only
    This section is aimed solely at providing a rationale for why all 
gap areas should be placed under the subpart 1 regulatory framework 
rather than the subpart 2 regulatory framework. Issues regarding what 
specific requirements should apply to subpart 1 areas are addressed in 
later sections of this preamble.
    In developing classification option 2, we explored a number of 
options regarding how to interpret the relationship of subpart 1 and 
subpart 2 for areas with 1-hour design values less than 0.121. These 
areas are referred to below as ``gap'' areas because their 1-hour 
design value falls below the lowest value in the subpart 2 
classification table and thus Congress did not dictate whether subpart 
2 or subpart 1 applies. The options we explored ranged from placing all 
of these areas into the subpart 2 classification scheme to placing none 
of these areas into the subpart 2 classification scheme. We are 
proposing the latter approach--that all areas that fall into the gap 
should be subject only to the planning obligations of subpart 1. When 
faced with a similar issue following enactment of the CAA Amendments of 
1990, we determined that areas that Congress did not mandate fall into 
the classification scheme of subpart 2 should be subject to only the 
planning obligations of subpart 1.\16\
---------------------------------------------------------------------------

    \16\ These areas included: (a) The transitional areas under 
section 185A (areas that were designated as an ozone nonattainment 
area as of the date of enactment of the CAA Amendments of 1990 but 
that did not violate the 1-hour ozone NAAQS between January 1, 1987, 
and December 31, 1989); (b) nonattainment areas that had incomplete 
(or no) recent attaining data and therefore could not be designated 
attainment; and (c) areas that were violating the 1-hour ozone 
standard by virtue of their expected number of exceedances, but 
whose design values were lower than the threshold for which an area 
can be classified under Table 1 of subpart 2 (submarginal areas). 
See 57 FR 13498 at 13524 col. 3 et seq. (April 16, 1992).
---------------------------------------------------------------------------

    For classification option 2, we believe it is appropriate to 
continue that interpretation of the CAA for 8-hour ozone areas, despite 
the fact that a significant number of areas designated nonattainment 
for the 8-hour NAAQS will fall into this group. Congress enacted 
subpart 2 with the understanding that all areas (except marginal areas, 
for which no new controls were required) would have to employ 
additional local controls to meet the 1-hour ozone standard in a timely 
fashion. Since then, many control measures have been implemented, our 
understanding of the importance of interstate pollution transport has 
improved, and we have promulgated interstate NOX transport 
rules. Regional modeling by EPA indicates that the majority of 
potential 8-hour nonattainment areas that fall into the gap will attain 
the 8-hour standard by 2007 based on reductions from the NOX 
SIP Call, the Federal Motor Vehicle Emissions Control Program, and 
other existing Federal and State control measures, without further 
local controls.
    Of the 76 hypothetical areas that would fall into the gap (and 
would thus be covered under subpart 1 under classification option 2), 
27 would have been classified as moderate if classified under option 1 
based on their 8-hour design values. Eighteen of these 27 areas are 
projected to attain by 2007 through existing regional or national 
measures. If these areas were to be classified as moderate (under 
classification option 1), these areas would nonetheless be required to 
implement statutorily specified controls for moderate areas. Using our 
discretion to regulate gap areas under subpart 1 is one way (the 
proposed incentive feature, discussed below in this section on 
classifications, is another way) to avoid requiring unnecessary new 
local controls in areas

[[Page 32815]]

already projected to meet the standard in the near term.
    The other 49 gap areas could be regulated either under subpart 1 
(under option 2) or as marginal areas if classified by 8-hour design 
value under subpart 2 (under option 1). These areas already are meeting 
the 1-hour standard and are close to meeting the 8-hour standard. 
Because control requirements for marginal areas are similar to those 
for subpart 1 areas, and because most of these areas are projected to 
attain within 3 years, the difference in regulatory category may make 
no practical difference for many of these areas. A potential rationale 
for placing these areas under subpart 1 is to provide States and EPA 
with greater discretion to handle implementation difficulties that 
might arise in some of these areas. For example, a gap area might fail 
to attain within the maximum attainment date for marginal areas (3 
years after designation) because of pollution transport from an upwind 
nonattainment area with a later attainment deadline. In that event, 
subpart 2 calls for the area to be reclassified as moderate and for the 
area to implement additional local controls specified for moderate 
areas. For areas under subpart 1, however, we could provide additional 
time for the area to attain while the upwind sources implemented 
required controls if this were determined to be a more effective or 
more appropriate solution. Although regional modeling projections 
indicate that the NOX SIP Call will bring most gap areas 
into attainment by 2007, some States have voiced concern to us that 
interstate or intrastate pollution transport may affect future 8-hour 
areas with near-term attainment deadlines. Subpart 1 would provide 
States and EPA with more flexibility on the remedy in any such cases.
    Although we believe that there are reasons to place gap areas in 
subpart 1, and have the legal authority to do so, we are not suggesting 
that subpart 2 is unreasonable for any area that would be subject to 
subpart 2 under either classification option. Also, our analysis here 
should not be taken as inconsistent with its proposal under 
classification option 1, whereby all 8-hour ozone nonattainment areas 
would be subject to the subpart 2 planning obligations. That simpler 
option, in conjunction with the incentive feature for classifications 
(if ultimately adopted), described below in this section on 
classification, could provide similar flexibility on control measures 
for most (though not quite all) areas. In addition, we are proposing 
ways in which to build some flexibility into some of the mandated VOC 
control obligations in subpart 2, in areas where it would make sense to 
provide such flexibility. A final observation is that Congress did 
recognize some benefit in prescribing measures for areas because of 
past failure to attain under less prescriptive provisions of the CAA.
    Placing all gap areas in subpart 1 would result in over half of the 
hypothetical nonattainment areas being covered by subpart 1. To be 
fair, this option might appear to result in some areas being placed in 
subpart 1 even though they have 8-hour ozone design values as high or 
higher than some areas that fall under Table 1 in section 181 and thus 
are covered under subpart 2. As explained above, we believe the most 
effective way to deal with that issue is not to exercise our discretion 
and make those areas subject to subpart 2. Rather, we can use our 
discretion under subpart 1 to determine how to define the controls 
required under subpart 1 for such areas in order to assure the most 
equitable, yet effective, means for these areas to attain the 8-hour 
ozone NAAQS. For example, in the section of this proposed rulemaking 
addressing RFP under subpart 1, we explore an option of defining RFP in 
the same manner as it is defined under subpart 2. EPA is open to 
suggestions as to how to make the subpart 1 planning process that would 
apply to these areas effective and also equitable in light of the 
subpart 2 planning obligations to which areas with a similar 8-hour 
ozone problem may be subject.
6. Proposed Incentive Feature
    In addition to the two basic classification options being proposed 
above, we are also proposing an early attainment incentive feature that 
could be applicable to either of the options proposed above. Under this 
feature, for areas classified under subpart 2, we would classify an 
area at a lower classification than it would receive based on its 
design value, if a modeled demonstration indicates the area will attain 
by an attainment date that is consistent with the lower classification. 
For instance, if a subpart 2 area has an 8-hour ozone design value of 
0.094 ppm, it would ordinarily be classified as moderate, with an 
attainment date 6 years after the area's designation as nonattainment 
for the 8-hour standard. If modeling acceptable to EPA demonstrates 
that this area will attain within 3 years after designation, the area 
would be eligible for classification as a marginal area, since marginal 
areas would have a maximum attainment date of 3 years after their 
nonattainment designation date. (See our proposal on attainment dates 
elsewhere in this proposed rulemaking.)
    The lower classification would provide additional flexibility to 
the area in that it would avoid the mandatory control requirements of 
the higher classification. Appendix A of this proposal provides a 
comparison of requirements under subparts 1 and 2.
    In granting a lower classification to an 8-hour ozone nonattainment 
area based on this option, we propose to take into account the extent 
to which the area significantly contributes to downwind nonattainment 
or interferes with maintenance under section 110(a)(2)(D) of the CAA. 
We solicit comment on possible mechanisms for assessing this 
contribution for purposes of granting the lower classification, and 
possible tests for whether to grant or deny the lower classification.
    In addition to soliciting comment on this proposed incentive 
feature itself, we are soliciting comment on whether such modeled 
demonstration would have to be made prior to the initial classification 
of areas, or whether it could be submitted after we have already 
classified the area initially at the higher classification, in which 
case we would have to revise the classification downward at a 
subsequent time.
    We also solicit comment on whether EPA, prior to initial 
classifications, should use EPA regional-scale modeling (rather than 
urban-scale modeling) to make determinations of which areas would 
receive a lower classification. Under this suboption, an area would 
qualify for the lower classification if EPA's regional modeling 
indicated that, based on emissions reductions from existing national 
and regional programs, the area would attain the 8-hour standard by the 
attainment deadline for the next lower classification. In requesting 
comment on this suboption, EPA notes that regional-scale modeling alone 
is not considered sufficient for an approvable attainment 
demonstration. We request comment on whether regional-scale modeling 
would nonetheless be adequate for purposes of lowering an area's 
classification. (Under this approach, if regional modeling did not 
provide grounds for the lower classification, States would need to 
perform local attainment demonstrations to take advantage of the 
incentive feature.)
    It should be noted that an option was presented and discussed at 
the public meetings similar to this incentive feature in conjunction 
with the option that would have classified all areas based on their 8-
hour design values but also relied on modeled results to adjust the 
classification. The option received

[[Page 32816]]

criticism from a wide variety of commenters, who argued that modeling 
could be applied inappropriately in classifying areas. We nonetheless 
believe it is appropriate to propose this feature to alleviate some of 
the other concerns that many commenters raised about the mandatory 
measures required under the higher classifications of subpart 2. 
Furthermore, we believe this option is justified by the intent of the 
CAA, in which an area's classification is generally linked to the 
amount of time the area is anticipated to need to attain the NAAQS. We 
recognize that the CAA was not originally structured to allow lower 
classifications based on an area being projected to attain earlier. 
However, under the Supreme Court ruling that required that we interpret 
the law regarding subpart 2's application to the 8-hour ozone standard, 
we believe it may reasonably give areas that are projected to attain 
the 8-hour ozone standard by an earlier date a classification that is 
consistent with that attainment date.
7. Other Options EPA Considered
    We considered many other options for classification and for the 
translation of the classification table in the CAA. These options are 
discussed in a separate document available in the docket.\17\ These 
other possible ways of translating the classification table, in our 
opinion, do not have the same degree of consonance with the intent of 
Congress when it enacted subpart 2 as those we are proposing. We are 
therefore not proposing them.
---------------------------------------------------------------------------

    \17\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
---------------------------------------------------------------------------

8. Implications for the Options
    To evaluate the potential impact of the various classification 
options, we developed a set of 122 hypothetical nonattainment areas 
based on the counties that have monitors measuring violations of the 8-
hour ozone standard for the 3-year period of 1998-2000. Our inclusion 
and grouping of counties into hypothetical nonattainment areas was done 
only for illustrative purposes and does not have any implications for 
the location, number or boundaries of nonattainment areas that may 
ultimately be evaluated and recommended by States and Tribes or 
designated by EPA. The final designations would be affected by factors 
contained in EPA's guidance on boundaries of nonattainment areas (which 
is, as noted earlier, not a topic of discussion or comment for this 
notice of proposed rulemaking). As noted earlier, Table 3 illustrates a 
possible classification grouping of nonattainment areas based on 
counties with monitors based on the options proposed above. The list of 
these areas and the information we used in assessing the consequences 
of our proposal are available in the docket.\18\
---------------------------------------------------------------------------

    \18\ Background Information Document, Hypothetical Nonattainment 
Areas for Purposes of Understanding the EPA Proposed Rule for 
Implementing the 8-hour Ozone National Ambient Air Quality Standard. 
Illustrative Analysis Based on 1998-2000 Data. U.S. Environmental 
Protection Agency, Office of Air and Radiation, Office of Air 
Quality Planning and Standards, Draft, April 2003. Available at: 
http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr/.

                                  Table 3.--Proposed Classification Options Counts of Hypothetical Nonattainment Areas
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                              Subpart 2                                   Subpart 1
                                                                 ---------------------------------------------------------------------------------------
                                                                   Extreme   Severe-17  Severe-15   Serious    Moderate   Marginal               Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Option 1 (8-hour design value)..................................          0          1          1          6         53         61          0        122
Option 1 (8-hour design value)-with incentive feature*..........          0          1          1          6         30         84          0        122
Option 2 (2-step approach--areas < 0.121 ppm = subpart 1).......          0          1          1          6         26         12         76        122
Option 2 (2-step approach--areas < 0.121 ppm = subpart 1)-with            0          1          1          6         21         17         76        122
 incentive feature \1\..........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Areas that would be moderate using their 8-hour design value but that are projected to attain by 2007 would be classified marginal.

9. Other Considerations
    In addition to the overall classification options being proposed, 
it should be noted that subpart 2 also provides that classifications 
may be adjusted upward or downward for an area if the area's design 
value is within 5 percent of another classification. This provision 
(section 181(a)(4)) reads:

    If an area classified under [Table 1] would have been classified 
in another category if the design value in the area were 5 percent 
greater or 5 percent less than the level on which such 
classification was based, the Administrator may, in the 
Administrator's discretion, within 90 days after the initial 
classification, * * * adjust the classification to place the area in 
such other category. In making such adjustment, the Administrator 
may consider the number of exceedances of the national primary 
ambient air quality standard for ozone in the area, the level of 
pollution transport between the area and other affected areas, 
including both intrastate and interstate transport, and the mix of 
sources and air pollutants in the area.

    Thus, for example, if a downwind area is subjected to a subpart 2 
classification and there is evidence that the area will not benefit 
significantly from local controls mandated by subpart 2 for the area's 
classification and can attain within the time period specified for the 
next lower classification, the area may obtain some relief based on the 
5 percent rule in the CAA, if applicable.
    This provision does not establish a mechanism for removing areas 
from the subpart 2 classification scheme.

B. How Will EPA Treat Attainment Dates and Other Dates Including SIP 
Submittal Dates for the 8-Hour Ozone Standard?

1. Background
    Under subpart 2 of the CAA, maximum attainment dates and most SIP 
submittal dates are fixed as a function of a nonattainment area's 
classification under Table 1. The CAA provides that an area's 
attainment date must be ``as expeditious as practicable but no later 
than'' the date prescribed in Table 1 for that area's classification. 
The statutory dates are specified as a number of years (e.g., 6 years) 
from the date of enactment of the CAA Amendments, which was November 
15, 1990. Because these dates are a set number of years after enactment 
of the CAA Amendments, one might initially

[[Page 32817]]

conclude that the subpart 2 classifications, with their associated 
attainment dates, should not apply for the 8-hour standard. The Supreme 
Court, however, rejected a conclusion that the subpart 2 
classifications do not apply, although it noted that the attainment 
dates ``seem[ ] to make no sense'' for areas classified under a new 
standard after November 15, 1990. 121 S.Ct. at 918.
    We believe that applying the attainment dates as expressly provided 
under Table 1 would produce absurd results. For example, a strict 
application of Table 1 would result in areas classified as marginal for 
the 8-hour NAAQS as having an attainment date of November 15, 1993 and 
areas classified as moderate as having an attainment date of November 
15, 1996. Since these dates have long passed, it makes no sense to 
establish them as the applicable dates.
    Many provisions of the CAA, however, indicate what Congress' intent 
was in setting attainment dates. For example, section 181(b), provides 
that for areas designated attainment or unclassifiable for ozone 
immediately following enactment of the 1990 CAA Amendments and 
subsequently redesignated to nonattainment, the attainment date would 
run from the date the area is classified under subpart 2.\19\ Thus, if 
an area designated as attainment for the 1-hour ozone standard in 1990 
were redesignated to nonattainment for the 1-hour ozone standard in 
January 2002 and classified as moderate, the area's attainment date 
would be 6 years following January 2002, i.e., January 2008. Similarly, 
section 172(a)(2) provides for attainment dates to be calculated from 
the time the area is designated nonattainment. We believe that Congress 
would have intended for areas designated nonattainment and classified 
under subpart 2 for the 8-hour standard to have attainment periods 
consistent with those in Table 1 (e.g., 3 years for a marginal area, 6 
years for a moderate area, etc.), but running from the date the area is 
designated and classified for purposes of the 8-hour NAAQS. We are 
proposing for areas classified under subpart 2, the period for 
attainment (running from date of designation/classification) would be:
---------------------------------------------------------------------------

    \19\ Section 181(b) provides that ``any absolute, fixed date 
applicable in connection with any such requirement is extended by 
operation of law by a period equal to the length of time between the 
date of the enactment of the CAAA of 1990 and the date the area is 
classified under this paragraph.'' Under section 181(b), the date of 
classification is the same as the date of redesignation to 
nonattainment.
---------------------------------------------------------------------------

    [sbull] Marginal--3 years.
    [sbull] Moderate--6 years.
    [sbull] Serious--9 years.
    [sbull] Severe--15 or 17 years.
    [sbull] Extreme--20 years (no areas currently expected to be in 
this category for the 8-hour ozone standard).
    Note that the CAA requires each area to demonstrate attainment as 
expeditiously as practicable, regardless of maximum statutory periods.
    Most SIP submittal dates in subpart 2 run for a fixed period from 
the date of enactment of the 1990 CAA, which was also the date of 
designation and classification by operation of law for most subpart 2 
areas. Under section 181(b)(1), the statute provides that any fixed 
dates will be extended by operation of law to a period equal to the 
length of time between that date of enactment and the date an area is 
subsequently designated and classified. Thus, unless EPA has reason to 
create a different time period, either as explained specifically below 
or in any subsequent specific rulemaking applicable to a particular 
subpart 2 requirement, subpart 2 SIP submittals will be due as a 
general matter by the same period of time after designation and 
classification under the 8-hour standard as provided in subpart 2 for 
areas designated and classified at the time of enactment of the 1990 
CAA.
    For areas classified under subpart 1, attainment dates would be set 
under section 172(a)(2)(A), which provides that the SIP must 
demonstrate attainment as expeditiously as practicable, but no later 
than 5 years after designation or 10 years after designation if the 
severity of the area's air pollution and the availability and 
feasibility of pollution control measures indicate more time is needed.
    Note that in determining whether an area actually attains the NAAQS 
at the time of the attainment date, EPA would use the ambient air 
quality data for the three ozone seasons prior to the attainment date. 
As an example, if the effective date of the nonattainment designations 
is May 15, 2004, the maximum attainment date for an area classified 
marginal would be May 15, 2007. In this example, EPA would consider the 
8-hour ozone data for the three previous ozone seasons--2004, 2005 and 
2006.
2. How Will EPA Address the Provision Regarding 1-Year Extensions?
    Both subpart 1 and subpart 2 provide for two brief attainment date 
extensions for areas in limited circumstances where they do not attain 
by their attainment date. Section 172(a)(2)(C) (under subpart 1) 
provides for EPA to extend the attainment date for 1 year if the State 
has complied with all requirements and commitments pertaining to the 
area in the applicable implementation plan, and no more than a minimal 
number of exceedances of the relevant NAAQS has occurred in the area in 
the attainment year. No more than two 1-year extensions may be issued 
under this subparagraph for a single nonattainment area. Section 
181(a)(5) (under subpart 2) contains a similar provision, but instead 
of allowing a ``minimal'' number of exceedances, it provides for only 
one exceedance of the standard in the year preceding the extension 
year. This reflects the form of the 1-hour ozone standard, which is 
exceedance-based. The 8-hour ozone standard, however, is not an 
exceedance form of standard, but rather a concentration-based 
standard.\20\ We have issued guidance on the portion of these two 
provisions relating to the State's compliance with all requirements and 
commitments pertaining to the area in the applicable implementation 
plan.\21\ However, for purposes of section 181(a)(5), we need to 
determine a reasonable interpretation in light of the fact that the 
statute, as written, does not fit the form of the 8-hour standard. 
Because Congress has addressed this issue elsewhere in the statute, we 
believe it is reasonable to adopt that formulation. Therefore, we would 
apply the same test under subparts 1 and 2 for determining whether to 
grant a 1-year extension, i.e., whether there was a minimal number of 
exceedances. For both subparts, we propose to interpret this to mean 
for the 8-hour standard, the area would be eligible for the first of 
the 1-year extensions under the 8-hour standard if, for the attainment 
year, the area's 4th highest daily 8-hour average is 0.084

[[Page 32818]]

ppm or less. An area that has received the first of the 1-year 
extensions under the 8-hour standard would be eligible for the second 
extension if the area's 4th highest daily 8-hour value, averaged over 
both the original attainment year and the first extension year, is 
0.084 ppm or less.
---------------------------------------------------------------------------

    \20\ See 40 CFR 50.9(a); the 1-hour standard for ozone ``* * * 
is attained when the expected number of days per calendar year with 
maximum hourly average concentrations above 0.12 parts per million 
(235 [mu]g/m3) is equal to or less than 1 in order for 
the area to be considered attaining the standard, as determined by 
Appendix H to this part.'' Thus, the 1-hour standard is an 
``exceedance'' based standard, since the number of exceedances of 
the standard (yearly average over 3 years under appendix H) must be 
equal to or less than 1. In contrast, see 40 CFR 50.10(b); the 8-
hour standard for ozone is ``* * * met at an ambient air quality 
monitoring site when the average of the annual fourth-highest daily 
maximum 8-hour average ozone concentration is less than or equal to 
0.08 ppm, as determined in accordance with Appendix I to this 
part.'' Thus, this is a concentration-based standard, because 
meeting the standard is determined by calculating the concentration, 
not the number of exceedances as under the 1-hour standard.
    \21\ Memorandum of February 3, 1994, from D. Kent Berry re: 
``Procedures for Processing Bump Ups and Extension Requests for 
Marginal Ozone Nonattainment Areas.'' U.S. Environmental Protection 
Agency, Research Triangle Park, North Carolina.
---------------------------------------------------------------------------

3. How Do Attainment Dates Apply to Indian Country?
    As discussed elsewhere in this proposed rulemaking, the Tribal 
Authority Rule (TAR), 40 CFR 49.9 provides that Tribes should not be 
treated in a manner similar to States with regard to schedules, 
including the attainment dates. However, the TAR also requires EPA to 
develop Federal implementation plans (FIPs) where necessary and 
appropriate. (40 CFR 49.11). Because we believe that public health 
considerations are of primary concern, the attainment dates for primary 
NAAQS should be met. Therefore, EPA, in consultation with the Tribes, 
will work to ensure that the standards are addressed as soon as 
possible, considering the needs of the Tribes, and ensure that 
attainment in other jurisdictions is not adversely affected.
4. How Will EPA Establish Attainment Dates for Areas Classified as 
Marginal Under the ``Incentive'' Feature Proposed Under the 
Classification Section or Areas Covered Under Subpart 1 With a 
Requested Attainment Date of 3 Years or Less After the Designation 
Date?
    EPA would ordinarily have established attainment dates for areas 
through a review of the SIP and whether attainment is as expeditious as 
practicable but no later than the date prescribed in the CAA. Elsewhere 
in this proposal, we are providing that marginal areas (under subpart 
2) and areas under subpart 1 with an attainment date within 3 years 
after designation would not actually have to submit an attainment 
demonstration within 3 years after designation. Therefore, we must 
establish another procedure for establishing the attainment dates for 
these areas. We are proposing the following procedure.
    a. Areas that are classified marginal based solely on their 8-hour 
ozone design value. For these areas, we are proposing that the CAA 
attainment date under Table 1 of section 181 would be the area's 
attainment date (namely, 3 years after designation).
    b. Areas that are classified marginal based on the proposed 
incentive feature proposed elsewhere and areas covered under subpart 1 
with a requested attainment date of 3 years or less after the 
designation date. These are areas that are projected through modeling 
to attain within 3 years following designation. For these areas, we are 
proposing that these States must submit a SIP--within 1 year after 
designation--that provides documentation (viz., concerning the modeling 
and analyses that the area is relying on to support its claim) that the 
area will attain within 3 years following designation. Such a SIP 
submission must undergo the normal public hearing and comment 
procedures as for any SIP submission.

C. How Will EPA Implement the Transition From the 1-Hour to the 8-Hour 
Standard in a way To Ensure Continued Momentum in States' Efforts 
Toward Cleaner Air?

    As areas are designated for the 8-hour ozone NAAQS, we must address 
how those areas will transition from current implementation of the 1-
hour standard to implementation of the 8-hour standard. In addressing 
this issue, we considered a number of factors, including the existing 
``anti-backsliding'' provisions of the CAA, Congress' intent, as 
evidenced in the statute, to ensure continued progress toward 
attainment of the ozone standard, and the Supreme Court's 
interpretation of the CAA and Congressional intent. In subsection 1 of 
this section, we provide background information on the transition 
process we set forth in 1997 (and subsequently amended through 
regulation) and we summarize the statutory anti-backsliding provisions 
and the Congressional intent in enacting these provisions and subpart 2 
of the CAA. In subsection 2, we identify two proposed options to effect 
the transition from implementation of the 1-hour standard to the 8-hour 
standard that concern the revocation of the 1-hour standard in whole or 
revocation of the 1-hour standard in part. In subsection 3, we 
indicate--in light of the CAA provisions and Congressional intent--
which requirements that applied for purposes of the 1-hour standard 
should continue to apply to areas after they are designated for the 8-
hour standard. Next, in subsection 4, we consider whether there is a 
point at which the States should no longer be required to implement 
those obligations EPA determines continue to apply after areas are 
designated for the 8-hour standard. Finally, in subsection 5, we 
indicate how it will ensure through regulation that the public knows 
which ``1-hour'' obligations remain in place and for which areas.
1. Background
    a. Background on EPA's current regulation for governing the 
transition. At the time we promulgated the 8-hour ozone NAAQS in July 
1997, we issued a rule (40 CFR 50.9(b)) providing that the 1-hour 
standard would no longer apply to an area once we determined that the 
area had attained the 1-hour NAAQS. (62 FR 38856, July 18, 1997). This 
process became known as ``revocation'' of the 1-hour NAAQS. We 
interpreted that provision to mean that once the 1-hour standard was 
revoked, the area's 1-hour ozone designation no longer applied. Due to 
the ongoing litigation concerning the 8-hour ozone NAAQS and our 
implementation strategy for that standard, we subsequently modified 40 
CFR 50.9(b) in part to provide that ``after the 8-hour standard has 
become fully enforceable under part D of title I of the CAA and subject 
to no further legal challenge, the 1-hour standards set forth in this 
section will no longer apply to an area once we determine that the area 
has air quality meeting the 1-hour standard.'' (65 FR 45181, July 20, 
2000).\22\ Thus, currently, three criteria would need to be met before 
we could revoke the 1-hour standard for an area: (1) The 8-hour 
standard would need to be fully enforceable, (2) all legal challenges 
to the 8-hour ozone NAAQS would need to be resolved; and (3) we would 
need to determine that an area had attained the 1-hour standard.
---------------------------------------------------------------------------

    \22\ On December 27, 2002 (67 FR 79460), EPA proposed to stay 
the applicability of its authority to revoke the 1-hour standard 
pending rulemaking to consider whether to modify the approach for 
transitioning to the 8-hour standard.
---------------------------------------------------------------------------

    In this section, we are proposing to revise 40 CFR 50.9(b) to 
reflect more appropriately the implementation strategy that we develop 
pursuant to this proposal. At the time that we initially promulgated 40 
CFR 50.9(b), we contemplated that areas would not be subject to the 
planning obligations of subpart 2 for purposes of implementing the 
revised 8-hour ozone NAAQS. Furthermore, we stated that ``as a matter 
of law,'' areas should continue to be subject to the planning 
obligations of subpart 2 for purposes of implementing the 1-hour 
standard until such time as they attained the 1-hour ozone NAAQS. Thus, 
we contemplated that the 1-hour NAAQS--and the associated designation 
and classification under subpart 2 for an area, including any mandated 
control obligations--would continue to apply until the area attained 
that standard. At that time, the area would be subject only to the 
planning obligations of subpart 1. In light of the

[[Page 32819]]

Supreme Court's ruling that we cannot ignore subpart 2 for purposes of 
implementing a revised ozone NAAQS, we believe it is appropriate to 
reconsider how to transition from the 1-hour NAAQS to the 8-hour NAAQS 
in light of the statutory structure of the CAA, as amended in 1990.
    Our principal objectives for the mechanism that would ensure a 
smooth transition to implementation of the 8-hour standard are to 
ensure (1) that there will be no degradation of air quality, (2) that 
areas continue to make progress toward ozone attainment, and (3) 
consistency with the intent of Congress when it originally established 
the implementation structure for ozone in subpart 2 of the CAA.
    We believe the several alternative approaches proposed below are 
more consistent with the implementation path we are proposing in light 
of the Supreme Court's remand. These alternatives would more 
effectively continue the momentum towards cleaner air than would have 
been accomplished under the current 40 CFR 50.9(b) structure while 
allowing 8-hour ozone nonattainment areas to more readily focus on 
their 8-hour ozone standard SIP obligations.
    b. Background on the CAA's anti-backsliding provisions. The CAA 
contains a number of provisions that indicate that Congress did not 
intend to allow States to alter or remove provisions from 
implementation plans if the plan revision would jeopardize the air 
quality protection provided in the approved plan. Section 110(l) 
provides that EPA may not approve a SIP revision if it interferes with 
any applicable requirement concerning attainment and ROP or any other 
applicable requirement of the CAA. Congress created a tougher test for 
areas that might want to relax control requirements that were in SIPs 
prior to the CAA Amendments of 1990. Section 193 of the CAA prohibits 
modification of a control requirement in effect or required to be 
adopted as of November 15, 1990 (i.e., enactment of the 1990 CAA 
Amendments), unless such a modification would ensure equivalent or 
greater emissions reductions.
    We also believe that Congress set an additional statutory bar for 
1-hour ozone areas that were designated nonattainment and classified at 
the time of the 1990 CAA Amendments. For these areas, Congress 
classified the areas ``as a matter of law'' and provided that even upon 
redesignation to attainment, such areas could not remove from the SIP 
control measures specified in subpart 2 (``applicable requirements''), 
but could shift them to contingency measures that would be implemented 
to ``promptly correct any violation of the standard.''
    For these reasons, we believe that although Congress gave EPA the 
power to revise the existing ozone standard, Congress did not open the 
door for States to remove SIP-approved measures or to avoid control 
obligations with which they have not yet complied.
    One other provision, though not directly applicable, sheds light on 
Congress' intent. In 1990, Congress enacted section 172(e), which 
applies when EPA revises a NAAQS and makes it less stringent. This 
provision specifies that in those circumstances, States cannot relax 
control obligations that apply in nonattainment area SIPs or avoid 
adopting those that they have not yet adopted.\23\ Because Congress 
specifically mandated that such control measures need to be adopted or 
retained even when EPA relaxes a standard, we believe that Congress did 
not intend to permit States to remove control measures when EPA revises 
a standard to make it more stringent, as in the case of the 8-hour 
standard.
---------------------------------------------------------------------------

    \23\ Specifically, section 172(e) requires EPA to promulgate 
regulations providing for controls that ``are not less stringent 
than the controls applicable to areas designated nonattainment'' 
before relaxation of the standard.
---------------------------------------------------------------------------

    We also note that in finding EPA's subpart 1-only implementation 
approach unlawful, the Supreme Court voiced concern that EPA not render 
subpart 2 ``abruptly obsolete'' because ``Subpart 2 obviously was 
enacted to govern implementation for some time. * * * A plan reaching 
so far into the future was not enacted to be abandoned the next time 
EPA reviewed the ozone standard--which Congress knew could happen at 
any time, since technical staff papers already had been completed in 
1989.'' In response to the decision, we are now proposing (as noted 
above in the discussion on classifications) to use subpart 2 in 
implementing the 8-hour standard. However, the classification systems 
we are proposing today would result in the majority of ozone 
nonattainment areas that are currently classified for the 1-hour 
standard being placed in a lower classification for the 8-hour 
standard. Our proposed anti-backsliding approaches, discussed below, 
would not render obsolete the congressionally-specified control measure 
requirements of subpart 2 for 1-hour ozone nonattainment areas at a 
time when those areas have not yet met either of the health-based ozone 
standards.
2. When Will EPA Revoke the 1-Hour Standard?
    We are proposing to revoke the 1-hour standard either in part or in 
whole 1 year following designations for the 8-hour NAAQS. As discussed 
below, we are proposing two different legal mechanisms for achieving 
the revocation. Under either approach, however, the same stipulations 
continue to apply to areas currently or formerly designated 
nonattainment for the 1-hour standard.
    The deciding factor supporting the schedule for the revocation in 
our proposal is to ensure areas do not have to perform conformity 
analyses for both the 1-hour and 8-hour standards at the same time. As 
background, areas designated nonattainment for the first time for a new 
standard (e.g., the 8-hour ozone standard) have a 1-year grace period 
before conformity applies for that standard (i.e., a 1-year grace 
period before conformity applies for the 8-hour ozone standard). This 
1-year grace period before conformity is required for the 8-hour 
standard applies to all areas designated nonattainment for the 8-hour 
standard, regardless of their 1-hour NAAQS designation status. Thus, 
under either of the mechanisms described below, we are proposing that 
conformity for the 1-hour standard no longer apply 1 year following the 
effective date of the 8-hour designation (i.e., when the standard is 
revoked in whole or in part). However, conformity obligations for the 
1-hour ozone standard would remain applicable during the grace period 
and would not be affected by the designation of areas for the 8-hour 
standard. Our intentions regarding conformity--as well as a more 
complete discussion of transportation conformity appear elsewhere in 
this proposal.
    (i) Option 1: Revocation in whole of the 1-hour standard. Under 
this option, which is our preferred option, EPA would revoke the 1-hour 
standard and the associated designations and classifications 1 year 
following the effective date of the designations for the 8-hour NAAQS. 
The complete revocation of the 1-hour standard would occur in late 
spring of 2005 on the effective date of the 8-hour NAAQS designations, 
which will be issued by April 15, 2004. In order to address the anti-
backsliding issues discussed in section 3, below, EPA would promulgate 
regulations specifying those requirements that would continue to apply 
after the revocation of the 1-hour standard. The regulations would also 
specify the geographic areas in which those obligations continue to 
apply, since areas designated nonattainment

[[Page 32820]]

for the 8-hour standard may include counties that were not designated 
nonattainment for the 1-hour standard. The anti-backsliding regulations 
would apply only to the portion of the 8-hour nonattainment area that 
was designated nonattainment for the 1-hour standard.
    (ii) Option 2: Partial revocation of 1-hour standard. Under this 
mechanism, EPA would retain the 1-hour standard and its associated 
designations and classifications for limited purposes (viz., those 
discussed and proposed below in section 3) until the area meets the 1-
hour standard. For many areas, this is likely to extend well beyond May 
2005, the date of likely revocation under option 1.\24\ For all 
remaining purposes, EPA would revoke the 1-hour standard and the 
associated designations and classifications 1 year after the effective 
date of designations for the 8-hour standard. As noted above, we 
believe that Congress initially intended the State's obligations under 
subpart 2 to continue to apply ``as a matter of law,'' and the 1-hour 
designations and classifications--established for the circumstances 
present when the requirements were enacted--are the mechanism Congress 
identified for triggering the applicability of these requirements. 
Under this theory, Congress would have intended the standard to remain 
in place for purposes of control measures and NSR requirements, as 
discussed above.
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    \24\ A number of commenters in the pre-proposal phase 
recommended an approach premised on retention of the standard. See, 
e.g., Letter of December 5, 2002 from Michael P. Kenny, Executive 
Director, California Air Resources Board, to Jeffrey R. Holmstead, 
EPA Assistant Administrator for Air and Radiation. Available at: 
http://www.epa.gov/ttn/naaqs/ozone/o3imp8hr/.
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    While the partial retention of the standard itself and the 
associated designations and classifications would be the mechanism used 
to retain the specified obligations, we would need to promulgate 
regulations similar to those described in option 1 to ensure that it is 
clear for which purposes the standard is being retained.
    (iii) Request for comment. Both of these options would achieve the 
same result--ensuring the continued applicability of certain control 
requirements in subpart 2 and ensuring continued improvement in air 
quality, while shifting the focus from modeling and other planning 
requirements for the 1-hour standard to analyses for the 8-hour 
standard. We solicit comment on which mechanism is preferable for 
accomplishing the overriding objective of preventing backsliding from 
statutory and SIP requirements while achieving a smooth transition to 
implementation of the new standard. In addition, EPA also solicits 
comment on whether to retain the limit in current 40 CFR 50.9(b) that 
the 1-hour standard will not be revoked for any area until the 8-hour 
standard is no longer subject to legal challenge.
    (iv) Other possible approaches for the transition from the 1-hour 
to the 8-hour standard.
    EPA considered other approaches for the timing of the revocation of 
the 1-hour ozone standard; these are discussed in a separate document 
available in the docket.\25\
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    \25\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
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3. What Obligations Should Continue To Apply as an Area Begins To 
Implement the 8-Hour Ozone NAAQS and What Obligations Should no Longer 
Apply?
    In this section, we consider what obligations from subpart 2 
relative to the 1-hour ozone standard should continue to apply to areas 
after they have been designated for the 8-hour standard. We are 
proposing that the continuity of particular obligations should vary 
depending on the attainment status of an area for both the 1-hour and 
8-hour standard. We first discuss those obligations that we propose 
should continue to apply to an area that is designated nonattainment 
for the 8-hour NAAQS, and that was designated nonattainment for the 1-
hour ozone standard on or after November 15, 1990. Second, we discuss 
those obligations that should continue to apply to an area that is 
designated attainment for the 8-hour NAAQS, and that was designated 
nonattainment for the 1-hour standard on or after November 15, 1990. 
(This section addresses only the continued application of requirements 
that applied by virtue of an area having been designated nonattainment 
for the 1-hour standard at some point following enactment of the CAA 
Amendments of 1990. It does not address areas that have been designated 
attainment for the 1-hour standard at all times since November 15, 
1990, because they would not have any continuing obligations under 
subpart 2 for purposes of the 1-hour standard.) Finally, we address 
States' continued obligations with respect to the NOX SIP 
Call. We address this issue separately since this obligation applies 
statewide and without respect to the designation status of areas within 
the State.
    In general, the types of obligations that apply to areas by virtue 
of their 1-hour classification can be broken into three groups: control 
obligations; measures to address growth in new sources; and planning 
obligations. Control measures include specific emission reduction 
obligations such as NOX RACT, I/M, and fuel programs, which 
are mandated in subpart 2. Measures to address growth are NSR (required 
under subpart 1 and subpart 2) and conformity (required by subpart 1). 
Planning obligations consist of attainment and maintenance 
demonstrations and RFP plans. For purposes of clarifying what we are 
proposing with respect to control measures, we also discuss in this 
section ``discretionary'' control measures that are not specified in 
subpart 2. Generally, these are control measures or other obligations 
the State selected and adopted into the SIP for purposes of attainment, 
ROP or any other goal to benefit air quality, but which are not 
specifically mandated by subpart 2.
    a. What obligations should continue to apply for an area that is 
designated nonattainment for the 8-hour NAAQS and that was designated 
nonattainment for the 1-hour ozone NAAQS on or after November 15, 1990? 
We believe that Congress intended each area that was classified for the 
1-hour ozone NAAQS under subpart 2 to adopt the specified control 
obligations in subpart 2 for the area's 1-hour classification. We 
interpret the mandated obligations in subpart 2 for purposes of an 
area's 1-hour ozone classification to remain applicable to such areas 
by virtue of the area's classification ``as a matter of law'' in 1990. 
(Appendix B of this proposed rulemaking contains a list of the subpart 
2 requirements that remain applicable.) The three types of obligations 
described above (control obligations, measures to address growth in new 
sources, and planning obligations) are discussed separately below.
    (i) Control measures. We are proposing that all areas designated 
nonattainment for the 8-hour ozone NAAQS remain subject to control 
measures that applied by virtue of the area's classification for the 1-
hour standard. To the extent the area has met the obligation and the 
control measure is a part of the approved SIP, the State could not 
modify or remove that measure except to the extent that it could modify 
or remove that measure for purposes of the 1-hour standard and subject 
to a demonstration under section 110(l) that modification or removal 
would not interfere with attainment or maintenance of the 8-hour ozone

[[Page 32821]]

NAAQS.\26\ For control measures that the State has not yet adopted, the 
State remains obligated to adopt and submit such controls. And, once 
adopted into the approved SIP, the State could not modify or remove 
that measure except to the extent that it could modify or remove that 
measure for purposes of the 1-hour standard and subject to a 
demonstration under section 110(l) that modification or removal would 
not interfere with attainment or maintenance of the 8-hour ozone NAAQS. 
This obligation would apply only to the part of the 8-hour ozone 
nonattainment area that was designated nonattainment for the 1-hour 
ozone NAAQS.
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    \26\ In addition, for a revision to an obligation that was in 
effect prior to November 15, 1990, section 193 prohibits a SIP 
revision without a showing that it would result in equivalent or 
greater emission reductions. For purposes of avoiding repetition, we 
do not mention section 193 in each of the examples discussed in this 
section. However, States remain obligated to make the section 193 
demonstration for any revision to a requirement that applied prior 
to November 15, 1990.
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    To illustrate what we are proposing, we provide the following 
example, which will also be used in the next section discussing 
discretionary control measures. Assume an area is classified as 
marginal for the 8-hour ozone NAAQS and was classified as serious for 
the 1-hour ozone NAAQS at the time of the 8-hour designations. Also 
assume RACT for a particular source category is considered an 80 
percent reduction in uncontrolled emissions of VOCs at all major 
sources. In its 1-hour SIP, the State chose to require emissions 
reductions of 90 percent and the RACT requirement applied to all major 
stationary sources, which for a serious area includes all sources that 
emit greater than 50 tons/year VOCs. After designation for the 8-hour 
standard, the State wants to modify this RACT requirement to require 
only 80 percent reduction in emissions and to limit the requirement to 
sources that emit 100 tons/year of VOCs. Because the State could not 
have modified the RACT obligation to apply only to sources emitting 100 
tons/year or more of VOCs for purposes of the 1-hour standard, the 
State could not change the source cut-off from 50 tons/year for 
purposes of the 8-hour standard. The 50 tons/year major source 
threshold would continue to be an ``applicable requirement'' for the 
part of the area that was designated nonattainment for the 1-hour 
NAAQS. The State, however, could apply RACT only to sources that emit 
100 tons/year or more for any portion of the area that was not a part 
of the 1-hour serious nonattainment area. While the 80 percent control 
level would be considered mandatory, the 90 percent control level was 
not mandated by the CAA and thus is considered a ``discretionary 
control measure.'' We address below how modification of a discretionary 
control measure would be treated under this proposal.
    The same principle would hold true for control measures in a 
maintenance plan for an area that was designated nonattainment for the 
1-hour standard at or after November 15, 1990 and that was subsequently 
redesignated to attainment under the 1-hour ozone standard.\27\ Subpart 
2 control measures (including those that had been shifted to 
contingency measures) could not be removed from the SIP and could be 
modified only to the extent that they could have been modified if the 
1-hour standard remained in effect for the area. If the State had 
previously shifted a mandated subpart 2 control measure to its 
contingency plan, we would not require that the area begin to implement 
that measure as part of its 8-hour implementation plan, if the measure 
was not required under its classification under the 8-hour standard. 
However, the measure would need to remain as a contingency measure for 
the area and could not be removed from the SIP.
---------------------------------------------------------------------------

    \27\ A maintenance plan, which is a SIP revision required under 
sections 107(d)(3)(E) and 175A as a prerequisite for redesignating a 
nonattainment area to attainment, must provide for maintenance of 
the NAAQS for 10 years after redesignation and must contain 
contingency measures to promptly correct any violation of the 
standard that occurs after redesignation. Contingency measures must 
provide for implementation of all measures that were contained in 
the SIP for the area before redesignation of the area as an 
attainment area.
---------------------------------------------------------------------------

    (ii) Discretionary control measures. Many approved SIPs contain 
control measures that are not specified under subpart 2 for the area, 
but that the State chose to adopt as part of the demonstration of 
attainment or part of the ROP requirement for the 1-hour NAAQS. For 
these kinds of measures, we are proposing that no additional burden be 
placed on the State. For purposes of the 1-hour standard, States may 
currently revise or remove those requirements so long as they make a 
demonstration consistent with section 110(l) that such removal or 
modification would not interfere with attainment of or progress toward 
the 1-hour ozone NAAQS (or any other applicable requirement of the 
CAA). Under the CAA, for purposes of the 8-hour standard, the same 
obligation would apply except the State would need to make the 
demonstration with respect to the 8-hour standard instead of the 1-hour 
standard.
    In the example above, if a State wants to revise the control level 
for certain sources from 90 percent control to 80 percent control, the 
State may do so because subpart 2 mandated RACT in this example is an 
80 percent level of control rather than a 90 percent control level. The 
90 percent control level thus was ``discretionary.'' We are proposing 
that no additional burden, beyond the statutory section 110(l) test, be 
placed on the State to alter this requirement. Thus, to revise the 
control level, the State would need to demonstrate, consistent with 
section 110(l), that the lower control level of 80 percent would not 
interfere with attainment of the 8-hour standard or RFP for the 8-hour 
standard (or any other applicable requirement of the CAA).
    A number of SIPs contain enforceable commitments to adopt 
additional discretionary emission reduction control measures in the 
future. The State remains obligated to these commitments to the same 
extent as if they were adopted measures. The only way a State may 
modify or remove such a commitment is through a demonstration under 
section 110(l).
    (iii) Measures to address growth. For 1-hour nonattainment NSR 
requirements in place at the time an area is designated nonattainment 
for the 8-hour standard, we are proposing that the major source 
applicability cut-offs and offset ratios continue to apply to the 
extent the area has a higher classification for the 1-hour standard 
than for the 8-hour standard. We see no rationale under the CAA--given 
the Congressional intent for areas ``classified by operation of law''--
why the existing NSR requirements should not remain ``applicable 
requirements'' for the portion of the 8-hour nonattainment area that 
was classified higher for the 1-hour standard. However, if an area has 
been redesignated to attainment for the 1-hour standard as of the date 
of designation for the 8-hour standard, and is thus no longer 
implementing the nonattainment NSR program for its previous 1-hour 
ozone classification, it would not need to revert back to the program 
it had for purposes of the 1-hour standard. For example, if an area is 
classified moderate under the 8-hour standard, but was classified 
severe under the 1-hour standard at the time of the 8-hour 
designations, the portion of the 8-hour nonattainment area that was 
classified severe for the 1-hour standard would remain subject to an 
offset ratio of 1.3:1 and a major source threshold of 25 tons/year. The 
remaining portions of the 8-hour area would be subject to the offset 
ratio for moderate areas (1.15:1)

[[Page 32822]]

and the moderate area major source threshold (100 tons/year). If the 
severe 1-hour area had been redesignated to attainment prior to the 
time of the 8-hour designations and was subject to PSD rather than NSR, 
however, the entire designated area for the 8-hour standard would be 
subject to the offset ratio and major source threshold for a moderate 
area.
    (iv) Planning SIPs. Most areas that are nonattainment under the 1-
hour standard have already adopted attainment and ROP plans. However, 
there are a few areas that remain obligated to submit attainment or ROP 
SIPs. We have outlined our proposal for addressing ROP elsewhere in 
this proposed rulemaking and will not repeat those options in detail 
here. In general, however, we are proposing that States are still 
obligated to address separately ROP that does not overlap with ROP 
obligations for the 8-hour NAAQS. Where the ROP obligations overlap, 
the area need not separately address ROP for the 1-hour standard. For 
ROP already adopted into the SIP, we are proposing that the State may 
remove or revise control measures needed to meet the ROP milestone if 
such control measures were ``discretionary,'' as discussed above. But, 
a State could not revise or remove control measures if they would 
interfere with meeting the ROP goals. In other words, the CAA-mandated 
ROP emission reduction targets that applied for the 1-hour standard 
would still have to be met, but discretionary measures adopted to meet 
those targets could be modified, if the State makes the necessary 
showing under section 110(l).
    With respect to attainment demonstrations, we are soliciting 
comment on the interpretation we should take for the two scenarios we 
believe exist. The first scenario would be a State that does not have a 
fully approved attainment demonstration under the 1-hour standard 
because it has failed to act in a timely manner. The second scenario is 
an area subject to an obligation to submit an attainment demonstration 
under the 1-hour standard in the future. In general, since attainment 
demonstrations are planning SIPs, and States must now be planning to 
attain the 8-hour NAAQS, one might argue that Congress could not have 
intended areas to continue to plan to meet a standard that EPA no 
longer considers to be adequately protective of public health. This is 
especially true when to do so would divert resources from planning to 
meet the 8-hour standard. In contrast, one could argue that allowing 
areas to bypass planning obligations under the 1-hour standard will 
delay attainment of health protection since States have more time to 
submit attainment plans under the 8-hour standard than under the 1-hour 
standard.\28\
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    \28\ For instance, an area with a past-due obligation to revise 
its SIP to develop a new attainment demonstration for the 1-hour 
standard could possibly submit such a revision within the next year 
or so (2004-2005), with emissions reductions beginning to occur 
likely within 1 or 2 years (by 2006-2007). If this area were now 
only required to address the 8-hour standard, it would not have to 
submit a new attainment demonstration until 2007, as proposed 
elsewhere in this proposed rule, with emissions reductions occurring 
from that demonstration likely a year or more after 2007, which is 
several years after the time period possible by fulfilling the 
existing obligation.
---------------------------------------------------------------------------

    There are some cases where a State does not have a fully-approved 
attainment demonstration because it has failed to act in a timely 
manner. To lift that obligation from those areas simply because EPA had 
adopted a more stringent NAAQS could result in a more preferential 
treatment of those areas over areas that did adopt fully-approvable 
attainment demonstrations with the requisite controls. For example, if 
an area has adopted controls to demonstrate attainment of the 1-hour 
standard, it may not remove those controls from its SIP without a 
demonstration that those controls would not interfere with attainment 
or progress toward the 8-hour standard (or any other applicable 
requirement of the CAA). Such an area likely would have more stringent 
control obligations in place than the area without a fully-approved 
attainment SIP and would have a high hurdle to removing or altering 
those controls. In contrast, the area without a fully-approved 
attainment demonstration would likely make slower progress toward 
attaining the 8-hour NAAQS (at least in the short-term) because it does 
not have all necessary measures in its approved SIP and--without a 
clear requirement to the contrary--would be under no pressure to have 
those measures in its SIP until its attainment demonstration for the 8-
hour NAAQS is due.
    For the following examples of actual situations, we are soliciting 
comment on whether to retain the obligation to develop a 1-hour 
attainment demonstration or to determine that the requirement no longer 
applies. In addition, we are soliciting comment on two alternatives 
that might address some of the inequities, while not subjecting States 
to the more complicated planning associated with developing two 
separate attainment demonstrations (one under the 1-hour standard and 
another under the 8-hour standard). Under the first alternative 
approach, areas that are subject to an obligation to submit a new or 
revised attainment demonstration would instead be required to submit a 
SIP revision that would obtain an advance increment of emissions 
reductions toward attainment of the 8-hour ozone standard within a 
specified, short-term timeframe. For example, we could require these 
areas to submit within 1 year of promulgation of the implementation 
rule a plan revision that requires a specific percentage of emissions 
reductions (e.g., 5 percent or 10 percent) from the baseline emissions 
for the 8-hour NAAQS. In addition, we could require that the measures 
be implemented in the near term, e.g., no more than 2 years after the 
required submission date. Under the second alternative, areas with an 
outstanding obligation to submit a 1-hour attainment demonstration 
would be required to submit their 8-hour ozone attainment demonstration 
early in lieu of being required to submit a 1-hour attainment 
demonstration. Submittal of an early 8-hour attainment demonstration 
would likely prevent the inequity of areas avoiding emissions 
reductions in the short term, as described in the preceding footnote.
    [sbull] Example 1: An area has not met in part or in full a past-
due obligation to submit a 1-hour attainment demonstration required 
because EPA reclassified the area to a higher classification after it 
failed to attain the 1-hour standard by its attainment date.
    [sbull] Example 2: An area is subject to an obligation to submit an 
attainment demonstration in the future, as is the case where EPA 
applied its attainment date extension policy rather than reclassifying 
an area that failed to meet its attainment date and EPA has 
subsequently reclassified the area or soon will do so, because of the 
courts' rejection of the extension policy.
    (v) Other obligations. A number of areas have SIPs that contain 
commitments to review their progress toward attaining the 1-hour NAAQS 
(in some cases, these are called ``mid-course reviews''). These SIP-
approved commitments are enforceable, and EPA and the States can use 
these mid-course reviews to ensure that progress is being made 
consistent with the analysis in the area's 1-hour attainment 
demonstration. The State remains obligated to honor these commitments.
    b. What obligations continue to apply for areas that are designated 
attainment under the 8-hour standard and that were designated 
nonattainment for the 1-hour standard on or after November 15, 1990?

[[Page 32823]]

    (i) Obligations related to NSR. Areas that are in attainment for 
the 8-hour ozone NAAQS would not be subject to nonattainment NSR for 
the 8-hour standard. We believe it makes little sense to require 
nonattainment NSR to continue simply because these areas were 
previously designated nonattainment for the 1-hour standard. Thus, we 
propose that these areas would be subject to PSD and would not be 
subject to the nonattainment NSR offset and major source thresholds 
that applied under their classification for the 1-hour standard.
    (ii) Obligations related to planning obligations other than 
maintenance plans. With respect to SIP planning obligations (ROP plans 
and attainment demonstrations), we are proposing that the SIP planning 
requirements that applied for purposes of the 1-hour standard would not 
continue to apply to these areas as long as they continue to maintain 
the 8-hour NAAQS. Thus, even if these areas have failed to meet ROP or 
attainment plan obligations for the 1-hour standard, they would not be 
required to meet them for so long as they remain in attainment with the 
8-hour standard. (As discussed below, however, we are proposing that 
such areas develop a maintenance plan under section 110(a)(1).) This 
approach is consistent with EPA's ``Clean Data Policy'' \29\ under the 
1-hour standard, which provides for these planning obligations to be 
stayed once an area attains the standard, but only for so long as an 
area remains in attainment of the 1-hour standard. If such an area 
violates the 8-hour NAAQS-prior to having an approved maintenance plan 
in effect (as proposed below to be required for these areas)--those 
obligations would once again apply in the same manner that they apply 
in areas designated nonattainment for the 8-hour ozone NAAQS.
---------------------------------------------------------------------------

    \29\ Memorandum of May 10, 1995, ``RFP, Attainment 
Demonstration, and Related Requirements for Ozone Nonattainment 
Areas Meeting the Ozone National Ambient Air Quality Standard,'' 
from John S. Seitz, Director, Office of Air Quality Planning and 
Standards. Available at: http://www.epa.gov/ttn/oarpg/t1/memoranda/clean15.pdf.
---------------------------------------------------------------------------

    (iii) Obligations related to control measures and maintenance 
plans. The issue of what obligation remains with respect to ``non-
discretionary'' control measures approved into the SIP or required 
under the CAA is more difficult. Our approach for these is based on the 
CAA's requirements for maintenance plans. (Consistent with our proposal 
for discretionary control measures in areas designated nonattainment 
for the 8-hour NAAQS, we would permit areas to modify discretionary 
measures for areas designated attainment for the 8-hour NAAQS so long 
as section 110(l) is met.)
    If EPA determined that these areas \30\ were required to develop 
maintenance plans pursuant to section 175A, then they would need to 
keep (or to adopt and then keep) those control measures in the SIP, 
though they could shift them to contingency measures. Some commenters 
urged us to require all areas previously designated nonattainment for 
the 1-hour NAAQS to retain (where the area had been redesignated to 
attainment) or develop (where the area was still designated 
nonattainment for the 1-hour NAAQS at the time of 8-hour designations) 
a section 175A maintenance plan. However, we do not believe that a 
section 175A maintenance plan is mandated or is necessary for areas 
initially designated attainment for the 8-hour NAAQS.
---------------------------------------------------------------------------

    \30\ Areas that are designated attainment under the 8-hour 
standard and that were designated nonattainment for the 1-hour 
standard on or after November 15, 1990.
---------------------------------------------------------------------------

    Section 175A maintenance plans are required for areas that were 
designated nonattainment for a NAAQS and then subsequently redesignated 
to attainment for that NAAQS. The areas addressed in this section have 
never been designated nonattainment for the 8-hour ozone NAAQS. 
Moreover, they have a maintenance obligation that already applies: 
Section 110(a)(1) requires areas to demonstrate how they will attain 
and maintain a new or revised NAAQS.\31\ Therefore, we do not believe 
that Congress mandated that such areas be subject to the section 175A 
maintenance plan obligation for the 8-hour NAAQS, nor do we believe it 
is necessary to interpret that provision to apply.
---------------------------------------------------------------------------

    \31\ Based on ambient ozone data for the period 1998 to 2000 for 
the hypothetical nonattainment areas, we identified approximately 20 
areas that are currently designated nonattainment under the 1-hour 
standard but that will likely be designated attainment under the 8-
hour standard).
---------------------------------------------------------------------------

    For an area that was never redesignated to attainment for the 1-
hour standard and never had a section 175A maintenance plan, we are 
proposing that if the area wants to revise any part of its current 1-
hour SIP, the area must first adopt and submit a maintenance plan 
consistent with section 110(a)(1). Moreover, even if the State elects 
not to revise its existing SIP, we are proposing that the area submit a 
section 110(a)(1) maintenance plan within 3 years of designation as 
attainment for the 8-hour NAAQS. We believe that the maintenance plan 
should provide for continued maintenance of the 8-hour standard for 10 
years following designation for the 8-hour NAAQS and should include 
contingency measures. Unlike section 175A, section 110(a)(1) does not 
address contingency measures and thus does not specify that mandated 
controls in the existing SIP must be shifted to contingency measures if 
modified or removed. We are proposing that if the State adopts 
sufficient contingency measures, and if it makes a demonstration 
consistent with section 110(1), it can modify or remove control 
measures in the approved SIP.
    We are also proposing that areas with approved 1-hour section 175A 
maintenance plans will be able to modify those maintenance plans 
consistent with their obligation to have a maintenance plan for the 8-
hour NAAQS under section 110(a)(1). For these areas, we are proposing 
that the following obligations could be removed from the SIP if the 
State demonstrates that the area will maintain the 8-hour standard 
consistent with section 110(a)(1) for a period of 10 years following 
designation for the 8-hour NAAQS:
    [sbull] the obligation to submit a maintenance plan for the 1-hour 
standard 8 years after approval of their initial 1-hour maintenance 
plan;
    [sbull] the requirement to implement contingency measures upon a 
violation of the 1-hour ozone standard; however, such areas would need 
contingency measures as part of a maintenance SIP for the 8-hour NAAQS 
and States could elect to modify the existing contingency measure 
trigger so that it is based on a violation or exceedance of the 8-hour 
standard.
    (iv) Obligations related to conformity. For all areas designated 
attainment for the 8-hour ozone NAAQS, the requirement to demonstrate 
conformity to the 1-hour standard would no longer apply once the 1-hour 
standard is revoked in whole or determined not to apply for that 
purpose under a partial revocation of the 1-hour standard (as proposed 
below). Under section 176 of the CAA, conformity applies to areas 
designated nonattainment or subject to the requirement to develop a 
maintenance plan pursuant to section 175A. Areas designated attainment 
for the 8-hour standard would no longer be subject to the obligation to 
demonstrate conformity to the 1-hour emissions budgets in an approved 
attainment or ROP SIP or an approved section 175A maintenance plan for 
the 1-hour standard. The reason for this is that, under the options 
proposed below, they would either no longer be designated nonattainment 
for the 1-hour standard or the nonattainment designation would

[[Page 32824]]

no longer apply for purposes of conformity, and the area would no 
longer be required to develop a maintenance plan under section 175A for 
purposes of the 1-hour standard.
    c. What happens with respect to the NOX SIP Call?
    Section 110(a)(2)(D) of the CAA establishes requirements for States 
to address the problem of transport. It requires a SIP to prohibit the 
State's sources from emitting air pollutants in amounts that will 
contribute significantly to nonattainment, or interfere with 
maintenance, in one or more downwind States. As noted above in section 
I of this proposal, in 1998, EPA called on 22 States and the District 
of Columbia (``States'') to reduce emissions of NOX 
consistent with budgets set for each State. (63 FR 57356, October 27, 
1998). Furthermore, EPA granted petitions under section 126 and thus 
directly regulated certain sources of NOX emissions in many 
of the States covered by the NOX SIP Call. (65 FR 2674, 
January 18, 2000). Below, we refer to these collectively as the 
``NOX transport rules.''
    The NOX transport rules were designed to prevent upwind 
NOX emissions from contributing to nonattainment in a 
downwind area for both the 1-hour and 8-hour ozone NAAQS. EPA, however, 
stayed the 8-hour basis for the NOX transport rules in 
response to the extensive and extended litigation (described above) 
that occurred concerning the establishment of the 8-hour ozone 
standard. We intend to take rulemaking action to lift the stay of the 
8-hour basis for these rules.
    We believe it important to ensure that the transition to the 8-hour 
standard does not have the effect of jeopardizing the controls required 
to be in place under the NOX transport rules. Regardless of 
whether EPA lifts the stay of the 8-hour basis for these rules, the 
controls required have substantial benefits for reductions of both 1-
hour and 8-hour ozone levels. We believe that relaxing such controls 
would be contrary to the principles we identified above for an 
effective transition. Consequently, we are proposing that States must 
continue to adhere to the emission budgets established by the 
NOX SIP Call after the 1-hour standard is revoked in whole 
or in part, as proposed below. Similarly, we are not proposing to 
revoke or modify its section 126 regulation.
    However, States retain the authority to revise the control 
obligations they have established for specific sources or source 
categories, if they continue to meet their SIP Call budgets. In 
addition, consistent with section 110(l), the States would need to 
demonstrate that the modification in control obligations would not 
interfere with attainment of or progress toward the 8-hour NAAQS or 
with any other applicable requirement of the CAA.
    d. What additional obligations under part D of title I of the CAA 
would not continue to apply after the 1-hour standard is revoked in 
whole or in part?
    As discussed elsewhere in this proposal, we are proposing that 
areas would not be obligated to continue to demonstrate conformity for 
the 1-hour standard once the 1-year grace period for application of 
conformity for the 8-hour standard has elapsed.
    In addition, EPA would not take certain actions with respect to the 
1-hour ozone NAAQS. First, we are proposing that we would no longer 
make findings of failure to attain the 1-hour standard and, therefore, 
would not reclassify areas to a higher classification for the 1-hour 
standard based on a failure to meet the 1-hour standard. We believe 
that areas should focus their resources on attainment of the 8-hour 
standard and that it would be counterproductive to establish new 
obligations for States with respect to the 1-hour standard after they 
have begun planning for the 8-hour standard. (Moreover, we note that 
the attainment dates for marginal, moderate and serious areas have 
passed and the CAA does not provide for reclassification of severe 
areas in the absence of a request by the State.) EPA must ensure that 
areas are continuing to make progress toward cleaner air. If EPA 
determines that a State is not adequately implementing an approved SIP 
and achieving air quality reductions in a timely manner, EPA may enter 
into an informal process to ensure the State takes any necessary action 
\32\ or, alternatively, may take more formal action such as making a 
finding of failure to implement the SIP or issuing a SIP Call to 
require action. As noted above, many areas have SIPs that contain 
commitments to review their progress toward attaining the 1-hour NAAQS 
(``mid-course review''). These SIP-approved commitments are 
enforceable, and EPA and the States can use these mid-course reviews to 
ensure that progress is being made consistent with the analysis in the 
area's 1-hour attainment demonstration.
---------------------------------------------------------------------------

    \32\ For instance, upon discussion between EPA and States, some 
States have in the past voluntarily agreed to revise their SIPs when 
it appears that the SIP is inadequate to attain or maintain the 
NAAQS.
---------------------------------------------------------------------------

4. Does the Requirement for Continued Implementation of the Obligations 
Addressed Above Expire at Some Point?
    The SIP obligations under the 1-hour standard for an area's 
classification under the 1-hour standard would not expire after the 1-
hour standard is revoked in whole or in part. However, for those 
mandatory requirements that continue to apply to an area due to the 
area's classification for the 1-hour NAAQS, we are proposing two 
options for when the State may move the mandatory measures to a 
maintenance plan in the SIP and treat them as contingency measures:
    a. Option 1. When the area achieves the level of the 1-hour ozone 
standard (even if the area has not yet attained the 8-hour standard). 
The rationale for this option is that Congress intended an area to 
continue to implement these obligations until it attained the 1-hour 
standard, at which time the area would be able to discontinue 
implementation upon a showing of continued maintenance. However, in 
such a case, the area could not remove the measures from the SIP; 
rather, it could shift such measures to contingency measures.
    b. Option 2. When the area attains the 8-hour standard and is 
designated attainment (regardless of when, if ever, the area attains 
the 1-hour standard). The rationale for this option is that the 8-hour 
standard is the standard that EPA has determined will protect public 
health and the environment. Once an area demonstrates it has met and 
can maintain the health protective standard, it would be appropriate to 
remove or modify those controls.
    It should be noted that either of these two options could apply for 
either of the transition options, discussed in section 2, above.
    It should also be noted that the SIP obligations would include not 
only requirements in the 1-hour nonattainment area but also for the SIP 
in general, including the SIP requirements to address the 
NOX SIP Call. We are proposing under the anti-backsliding 
provision in section 110(l) to require that the SIP retain the 
NOX SIP Call controls that have already been approved. In 
the absence of appropriate regional scale modeling that would 
demonstrate that changing a SIP Call control to a contingency measure 
would not interfere with attainment or maintenance in any other State, 
the State could not shift SIP Call control strategies to contingency 
measures. The State would, of course, also have to submit a 
demonstration that the SIP change would not interfere with attainment 
or reasonable further

[[Page 32825]]

progress for any air quality standard or other applicable requirement 
of the Act.
5. How Will EPA Ensure That the Public Knows Which Areas Must Continue 
Provisions Under the 1-Hour SIPs if EPA Revokes the 1-Hour Standard?
    EPA would promulgate regulatory provisions identifying the 
obligations to which areas remain subject, and identifying the areas. 
If EPA ultimately chooses to revoke the 1-hour standard and the 
associated designations and classifications shortly after designations 
for the 8-hour standard (as proposed below), EPA would ensure that 
there are provisions in the Code of Federal Regulations (CFR) that 
continue to define the boundaries for those areas. The reason for this 
is that boundaries for 8-hour ozone nonattainment areas may not be 
coextensive with those for the 1-hour standard, and EPA would need to 
make clear which areas or portions of areas must continue to implement 
obligations due to their 1-hour classification.

D. Should Prescribed Requirements of Subpart 2 Apply in all 8-Hour 
Nonattainment Areas Classified Under Subpart 2, or Is There Flexibility 
in Application in Certain Narrowly Defined Circumstances?

1. Background
    The 1990 CAA Amendments overhauled the CAA's requirements for ozone 
nonattainment areas and, in doing so, specified new mandatory measures 
for many areas. The new approach embodied in subpart 2 was to classify 
areas according to the severity of their pollution. Areas with more 
serious ozone pollution were allowed more time to meet the standard--
but were required to adopt more numerous and stringent measures 
depending on their classification. Congressional proponents of this 
approach argued that specifying mandatory measures in the statute was 
necessary because States and EPA, prior to 1990, had failed to ensure 
that SIPs achieve steady reasonable progress in reducing emissions or 
to require readily available measures that were cost effective and 
needed to meet the standard.
    Mandatory subpart 2 requirements for moderate and higher-classified 
areas include, for example, specific ROP requirements (including a 15 
percent VOC reduction for moderate and above areas), basic I/M 
programs, a requirement that sources subject to NSR obtain emissions 
offsets at a ratio of 1.15-to-1, and RACT for NOX sources as 
well as VOC sources. Serious and severe areas are subject to additional 
measures such as further ROP requirements, applicability of NSR to 
smaller sources, enhanced I/M, and applicability of RACT to smaller 
sources. (Appendix A presents a summary comparison of measures under 
subparts 1 and 2.)
    For the proposed 8-hour ozone implementation strategy, EPA has 
examined the issue of mandatory measures from both legal and policy 
standpoints. EPA's legal view is guided by the Supreme Court decision. 
The Court held that Congress drastically limited EPA's discretion on 
whether the mandatory requirements of subpart 2 will apply to 8-hour 
areas by concluding that the classification scheme of subpart 2 applied 
for purposes of a revised ozone NAAQS. ATA I, 175 F3d at 1048-1050.
    As discussed elsewhere, the Supreme Court decision states that 
subpart 2 provides for classification of areas under the 8-hour 
standard. With respect to the requirements of subpart 2, the Supreme 
Court stated, ``The principal distinction between Subpart 1 and Subpart 
2 is that the latter eliminates regulatory discretion that the former 
allowed.'' Whitman 121 S.Ct. at 918. The Court went on to state, 
``Whereas Subpart 1 gives EPA considerable discretion to shape 
nonattainment programs, Subpart 2 prescribes large parts of them by 
law.'' Id. The Court also stated, ``EPA may not construe the statute in 
a way that completely nullifies textually applicable provisions meant 
to limit its discretion.'' Id. 918-919.
    Once an area is classified under subpart 2, the subpart 2 
requirements apply. EPA may have some limited ability to change or 
limit subpart 2 controls, consistent with the statutory language, but 
EPA cannot broadly waive those requirements. For example, EPA may have 
some flexibility to modify regulatory requirements for programs such as 
NSR (discussed elsewhere in this proposed rulemaking). Furthermore, 
subpart 2 provides discretion to EPA in implementing certain provisions 
already, such as waivers for stage II vapor recovery, NOX 
RACT and NOX NSR. In addition, case law may provide EPA with 
some flexibility to waive federally applicable requirements on a case-
by-case basis where application of those requirements would produce an 
``absurd result.''
    With respect to policy considerations, some commenters at public 
meetings or in written submissions to EPA have expressed the view that 
mandatory measures are needed to ensure actions are taken, but a number 
of commenters have raised concerns. These include whether mandated VOC 
controls will be appropriate for all areas in the future, and whether 
mandatory measures are appropriate in areas projected to attain in the 
near term. A number of commenters recommended that EPA allow for 
flexibility in implementing the 8-hour ozone standard and not require 
mandatory measures, such as local VOC measures, where they would not be 
very effective in achieving attainment of the standard. In many cases, 
particularly for areas that would be new nonattainment areas under the 
8-hour standard, region wide NOX controls and national 
controls on mobile sources are predicted to greatly reduce the areas' 
ozone levels and to bring many into attainment without additional local 
emission controls.
    Although a number of comments were received on the issue of 
flexibility, many commenters on this issue took the position that they 
would prefer areas to be classified under subpart 1 rather than subpart 
2. Some commenters did recommend that EPA make the argument that new 
information about the relative benefits of NOX and VOC 
control would lead to allowing more tailored controls for a number of 
areas, rather than the one-size-fits-all approach of subpart 2. 
However, commenters did not suggest how the CAA could be interpreted to 
allow the flexibility they were advocating for the mandatory 
requirements of subpart 2. Other commenters argued that the subpart 2 
measures are mandatory under the CAA for areas classified under subpart 
2 and that the CAA does not provide flexibility to waive those 
requirements.
    Regarding the VOC/NOX issue, we observe that scientific 
understanding of ozone pollution and the impact of control strategies 
has improved over time. Prior to 1990, the main focus of ozone control 
strategies was VOC control. Since then, scientific studies have more 
clearly recognized the role of NOX, biogenic emissions, and 
transport of ozone and NOX in ozone nonattainment. In 
response, EPA's ozone strategy for the 1-hour standard evolved to put 
greater emphasis on controlling NOX in addition to VOC and 
to require control of NOX emissions that contribute to 
interstate ozone problems.
    We recognize that the relative effectiveness of VOC and 
NOX controls will vary from area to area, depending 
significantly upon VOC/NOX ratios in the atmosphere. Current 
scientific information shows that VOC reductions will reduce ozone in 
urban areas and in other areas where there is excess NOX 
available for reaction. Ozone levels in areas that are less urban and 
have lower NOX emissions, or that have high biogenic VOC 
levels, may be more sensitive to NOX control and less

[[Page 32826]]

sensitive to VOC control. Because ozone formation is greatly affected 
by meteorological conditions and source/receptor orientation, ozone 
formation may be limited by either VOC or NOX concentrations 
at different times and locations within the same area.
    In order to support the approach proposed below, we solicit 
relevant technical information on this issue from States and others.
2. Approach Being Proposed
    In line with the legal interpretation above, we are proposing that 
subpart 2 requirements would apply to each area classified under 
subpart 2 consistent with the area's classification. However, today's 
proposal contains several features intended to provide States with 
flexibility on the measures required to be included in SIPs for 8-hour 
areas.
    First, as explained in the section on classifications above, 
proposed classification option 2 would result in a number of areas 
being classified under subpart 1 rather than under subpart 2. Second, 
for both classification options, we are proposing an incentive feature 
that would allow areas to qualify for a lower classification with fewer 
mandatory requirements if the area could show it will meet the standard 
by the deadline for the lower classification. This would, for example, 
allow any area projected to attain by 2007 based on existing Federal 
measures and any State or local measures approved into the SIP to be 
classified as marginal and to avoid subpart 2 mandatory measures--some 
of which may be significant--that apply to higher classifications.
    Under either of our proposed classification frameworks, a majority 
of potential 8-hour areas would not be subject to significant subpart 2 
mandatory measures because they would be classified marginal or lower. 
Based on our analysis of hypothetical nonattainment areas, there would 
be fewer than 10 potential 8-hour nonattainment areas classified 
``serious'' or above, and these areas already are implementing 
requirements applicable to serious or above areas for the 1-hour 
standard. Therefore, the main impact of subpart 2 mandatory measures in 
8-hour implementation would be on (1) areas that are classified as 
moderate, and did not have to meet moderate or above requirements for 
the 1-hour standard, (2) areas classified as moderate or above that 
would be subject to ROP requirements for the 8-hour NAAQS, and (3) new 
counties or areas included as part of a serious or higher classified 
nonattainment area.
    As a third flexibility mechanism, we are proposing to consider 
allowing case-by-case waivers when sufficient evidence is presented 
that application of a specific requirement in a particular area would 
cause absurd results. Evidence of an absurd result might, for example, 
include a modeled demonstration that future VOC reductions required 
under subpart 2 for a particular area would actually cause ozone to 
increase more than a de minimis amount and therefore increase the 
amount of NOX emissions reductions needed for the attainment 
demonstration. Such a showing would also have to account for the 
potential benefits of the mandated controls in downwind areas in 
determining whether on the whole the application of the subpart 2 
measure would produce an absurd result.
    We believe that absurd results will happen only rarely in those 
cases where application of the requirement in that area would thwart 
the intent of Congress in enacting the relevant provisions of the CAA. 
In such cases, EPA may be able to provide limited relief to the area, 
but only to the degree needed to protect Congressional intent. For 
example, we believe that the purpose of the 15 percent VOC ROP 
requirement is to ensure that areas make progress cleaning up their air 
and moving toward their goal of attainment in the first 6 years 
following the emissions baseline year. If an area could demonstrate 
that reductions in VOC would provide no progress toward attaining the 
standard, EPA may be allowed to interpret the statute to allow for 
reduction in NOX emissions instead. EPA could not, however, 
simply waive the requirement for the area to meet the ROP goals of the 
CAA. Moreover, it would not be sufficient for the area to show that VOC 
reductions would be less beneficial than NOX reductions. 
While one might contend that such a result is not the most logical 
result, it is not absurd. The above example is a simplistic example--
application of the absurd results test in any specific situation would 
likely be more complex. In any specific situation, we would need to 
consider all of the facts in light of various statutory provisions. For 
example, we would need to consider that another goal of the SIP 
provisions in the CAA is to mitigate transport of ozone (and ozone 
precursors). Therefore, in determining whether there is an ``absurd 
result,'' we would not only need to consider the implications for the 
specific area asserting an absurd result, but also the effects on 
downwind areas.
    A State attempting an absurd results demonstration would have to 
work very closely with EPA to ensure that the demonstration passes the 
highest standards of technical credibility. If we had information that 
the agency believes supports an absurd results showing, we would make 
that information available to the State. The State would, of course, 
have to subject this demonstration to the same public process carried 
out for the SIP submission itself prior to submission to EPA of the SIP 
containing the demonstration. In no way would this waiver exempt an 
area from the requirement to demonstrate attainment by the attainment 
date or to demonstrate RFP toward attainment consistent with the area's 
classification. We would have to review the State's demonstration as to 
whether the result is ``absurd'' in light of the particular statutory 
requirement at issue and within the context of the statute as a whole. 
Simply because a State may demonstrate an absurd result for purposes of 
meeting one statutory provision, such as the requirement for a 15 
percent VOC reduction within 6 years after a base year, this does not 
imply that some other provision of the CAA that requires VOC reductions 
is automatically considered ``absurd.''
3. Other Approaches Considered
    We considered a number of other options for allowing additional 
flexibility for subpart 2 requirements. These other options that were 
considered but are not being proposed are described in a separate 
document available in the docket.\33\
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    \33\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
---------------------------------------------------------------------------

E. What Is the Required Timeframe for Obtaining Emissions Reductions To 
Ensure Attainment by the Attainment Date?

    Section 172(c)(2) of the CAA requires that emissions reductions 
needed for attainment be phased in such that RFP toward attainment is 
achieved. For areas classified as moderate under subpart 2, their 
attainment date would be as expeditiously as practicable but no later 
than 6 years after the date of classification. Their ROP requirement 
would be at least a 15 percent VOC emissions reduction from the base 
year to be achieved no later than 6 years after the base year. However, 
if the area needed more than 15 percent VOC reductions in order to 
demonstrate attainment, then any additional reductions would also have 
to be achieved by the beginning of the ozone season prior to the area's 
attainment date.

[[Page 32827]]

    States should be aware of the consequences of failing to implement 
the control measures necessary for attainment sufficiently far in 
advance of the attainment date. For areas covered under subpart 2, 
section 181(a)(5) of the CAA does allow for up to two 1-year attainment 
date extensions in certain circumstances. We are proposing how those 
extension provisions would be implemented elsewhere in this proposal 
under the discussion of attainment dates. To obtain the first of the 1-
year extensions, the CAA basically requires that the area be meeting 
the level of the standard in the attainment year itself, even if the 
area has not actually attained considering the most recent 3 years of 
data. Thus, the States should ensure that the emissions reductions be 
implemented to ensure that ozone levels for the ozone season preceding 
the attainment date are below the level of the standard. If an area 
does not meet the eligibility requirements for a 1-year extension (as 
proposed elsewhere in this rulemaking) in the attainment year, then the 
area would not be eligible for an attainment date extension, and EPA 
would have an obligation to reclassify the area to a higher 
classification (``bump-up''). A marginal area with an attainment date 3 
years after its nonattainment designation that fails to attain would be 
subject to bump-up to at least moderate, and would then have to prepare 
a plan to attain within 3 years afterward (6 years after their 
nonattainment designation).
    There is further discussion of this situation as it relates to the 
1-hour ozone standard in the General Preamble of April 16, 1992 (57 FR 
13498, 13506); this discussion may have some applicability to the 8-
hour standard.
    Areas covered under subpart 1 are also able to obtain up to two 1-
year extensions of the attainment date (see section 172(a)(2)(C)). 
There is no provision for bump-up in classification similar to that 
under subpart 2. However, if an area fails to attain, section 179 of 
the CAA provides that EPA publish a finding that the area failed to 
attain. The State then must submit within 1 year after that publication 
a revision to the SIP that provides for attainment within the time 
provided under section 179. Section 179 also provides that the SIP 
revision must also include any additional measures that EPA may 
prescribe.
    Elsewhere in this notice of proposed rulemaking, we also refer to 
requiring that emission reductions needed for attainment need to be 
implemented by the attainment date. By this, we mean that they must be 
implemented by the beginning of the ozone season prior to the 
attainment date. In other words, if the attainment date is April 15, 
2010, the reductions would need to be implemented by the beginning of 
the ozone season in the previous year (2009). Ozone seasons are defined 
in 40 CFR Part 58, Appendix D; for many States, the ozone season starts 
March 1 or April 1.

F. How Will EPA Address Long-Range Transport of Ground-Level Ozone and 
Its Precursors When Implementing the 8-Hour Ozone Standard?

1. Background
    Although much progress has been made over the last decade to 
improve air quality, many States contain areas that have not yet 
attained the 1-hour ozone standard and/or that are violating the 8-hour 
ozone standard. Some of these areas are significantly affected by 
interstate ozone transport from upwind areas. Wind currents can 
transport ozone and NOX, a primary precursor to ozone, long 
distances, affecting multiple States downwind of a source area. EPA 
recognizes that this type of interstate transport can make it 
difficult--or impossible--for some States to meet their attainment 
deadlines solely by regulating sources within their own boundaries. The 
1990 Amendments to the CAA reflect Congress' awareness that ozone is a 
regional, and not solely a local problem. Section 110(a)(2)(D) provides 
an important tool for addressing the problem of transport. It provides 
that a SIP must contain adequate provisions to prohibit sources in a 
State from emitting air pollutants in amounts that contribute 
significantly to nonattainment, or interfere with maintenance, in one 
or more downwind States. Section 110(k)(5) authorizes EPA to find that 
a SIP is substantially inadequate to meet any CAA requirement, 
including the requirements of section 110(a)(2)(d). If EPA makes such a 
finding, it must require the State to submit, within a specified 
period, a SIP revision to correct the inadequacy. The CAA further 
addresses interstate transport of pollution in section 126, which 
authorizes any State to petition EPA for a finding designed to protect 
the State from significant upwind sources of air pollutants from other 
States.
    In the past several years, EPA has conducted two rulemakings to 
control interstate ozone transport in the eastern U.S. In 1998, EPA 
issued the NOX SIP Call, which requires certain States in 
the eastern U.S. to meet statewide NOX emissions budgets (63 
FR 57356, October 27, 1998.) State programs to implement the rule have 
focused on reducing emissions from electric power generators and large 
industrial emitters. In addition, in response to petitions submitted by 
several northeastern States under section 126, EPA issued a separate 
rule (usually known as the Section 126 Rule) to establish Federal 
control requirements for certain electric power generators and 
industrial boilers and turbines in upwind States (64 FR 28250, May 25, 
1999 and 65 FR 2674, January 18, 2000). For both rules, the compliance 
date for achieving the required NOX reductions is May 31, 
2004. These two transport rules overlap considerably, with the 
NOX SIP Call being the broader action affecting more States. 
All the States affected by the Section 126 Rule are covered by the 
NOX SIP Call. Therefore, EPA coordinated the two rulemakings 
and established a mechanism under which the Section 126 Rule would be 
withdrawn for sources in a State where EPA has approved a SIP meeting 
the NOX SIP Call.\34\
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    \34\ As a result of court actions, certain circumstances upon 
which the Section 126 Rule withdrawal provision was based have 
changed. The compliance dates for the Section 126 Rule and the 
NOX SIP Call have been delayed and the NOX SIP 
Call has been divided into two phases. The EPA recently issued a 
proposed rulemaking to update the withdrawal provision so that it 
will operate appropriately under these new circumstances (68 FR 
16644, April 4, 2003).
---------------------------------------------------------------------------

    In both the NOX SIP Call and the Section 126 Rule, EPA 
made determinations of whether upwind sources are significantly 
contributing to downwind nonattainment problems under both the 1-hour 
and 8-hour ozone standards. In the final SIP Call rule, EPA determined 
that the same level of reductions was needed to address transport for 
both the 1-hour and 8-hour standards.\35\ Thus, unlike in the past, 
States affected by transport can develop their new ozone implementation 
plans with the knowledge that the issue of interstate transport has 
already been addressed up front. This approach will provide these 
States with certainty that they will benefit from substantial emissions 
reductions from upwind sources and give them significantly improved 
boundary conditions that they

[[Page 32828]]

can rely on as they work to identify additional emission reductions 
they will need to include in a local area's attainment SIP.
---------------------------------------------------------------------------

    \35\ The Agency stayed the 8-hour basis for both rules in 
response to the extensive and extended litigation that occurred 
concerning the establishment of the 8-hour ozone standard. (65 FR 
56245, September 18, 2000 and 65 FR 2674, January 18, 2000). 
Recently, however, the Administrator signed a final rule on the UV-B 
issue and reaffirmed the 8-hour ozone standard (68 FR 614, January 
6, 2003), which was remanded to EPA in ATA I, 175 F.3d 1027. Having 
now reaffirmed the 8-hour standard, the Agency plans to take action 
in the near future to reinstate the 8-hour bases for both the 
NOX SIP Call and the Section 126 Rule. Such action would 
provide the initial basis for dealing with ozone transport as part 
of the implementation of the 8-hour standard.
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2. EPA's Anticipated Approach
    In providing their views to EPA on the 8-hour ozone implementation 
rule, the Ozone Transport Commission (OTC) and other State commenters 
have argued that the NOX SIP Call and the Section 126 Rule 
are not fully adequate. In their view, additional steps are needed to 
reduce interstate transport of ozone and NOX to assist 
downwind areas in meeting the 8-hour ozone standard. In particular, 
these commenters have expressed continued concern about upwind 
emissions from power plants and other major sources and transported 
pollution from upwind cities.
    As described above, EPA has already taken two actions to address 
the issue of interstate transport for purposes of the 8-hour standard. 
The NOX SIP Call and the Section 126 Rule require that 
States within the SIP Call make significant emissions reductions from 
power plants and other major sources that contribute to ozone 
nonattainment in downwind areas. For both rules, the compliance date 
for achieving the required emissions reductions is May 31, 2004.
    EPA intends to investigate the extent, severity and sources of 
interstate ozone transport that will exist after the NOX SIP 
Call and the Section 126 Rule are implemented in 2004. The Agency 
believes that it may be appropriate to consider the need to reduce 
interstate transport that contributes to unhealthy levels of 
PM2.5 in downwind nonattainment areas when looking at any 
additional requirements for reducing the transport of ozone or ozone 
precursors.
    As noted above, the President recently proposed the CSA that, among 
other things, would achieve significant reductions--beyond those 
required under the SIP Call and the Section 126 Rule--in the regional 
transport of ozone and ozone precursors. Detailed modeling by EPA for 
the year 2010 shows that the 2008 Phase I NOX limits in the 
CSA would reduce maximum 8-hour ozone levels in many parts of the 
eastern U.S., including a number of areas likely to be designated 
nonattainment for the 8-hour standard. The modeling results are 
available on the Web at http://www.epa.gov/clearskies.
    The Clear Skies reductions would enable several additional areas to 
meet the 8-hour standard without imposing any additional local 
controls. A number of other areas would find it easier to meet the 8-
hour standard because of the additional reductions in power plant 
emissions that would be required under Clear Skies. However, the Agency 
has not made a determination that such reductions are warranted under 
the transport provisions of the CAA. As noted above, in order to 
evaluate this issue, the Agency intends to investigate the extent, 
severity and sources of interstate ozone transport that will exist 
after the existing transport rules are implemented in 2004.
    The Agency welcomes input from States and other interested parties 
as to how to deal with ozone transport effectively and equitably and on 
the technical and other issues that will have to be confronted as part 
of an evaluation of what further steps should be taken beyond the 
existing NOX SIP Call to deal with ozone transport.
3. Other Concerns About Transport
    EPA realizes that, whatever measures may be taken in the future, 
attainment demonstrations for some areas would continue to be 
complicated by the effects of ozone and transport from upwind sources 
and other nonattainment areas in cases where upwind source controls are 
scheduled for implementation after the downwind area's attainment date 
(e.g., 2007 attainment date).
    Downwind areas could be in one of two situations. In the first 
situation, an area might be receiving such high levels of transported 
ozone or ozone precursors that even if it totally eliminated its own 
emissions, the incoming ozone and precursors would be sufficient to 
continue to cause violations of the standard beyond the applicable 
attainment date. In the second situation, the area might be able to 
achieve additional local reductions sufficient to demonstrate 
attainment. In this second case, the question arises as to whether it 
is equitable to require those reductions or to allow more time for the 
reductions in the ``upwind'' area to take place.\36\
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    \36\ The CAA's requirement for RACM in section 172(c)(1) does 
require the SIP to include RACM; EPA has noted in policy elsewhere 
that a measure is RACM if it is technologically and economically 
feasible and if it would advance the attainment date. Thus, if there 
are measures available in the nonattainment area that would advance 
the attainment date--even if attainment is likely at a later date 
due to upwind emissions reductions that occur later--then the CAA 
requires such measures to be in the SIP.
---------------------------------------------------------------------------

    EPA solicits comment on how to address this issue. EPA believes 
that a subpart 1 area could be granted a later attainment date if 
warranted considering transport. For areas classified under subpart 2, 
the statute provides no express relief for these situations. The area 
does have the option of requesting to be classified to the next higher 
classification. Thus, where the demonstration of attainment is 
complicated by transport between two areas of different 
classifications, the State is still responsible for developing and 
submitting demonstrations which show that the standard will be attained 
by the applicable date. In other words, the State must provide for 
sufficient emissions reductions on a schedule that will ensure 
attainment in its area.
    One approach would be for States to work together in a 
collaborative process to perform the necessary analyses to identify 
appropriate controls that provide for attainment throughout the multi-
State area. EPA believes that the wording in sections 172(c)(1) and 
182(b)(1)(A)(i) requires the State to develop a plan providing such 
emissions reductions. States working together in a collaborative 
process could perform a comprehensive assessment of the impacts of all 
control measures being implemented in both the local and upwind areas. 
The analysis may show the extent to which the downwind area is 
dependent on upwind strategies while fully meeting its own requirements 
associated with its classification. Upwind areas may provide a 
comprehensive assessment of the impacts of all control measures being 
implemented on the downwind areas.
4. Other Options Considered
    We considered a number of other options and approaches for 
addressing transport. The other options that were considered but are 
not being proposed are described in a separate document available in 
the docket.\37\
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    \37\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
---------------------------------------------------------------------------

G. How Will EPA Address Transport of Ground-level Ozone and its 
Precursors for Rural Nonattainment Areas, Multi-State Nonattainment 
Areas, Areas Affected by Intrastate Transport, and International 
Transport?

1. Rural Transport Nonattainment Areas
    Section 182(h) recognizes that the ozone problem in a rural 
transport area is almost entirely attributable to emissions from upwind 
areas. Therefore, the only requirements for the rural area are the 
minimal requirements specified for areas expected to attain within 3 
years of designation, the assumption being that the controls in

[[Page 32829]]

the upwind area will solve the remaining nonattainment problem in the 
rural transport area as well. In these cases, the timing for attainment 
will depend on the schedule for adoption and implementation of control 
measures in the upwind areas.
2. Multi-State Nonattainment Areas
    Section 182(j)(2) for multi-State nonattainment areas (i.e., 
portions of the nonattainment area lie in two or more States) 
recognizes that one State may not be able to demonstrate attainment for 
the portion of the nonattainment area within its borders if other 
States containing the remaining portions of the nonattainment area do 
not adopt and submit the necessary attainment plan for their portions 
of the nonattainment area. In such cases, even though the area as a 
whole would not be able to demonstrate attainment, the sanction 
provisions of section 179 shall not apply in the portion of the 
nonattainment area located in a State that submitted an attainment 
plan.
    Section 182(j) defines a multi-State ozone nonattainment area as an 
ozone nonattainment area, portions of which lie in two or more States. 
Section 182(j)(1)(A) and (B) set certain requirements for such areas. 
First, each State in which a multi-State ozone nonattainment area lies, 
must take all reasonable steps to coordinate the implementation of the 
required revisions to SIPs for the given nonattainment area [section 
182(j)(1)(A)]. Next, section 182(j)(1)(B) requires the States to use 
photochemical grid modeling or any other equally effective analytical 
method approved by EPA for demonstrating attainment. EPA is prevented 
by section 182(j) from approving any SIP revision submitted under that 
section if a State has failed to meet the above requirements.
    Pursuant to section 182(j)(1)(A), States that include portions of a 
multi-State ozone nonattainment area are required to develop a joint 
work plan as evidence of early cooperation and integration. The work 
plan should include a schedule for developing the emissions 
inventories, and the attainment demonstration for the entire multi-
State area. Each State within a multi-State ozone nonattainment area is 
responsible for meeting all the requirements relevant to the given 
area. Care should be taken to coordinate strategies and assumptions in 
a modeled area with those in other, nearby modeled areas in order to 
ensure that consistent, plausible strategies are developed.
3. Intrastate Transport
    Several State air agency representatives have voiced a concern 
about intrastate transport of ozone and precursor emissions and have 
asked EPA to address this concern. One State, for instance, notes that 
it has upwind areas that are affecting downwind areas and in some cases 
may be preventing a downwind area from attaining the standard by its 
statutory date.
    We believe that the CAA requires individual States, as an initial 
matter, to deal with intrastate transport. We realize that some States 
are structured with semi-autonomous local air agencies that are 
empowered to address major elements of the SIP process, including 
preparation of the attainment demonstration. In those situations, the 
CAA provides that the State retain sufficient backstop authority to 
ensure all areas within its borders reach attainment, (110(a)(2)(E)). A 
State could, of course, recommend designation of nonattainment areas 
that are large enough to encompass upwind and downwind areas of the 
State and require that the individual jurisdictions work together on an 
attainment plan that accounts for transport and results in attainment 
by the attainment date for the entire nonattainment area. Or a State 
could require the individual agencies to work together in the same 
manner as multi-State organizations. In this case, there would be 
separate nonattainment areas with independent agencies expected to work 
together to address transport among the nonattainment areas. To 
facilitate this process, the State could require the agencies to sign a 
memorandum of agreement which describes the technical and 
administrative approach for performing the modeling analysis and 
identifying the appropriate controls measures. Upon a State's request, 
we would be willing to provide support for these activities.
    We also solicit comments on other ways of addressing intrastate 
transport within the context of the CAA provisions.
4. International Transport
    a. International transboundary transport. International 
transboundary transport of ozone and ozone precursors can contribute to 
exceedances of the NAAQS. It is likely that the international transport 
of air pollutants will affect the ability of some areas to attain and 
maintain the 8-hour ozone NAAQS. As States and EPA implement control 
strategies and national emission reduction programs, the impact of high 
background levels emanating from outside the U.S. may play a larger 
role in future attainment demonstrations. We have developed an 
information document on ``International Transboundary Influences and 
Meeting the NAAQS,'' which is located in the Docket to this proposed 
rulemaking. This document provides information on efforts with Canada 
and Mexico to address transboundary air pollution as well as additional 
information for intercontinental modeling work currently underway 
within EPA.
    b. Section 179B and the SIP approval process. Section 179B of the 
CAA (International Border Areas), applies to nonattainment areas that 
are affected by emissions emanating from outside the United States. 
This section requires EPA to approve a SIP for a nonattainment area if: 
It meets all of the requirements applicable under the CAA, other than a 
requirement that the area demonstrate attainment and maintenance of the 
ozone NAAQS by the applicable attainment date; and the affected State 
establishes to EPA's satisfaction that the SIP would be adequate to 
attain and maintain the ozone NAAQS by the applicable attainment date 
but for emissions emanating from outside the United States. Further, 
any State that establishes to the satisfaction of EPA that the State 
would have attained the 8-hour ozone NAAQS, but for emissions emanating 
from outside the U.S., would not be subject to the attainment date 
extension provided in section 181(a)(5), the fee provisions of section 
185, and the bump-up provisions for failure to attain for 8-hour ozone 
NAAQS specified in section 181(b)(2).\38\
---------------------------------------------------------------------------

    \38\ The statute contains a typographical error referring to 
section 181(a)(2) instead of 181(b)(2).
---------------------------------------------------------------------------

    In demonstrating that an area could attain the 8-hour ozone NAAQS 
but for emissions emanating from outside the U.S., approved EPA 
modeling techniques should be used to the best extent practicable. An 
emission inventory incorporating vehicle emissions released in the U.S. 
by foreign vehicles, i.e., those vehicles registered in the adjacent 
foreign country, must be completed by the States before modeling the 
U.S. side only and attempting to demonstrate attainment.\39\ We 
recognize that adequate data may not be available for mobile and 
stationary sources outside the United States. Therefore, modeling, per 
EPA's ``modeling

[[Page 32830]]

guidance'' described elsewhere in the section on attainment 
demonstrations, may not be possible in all cases. Because very few 
areas are likely to be affected by this provision, EPA will determine 
on a case-by-case basis whether the State has satisfactorily made the 
required demonstration. The State is encouraged to consult with EPA 
Regional Office in developing any alternate demonstration methods. 
Methods that the State may want to consider include: Using ozone 
episodes that do not involve international transport of emissions for 
modeling (see guidance document entitled ``Criteria for Assessing Role 
of Transported Ozone/Precursors in Ozone Nonattainment Areas''), 
running the model with boundary conditions that reflect general 
background concentrations on the U.S. side, analyzing monitoring data 
if a dense network has been established, and using receptor modeling. 
States should confer with the appropriate EPA Regional Office to 
establish appropriate technical requirements for these analyses.
---------------------------------------------------------------------------

    \39\ As noted elsewhere in this notice, the Consolidated 
Emissions Reporting Rule (67 FR 39602, June 10, 2002) has 
established basic emission inventory requirements for all areas of 
the country and generally requires periodic inventories of emissions 
that actually occur in the year of the inventory in the U.S. area of 
interest. This would include emissions from foreign-registered 
vehicles.
---------------------------------------------------------------------------

5. Additional Ways of Addressing Transport
    Additional approaches to address transport are discussed in the 
section on classifications.
6. State-Tribal Transport
    States have an obligation to notify Tribes as well as other States 
in advance of any public hearing(s) on their State plans that will 
significantly impact such jurisdictions. Under 40 CFR 51.102(6)(i), 
States must notify the affected States of hearings on their SIPs; this 
requirement extends to Tribes under 301(d) of the CAA and the TAR. (40 
CFR Part 49). Therefore, affected Tribes that have achieved ``treatment 
as States'' status must be informed of the contents of such plans and 
the extent of documentation to support the plans. For example, in the 
case where the State models projected emissions and air quality under 
the SIP, the Tribes should be made aware of these modeling analyses. 
Tribes may wish to determine if the Tribal area has been affected by 
upwind pollution and whether projected emissions from the Tribal area 
have been considered in the modeling analyses.
    Generally, Tribal lands have few major sources, but in many cases, 
air quality in Indian country is affected by the transport--both long 
range and shorter distance transport--of pollutants. In many cases, 
Tribal nonattainment problems caused by upwind sources will not be 
solved by long-range transport policies, as the Tribes' geographic 
areas are small. Tribes are sovereign entities, and not political 
subdivisions of States. Strategies used for intrastate transport are 
not always available. Most of the strategies and policies used by 
States in dealing with short-range transport are not available to 
Tribes, e.g., requiring local governments to work together and 
expanding the area to include the upwind sources. Unlike Tribes, States 
can generally require local governments to work together, or make the 
nonattainment area big enough to cover contributing and affected areas. 
We believe that it is also unfair to Tribes to require disproportionate 
local regulatory efforts to compensate for upwind emissions. In many 
cases, attainment could not be reached even if emissions from the Tribe 
were zero.
    To address these concerns, we propose to take comment on the 
following: EPA will review SIPs for their effectiveness in preventing 
significant contributions to nonattainment in downwind Tribal areas 
with the same scrutiny it applies to reviewing SIPs with respect to 
impacts on downwind States. Where a Tribe has ``treatment in the same 
manner as States,'' EPA will support the Tribe in reviewing upwind area 
SIPs during the State public comment period.

H. How Will EPA Address Requirements for Modeling and Attainment 
Demonstration SIPs When Implementing the 8-Hour Ozone Standard?

    An attainment demonstration SIP consists of (1) technical analyses 
to locate and identify sources of emissions that are causing violations 
of the 8-hour NAAQS within nonattainment areas (i.e., analyses related 
to the emissions inventory required for the nonattainment area), (2) 
adopted measures with schedules for implementation and other means and 
techniques necessary and appropriate for attainment, (3) commitments, 
in some cases, to perform a mid-course review, and (4) contingency 
measures required under section 172(c)(9) of the CAA that can be 
implemented without further action by the State or the Administrator to 
cover emissions shortfalls in RFP plans and failures to attain. We are 
soliciting public comment on the following guidance. Associated with 
the attainment demonstration also are the RFP/ROP plans and the SIP 
submission concerning RACM, for which we are proposing rules elsewhere 
in this proposal.
1. Multi-Pollutant Assessments (One-Atmosphere Modeling \40\)
---------------------------------------------------------------------------

    \40\ Use of models that are capable of simulating transport and 
formation of multiple pollutants simultaneously. For example, for 
ozone and fine particles, it is critical that the model simulate 
photochemistry, which includes interactions among the pollutants and 
their precursors.
---------------------------------------------------------------------------

    Many factors affecting formation and transport of secondary fine 
particles (i.e., PM2.5 components) are the same as those 
affecting formation and transport of ozone. For example, similarities 
exist in sources of precursors for ozone and secondary fine particles. 
Sources of NOX may lead to formation of ozone as well as 
nitrates which contribute to the formation of secondary fine particles. 
Sources of VOC may contribute to ozone formation and may also be 
sources or precursors for organic particles. Presence of ozone itself 
may be an important factor affecting secondary particle formation. As 
ozone builds up, so do hydroxyl (OH) radicals as a result of 
equilibrium reactions between ozone, water and OH in the presence of 
sunlight. Hydroxyl radicals are instrumental in oxidizing gas phase 
SO2 to sulfuric acid, which is eventually absorbed by liquid 
aerosol and converted to particulate sulfate in the presence of 
ammonia. Therefore, strategies to reduce ozone can also affect 
formation of secondary fine particles which contribute to visibility 
impairment.
    Therefore, models and data analysis intended to address visibility 
impairment need to be capable of simulating transport and formation of 
both secondary fine particles and ozone. At a minimum, modeling should 
include previously implemented or planned measures to reduce ozone, 
secondary fine particles, and visibility impairment. An integrated 
assessment of the impact controls have on ozone, secondary fine 
particles, and regional haze provides safeguards to ensure ozone 
controls will not preclude optimal controls for secondary fine 
particles and visibility impairment.
    The concept of modeling control impacts on all three programs is 
further strengthened by the alignment of the implementation process for 
ozone and secondary fine particles. As the dates for attainment 
demonstration SIPs begin to coincide, the practicality of using common 
data bases and analysis tools for all three programs becomes more 
viable and encourages use of shared resources.
    States that undertake multi-pollutant assessments as part of their 
attainment demonstration would assess the impact of their ozone 
attainment strategies on

[[Page 32831]]

secondary fine particles and visibility or perform a consistent 
analysis for ozone, secondary fine particles, and visibility. To 
facilitate such an effort, we would encourage States to work closely 
with established regional haze Regional Planning Organizations (RPOs) 
and the jurisdictions responsible for developing PM2.5 
implementation plans. Though the CSA, if enacted as introduced, would 
provide substantial improvement in air quality for ozone, 
PM2.5 and visibility, States are encouraged to follow EPA's 
lead and perform similar multi-pollutant assessments as part of their 
ozone attainment demonstrations, considering the programs that are in 
place at the time of the assessment. Multi-pollutant assessments are 
discussed elsewhere in this proposed rulemaking.
2. Areas With Early Attainment Dates
    Under section 182(a), marginal areas, which have an attainment date 
of only 3 years after designation, are not required to perform a 
complex modeling analysis using photochemical grid modeling. Areas 
covered under either subpart 1 or 2 with ozone concentrations close to 
the level of the NAAQS (e.g., within 0.005 ppm), will most likely come 
into attainment within 3 years after designation as nonattainment 
without any additional local planning as a result of national and/or 
regional emission control measures that are scheduled to occur. We have 
good reason to believe these areas will come into attainment. Regional 
scale modeling for national rules, such as the NOX SIP Call 
and Tier II motor vehicle tailpipe standards, demonstrates major ozone 
benefits for the 3-year period of 2004-2006. This period would be 
relevant for demonstrating attainment within 3 years of designation, 
assuming designations occur in early 2004. Many similar areas 
classified as marginal for the 1-hour ozone NAAQS in 1990 came into 
attainment within the initial 3-year period. As an additional 
safeguard, if attainment demonstration modeling is performed using 
multi-State geographic areas, most of these areas with early attainment 
dates will be included in the modeling analyses conducted by areas with 
later attainment dates. This will provide an opportunity for review of 
the impact control programs will have on areas with early attainment 
dates.
    Experience with the 1-hour ozone attainment demonstrations has 
shown that 3 years is not enough time to perform the detailed 
photochemical grid modeling needed to develop the demonstration and 
complete the regulatory process needed to adopt and implement control 
measures sufficiently before the attainment date. It would not be 
reasonable to require these areas to expend the amount of resources 
needed to perform a complex modeling analysis given how close these 
areas are to meeting the level of the NAAQS. Therefore, we propose that 
no additional modeled attainment demonstration would be required for 
areas with air quality observations close to the level of the standard 
as described above and where regional or national modeling exists and 
is appropriate for use in the area demonstrates that an area will 
attain the 8-hour standard within 3 years after designation. This 
proposal would apply for areas covered under either subpart 1 or 
subpart 2.
    Areas with early attainment dates with air quality observations 
that are not close to the level of the NAAQS (as described above) and 
regional scale modeling for national rules that demonstrates they will 
not be in attainment within 3 years of designation should consider 
requesting reclassification to the next higher classification. This 
reclassification would provide additional time for developing an 
attainment demonstration SIP and adopting and implementing the control 
measures needed.
3. Areas With Later Attainment Dates
    Areas with later attainment dates (more than 3 years after 
designation), regardless of whether they are covered under subpart 1 or 
subpart 2, would be required to do an attainment demonstration SIP. 
Local, regional and national modeling developed to support Federal or 
local controls may be used provided the modeling is consistent with 
EPA's modeling guidance, described below. Several States have invested 
considerable time and resources in regional 8-hour ozone modeling 
projects following this guidance. Since exceedances of the 8-hour ozone 
NAAQS are more pervasive than 1-hour ozone exceedances, we encourage 
multi-State applications of the modeling guidance. States should work 
together and leverage off work under development and resources spent on 
these projects. This will be most beneficial in developing attainment 
demonstrations to achieve attainment.
4. Modeling Guidance
    Section 182 (b)(1)(A) requires ozone nonattainment areas to develop 
an attainment demonstration which provides for reductions in VOC and 
NOX emissions ``as necessary to attain the national primary 
ambient air quality standard for ozone.'' Section 172(c), requires 
areas covered under subpart 1 to demonstrate attainment. As noted 
above, if a subpart 1 area has an attainment date beyond 3 years of 
designation, we would require the State to develop an attainment 
demonstration.
    Section 182(c)(2)(A) provides that for serious and higher-
classified areas the ``attainment demonstration must be based on 
photochemical grid modeling or any other analytical method determined 
by the Administrator, in the Administrator's discretion, to be at least 
as effective.'' A photochemical grid model should meet several general 
criteria for it to be a candidate for consideration in an attainment 
demonstration. Note that, unlike in previous guidance (U.S. EPA, 1991), 
we are not recommending a specific model for use in the attainment 
demonstration for the 8-hour NAAQS for ozone. At present, there is no 
single model which has been extensively tested and shown to be clearly 
superior or easier to use than other available models. General criteria 
for attainment demonstrations are contained in 40 CFR part 51, appendix 
W (i.e., ``EPA's Guideline on Air Quality Models'', 68 FR 18440, April 
15, 2003). Appendix W refers to EPA's May 1999 draft ``Guidance on the 
Use of Models and Other Analyses in Attainment Demonstrations for the 
8-Hour Ozone NAAQS'' for a set of general requirements that an air 
quality model should meet to qualify for use in an attainment 
demonstration for the 8-hour ozone NAAQS.\41\ Thus, States may choose 
from several alternatives. These include having received a scientific 
peer review, being applicable to the specific application on a 
theoretical basis, and having an adequate database to support its 
application. It is also important that past applications indicate model 
estimates are not likely to be biased low and that the model is applied 
consistently with a protocol on methods and procedures. We plan to 
finalize this guidance at the same time the final implementation rule 
is published. Comments on this document are solicited as part of this 
proposal.
---------------------------------------------------------------------------

    \41\ U.S. EPA, (May 1999), Draft Guidance on the Use of Models 
and Other Analyses in Attainment Demonstrations for the 8-Hour Ozone 
NAAQS, EPA-454/R-99-004, http://www.epa.gov/ttn/scram, (Modeling 
Guidance, File name: DRAFT8HR).
---------------------------------------------------------------------------

    The guidance describes how to apply air quality models. The output 
from such a model is used to support an attainment demonstration. The 
recommended procedure for applying a model includes developing a 
conceptual description of the problem to be addressed; developing a 
modeling/analysis protocol; selecting an appropriate model to support 
the demonstration; selecting appropriate

[[Page 32832]]

meteorological episodes or time periods to model; choosing an 
appropriate area to model with appropriate horizontal/vertical 
resolution; generating meteorological and air quality inputs to the air 
quality model; generating emissions inputs to the air quality model; 
evaluating performance of the air quality model; and performing 
diagnostic tests. After these steps are completed, the model is used to 
simulate effects of candidate control strategies.
    The guidance recommends procedures for estimating if a control 
strategy to reduce emissions of ozone precursors will lead to 
attainment of the 8-hour NAAQS for ozone. It explains what is meant by 
a modeled attainment demonstration, a modeled attainment test, a 
screening test, and a weight of evidence determination. It also 
identifies additional data which, if available, should enhance the 
credibility of model results and results of other analyses used in a 
weight of evidence determination. States should work closely with the 
appropriate U.S. EPA Regional Office(s) in executing each step.
    We are planning to make substantial changes to the draft version of 
this document. Changes include: (1) The future year of emission 
estimates to model, (2) the recommended length of time period to model 
(i.e., up to full ozone season), and (3) the use of spatial fields of 
ambient concentrations as part of the ``modeled attainment test.'' We 
welcome public comments on the guidance at any time and will consider 
those comments in any future revision of the document. Comments 
submitted on the modeling guidance document should be identified as 
such and will not be docketed as part of this rulemaking, nor will a 
comment/response summary of these comments be a part of the final 8-
hour ozone implementation rule since they will not affect the rule 
itself. The final version of the guidance is scheduled for release by 
December 2003 and will be posted on EPA's Web site (http://www.epa.gov/ttn/scram/).
5. Mid-Course Review (MCR)
    A MCR provides an opportunity to assess whether a nonattainment 
area is or is not making sufficient progress toward attainment of the 
8-hour ozone standard, as predicted in its attainment demonstration. 
The review utilizes the most recent monitoring and other data to assess 
whether the control measures relied on in a SIP's attainment 
demonstration have resulted in adequate improvement in air quality. We 
believe that a commitment to perform a MCR is a critical element in an 
attainment demonstration that employs a long-term projection period and 
relies on weight of evidence. Because of the uncertainty in long-term 
projections, we believe such attainment demonstrations need to contain 
provisions for periodic review of monitoring, emissions, and modeling 
data to assess the extent to which refinements to emission control 
measures are needed.
    A number of States have participated in a consultative process with 
EPA, which resulted in the development of the 1-hour MCR guidance.\42\ 
We are updating the 1-hour MCR policy and technical guidance to include 
8-hour metrics and are soliciting comment on appropriate revisions; 
final MCR guidance incorporating 8-hour metrics will be available at 
the time we issue our final implementation rule. States should consult 
with EPA prior to using a methodology other than the one developed 
through the public consultative process.
---------------------------------------------------------------------------

    \42\ Memorandum of March 28, 2002, from Lydia N. Wegman and J. 
David Mobley, re: ``Mid-Course Review Guidance for the 1-Hour Ozone 
Nonattainment Areas that Rely on Weight-of-Evidence for Attainment 
Demonstration.'' Located at URL: http://www.epa.gov/scram001/guidance/guide/policymem33d.pdf.
---------------------------------------------------------------------------

    The procedure for performing a MCR contains three basic steps: (1) 
Perform an administrative test (e.g., demonstrate whether the 
appropriate emission limits were adopted and implemented); (2) analyze 
available air quality, meteorology, emissions and modeling data and 
document findings; and (3) document conclusions regarding whether 
progress toward attainment is being made using a weight of evidence 
determination (which may or may not include new modeling analyses).
    EPA does not request that States commit in advance to adopt new 
control measures as a result of the MCR process. Based on the MCR, if 
EPA determines sufficient progress has not been made, EPA would 
determine whether additional emissions reductions are necessary from 
the State or States in which the nonattainment area is located or 
upwind States, or both. EPA would then require the appropriate State or 
States to adopt and submit the new measures within a specified period. 
We anticipate that these findings would be made as calls for SIP 
revisions under section 110(k)(5) and, therefore, the period for 
submission of the measures would be no longer than 18 months after the 
EPA finding. Thus, States should complete the MCR 3 or more years 
before the applicable attainment date to ensure that any additional 
controls that may be needed can be adopted in sufficient time to reduce 
emissions by the start of the ozone season in the attainment year.

I. What Requirements for RFP Should Apply Under the 8-Hour Ozone 
Standard?

1. Background
    Section 172(c)(2), which is located in subpart 1 of part D of title 
I, requires State plans for nonattainment areas to require RFP. Section 
171(1) of the CAA defines RFP to mean ``such annual incremental 
reductions in emissions of the relevant air pollutant as are required 
by this part [part D of title I] or may reasonably be required by the 
Administrator for the purpose of ensuring attainment of the applicable 
[NAAQS] by the applicable date.''
    Subpart 2 of part D of title I provides more specific RFP 
requirements for ozone areas classified under section 181. (In general, 
we have used the term ``RFP'' as the more generic progress requirement, 
whereas it has used the term ``rate of progress'' or ``ROP'' to denote 
the specific subpart 2 progress requirements that are defined as 
specific percent reductions from a baseline emissions inventory.) In 
particular, it specifies the base year emission inventory upon which 
ROP is to be planned for and implemented, the increments of emissions 
reductions required over specified time periods, and the process for 
determining whether the ROP milestones were achieved.
    Subpart 2 does not specify ROP requirements for marginal areas. 
Section 182(b)(1)(A) mandates a 15 percent VOC emission reduction, 
accounting for growth, between 1990 and 1996 for moderate and above 
ozone nonattainment areas. Furthermore, section 182(c)(2)(B) of the CAA 
requires each serious and above ozone nonattainment area to submit a 
SIP revision providing for an actual VOC emission reduction of at least 
3 percent per year averaged over each consecutive 3-year period 
beginning in 1996 until the area's attainment date (the post-1996 ROP 
plan). Section 182(c)(2)(C) of the CAA allows for substitution of 
NOX for VOC emissions reductions in the post-1996 ROP plan. 
EPA's policy, the NOX Substitution Guidance (December 15, 
1993; available at http://www.epa.gov/ttn/oarpg/t1pgm.html), addresses 
the substitution of NOX emissions reductions for VOC 
emissions reductions. The baseline emission inventory for determining 
the required ROP reductions is specified as 1990.
    The requirements for RFP under subparts 1 and 2, as described 
above, are

[[Page 32833]]

the minimum required for an area. More reductions may be necessary for 
attainment within the nonattainment area or where the area contributes 
to a downwind area's nonattainment problem. Moreover, an upwind area 
that contributes to nonattainment in a downwind area may need more 
reductions in a shorter time in order for the downwind area to reach 
attainment by its required attainment date.
2. Proposed Features in General
    In developing an approach for addressing the RFP requirements for 
the 8-hour ozone standard, we propose the following:
--The same baseline year would be used both to address growth (in 
emissions, vehicle miles traveled (VMT) or otherwise) and to calculate 
the RFP target level.
--Emissions reductions from outside the nonattainment area up to 100 km 
for VOC and 200 km for NOX (and statewide if under a 
regional strategy) would be allowed consistent with EPA's existing 
December 1997 interim implementation policy for 1-hour ozone NAAQS.\43\
---------------------------------------------------------------------------

    \43\ Memorandum of December 29, 1997 from Richard D. Wilson to 
Regional Administrators, Regions I-X re: ``Guidance for Implementing 
the 1-Hour Ozone and Pre-Existing PM10 NAAQS.'' Located 
at URL: http://www.epa.gov/ttn/oarpg/t1/memoranda/iig.pdf. The 
distances used resulted from FACA discussions cited earlier and 
generally represent transport of 1 to 2 days.
---------------------------------------------------------------------------

--For areas classified under subpart 2, the ROP requirements specified 
in subpart 2 would apply, namely a 15 percent VOC emission reduction, 
accounting for growth, in the first 6 years after the baseline year for 
moderate and above ozone nonattainment areas. In addition, for areas 
classified as serious and above, the ROP provisions in subpart 2 
require a VOC or NOX emission reduction of at least three 
percent per year averaged over each consecutive 3-year period beginning 
6 years after the baseline year (specified as under the 1990 CAAA). 
Areas classified under subpart 2 as marginal, which are required to 
attain 3 years following classification, are subject only to such RFP 
as necessary to attain. We believe the periods for RFP under subpart 2 
for the 8-hour ozone NAAQS should run from the date of the baseline 
year under subpart 2, and would be equivalent to the periods under the 
1-hour ozone NAAQS. Thus, the first 15 percent reduction would be 
required for the 6-year period starting from the last day (December 31) 
of the baseline year and the first 3-year period for the subsequent 
three percent per year emission reduction requirement in serious areas 
would begin 6 years after the last day (December 31) of the baseline 
year. The baseline issue is discussed in section 4 below.
3. For Subpart 2 Areas, Should the Initial 15 Percent RFP Requirement 
Be Limited to VOC Emissions?
    Currently, for many areas of the country, particularly in the 
Eastern U.S. outside major metropolitan areas, there is a greater need 
for NOX reductions rather than VOC reductions. However, 
under the prescribed requirements of the CAA, NOX 
substitution is only allowed for the post-1996 ROP requirement (three 
percent per year averaged over 3 years), not for the initial 15 percent 
ROP requirement. We are proposing 2 options to address this issue.
    a. Option 1. Continue to require 15 percent VOC reductions within 6 
years after the baseline year for all areas designated moderate and 
above for the 8-hour ozone NAAQS. After 6 years, all serious and above 
areas would be required to achieve a nine percent reduction in VOC and/
or NOX emissions every 3 years, i.e., an average of three 
percent per year.
    b. Option 2. For those areas that have approved 15 percent plans 
for their 1-hour ozone SIPs, an additional 15 percent VOC reduction is 
not necessary. Areas that are classified as moderate under the 8-hour 
standard that have already implemented their 15 percent plans under 
their 1-hour ozone SIPs would be considered to have met the statutory 
15 percent requirement and would be covered under the more generic RFP 
requirements of subpart 1. Subpart 1 RFP requirements are discussed 
below. Areas that are classified as serious and above under the 8-hour 
standard that have already implemented their 15 percent plans under the 
1-hour ozone standard would have to include in their SIPs an additional 
RFP plan that would achieve an average of three percent per year of VOC 
and/or NOX over each 3-year period until their attainment 
year. We recognize that it would be difficult to submit a plan that 
provides for the first nine percent emission reduction within 3 years 
after nonattainment designation. Therefore, consistent with what 
Congress did under section 182(b)(1), we propose to allow the first ROP 
increment to be averaged over 6 years. We propose that an area 
classified serious or above submit its ROP plan within 2 years after 
designation that provides for 18 percent emissions reductions (VOC and/
or NOX) over the first 6 years from the baseline year and 
then submit within 3 years after designation a ROP plan that provides 
nine percent emissions reductions (VOC and/or NOX) over each 
of the next 3-year periods until the area's attainment date.
    This option recognizes previous efforts by areas that submitted 15 
percent plans as required under the 1-hour ozone NAAQS and provides 
flexibility to States to use a mix of NOX and VOC reductions 
to meet the additional ROP/RFP requirements. We believe that the 
statute can be interpreted to require the mandatory 15 percent VOC 
reduction only once for a given area. Once 15 percent VOC reduction 
requirements have been met, an area would actually have to achieve 
greater emissions reductions, i.e., an average of three percent per 
year, but could choose either VOC or NOX reductions as 
appropriate. We prefer this second option because it provides more 
flexibility for the ROP plan to be consistent with the area's needs in 
attaining the standard.
    c. Other options that EPA considered. We considered other options 
for addressing this issue that are not being proposed here; discussion 
of them appears in a separate document, available in the docket.\44\ 
However, we solicit comments on other options and what possible 
rationales--legal and scientific--might be used to justify those 
options.
---------------------------------------------------------------------------

    \44\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
---------------------------------------------------------------------------

4. What Baseline Year Should Be Required for the Emission Inventory for 
the RFP Requirement?
    The baseline inventory for RFP (under subpart 2) is used as the 
starting point for the determination of a target level of emissions for 
the future year RFP and as the baseline from which creditable 
reductions are determined. We currently anticipate designating 
nonattainment areas in 2004. Under the ``Consolidated Emissions 
Reporting Rule'' (67 FR 39602, June 10, 2002) revised emissions 
inventories are required for the years 2002 and 2005; therefore, we 
propose to require use of the 2002 inventory as the baseline inventory 
for the RFP requirement. This would be the most recently available 
inventory at the time of designation. We recently issued a memorandum 
identifying 2002 as the anticipated emission inventory base year for 
the SIP planning process to

[[Page 32834]]

address the 8-hour ozone and the PM2.5 standards.\45\
---------------------------------------------------------------------------

    \45\ Memorandum on November 18, 2002, from Lydia Wegman and 
Peter Tsirigotis, ``2002 Base Year Emission Inventory SIP Planning: 
8-hr Ozone, PM2.5 and Regional Haze Programs.'' This 
document is available at the following Web site: http://www.epa.gov/ttn/oarpg/meta.442.1.2002baseinv.pdf.
---------------------------------------------------------------------------

    We considered other options for addressing this issue that are not 
being proposed here; discussion of them appears in a separate document, 
available in the docket.\46\
---------------------------------------------------------------------------

    \46\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
---------------------------------------------------------------------------

5. Should Moderate Areas Be Subject to Prescribed Additional RFP 
Requirements Prior to Their Attainment Date?
    For areas initially classified moderate and higher under the 1-hour 
ozone standard, the baseline inventory was defined as 1990 in the CAA 
Amendments of 1990. Therefore, the 6-year period for the initial 15 
percent ROP requirement ended in the same year as the attainment date 
for moderate areas, viz., 1996. For areas classified moderate and 
higher under the 8-hour ozone standard, however, we are proposing that 
the 15 percent ROP target level of emissions would be calculated for 
the 6-year period after the 2002 baseline year, i.e., 2003-2008. 
Moderate areas would be required to meet an attainment date no later 
than 6 years after the area is designated nonattainment for the 8-hour 
standard. If the effective date of designation of nonattainment areas 
is, for instance, May 15, 2004, the attainment date would be May 15, 
2010. This leaves approximately a 1\1/2\ year gap between the end of 
the 6-year period for the 15 percent ROP requirement (i.e., December 
31, 2008) and the attainment date. If we were to also require moderate 
areas to obtain an additional three percent per year reduction beyond 
2008 for the 1\1/2\ additional years until 2010, the ROP requirement 
would be more than what we believe Congress intended for moderate areas 
under subpart 2. Additional three percent per year reductions were only 
required for serious and higher classified 1-hour ozone nonattainment 
areas. We are proposing that the only specific ROP requirement 
applicable for moderate areas is the 15 percent VOC requirement between 
the end of 2002 and the end of 2008. However, section 172(c)(2) also 
applies, requiring areas to meet RFP generally. Therefore, a moderate 
area would also have to provide any additional emissions reductions--
VOC and/or NOX--needed to provide for attainment by the 
area's attainment date. In proposing this approach, we are interpreting 
the subpart 1 RFP requirement to mean that the area must achieve 
whatever further reduction is needed for attainment in the remaining 
period prior to the attainment date (2009 and 2010).
    We are proposing that serious and higher classified areas would 
need to provide in their SIPs an additional average of three percent 
per year emissions reductions over each subsequent 3-year period beyond 
the initial 6-year period through the attainment year, consistent with 
what Congress specified in section 182(c)(2)(B) of the CAA.
6. What Is the Timing of the Submission of the ROP Plan?
    Section 182(b)(1) requires that moderate and higher classified 
areas submit their 15 percent ROP plans within 3 years after 1990. For 
the attainment dates under the 8-hour ozone standard, we propose 
interpreting the CAA's language referring to the date of enactment of 
the 1990 CAA Amendments to mean the date of designations for the 8-hour 
standard. If we were to require the ROP plans to be submitted within 3 
years after their nonattainment designation date (i.e., in 2007 if we 
designate in 2004), the plans would have to be implemented within 1 
year after submission to ensure the 15 percent emissions reductions are 
achieved by the end of the relevant 6-year period (i.e., December 
2008). We believe this would likely not be sufficient time to ensure 
that the reductions would occur by the required deadline. Therefore, we 
propose that the ROP SIP be submitted within 2 years after 
nonattainment designation--by 2006. This would provide 2 years for the 
State to develop and submit its ROP plan, and another 2 years for the 
control measures to be implemented.
7. How Should CAA Restrictions on Creditable Measures Be Interpreted? 
Which National Measures Should Count as Generating Emissions Reductions 
Credit Toward RFP Requirements?
    Section 182(b)(1) contains provisions that limit creditability 
toward meeting RFP for certain limited emission reduction measures 
required prior to the enactment of the CAA Amendments of 1990. We 
believe these specific restrictions should continue to apply for 
purposes of the 8-hour NAAQS as written in the CAA. We believe that 
Congress intended to prevent areas from taking credit for RFP only for 
those specific measures that were already adopted and in place (or 
required to be in place) prior to the date of enactment of the CAA 
Amendments of 1990 (November 15, 1990). We believe that this same logic 
holds true for the RFP requirement as it applies to the 8-hour ozone 
standard, namely preventing credit toward the mandatory RFP percent 
reductions for continuing reductions from those specific measures cited 
in the CAA that were already adopted and in place prior to the date of 
enactment of the CAA Amendments of 1990. There is no indication in the 
CAA that this exclusion should be changed. Congress mandated many 
emissions reductions in the 1990 CAA Amendments with no indication that 
they should not be credited to meeting RFP or attainment of any 
existing or revised NAAQS. Therefore, we are proposing that all 
emissions reductions that occur after the baseline emission inventory 
year from all Federal and any other measures (not otherwise identified 
in section 182(b)(1)(D)) would be creditable to the RFP requirement. 
For example, emissions reductions that occur after the 2002 baseline 
emission inventory year that result from the Tier 2 and sulfur in 
gasoline rules that were issued by EPA after the CAA Amendments of 1990 
are creditable toward the RFP requirement for the 8-hour ozone 
standard. Another example of emissions reductions that would be 
creditable toward the RFP requirement for the 8-hour ozone standard 
would be VOC emissions reductions from certain MACT standards that will 
not produce emissions reductions until after the 2002 baseline; these 
would include several recently promulgated MACT standards (such as 
those covering several surface coating operations) and also MACT 
standards that are expected to be promulgated in the summer of 2003. 
Reductions that occur prior to the baseline year would be incorporated 
into the baseline and could not be credited.
8. For Areas Covered by Subpart 1 Instead of Subpart 2, How Should the 
RFP Requirement Be Structured?
    As described above, the RFP requirement under subpart 1 is more 
general than that under subpart 2, and EPA thus has more flexibility in 
determining what RFP means under subpart 1. For instance, the State may 
rely on emissions reductions of VOC or NOX or a combination 
of both to meet its RFP requirement. However, we are also mindful of 
the need for ensuring equity between areas with similar 8-hour ozone 
problems covered under

[[Page 32835]]

subpart 1 and those covered under subpart 2. We are proposing rules for 
three kinds of areas: (a) Areas with attainment dates 3 years or less 
after designation; (b) Areas with attainment dates between 3 and 6 
years after designation; and (c) Areas with attainment dates beyond 6 
years after designation. Note that the CAA requires that attainment 
dates for areas subject only to subpart 1 be no longer than 10 years 
after designation.
    a. Areas with attainment dates 3 years or less after designation. 
We propose a RFP requirement for these areas similar to that for areas 
under subpart 2 that are classified as marginal. Such an area would not 
be subject to a separate RFP requirement, but would have to attain the 
standard by its attainment date.
    b. Areas with attainment dates between 3 to 6 years after 
designation. These areas would have attainment dates similar to subpart 
2 areas classified as moderate. We propose two options for these areas:
    (i) Option 1. This option would require the RFP plan to be 
submitted with the attainment demonstration within 3 years after 
designation of the nonattainment area. The SIP would have to show that 
all emissions reductions needed for attainment would be implemented by 
the attainment date. This situation would occur, for example, for an 
area with a base year inventory of 2002, designation in 2004, a 
required attainment SIP submission date of 2007 and an attainment date 
of 2010. Where areas have only 3 years after SIP submission before 
attainment, this option recognizes that there may be only a short 
amount of time available to achieve any specified emissions reductions 
beyond that needed to demonstrate attainment and therefore would not 
require a showing that a specified amount of emissions reductions occur 
between the time of SIP submission and the attainment date.
    (ii) Option 2. This option would require these areas to be treated 
in a manner similar to subpart 2 areas classified as moderate. The RFP 
SIP would have to provide for a 15 percent emission reduction from the 
baseline year within 6 years after the baseline year. The RFP SIP would 
have to be submitted within 2 years after designation. However, since 
the area is subject only to subpart 1, NOX emissions 
reductions could be substituted for some or all of the 15 percent 
reduction requirement, consistent with EPA's NOX 
substitution policy.\47\ Also, we are soliciting comment on whether a 
percentage other than 15 percent should be required as the minimum. 
Additional measures that would provide the remaining portion of the 
emissions reductions needed for attainment would have to be submitted 
with the area's attainment demonstration within 3 years after 
designation.
---------------------------------------------------------------------------

    \47\ NOX Substitution Guidance. December 15, 1993; 
avaialble at http://www.epagov/ttn/oarpg/t1pgm.html.
---------------------------------------------------------------------------

    c. Areas with attainment dates beyond 6 years after designation. 
These areas are similar in attainment dates to areas classified under 
subpart 2 as serious or higher. We are proposing that the RFP plan show 
increments of progress from the baseline emission inventory year until 
the attainment date. The RFP SIP would first have to provide for a 15 
percent emission reduction from the baseline year within 6 years after 
the baseline year. The 15 percent RFP SIP would have to be submitted 
within 2 years after designation. However, since the area is subject 
only to subpart 1, NOX emissions reductions could be 
substituted for some or all of the 15 percent reduction requirement, 
consistent with EPA's NOX substitution policy. Also, we are 
soliciting comment on whether a percentage other than 15 percent would 
be more appropriate. Then, for each subsequent 3-year period out to the 
attainment date, another RFP SIP would have to provide for an 
additional increment of progress no less than the amount of emissions 
reductions that would be proportional to the time between the end of 
the first increment (in 2008) to the attainment date. This second RFP 
SIP would have to be submitted at the same time as the attainment 
demonstration, namely within 3 years after designation.
9. How Should the RFP Requirements Be Implemented for Areas Designated 
for the 8-Hour Ozone Standard That Entirely or in Part Encompass an 
Area That Was Designated Nonattainment for the 1-Hour Ozone Standard?
    We are proposing the following approach to address this issue. 
Develop a new baseline and new ROP/RFP emission reduction targets for 
the entire 8-hour standard nonattainment area (the old 1-hour standard 
nonattainment area and the newly added portion of the 8-hour standard 
nonattainment area). Emissions reductions from measures in the 1-hour 
ozone SIP that are achieved after the 8-hour ozone NAAQS baseline year 
could count (subject to creditability restrictions as discussed above 
in this proposed rulemaking) toward meeting the RFP requirement for the 
entire 8-hour area.
    This approach would set a ROP target for the entire 8-hour ozone 
nonattainment area. The State would have to ensure that the target is 
at least as stringent as the 1-hour ROP/RFP target, thus ensuring no 
backsliding on the 1-hour NAAQS requirements. Under this approach, the 
new ROP/RFP target for the 8-hour standard would replace the previous 
1-hour ozone target (while ensuring that, at a minimum, the emissions 
reductions required to meet the old target are met). For example, the 
1-hour ozone NAAQS nonattainment area may comprise four counties and 
have a target level for one future RFP increment of 350 tons/day of VOC 
and 300 tons/day of NOX. The 8-hour ozone nonattainment area 
may comprise the initial 1-hour ozone standard nonattainment area and 
two more counties. The target for the same increment period for the 
entire six county nonattainment area may now be, for instance, 400 
tons/day of VOC and 350 tons/day of NOX (assuming that these 
emission reductions were consistent with the attainment demonstration).
    We considered another option for this issue. This option, which is 
not being proposed, is discussed in a separate document available in 
the docket.\48\
---------------------------------------------------------------------------

    \48\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC. March 2003.
---------------------------------------------------------------------------

10. Will EPA's ``Clean Data Policy'' Continue to Apply Under the 8-Hour 
Standard for RFP?
    We issued a clean data waiver policy on May 10, 1995, which allows 
EPA to determine that an area has attained the standard and that 
certain requirements (e.g., RFP) will not apply so long as the area 
remains in attainment. \49\ We propose that this policy would remain 
effective under the 8-hour ozone NAAQS.
---------------------------------------------------------------------------

    \49\ Memorandum of May 10, 1995, ``RFP, Attainment 
Demonstration, and Related Requirements for Ozone Nonattainment 
Areas Meeting the Ozone National Ambient Air Quality Standard,'' 
from John S. Seitz, Director, Office of Air Quality Planning and 
Standards. Available at: http://www.epa.gov/ttn/oarpg/t1/memoranda/clean15.pdf.
---------------------------------------------------------------------------

11. How Will RFP Be Addressed in Tribal Areas?
    As mentioned elsewhere in this proposed rulemaking, the TAR 
provides the Tribes with the ability to develop TIPs to address the 
NAAQS. However, it also provides the Tribes with

[[Page 32836]]

flexibility to develop these plans in a modular way, as long as the 
elements of their TIPs are ``severable.'' For example, each TIP 
submission must include a demonstration that the Tribe has authority to 
develop and run its program, the ability to enforce its rules, and the 
capacity and resources to implement the program it adopts. However, the 
modular approach provided for Tribes in the TAR allows the TIP to 
address a particular problem on the reservation. Therefore, it may 
include one or two source-specfic requirements but may not include 
provisions for RFP and other SIP requirements. We will review and 
approve these TIPs as a step in addressing an overall air quality plan 
to achieve health and environmental goals. In addition, a Tribe may 
later add other elements to the plan, or EPA may be obligated to step 
in to fill air quality gaps. In approving the TIPs, we will ensure that 
they will not interfere with the overall air quality plan for an area 
when Tribal lands are part of a multi-jurisdictional area.
    Because many of the nonattainment areas will include jurisdictions, 
including both Tribes and States, it is important for Tribes and States 
to work together wherever possible to coordinate their planning 
efforts.
12. How Will RFP Targets Be Calculated?
    We propose a methodology for the calculation of ROP target levels 
of emissions that is based on the method developed for the CAA 
Amendments of 1990, while taking into account our interpretation of CAA 
restrictions on creditable emissions and our proposal to use the 2002 
inventory as the baseline inventory for the ROP requirement. The CAA 
Amendments of 1990 specify four types of measures that were not 
creditable toward the 15 percent RFP requirement. These were:
    (1) Any measure relating to motor vehicle exhaust or evaporative 
emissions promulgated by the Administrator by January 1, 1990;
    (2) Regulations concerning Reid Vapor Pressure that would go into 
effect in 1992;
    (3) State regulations submitted to correct deficiencies in existing 
VOC RACT regulations or previously required RACT rules;
    (4) State regulations submitted to correct deficiencies in I/M 
programs.
    These four types of measures were all expected to result in a 
decrease in emissions between 1990 and 1996. Of these four types of 
measures, RACT and I/M program corrections and the 1992 Reid vapor 
pressure (RVP) requirements were completely in place by 1996 and 
therefore are already accounted for in the 2002 baseline. As a result, 
they would produce no additional reductions between 2002 and 2008 or 
later milestone years.
    However, the pre-1990 Federal Motor Vehicle Control Program (FMVCP) 
will continue to provide benefits during the first two decades of the 
21st century as remaining vehicles meeting pre-1990 standards leave the 
vehicle fleet. Because these benefits are not creditable for ROP 
purposes, in order to calculate the target level of emissions for ROP 
milestone years (i.e., 2008, 2011, etc.), States must first calculate 
the reductions that would occur over these years as a result of the 
pre-1990 FMVCP. We propose the following methods to properly account 
for the non-creditable reductions when calculating ROP targets for the 
2008 and later ROP milestone years.
    Method 1: For areas that must meet a 15 percent VOC reduction 
requirement by 2008:
    (1) Estimate the actual anthropogenic base year VOC inventory in 
2002 with all 2002 control programs in place.
    (2) Using the same highway vehicle activity inputs used to 
calculate the actual 2002 inventory, run MOBILE6 for 2002 and for 2008 
with all post-1990 CAA measures turned off. This is accomplished using 
the NO CLEAN AIR ACT command as described in the MOBILE6 User's Guide. 
Any other local inputs for I/M programs should be set according to the 
program that was required to be in place in 1990. Fuel RVP should be 
set at 9.0 or 7.8 depending on the RVP required in the local area as a 
result of fuel RVP regulations promulgated in June, 1990.
    (3) Calculate the difference between 2002 and 2008 VOC emission 
factors and multiply by 2002 VMT. The result is the VOC emissions 
reductions that will occur between 2002 and 2008 without the benefits 
of any post-1990 CAA measures. These are the non-creditable reductions 
that occur over this period.
    (4) Subtract the non-creditable reductions calculated in step 3 
from the actual anthropogenic 2002 inventory estimated in step 1.
    (5) Reduce the VOC inventory calculated in step 4 by 15 percent. 
The result is the target level of VOC emissions in 2008 in order to 
meet the 2008 ROP requirement. The actual projected 2008 inventory with 
all control measures in place and including projected 2008 growth in 
activity must be at or lower than this target level of emissions.
    Method 2: For areas that qualify under option 2 of section 3 above 
and must meet an 18 percent VOC emission reduction requirement by 2008 
with NOX substitution allowed, following EPA's 
NOX Substitution Guidance:
    (1) Estimate the actual anthropogenic base year inventory in 2002 
with all 2002 control programs in place.
    (2) Using the same highway vehicle activity inputs used to 
calculate the actual 2002 inventory, run MOBILE6 for 2002 and for 2008 
with all post-1990 CAA measures turned off. This is accomplished using 
the NO CLEAN AIR ACT command as described in the MOBILE6 User's Guide. 
Any other local inputs for I/M programs should be set according to the 
program that was required to be in place in 1990. Fuel RVP should be 
set at 9.0 or 7.8 depending on the RVP required in the local area as a 
result of fuel RVP regulations promulgated in June, 1990.
    (3) Calculate the difference between 2002 and 2008 VOC emissions 
factors and multiply by 2002 VMT. The result is the emissions 
reductions that will occur between 2002 and 2008 without the benefits 
of any post-1990 CAA measures. These are the non-creditable reductions 
that occur over this period.
    (4) Subtract the non-creditable reductions calculated in step 3 
from the actual anthropogenic 2002 inventory estimated in step 1.
    (5) Reduce the inventory calculated in step 4 by 18 percent. The 
result is the target level of emissions in 2008 in order to meet the 
2008 ROP requirement. The actual projected 2008 inventory with all 
control measures in place and including projected 2008 growth in 
activity must be at or lower than this target level of emissions.
    Method 3: For all areas that must meet an additional reduction VOC 
requirement of 9 percent every 3 years after 2008 with NOX 
substitution allowed, following EPA's NOX Substitution 
Guidance. Each subsequent target level of emissions should be 
calculated as emissions reductions from the previous target.
    (1) Using the same highway vehicle activity inputs used to 
calculate the actual 2002 inventory, run MOBILE6 for 2008 (previously 
done in step 2 above) and 2011 with all post-1990 CAA measures turned 
off. This is accomplished using the NO CLEAN AIR ACT command as 
described in the MOBILE6 User's Guide. Any other local inputs for I/M 
programs should be set according to the program that was required to be 
in place in 1990. Fuel RVP should be set at 9.0 or 7.8 depending on the 
RVP required in the

[[Page 32837]]

local area as a result of fuel RVP regulations promulgated in June, 
1990.
    (2) Calculate the difference between 2008 and 2011 emission factors 
and multiply by 2002 VMT. The result is the emissions reductions that 
will occur between 2008 and 2011 without the benefits of any post-1990 
CAA measures. These are the non-creditable reductions that occur over 
this period.
    (3) Subtract the non-creditable reductions calculated in step 2 
from the 2008 target level of emissions calculated previously.
    (4) Reduce the inventory calculated in step 3 by 9 percent. The 
result is the target level of emissions in 2011 in order to meet the 
2011 ROP requirement. The actual projected 2011 inventory with all 
control measures in place and including projected 2011 growth in 
activity must be at or lower than this target level of emissions.

J. Are Contingency Measures Required in the Event of Failure To Meet a 
Milestone or To Attain the 8-Hour Ozone NAAQS?

1. Background
    Under the CAA, nonattainment areas must include in their SIPs 
contingency measures consistent with section 172(c)(9). However, 
section 182(a) expressly exempts areas classified as marginal from this 
obligation. States with ozone nonattainment areas classified as 
moderate and above must include contingency measures in their SIPs 
consistent with sections 172(c)(9) and 182(c)(9). Contingency measures 
are additional controls to be implemented in the event the area fails 
to meet a RFP milestone or fails to attain by its attainment date. 
These contingency measures must be fully adopted rules or measures 
which are ready for implementation quickly upon failure to meet 
milestones or attainment. The SIP should contain trigger mechanisms for 
the contingency measures, specify a schedule for implementation, and 
indicate that the measures will be implemented without significant 
further action by the State or EPA. Additional background information 
concerning the CAA contingency measure provisions appears in the 
General Preamble of April 16, 1992 (57 FR 13510-13512 and 13520); and 
Section 9.2 of ``Guidance for Growth Factor, Projections, and Control 
Strategies for the 15 percent Rate-of-Progress Plans'' (EPA-452/R-93-
002), March 1993.
    The guidance indicates that States should adopt and submit 
contingency measures to provide a three percent emission reduction 
(beyond what is needed for attainment or the ROP requirement) for 
moderate and above ozone areas, which EPA concludes is generally 
acceptable to offset emission increases while States are correcting 
their SIPs.
    Also, EPA guidance suggests that contingency measures that a State 
adopted for purposes of the 15 percent ROP requirement may be used as 
the contingency measures for any post-1996 3-year requirements for RFP, 
provided they have not been triggered and used as contingency measures 
for the 15 percent plan. See Section 5.6 of ``Guidance on the Post 1996 
Rate-of-Progress Plan (ROP) and Attainment Demonstration'' (corrected 
version of February 18, 1994). Furthermore, Federal measures that 
result in additional emission reductions beyond those needed for 
attainment or ROP in an area could serve as contingency measures for a 
failure to attain or meet the ROP requirements. EPA has approved the 
use of Federal measures as part of contingency measures in several EPA 
actions approving 1-hour ozone SIPs (62 FR 15844, April 3, 1997), (62 
FR 66279, December 18, 1997), and (66 FR 30811, June 8, 2001), (66 FR 
586 and 66 FR 634, January 3, 2001).
2. Proposal
    For the 8-hour ozone standard, we intend to continue to observe our 
existing policies regarding contingency measures for areas covered 
under subpart 2. Areas that are nonattainment for the 8-hour ozone 
standard that have unused adopted contingency measures for the 1-hour 
ozone NAAQS may use those measures as appropriate as contingency 
measures for the 8-hour ozone NAAQS. For areas covered under subpart 1, 
we will provide additional guidance on the contingency measure 
requirement, but it is likely that it will be patterned after the 
subpart 2 requirement.

K. What Requirements Should Apply for RACM and RACT for 8-Hour Ozone 
Nonattainment Areas?

1. Background
    Subpart 1 of part D includes general requirements for all 
designated nonattainment areas, including a requirement that a 
nonattainment plan provide for the implementation of all RACM as 
expeditiously as practicable, including such reductions that may be 
obtained through RACT. Most areas designated nonattainment for the 1-
hour ozone standard are also subject to the requirements of subpart 2 
of part D, including its detailed control measure provisions. Under 
subpart 2, RACT requirements for ozone nonattainment areas apply 
independent of the emissions reductions needed to attain the standard. 
The RACT requirements also apply in attainment areas within the current 
ozone transport region (OTR) (or any additional OTR that EPA may 
establish under the CAA), regardless of the emissions reductions needed 
to attain. The RACT requirement applies to both ozone precursors--
NOX and VOC. Since 1990, we have issued guidance on the RACT 
requirements in subpart 2.\50\ Prior to enactment of the CAA Amendments 
of 1990, EPA also issued detailed guidance on RACT for ozone 
nonattainment area SIPs.\51\ This guidance continues to be relevant.
---------------------------------------------------------------------------

    \50\ 40 CFR part 52, State Implementation Plans; General 
Preamble for the Implementation of Title I of the Clean Air Act 
Amendments of 1990; Proposed Rule. April 16, 1992. (57 FR 13498); 40 
CFR part 52, State Implementation Plans; Nitrogen Oxides Supplement 
to the General Preamble; Clean Air Act Amendments of 1990; 
Implementation of Title I; Proposed Rule. November 25, 1992. (57 FR 
55620).
    \51\ ``Issues Relating to VOC Regulation Cutpoints, 
Deficiencies, and Deviations--Clarification to Appendix D of 
November 24, 1987, Federal Register.'' Ozone/Carbon Monoxide Program 
Branch, Air Quality Management Division, Office of Air Quality 
Planning and Standards, U.S. Environmental Protection Agency. May 
25, 1988; Federal Register of November 24, 1987, Appendix D (52 FR 
at 45105).
---------------------------------------------------------------------------

    Elsewhere in this proposed rulemaking, we are proposing one option 
for classifying 8-hour ozone nonattainment areas in which some areas 
would be subject to the requirements of subpart 1. Unlike subpart 2, 
which contains detailed requirements regarding the adoption of RACT, 
subpart 1 contains only a general provision which requires that SIPs 
for nonattainment areas provide for RACM, including RACT. See CAA 
section 172(c)(1). Because RACT is a control technology requirement, it 
is somewhat independent of the need to demonstrate attainment or RFP. 
In the period prior to enactment of the 1990 CAA Amendments, only the 
general requirements for RACM and RACT existed, and EPA had issued CTGs 
to provide presumptive norms for RACT for VOC controls for States to 
follow in adopting RACT for ozone nonattainment areas. In 1990, 
Congress institutionalized this requirement for NOX and VOC 
(as ozone precursors) in subpart 2, and emphasized the role of CTGs and 
EPA's pre-1990 guidance for ensuring that RACT rules themselves were 
adequately structured to ensure they would be effective and 
enforceable. For instance, ozone nonattainment areas classified as 
marginal or higher that had a previous obligation to submit corrections 
to their VOC RACT rules were required to complete and submit

[[Page 32838]]

those corrections within 6 months after the date of classification. See 
CAA section 182(a)(2)(A). However, the 1990 CAA Amendments did not 
require marginal areas to adopt any RACT rules if they did not have a 
pre-1990 obligation to do so. \52\
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    \52\ The exception to this rule is that States in the OTR are 
also required for all areas in the State to adopt RACT rules for all 
sources covered by a CTG and all other major sources of 
NOx or VOC regardless of their nonattainment 
classification. See CAA section 184(b).
---------------------------------------------------------------------------

    Also, the amended CAA required EPA to issue CTGs for certain VOC 
sources by November 15, 1993. See CAA section 183(a) and (b). 
Similarly, the EPA was required to issue alternative control techniques 
(ACT) documents for additional categories of VOC and NOX. 
See CAA section 183(c). The ACT documents are intended to help States 
in making RACT determinations.
2. Proposed Approach for RACT in General for Areas Covered Under 
Subpart 2
    We are proposing that the RACT requirement for areas covered under 
subpart 2 apply as specified in subpart 2. Thus, areas classified as 
marginal that had a pre-1990 obligation for RACT would continue to have 
that obligation. Areas classified as moderate and above would be 
required to adopt RACT for the categories covered by the CTG's that EPA 
has issued and to adopt non-CTG RACT measures for major sources.\53\
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    \53\ Note that under the anti-backsliding provisions proposed 
above, any portion of an area classified marginal under the 8-hour 
standard that was classified moderate or higher under the 1-hour 
standard would also have a continuing RACT requirement from its 
classification as moderate or higher.
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3. Proposed Approach for RACT in General for Areas Covered Only Under 
Subpart 1
    We are proposing two alternative options for addressing RACT for 
areas covered under subpart 1.
    a. Option 1: Treatment of RACT similar to subpart 2 areas. Based on 
the provisions of the CAA described above and the apparent differences 
in treatment regarding RACT between marginal and other areas, we 
propose to interpret the CAA in a manner similar to that under subpart 
2 by requiring areas covered under subpart 1 to face different RACT 
requirements based on the magnitude of the ozone problem. This proposal 
has the advantage of minimizing some of the apparent inequities that 
might exist under the classification option (discussed elsewhere in 
this proposed rulemaking) in which some areas are covered under subpart 
1 and others under subpart 2.
    (i) Areas similar to marginal areas. Those 8-hour nonattainment 
areas covered only under subpart 1 that have an ozone problem that is 
similar in degree to that of a marginal area would be subject to the 
same RACT requirement as areas classified as marginal under subpart 2. 
These areas would be defined as those whose 8-hour ozone design value 
at the time of designation/classification would have placed them in the 
marginal classification if they had been subject to subpart 2 (i.e., 
areas that have an 8-hour design value of less than 0.092 ppm. (See 
elsewhere in this proposed rulemaking under the section concerning 
classification.) Similarly, if we adopt the incentive feature proposed 
in the classification section, and a subpart 1 area with a design value 
of 0.092 ppm or greater can demonstrate that it will attain within 3 
years after designation, then it would be subject to the same RACT 
requirement as applies to marginal areas under subpart 2. As noted in 
the background of this section, the 1990 CAA Amendments did not require 
marginal areas (with the exception of those located in the OTR) to 
adopt any RACT rules if they did not have a pre-1990 obligation to do 
so. Marginal areas that had a pre-1990 obligation for RACT were 
required to make any corrections to those rules that we had previously 
identified.
    (ii) Areas similar to moderate and higher-classified areas. Those 
8-hour nonattainment areas covered under subpart 1 that have an ozone 
problem that is similar in degree to that of a moderate or higher-
classified area would be subject to the same RACT requirements as those 
that apply in subpart 2 for moderate and above areas. These areas would 
be defined as those whose 8-hour ozone design value at the time of 
designation/classification would have placed them in the moderate or 
above classification if they had been subject to subpart 2. As proposed 
elsewhere in this proposed rulemaking, this would mean areas that have 
an 8-hour design value of 0.092 ppm or greater that are not able to 
demonstrate attainment within 3 years after designation.
    b. Option 2: Alternative treatment for RACT under subpart 1. This 
option is similar to the approach we proposed in our November 17, 1998 
draft implementation guidance.\54\ At the time, we stated that we 
believed we had authority under subpart 1 to apply an interpretation 
for RACT for ozone nonattainment areas for the 8-hour NAAQS that was 
similar to the Agency's policy for pollutants other than ozone. Under 
that interpretation and this option, for the 8-hour ozone NAAQS, if the 
area is able to demonstrate attainment of the standard as expeditiously 
as practicable with emission control measures in the SIP, then RACT 
will be met, and additional measures would not be required as being 
reasonably available.
---------------------------------------------------------------------------

    \54\ Proposed Implementation Guidance for the Revised Ozone and 
Particulate Matter (PM) National Ambient Air Quality Standards 
(NAAQS) and the Regional Haze Program. November 17, 1998. Found at: 
http://www.epa.gov/ttn/oarpg/t1pgm.html.
---------------------------------------------------------------------------

    c. Ozone transport regions. In addition, all areas of the OTR are 
required to adopt NOX and VOC RACT requirements, regardless 
of their attainment classification.\55\ Of course, these areas were 
already required to submit RACT rules for purposes of the 1-hour 
standard.
---------------------------------------------------------------------------

    \55\ See CAA section 184(b).
---------------------------------------------------------------------------

4. Proposed Approach for Previous Source-Specific Major Source RACT 
Determinations
    Section 182(b)(2)(C) requires SIPs in moderate and higher 
classified areas to provide for RACT for major stationary sources of 
VOC that are not covered by CTGs. Section 182(f)(1) provided that this 
requirement also apply to major sources of NOX. Many areas 
subject to the major source RACT requirement under the 8-hour ozone 
standard would have previously addressed the RACT requirement with 
respect to the 1-hour ozone standard. This includes the non-CTG major 
source VOC RACT requirement and the NOX major source RACT 
requirement. For example, major sources located in States of the OTC 
were subject to the NOX RACT requirement in the mid-1990s. 
We believe that, in many cases, a new RACT determination under the 8-
hour standard would call for installation of similar control technology 
as the initial RACT determination under the 1-hour standard because the 
fundamental control techniques are still applicable. In other cases, a 
new RACT analysis could determine that better technology has become 
available and some additional emissions reductions are achievable. The 
cost per ton of NOX removed associated with installing a 
second round of RACT controls is likely to be high in many cases due to 
the relatively small amount of additional NOX emission 
reductions expected. In these cases, the additional costs associated 
with the replacement of the existing RACT controls may be an 
unnecessary burden, given the small emissions benefit potential. In 
contrast, a RACT analysis for uncontrolled

[[Page 32839]]

sources would be much more likely to find that cost-effective controls 
are available.
    Therefore, in portions of 8-hour ozone nonattainment areas where 
major sources or source categories were previously reviewed and 
controls subsequently applied to meet the RACT requirement under the 1-
hour standard, we propose that States may choose to accept the initial 
RACT analysis as meeting the RACT requirements for the 8-hour program 
and need not submit a new RACT SIP. At the time the State submits its 
attainment demonstration, it should submit a certification that it 
previously met the RACT requirement as part of its SIP revision. We 
also propose that a RACT determination would be necessary for major 
sources in any portion of the 8-hour nonattainment area that was not 
subject to an initial RACT program under the 1-hour standard. 
Furthermore, in cases where the initial RACT analysis under the 1-hour 
standard for a specific source or source category concluded that no 
additional controls were necessary, we propose that a new RACT 
determination is required. The new RACT determination is needed to take 
into account that newer, cost-effective control measures may have 
become available for sources that were not previously regulated. Thus, 
the State needs to reassess whether controls should be required. In 
addition, any major VOC or NOX source that exists at the 
time of final rulemaking on implementation of the 8-hour ozone standard 
but that did not exist during a previous RACT determination must be 
subject to a RACT determination as part of the SIP for the 8-hour ozone 
standard.
5. Proposed Approach for NOX RACT Determinations in Areas 
Affected by the NOX SIP Call
    All States submitting SIP revisions to meet the NOX SIP 
Call (October 27, 1998, 63 FR 57356) have elected to require large 
boilers and turbines to comply with an emissions cap-and-trade program 
consistent with EPA's model cap-and-trade rule. As a result, all these 
sources are already subject to stringent control requirements. As 
described below, these sources collectively achieve more emissions 
reductions than would be required by application of RACT requirements 
to each source. Therefore, where a nonattainment area is located in a 
State with an EPA-approved cap-and-trade program, EPA proposes that 
sources subject to the cap-and-trade program already meet the 
NOX RACT requirements.
    In previously issued guidance concerning NOX RACT for 
boilers and turbines, EPA indicated that NOX RACT for 
certain types of electricity generating units (EGUs) is equivalent to 
the title IV requirements and is the most effective level of combustion 
modification reasonably available (NOX General Preamble at 
57 FR 55625). In subsequent guidance, EPA further indicated that 
NOX RACT should generally be expected to achieve 
approximately 30-50 percent reduction from uncontrolled levels.\56\
---------------------------------------------------------------------------

    \56\ Memorandum of March 16, 1994, from D. Kent Berry re: 
``Cost-Effective Nitrogen Oxides (NOX Reasonably 
Available Control Technology (RACT).'' U.S. Environmental Protection 
Agency, Research Triangle Park, North Carolina.
---------------------------------------------------------------------------

    Large boilers and turbines subject to the NOx SIP Call 
cap-and-trade program are expected to achieve much greater emissions 
reductions than these NOX RACT levels. The NOX 
SIP Call base case assumes EGUs meet the title IV and/or RACT 
requirements. In the NOX SIP Call control case, EGUs are 
expected to achieve a 64 percent reduction beyond the base case 
requirements (65 FR 11225). Thus, these EGUs are expected to reduce 
emissions by far greater amounts than would be required by a RACT 
program. Furthermore, the EGU emissions reductions comprise nearly 85 
percent of the overall emissions reductions resulting from the 
NOX SIP Call. The non-EGUs subject to the States' cap-and-
trade program are expected to achieve a 60 percent reduction from 
uncontrolled levels (63 FR 57402). These non-EGU reductions are clearly 
beyond the 30-50 percent expected from a RACT program.
    Because the NOX SIP Call is a market-based program, 
there may be a few units that choose to meet those requirements simply 
by emissions trading, even though the vast majority of units affected 
by the NOX SIP Call will install controls. In any 
nonattainment areas where this is the case, EPA believes that the 
overall emission reductions from sources in the NOX SIP Call 
cap-and-trade program will achieve more emissions reductions in the 
nonattainment area than would application of RACT to each of those 
units.
    In summary, the level of emissions reductions required by the 
NOX SIP Call is far greater than the level of reductions 
achieved by controls we have determined to be NOX RACT. 
Therefore, EPA believes the sources that comply with the NOX 
SIP Call cap-and-trade program meet NOX RACT requirements. 
Accordingly, EPA proposes that the State need not perform a 
NOX RACT analysis for sources subject to the State's 
emission cap-and-trade program where the cap-and-trade program has been 
approved by EPA as meeting the NOX SIP Call requirements and 
need not submit a new NOX RACT SIP for those sources. EPA 
invites comment on this approach.
    As described in section 4, proposed approach for previous source-
specific major source RACT determinations, States would need to make a 
RACT determination for major sources not subject to the cap-and-trade 
program. However, in cases where States have adopted controls 
consistent with the NOX SIP Call for cement kilns (i.e., 30 
percent reduction), the State may choose to accept the NOX 
SIP Call requirements as meeting the NOX RACT requirements 
for the 8-hour standard and need not submit a new NOX RACT 
SIP for those sources. As part of the NOX SIP Call, EPA 
determined that highly cost-effective controls for cement kilns will 
achieve a 30 percent reduction and that many cement plants in the SIP 
Call region implemented such controls in State RACT programs (63 FR 
57418). In its RACT SIP submission, the State should identify the 
cement plants that are subject to NOX SIP Call controls and 
that, therefore, already meet RACT.
    In addition, through the NOX SIP Call or other programs 
(e.g., NSR) States may have adopted control measures for specific 
NOX sources that equal or exceed RACT requirements. For 
these sources, States may choose to submit, as part of its 
NOX RACT SIP revision, documentation that the previously 
adopted control measure meets the RACT requirement, where applicable. 
Finally, in developing the NOX SIP Call, States may have 
considered control measures for sources not in the cap-and-trade 
program--or may consider additional sources in responding to the second 
phase of the NOX SIP Call. EPA's NOX RACT 
guidance (NOX General Preamble at 57 FR 55625) encourages 
States to develop RACT programs that are based on ``areawide average 
emission rates.'' Thus, States can submit a demonstration as part of 
their RACT submittal showing that the weighted average emission rate 
from sources in the nonattainment area subject to RACT--including 
sources reducing emissions to meet the NOX SIP Call 
requirements--meet RACT requirements.
    It should also be noted that this proposal in no way limits States' 
discretion to require beyond-RACT NOX reductions from any 
source (including NOX SIP Call sources) in a plan to 
demonstrate attainment of the health-based ozone standards. In certain 
areas, States may choose to require NOX controls based on 
more advanced

[[Page 32840]]

control technologies to provide for attainment of the ozone standards.
    As stated in section 3, above, we are proposing an alternative 
option for RACT under subpart 1. In this option, areas that are able to 
demonstrate attainment of the 8-hour standard as expeditiously as 
practicable with the control measures in their SIP would be considered 
as having met RACT.
6. Proposed Approach for NOX as an Ozone Precursor
    In addition to the issue regarding the nature of the RACT rules 
that apply under subpart 1, another issue concerns the pollutants 
(precursors) to which the RACT rules apply. Although NOX has 
long been recognized as a precursor to ozone \57\ and several national 
rules \58\ have been promulgated to control NOX for purposes 
of helping attain the ozone standard, subpart 1 does not specifically 
address either NOX or VOC, but rather RACT in general. We 
propose to clarify this by recognizing both NOX and VOCs as 
precursors to ozone and to require NOX and VOC RACT under 
subpart 1. This is consistent with the application of RACT under 
subpart 2. Under section 182(f) (in subpart 2), a waiver from 
NOX RACT is possible under certain circumstances (the waiver 
provision is discussed elsewhere in this proposed rulemaking) for areas 
subject to subpart 2. We are proposing to allow areas subject to 
subpart 1, to seek a waiver consistent with the tests set forth in 
section 182(f).
---------------------------------------------------------------------------

    \57\ For example, the 1991 National Academy of Sciences report 
entitled Rethinking the Ozone Problem in Urban and Regional Air 
Pollution recommends that ``To substantially reduce O3 
[ozone] concentrations in many urban, suburban, and rural areas of 
the United States, the control of NOX emissions will 
probably be necessary in addition to, or instead of, the control of 
VOCs.''
    \58\ For example, NOX SIP Call (published October 27, 
1998), Tier 2/Gasoline Sulfur regulations (published on February 10, 
2000); and Control of Emissions of Air Pollution from 2004 and Later 
Model Year Heavy-duty Highway Engines and Vehicles (published 
October 6, 2000).
---------------------------------------------------------------------------

7. Proposed Approach for RACM
    We have also issued guidance for implementing the RACM provisions 
of the CAA that interprets those provisions to require a demonstration 
that the State has adopted all reasonable measures to meet RFP and 
attainment as expeditiously as practicable and thus that no additional 
measures that are reasonably available will advance the attainment date 
or contribute to RFP for the area. \59\ The RACM requirement, which is 
set forth in section 172(c)(1) of the CAA, applies to all nonattainment 
areas that are required to submit an attainment demonstration, whether 
covered under only subpart 1 or also subpart 2.
---------------------------------------------------------------------------

    \59\ ``State Implementation Plans; General Preamble for the 
Implementation of Title I of the Clean Air Act Amendments of 1990; 
Proposed Rule.'' 57 FR 13498 at 13560 (April 16, 1992).
    ``Guidance on the Reasonably Available Control Measures (RACM) 
Requirement and Attainment Demonstration Submissions for Ozone 
Nonattainment Areas.'' John S. Seitz, Director, Office of Air 
Quality Planning and Standards. November 30, 1999. Web site: 
www.epa.gov/ttn/oarpg/t1pgm.html.
    Memorandum of December 14, 2000, from John S. Seitz, Director, 
Office of Air Quality Planning and Standards, re: ``Additional 
Submission on RACM from States with Severe One-Hour Ozone 
Nonattainment Area SIPs.''
---------------------------------------------------------------------------

8. Proposed Submission Date for RACT and RACM Requirements
    We are proposing that the SIP provisions for RACT for a 
nonattainment area--regardless of whether the area is covered under 
subpart 1 or subpart 2--be submitted within 2 years after the area's 
nonattainment designation; this is consistent with the timing for 
submission of RACT rules in section 182(b)(2) for moderate areas.\60\
---------------------------------------------------------------------------

    \60\ Section 182(a) provided that marginal areas with pre-1990 
RACT obligations had to submit corrections to their RACT rules 
within 6 months after classification under the 1990 CAAA. New 8-hour 
ozone nonattainment areas that are classified as marginal would not 
have this requirement.
---------------------------------------------------------------------------

    We are proposing that the SIP provisions for RACM for a 
nonattainment area--regardless of whether the area is covered under 
subpart 1 or subpart 2--be submitted within 3 years after the area's 
nonattainment designation; this is consistent with the timing for 
submission of an area's demonstration of attainment.

L. How Will the Section 182(f) NOX Provisions Be Handled 
Under the 8-Hour Ozone Standard?

    In subpart 2 of part D, section 182(f) requires States to apply the 
same requirements to major stationary sources of NOX as are 
applied to major stationary sources of VOC. The applicable requirements 
are RACT and NSR for major stationary sources in certain ozone 
nonattainment areas and throughout States in the OTR.\61\ In addition, 
section 182(f) specifies circumstances under which these NOX 
requirements would be limited or would not apply (``NOX 
waiver''). Further, areas granted a NOX waiver under section 
182(f) may be exempt from motor vehicle I/M and certain Federal 
requirements of general and transportation conformity.\62\ For the same 
reasons described in the ``Nitrogen Oxides Supplement to the General 
Preamble'' with respect to the 1-hour ozone standard, we propose to 
also apply the NOX requirements and waiver provisions in 
section 182(f) for 8-hour ozone nonattainment areas under subpart 2 and 
OTRs.\63\
---------------------------------------------------------------------------

    \61\ See 57 FR 55622 (``Nitrogen Oxides Supplement to the 
General Preamble,'' published November 25, 1992).
    \62\ As stated in EPA's I/M (57 FR 52950) and conformity rules 
(60 FR 57179 for transportation rules and 58 FR 63214 for general 
rules), certain NOX requirements do not apply where EPA 
granted an areawide exemption under section 182(f).
    \63\ See 57 FR 55620, ``Nitrogen Oxides Supplement to the 
General Preamble,'' published November 25, 1992.
---------------------------------------------------------------------------

    Elsewhere in today's proposed rulemaking, we propose to establish 
NOX as a precursor to ozone under subpart 1 and require RACT 
and NSR in subpart 1 nonattainment areas for major sources of 
NOX as well as VOC. As noted in the preceding paragraph, we 
are also proposing that the NOX RACT and NSR requirements 
apply in certain subpart 2 nonattainment areas and throughout OTRs. 
While NOX emissions are necessary for the formation of ozone 
in the lower atmosphere, a local decrease in NOX emissions 
can, in some cases, increase local ozone concentrations. This potential 
``NOX disbenefit'' resulted in Congress including 
NOX waiver provisions in section 182(f) (in subpart 2 of 
part D) for areas classified under subpart 2. We believe the 
NOX waiver provisions are a prudent safeguard to avoid 
unnecessary emissions reductions and that these safeguards should be 
extended to areas classified under subpart 1 that are subject to the 
NOX RACT and NSR provisions. Therefore, we propose to 
establish NOX waiver provisions identical to those in 
section 182(f) for areas subject to subpart 1.
    In the event that the final rulemaking does not establish 
NOX as a precursor to ozone under subpart 1 and the 
NOX RACT and/or NSR requirements do not apply, a 
NOX waiver provision would be unnecessary with respect to 
subpart 1 areas. We propose that the concepts contained in the existing 
1-hour ozone guidance \64\ regarding section 182(f) would apply for the 
8-hour ozone program under subparts 1 and 2. We would update the 
existing guidance to take into account the new ozone and PM standards 
and modeling techniques now available. For areas that were previously 
granted a NOX waiver under the 1-hour ozone standard, a re-
approval would be needed to make it clear that the exemption applies, 
to allow for public

[[Page 32841]]

comment, to be consistent with the waiver guidance under the 8-hour 
standard (once issued), and to account for any new information that may 
point to a different conclusion.
---------------------------------------------------------------------------

    \64\ The EPA's primary guidance regarding section 182(f) is 
contained in the ``Guideline for Determining the Applicability of 
Nitrogen Oxide Requirements under Section 182(f),'' issued by John 
S. Seitz, Director, Office of Air Quality Planning and Standards, to 
the Regional Division Directors, December 16, 1993.
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M. What Aspects of Transportation Conformity and the 8-Hour Ozone 
Standard Are Addressed in This Proposal?

1. What Is Transportation Conformity?
    Transportation conformity is required under section 176(c) of the 
CAA (42 U.S.C.Sec.  7506(c)) to ensure that federally supported highway 
and transit project activities are consistent with (``conform to'') the 
purpose of a SIP. Conformity to the purpose of the SIP means that 
transportation activities will not cause new air quality violations, 
worsen existing violations, or delay timely attainment of the NAAQS. 
Transportation conformity applies in nonattainment areas and 
maintenance areas. EPA's transportation conformity rule, 40 CFR part 
93, establishes the criteria and procedures for determining whether 
transportation activities conform to the State air quality plan. It 
also establishes criteria and procedures for determining whether 
transportation activities conform in areas where no SIP containing 
mobile source emissions budgets yet exists.
    EPA first published the transportation conformity rule on November 
24, 1993 (58 FR 62188) and has amended the rule several times. On 
August 15, 1997, a comprehensive set of amendments was published that 
clarified and streamlined language from the 1993 transportation 
conformity rule (62 FR 43780). These rulemakings, as well as other 
relevant conformity materials such as guidance documents, policy 
memoranda, and conformity research can be found at EPA's transportation 
conformity Web site, at: http://www.epa.gov/otaq/transp.htm (once at 
the site, click on ``Transportation Conformity.'')
2. Why Is EPA Discussing Transportation Conformity in This Proposed 
Rulemaking?
    We are discussing transportation conformity in this proposed 
rulemaking in order to provide affected parties with information on 
when transportation conformity will be implemented under the 8-hour 
ozone standard and how we plan to make the transition from the 1-hour 
ozone standard to the 8-hour ozone standard. Affected parties may 
include State and local transportation and air quality agencies, 
metropolitan planning organizations (MPOs) and the U.S. Department of 
Transportation (DOT). To determine whether this discussion affects your 
organization, you should carefully examine the applicability 
requirements in 40 CFR 93.102 of the transportation conformity rule.
3. Are Any Changes Being Made to Transportation Conformity in This 
Proposed Rulemaking?
    No, we are not proposing changes to the transportation conformity 
rule in this proposed rulemaking. In the future, we plan to conduct a 
rulemaking to establish the specific conformity tests that will apply 
under the 8-hour standard. We intend to complete that rulemaking prior 
to area designations for the 8-hour standard and will provide the 
public with the opportunity to comment on the proposed changes. We plan 
to propose this rulemaking in the summer of 2003.
4. When Does Transportation Conformity Apply to 8-hour Ozone 
Nonattainment Areas?
    Transportation conformity applies to 8-hour ozone nonattainment 
areas 1 year after the effective date of an area's designation. This 1-
year grace period is found in the CAA at 42 U.S.C. 7506(c)(6). 
Specifically, this section of the CAA provides areas, that for the 
first time are designated nonattainment for a given air quality 
standard, with a 1-year grace period before the conformity regulation 
applies with respect to that standard. Since the 8-hour ozone standard 
is a different standard from the 1-hour ozone standard, every area that 
is designated nonattainment for the 8-hour ozone standard will have a 
1-year grace period before conformity applies for the 8-hour standard, 
regardless of whether or not it was designated nonattainment or 
maintenance for the 1-hour ozone standard.
    For more information, please see the proposed and final rulemaking 
entitled, ``Transportation Conformity Rule Amendments: Minor Revision 
of 18-Month Requirement for Initial SIP Submissions and Addition of 
Grace Period for Newly Designated Nonattainment Areas,'' published 
October 5, 2001 (66 FR 50954); and August 6, 2002 (67 FR 50808), 
respectively for additional discussion of the 1-year grace period for 
newly designated areas. (The proposed and final rule can be found on 
EPA's transportation conformity Web site mentioned above.)
5. How Does the 1-Year Grace Period Apply in Metropolitan Areas?
    Metropolitan areas are those areas that have a MPO designated as 
being responsible for transportation planning per 23 U.S.C. 134. In 
these areas, the 1-year grace period means that, 1 year after the 
effective date of an area's designation as nonattainment for the 8-hour 
standard, the area must have a conforming transportation plan and 
Transportation Improvement Program in place to fund or approve 
transportation projects. If, at the conclusion of the 1-year grace 
period, a metropolitan area is not able to make a conformity 
determination for its plan and Transportation Improvement Program, the 
area will be in what is known as a ``conformity lapse.'' (For the 
discussion of which projects can proceed during a conformity lapse, 
please see DOT's January 2, 2002 guidance, published February 7, 2002, 
at 67 FR 5882; and EPA's May 14, 1999 guidance.\65\ Both of these 
documents can be found on EPA's transportation conformity Web site: 
http://www.epa.gov/otaq/transp/traqconf.htm.
---------------------------------------------------------------------------

    \65\ The EPA's Conformity Guidance on Implementation of March 2, 
1999, Conformity Court Decision (EPA 420-F-99-025, May 1999).
---------------------------------------------------------------------------

6. How Does the 1-Year Grace Period Apply in ``Donut'' Areas?
    For the purposes of conformity, a donut area is the geographic area 
outside a metropolitan planning area boundary, but inside the boundary 
of a designated nonattainment/maintenance area. The conformity 
requirements for donut areas are generally the same as those for 
metropolitan areas, and the MPO would include any projects occurring in 
the donut area in its analysis of the metropolitan transportation plan 
and TIP. Therefore, the one-year grace period applies to donut areas in 
much the same way that it applies to metropolitan areas. That is, 
within one year of the effective date of an area's designation, a donut 
area's projects must be included in an MPO's conformity determination 
for the metropolitan plan and TIP for those projects to be funded or 
approved. If, at the conclusion of the one-year grace period, the donut 
area's projects have not been included in an MPO's conformity 
determination, the entire nonattainment area's conformity would lapse.
7. How Does the 1-Year Grace Period Apply in Isolated Rural Areas?
    For the purposes of conformity, a nonattainment or maintenance area 
(or portion thereof) is considered to be an isolated rural area if it 
does not have a metropolitan transportation plan or Transportation 
Improvement Program required under 23 U.S.C. 134, and its projects are 
not considered in the emissions analysis of any MPO's

[[Page 32842]]

transportation plan or Transportation Improvement Program. Isolated 
rural areas are distinguished from ``donut'' areas which are outside 
the metropolitan planning boundary and inside the nonattainment/
maintenance area boundary.
    Because isolated rural areas do not have federally required 
metropolitan transportation plans and Transportation Improvement 
Programs, a conformity determination need only be done in an isolated 
rural area when that area has a transportation project or projects that 
need approval. Therefore, isolated rural areas also have a 1-year grace 
period before conformity applies under the 8-hour ozone standard, but 
at the end of that grace period, the area is not required to have made 
a conformity determination. An isolated rural area would be required to 
make a conformity determination only at the point when a new 
transportation project needs approval. This point may occur 
significantly after the 1-year grace period has ended. (Conformity 
requirements for isolated rural areas can be found at 40 CFR 
93.109(g)).
8. Does Conformity Apply for the 1-Hour Ozone Standard Once the 1-Hour 
Ozone Standard Is Revoked?
    The CAA only requires conformity in areas that are designated 
nonattainment or maintenance for a standard. Therefore, conformity will 
not apply for purposes of the 1-hour ozone standard after the 1-hour 
standard and an area's 1-hour designation are revoked. In other words, 
existing 1-hour ozone nonattainment and maintenance areas, including 
those that will not be designated nonattainment for the 8-hour ozone 
standard, will no longer be required to demonstrate conformity to the 
1-hour standard when EPA revokes the standard, 1 year after the 
effective date of EPA's 8-hour ozone designations. This interpretation 
that conformity would not apply in 1-hour ozone maintenance areas once 
the 1-hour standard is revoked is a change from the approach we planned 
to take in 1997. Since that time, we have reconsidered whether or not 
conformity should continue to apply in maintenance areas. We have 
concluded that the better interpretation is that conformity would not 
apply in 1-hour maintenance areas once the 1-hour ozone standard is 
revoked because maintenance areas are relieved of the obligation under 
section 175A of the CAA to have a maintenance plan. Since a maintenance 
plan is not required, conformity no longer applies in these areas. A 
detailed discussion of our plans for revoking the 1-hour standard and 
the associated 1-hour designations may be found elsewhere in today's 
proposed rulemaking.
9. What Are EPA's Plans for Amending the Conformity Rule To Address the 
8-Hour Ozone Standard?
    The conformity rule will need to be amended to address the 
implementation of both the 8-hour ozone and PM2.5 air 
quality standards. We plan to address both standards in one revision to 
the rule. We anticipate proposing this revision in 2003 and finalizing 
the rulemaking prior to EPA's finalization of designations of 
nonattainment areas in 2004. This schedule would allow areas to be well 
aware of the conformity requirements that will apply to them prior to 
the start of the 1-year grace period. The proposal will provide an 
opportunity for stakeholders to offer comments and ideas for providing 
flexibilities that would be appropriate for some or all nonattainment 
areas.
10. What Impact Will the Implementation of the 8-Hour Ozone Standard 
Have on a State's Transportation Conformity SIP?
    Since we are not now proposing to make specific revisions to our 
Transportation Conformity Regulations in this proposal, States should 
not need to revise their Transportation Conformity SIPs, unless they 
need to do so to ensure the regulations apply in the appropriate areas.
11. What Other Parts of This Proposal Could Affect Transportation 
Conformity Determinations?
    We believe that transportation conformity stakeholders would be 
interested in the proposed Clean Air Development Communities program 
found in section O, question 9 of this proposal. Section O discusses 
how we propose to implement the NSR, EPA's program that regulates 
emissions from stationary sources such as power plants, under the 8-
hour ozone standard. In question 9 of section O, we propose two options 
to recognize the air quality benefits that may result from siting new 
sources and planning development in a particular manner. Under these 
two options, the air quality benefit of location decisions would be 
applied to the stationary source sector. Because the benefits of 
measures cannot be counted twice, if air quality benefits of location 
decisions are applied to the stationary source sector, they could not 
also be credited to the transportation sector in a conformity 
determination. These options and their implications are discussed in 
further detail in section O, question 9. We encourage transportation 
conformity stakeholders to review that section carefully and submit any 
comments to us.

N. What Requirements for General Conformity Should Apply to the 8-Hour 
Ozone Standard?

1. What Is the Purpose of the General Conformity Regulations?
    Section 176(c) of the CAA requires that before a Federal entity 
takes an action, it must make a determination that the proposed action 
will not interfere with the SIP or the State's ability to attain and 
maintain the NAAQS. In November 1993, EPA promulgated two sets of 
regulations to implement section 176(c). One set, known as the 
Transportation Conformity Regulations (described above) deals with 
approval and funding of highway and mass transit projects. The other 
set, known as the general conformity regulations, deals with all other 
Federal activities. Besides ensuring that Federal actions will not 
interfere with the SIP, the general conformity program also fosters 
communications with State/local air quality agencies, allows for public 
participation in the review of air quality impacts from Federal 
actions, and allows for air quality review of individual projects. In 
1995, Congress limited the application of section 176(c) to 
nonattainment and maintenance areas only.
2. How Is the General Conformity Program Currently Structured?
    Due to the very broad definition of ``Federal action'' in the 
statute and the number of Federal agencies subject to the conformity 
requirement, the number of individual conformity decisions could have 
been on the order of a thousand or more per day. To avoid creating an 
unreasonable administrative burden, EPA established de minimis 
emissions levels and exempted certain actions. In addition, the 
regulations allow Federal agencies to develop their own list of actions 
which are presumed to conform. For non-exempt actions that increase 
emissions above the de minimis levels, the Federal agency must 
demonstrate that the action will conform with the SIP or will not cause 
or contribute to any new violation of any standard in any area; 
interfere with provisions in the applicable SIP for maintenance of any 
standard; increase the frequency or severity of any existing violation 
of any standard; or delay timely attainment of any standard or any 
required interim emissions reductions or other milestone. We are 
currently reviewing the general

[[Page 32843]]

conformity program and, in a separate action, may revise the 
regulations as appropriate, with respect to the 8-hour standard.
3. Who Runs the General Conformity Program?
    Each Federal agency is responsible for determining if the action it 
takes is subject to the conformity regulations and, if so, whether the 
action conforms to the SIP. Each Federal agency's approach to the 
conformity evaluation differs depending upon the actions being taken. 
Agencies that are permitting or funding actions subject to the 
conformity rules generally require the applicant to develop the 
technical support for the conformity determination, although some 
agencies undertake the complete evaluation themselves.
4. How Does an Agency Demonstrate Conformity?
    Depending upon the pollutant and the specific situation, Federal 
agencies have several options for demonstrating conformity. For actions 
in ozone nonattainment and maintenance areas, the Federal agency can 
demonstrate that the project/action is specifically identified and 
accounted for in the SIP, obtain documentation from the State that the 
emissions are included in the SIP, have the State commit to include the 
emissions in the SIP, or mitigate the emissions or offset the emissions 
from emissions reductions within the same nonattainment or maintenance 
area.
5. General Conformity Regulation Revisions for the 8-Hour Ozone 
Standard
    a. What de minimis emission levels will be set for ozone 
precursors? For the ozone precursors VOC and NOX, we are 
proposing to retain the existing de minimis emission levels. Those 
levels were based on the definition of a major stationary source for 
the NSR programs as established by sections 182, 183, and 302 of the 
CAA. The current de minimis levels are identified in Table 4 below.

          Table 4.--De Minimis Emission Levels for VOC and NOX
------------------------------------------------------------------------
                                                    VOC tons/  NOX tons/
                Type of ozone area                     year       year
------------------------------------------------------------------------
Extreme Nonattainment.............................         10         10
Severe Nonattainment..............................         25         25
Serious Nonattainment.............................         50         50
Moderate and Marginal Nonattainment in the OTR....         50        100
Other Nonattainment...............................        100        100
Maintenance in OTR................................         50        100
Other Maintenance.................................        100        100
------------------------------------------------------------------------

    Areas covered by subpart 1 are included in the ``Other 
Nonattainment'' category listed in Table 4 and would have de minimis 
emission levels of 100 tons per year for both VOC and NOX 
emissions.
    b. What impact will the implementation of the 8-hour ozone standard 
have on a State's general conformity SIP? Since we are not now 
proposing to make specific revisions to its general conformity 
regulations in this proposal, States should not need to revise their 
general conformity SIPs, unless they need to do so to ensure the 
regulations apply in the appropriate areas.
    c. Are there any other impacts on the SIPs related to general 
conformity based on implementation of the 8-hour standard? Currently, 
we are reviewing the general conformity regulations and are considering 
whether it would be appropriate to revise them in the near future. We 
are not proposing any revisions at this time. However, as areas develop 
SIPs for the 8-hour ozone standard, we recommend that State and local 
air quality agencies work with major facilities which are subject to 
the general conformity regulations (e.g., commercial airports and large 
military bases) to establish an emission budget for those facilities in 
order to facilitate future conformity determinations. Such a budget 
could be used by Federal agencies in determining conformity or 
identifying mitigation measures.
6. How Does the 1-Year Grace Period Apply to General Conformity 
Determinations?
    Section 42 U.S.C. 7506(c)(6) applies to both transportation and 
general conformity. Therefore, the general conformity requirements 
would not apply to actions/projects in newly designated nonattainment 
areas until 1 year after the effective date of the designation. As 
discussed in section M.4., the 8-hour ozone standard is a new standard 
and the grace period applies to all the areas designated nonattainment 
for that standard. Actions/projects in areas previously designated 
nonattainment or maintenance for the 1-hour ozone standard must 
demonstrate conformity for the 1-hour standard until that standard is 
revoked in whole or in part. Once the 1-hour ozone standard is revoked 
in whole or in part, Federal agencies will be required to conduct 
conformity determinations for the 8-hour standard if the project/action 
is in an area designated nonattainment for that standard. The general 
conformity regulations specify requirements for actions/projects in 
areas without an approved SIP. Those requirements would apply to 8-hour 
ozone nonattainment areas until the SIP is approved by EPA.

O. How Should the NSR Program be Implemented Under the 8-Hour Ozone 
NAAQS?

1. Background
    The major NSR program contained in parts C and D of title I of the 
CAA is a preconstruction review and permitting program applicable to 
new or modified major stationary sources of air pollutants regulated 
under the CAA. In nonattainment areas, and throughout the OTR, the 
program is implemented under the requirements of part D of Title I of 
the CAA, and is referred to as nonattainment NSR. In attainment or 
unclassifiable areas outside the OTR, the requirements under part C of 
title I of the CAA apply, and the program is called the Prevention of 
Significant Deterioration (PSD) program. Collectively, we also commonly 
refer to these programs as the major NSR program. These regulations are 
contained in 40 CFR 51.165, 51.166, 52.21, 52.24 and part 51, appendix 
S.
    In attainment/unclassifiable areas outside of the OTR, a new major 
source, or a major modification to an existing source, must install 
best available control technology (BACT) and conduct an air quality 
modeling analysis and an analysis of potential impacts on Class I areas 
(see section 162 of the CAA). If the source is located in a 
nonattainment area, or anywhere in the OTR, including OTR attainment 
areas, it must install technology that meets the lowest achievable 
emission rate (LAER), secure emission reductions to offset any 
increases in emissions, and perform other analyses.
    As of the date areas are designated attainment or nonattainment 
under the 8-hour standard, major NSR will apply under the standard. In 
areas outside the OTR that will be designated as attainment for the 8-
hour ozone standard, the part C PSD program will apply. As there are 
currently PSD programs in place in all areas of the country, 
implementation of the new standard should be a straightforward

[[Page 32844]]

matter. (Note that one change we will be codifying is the addition of 
NOX as an ozone precursor. This is discussed in more detail 
later in this section).
    In areas newly designated as nonattainment for the 8-hour ozone 
standard, however, a number of implementation issues will arise, which 
we discuss below. Typically, upon designation, nonattainment areas 
would be required to implement nonattainment NSR for major sources and 
major modifications.\66\ However, in order to reduce the burden for 
nonattainment areas meeting certain conditions, we are proposing a 
revised set of major NSR requirements under the authority of 40 CFR 
Part 51, appendix S, section VI. We are referring to this as the 
transitional program, and it is discussed in more detail later in this 
section.
---------------------------------------------------------------------------

    \66\ Should EPA issue revisions to these regulations, the 
revised NSR program would of course apply to new sources and major 
modifications.
---------------------------------------------------------------------------

2. Nonattainment NSR Under the 8-Hour Ozone Standard
    Some States may already have in place a part D major source program 
applicable to newly designated 8-hour ozone nonattainment areas. For 
nonattainment areas in States whose SIPs contain a generic requirement 
to issue part D major source NSR permits in areas designated as 
nonattainment, nonattainment NSR permit requirements will become 
automatically effective upon designation (See Figure 1).\67\
---------------------------------------------------------------------------

    \67\ States with already applicable part D NSR programs may 
choose to amend their SIPs to allow them to take advantage of the 
transitional option described in this section, provided they meet 
the transitional program eligibility criteria.

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[[Page 32845]]

[GRAPHIC] [TIFF OMITTED] TP02JN03.000

    For a nonattainment area in a State with a SIP that specifically 
lists the areas in which part D NSR applies, or in areas which 
currently have no nonattainment plan, there will be an interim period 
between the designation date and the date that the State amends its SIP 
either to list any new nonattainment area(s) or to include a part D 
plan. During this interim period, part D NSR requirements are governed 
not by section 51.165, but by appendix S to part 51.
    a. What does appendix S require for nonattainment areas during the 
interim period? In general, appendix S requires new or modified major 
sources to meet LAER and obtain sufficient offsetting emissions 
reductions to assure that the new major source will not interfere with 
the area's progress toward attainment. (Readers should refer to 40 CFR 
part 51, appendix S for a complete understanding of these and other

[[Page 32846]]

appendix S permitting requirements.) However, per section VI of 
appendix S, we have always recognized the need for flexibility under 
certain circumstances, which we address in detail below.
    Also, note that EPA does not have a Federal permit program in place 
for nonattainment NSR. This creates particular difficulties for the 
Tribes, because their programs are not as mature as the State programs. 
Therefore, in most locations, EPA, not the Tribes, will need to address 
the implementation of appendix S in these areas, until a Tribe develops 
a nonattainment NSR program on its own.
    b. What is the legal basis for requiring States to issue 
nonattainment NSR permits during the interim period? Section 
110(a)(2)(c) of the CAA establishes a general duty on States to include 
a program in their SIP that regulates the modification and construction 
of any stationary source as necessary to assure that NAAQS are 
achieved. This general duty, often referred to as ``minor NSR,'' exists 
during all periods, including before a State has an approved part D NSR 
permit program.
    Although section 110(a)(2)(c) does not define specific requirements 
States must follow for issuing major source permits during the interim 
period between nonattainment designation and EPA approval of a part D 
nonattainment NSR SIP (``interim period''), EPA's regulations codified 
at 52.24(k) require States to follow EPA's Emission Offset 
Interpretative rule codified at 40 CFR part 51, appendix S (hereinafter 
referred to as appendix S) during this time.\68\
---------------------------------------------------------------------------

    \68\ The actual language at 40 CFR 52.24(k) allows States to 
issue permits under appendix S for a maximum period of 18 months 
after designation. After this time, if the nonattainment area does 
not have an approved Part D NSR permit program, a construction ban 
would apply. However, in 1990, Congress altered the provisions of 
the construction ban such that it would not apply when a State 
lacked an approved part D NSR permit program in the future. We 
believe that Congress' removal of the construction ban from the CAA 
supersedes the regulatory language at 52.24(k) and EPA has 
reinterpreted this language to allow States to issue permits under 
appendix S from designation until the SIP is approved even if this 
exceeds 18 months. See 1991 guidance memo, ``New Source Review (NSR) 
Program Transitional Guidance'', John S. Seitz, March 11, 1991. We 
will be revising the language at section 52.24(k) to properly 
reflect this interpretation.
---------------------------------------------------------------------------

    c. Codification of NOX as an ozone precursor. Currently, 
only VOCs are expressly regulated as ozone precursors under the PSD 
regulations. Although appendix S specifically states that a source is 
major for ozone if it is major for VOCs, we do not believe this 
language is exclusive. The more general portion of the ``major 
stationary source'' definition states, ``* * * any stationary source 
that emits, or has the potential to emit, 100 tons per year or more of 
any pollutant subject to regulation under the Act,'' is considered a 
major source. There is similar general language within the definition 
of ``major modification.'' The nonattainment provisions of the Act, as 
amended in 1990, recognize NOX as an ozone precursor; 
section 182(f) of the CAA established nonattainment requirements for 
NOX. In addition, the definition of air pollutant under 
section 302(g) of the CAA includes, ``* * * any precursors to the 
formation of any air pollutant * * *'' Thus, where NOX is 
considered a precursor to the formation of ozone, the State would use 
appendix S to issue a preconstruction permit to a new major source of 
NOX emissions during the interim period.\69\
---------------------------------------------------------------------------

    \69\ Note that new sources or modifications which are major as a 
result of NOX emissions, and are thus subject to 
nonattainment NSR for NOX, would also be considered major 
sources of nitrogen dioxide (NO2), which is also a 
criteria pollutant. Since all areas are currently in attainment 
under the NO2 NAAQS, these new NOX sources 
will also need to go through PSD review of NO2.
---------------------------------------------------------------------------

    Notwithstanding the above, in order to be completely clear, we are 
proposing to amend both our NSR and PSD regulations to expressly 
include NOX as an ozone precursor in major PSD and major 
nonattainment NSR programs. Where relevant for both PSD areas and 
transitional NSR areas, States would be required to modify their 
existing programs to include NOX as an ozone precursor.
    Elsewhere in today's action, we are proposing to include 
NOX as an ozone precursor for RACT requirements under 
subpart 1. Under section 182(f) (in subpart 2), a waiver from 
NOX RACT and nonattainment NSR is possible under certain 
circumstances. We are proposing that the section 182(f) waiver 
provisions would also apply to areas designated nonattainment under 
either subpart 1 or subpart 2. However, the waiver provisions do not 
apply in areas where PSD is applicable.
3. Under What Circumstances Is a Transitional Program Needed During the 
Interim Period?
    We request comment on providing States flexibility regarding major 
source nonattainment NSR program requirements in areas that meet 
specific conditions. We believe that a more flexible NSR option is 
appropriate in areas that are expected to reach 8-hour ozone attainment 
early--within 3 years after designation--through, for example, national 
or regional programs such as the NOX SIP Call and the Tier 2 
motor vehicle emissions standards. In these areas, we believe that 
States should have the flexibility to apply a nonattainment NSR program 
that provides some relief from certain requirements.
    Several factors warrant a flexible approach for implementing NSR in 
areas which qualify for the transitional program. We expect many areas 
to attain the new 8-hour standard within 3 years solely through 
regional NOX reductions under the NOX SIP Call 
rule and other currently applicable Federal programs. We intend this 
option to be available to any 8-hour ozone nonattainment areas located 
outside the NOX SIP Call area, so long as those 
nonattainment areas can meet the 8-hour ozone NAAQS within 3 years 
after designation. Some of these areas may be in nonattainment due 
largely to transport from upwind sources; but no allowance is made 
under major NSR for sources in areas overwhelmed by transport. As we 
have construed it, this option would also encourage the early adoption 
of attainment plans, which we believe will lead to emissions reductions 
and resultant health benefits earlier than would otherwise occur. We 
request comment on the transitional program described in this proposed 
rulemaking, and in particular welcome information from States regarding 
how many new major sources or major modifications they anticipate would 
construct in transitional areas during the period between EPA's 
approval of a transitional part D nonattainment NSR plan and the State 
reaching attainment of the 8-hour NAAQS.
4. Elements of the Appendix S Transitional Program
    a. Which nonattainment areas would be eligible for the transitional 
program? The appendix S transitional program would only be available to 
8-hour ozone nonattainment areas that are subject to NSR under subpart 
1, not subpart 2 (see discussion of classifications elsewhere in this 
proposal). In addition, in order to be eligible for the transitional 
option, by the date EPA publishes the nonattainment designations for 
the 8-hour standard (currently expected in 2004) a subpart 1 
nonattainment area must: (1) Be attaining the 1-hour ozone standard; 
(2) be subject to subpart 1, not subpart 2, of part D; \70\ (3) have 
submitted an attainment plan that demonstrates attainment within 3 
years after designation; the attainment plan would have to include 
control measures under the NOX SIP Call rule where

[[Page 32847]]

applicable; and (4) have submitted an attainment plan containing any 
additional local control measures needed for attainment of the 8-hour 
standard. These plans must commit the State to implement, by December 
31, 2004, all measures necessary to bring the nonattainment area into 
attainment by a 2007 attainment date.\71\ In addition, when a State 
submits its attainment plan, it should note that it intends to 
implement a program under appendix S, section VI that meets the 
requirements for transitional areas discussed below.
---------------------------------------------------------------------------

    \70\ Certain nonattainment NSR requirements in subpart 2 of part 
D are specifically spelled out in the CAA, and thus cannot be 
altered under a transitional program.
    \71\ The actual attainment date--as proposed elsewhere in this 
proposal--would be 3 years after the nonattainment designation.
---------------------------------------------------------------------------

    Note that, under this option, the attainment plan submission timing 
(i.e., submission by the date of EPA designation of nonattainment 
areas) for transitional areas is about 3 years earlier than is 
otherwise required for areas not meeting the 8-hour standard. Note also 
that areas would be eligible for this transitional NSR provision even 
though we are not establishing a ``transitional'' nonattainment 
classification for areas covered under subpart 1. We request comment on 
these criteria.
    Also, note that while relief from offsets is provided for the NSR 
transitional program (see discussion below), those States and Tribes 
subject instead to the main body of appendix S will still need to 
provide offset provisions.
    b. What would be the basic requirements of a transitional 
nonattainment NSR program under appendix S, section VI?
    i. Major source applicability threshold. Under the general part D 
NSR requirements, the applicability threshold for ``major stationary 
source'' is defined as 100 tons per year of a nonattainment pollutant; 
in some instances under subpart 2 the major source threshold can be as 
low as 10 tons per year. In contrast, the major source threshold under 
the PSD program is either 100 or 250 tons per year, depending upon the 
type of stationary source undergoing review. We propose that, 
consistent with the subpart 1 part D NSR requirements, an appendix S, 
subpart VI transitional nonattainment programs will use a major source 
threshold of 100 tons per year for each ozone precursor.
    ii. Emission Control. Another key provision of the part D 
nonattainment NSR program is that, in order to be permitted, major new 
and modified sources must minimize their emission rate by applying 
control technology to achieve LAER, which is generally the most 
stringent emission limit contained in a SIP or achieved in practice.
    In contrast to LAER, which does not consider costs and other 
factors, a BACT analysis requires consideration of energy, 
environmental, and economic impacts in determining the maximum degree 
of reduction achievable for the proposed new source or modification. In 
a BACT analysis, as described in the New Source Review Workshop 
Manual,\72\ the most stringent emission limit, including the limit 
representing LAER and its associated control technology, must be 
considered. If the most stringent limit is rejected as BACT for a 
particular case, that decision must be supported by an analysis that 
shows that the most stringent limit should not be chosen in light of 
the costs or other relevant factors. For example, if the most effective 
control technology would impose unacceptably high costs because of 
site-specific factors, that technology could be rejected as BACT for 
the proposed source. In this way, BACT may be less stringent than LAER.
---------------------------------------------------------------------------

    \72\ U.S. EPA Office of Air Quality Planning and Standards, New 
Source Review Workshop Manual, Prevention of Significant 
Deterioration and Nonattainment Area Permitting, Draft, October 
1990. Available at: http://www.epa.gov/ttn/nsr/gen/wkshpman.pdf.
---------------------------------------------------------------------------

    We request comment on whether a BACT requirement, consistent with 
the BACT approach described in the NSR workshop manual, may be required 
in transitional appendix S nonattainment NSR programs in lieu of 
requiring LAER. We believe granting this relief is appropriate, given 
the minimal difference we would expect between the emissions reductions 
achieved from BACT, rather than LAER, for the small number of sources 
that may trigger nonattainment NSR in transitional areas, for the few 
years the area is nonattainment.
    iii. Relief from source-specific offsets requirements. We are 
proposing that major sources and major modifications would not be 
required to obtain case- and source-specific offsets under the 
transitional program. However, despite locating in a nonattainment area 
which qualifies for the NSR transitional program, a new major source 
may not cause or contribute to the existing violation in the 
nonattainment area. If the State determines that the source does not 
contribute to the existing violation, then mitigation would not be 
required.
    There are several circumstances under which it is reasonable to 
assume that a new major source locating in a nonattainment area will 
not interfere with timely attainment of the standard. First, if the 
nonattainment area which qualifies for the NSR transitional option is 
participating in the NOX SIP Call (63 FR 57356; October 27, 
1998), we expect that a source locating in the area will not cause or 
contribute to the existing violation, so long as the new emissions are 
consistent with growth projections. This is because it is assumed that 
where new emissions are consistent with growth projections, those new 
emissions will not interfere with timely attainment of the standard. 
Under the NOX SIP Call, we modeled emissions for 2007. We 
included future growth projections for both VOC and NOX 
emissions, and allocated each State a NOX budget designed to 
control interstate NOX transport. Because these budgets 
include an emission growth factor for VOC and NOX, we 
believe that new major sources may locate in those nonattainment areas 
which qualify for the NSR transitional option without interfering with 
the area's ability to reach attainment, provided that any new emissions 
are within the projected emissions growth factor. We expect States to 
develop appropriate emission inventory procedures to assure that any 
new emissions are consistent with projected growth in emissions.
    Those nonattainment areas which qualify for the NSR transitional 
program that are not projected to attain under the NOX SIP 
Call or are not covered by the NOX SIP Call may also allow 
for an increase in new major source emissions if their attainment 
demonstration includes an emissions growth factor for major new and 
modified sources and demonstrates that, provided emission increases 
from new major sources remain below this level, the area will reach 
attainment. Again, we expect States to develop appropriate emission 
inventory procedures to demonstrate that the new emissions are 
consistent with projected growth in emissions.
    iv. Other requirements. In addition to the control technology 
requirements discussed above, and consistent with current NSR 
requirements under appendix S, section IV, condition 2, sources 
locating in transitional areas will be required to certify statewide 
compliance of all existing major sources under the same ownership or 
control. We believe this requirement will not impose a substantial 
burden on permit applicants or permitting authorities.
    v. Backstop Provisions. Should a nonattainment area under the 
appendix S, section VI transitional program fail to meet its SIP 
obligations to attain the NAAQS before the end of the interim period, 
then it will no longer be eligible for the transitional program. We 
request comment on the need for a backstop provision that requires a 
State to notify

[[Page 32848]]

us, at the time of such failure, that it is reverting to the 
traditional nonattainment requirements under appendix S. We also 
request comment on any other findings which should end eligibility for 
the transitional program.
5. Will a State Be Required To Assure That the Increased Emissions From 
a new Major Source Do Not Cause or Contribute to a Violation in a 
Nearby Nonattainment Area Before It Issues a Preconstruction Permit 
Under Appendix S?
    At the current time, EPA allows the State to presume that a source 
locating outside a designated ozone nonattainment area will have no 
significant impact on the designated nonattainment area. See section 
III of appendix S. However, given the recent advances in the scientific 
understanding of ozone formation, we may revise these guidelines in the 
near future. In the meantime, under the PSD rules, States may choose to 
address the impacts of sources in attainment areas on nearby 
nonattainment areas in a more proactive manner; i.e., through PSD 
offsets and/or tighter emission controls when the source is shown to 
contribute to a violation of the NAAQS.
6. What Happens at the End of the Interim Period?
    a. Transitional NSR areas. As noted above, this transitional option 
is only intended to apply to certain nonattainment areas that expect to 
attain the 8-hour ozone NAAQS within 3 years after designation. 
Therefore, we expect these areas to be in attainment on or before an 
attainment date in 2007. Accordingly, States must submit, by the 
attainment date in 2007, an attainment demonstration with a maintenance 
plan. A State may continue implementing transitional NSR under appendix 
S, section VI for 6 months following submission of its attainment plan, 
or until its attainment plan is approved, whichever is earlier.
    b. Traditional NSR areas. If a State has never been or is no longer 
operating under a section VI transitional program, it must submit a 
part D nonattainment NSR plan within 3 years after designation (in 
2007). The State may continue implementing traditional part D 
nonattainment requirements under appendix S until we approve its part D 
plan.
7. What Is the Legal Basis for Providing This Transitional Program?
    As stated earlier, appendix S applies during the period after an 
area is designated nonattainment but before a part D nonattainment NSR 
plan is due under subparts 1 and 2 of part D. Application of appendix S 
during this interim period ensures compliance with the section 
110(a)(2)(C) ``minor'' NSR program. However, Congress was ambiguous 
regarding what specific requirements States must follow for issuing 
major source permits during the interim period described above. Thus, 
we have discretion to interpret those regulations in a reasonable 
manner. Chevron, U.S.A. v. NRDC, 467 U.S. 837 (1984).
    The transitional appendix S approach is reasonable for several 
reasons. First, it would be available only for those areas that are 
already attaining the 1-hour standard and that will attain the 8-hour 
standard within 3 years after designation (before a part D 
nonattainment NSR SIP revision is due) through national and regional 
planning. These areas appropriately deserve a different approach for 
implementing the section 110(a)(2)(C) requirements than areas that are 
in nonattainment for the 1-hour standard and thus currently 
implementing NSR, or those areas that are not projected to reach 
attainment of the 8-hour in the short term.
    We believe that the transitional option, as we have constructed it, 
would result in a level of emissions reductions that is substantially 
similar to the level that would be achieved from traditional NSR for 
the small number of sources it will affect in the short period during 
which these areas are designated nonattainment. Thus, these 
transitional areas would still be implementing a program that regulates 
the modification and construction of any stationary source ``as 
necessary'' to assure that the NAAQS are achieved as expeditiously as 
practicable.
    Currently, the language of section VI allows all States to exempt a 
new major source from complying with the requirement to install LAER 
and obtain offsets if the source will meet all other applicable SIP 
requirements and not interfere with the area's ability to meet its 
attainment date. However, we plan to revise section VI to remove this 
general exemption and apply the transitional approach. This revision is 
appropriate because we do not believe that areas not meeting the 
transitional approach would be able to ensure that they were 
implementing an NSR program ``as necessary'' to ensure the attainment 
of the NAAQS without complying with appendix S in general (e.g., 
sections I-V). Note that section VI of appendix S originally applied 
only to secondary NAAQS, and we revised section VI to include primary 
standards following the 1977 Amendments. The exemption provided by 
section VI applied to areas whose attainment dates were shortly after 
the CAA was re-authorized in 1977 because these areas had already 
submitted their attainment plans to us, and we believed that these 
areas would reach attainment without having to impose LAER and offsets 
on new major sources.
    While nonattainment areas that qualify for the 8-hour ozone 
standard NSR transitional option are in a similar situation, areas not 
qualifying for the transitional approach are not. In order to qualify 
for the NSR transitional option, States will have to submit an 
attainment plan by the date of designation for the 8-hour NAAQS in 
2004. These plans must commit the State to implement by December 31, 
2005, all measures necessary to bring the nonattainment area into 
attainment and to meet a 2007 attainment date.\73\ Similar to the 
nonattainment areas to which section VI originally applied, we believe 
that nonattainment areas which qualify for the NSR transitional option 
will be able to meet a 2007 attainment date without imposing LAER and 
offsets on new major sources.
---------------------------------------------------------------------------

    \73\ The actual attainment date--as proposed elsewhere in this 
proposed rulemaking--would be 3 years after the effective date of 
nonattainment designation, which we anticipate will occur in the 
spring of 2004.
---------------------------------------------------------------------------

    On its surface, section VI's existing language could be applied in 
any nonattainment area during the interim period. For an area that 
fails to meet the transitional option requirements, however, we believe 
that the area would not be able to show that it will continue to meet 
the areas attainment date if it does not apply LAER or obtain offsets. 
Thus, we are proposing to revise the language of section VI to apply 
only in areas qualifying for the transitional NSR program.
8. How Should the NSR Requirements Be Implemented for New 8-Hour Ozone 
Areas that Encompass the Old 1-Hour Ozone Nonattainment Areas After EPA 
Revokes the 1-Hour Ozone Standard?
    Newly-designated 8-hour ozone areas which include areas which have 
never attained the 1-hour standard will have two different sets of 
requirements in place until a point in time proposed elsewhere in this 
proposed rulemaking under the anti-backsliding provisions. (There are 
two options proposed in the anti-backsliding section of this proposal 
for that point in time--until either the level of the 1-hour ozone 
standard is achieved or the 8-hour ozone standard is attained.) The 1-
hour NSR requirements and higher offset ratios (if applicable) will 
remain in place in the area that was designated nonattainment

[[Page 32849]]

for the 1-hour standard until that point in time. The remaining portion 
of the newly-designated 8-hour ozone area must comply only with the 8-
hour ozone NSR requirements and offset ratios (if applicable).
9. NSR Option To Encourage Development Patterns That Reduce Overall 
Emissions--Clean Air Development Communities
    EPA is considering two options to recognize the air quality 
benefits which can accrue when areas site new sources and plan 
development in a manner that results in overall reduced emissions. EPA 
would define a community that changes its development patterns in such 
a way that air emissions within the non-attainment area are 
demonstrably reduced as a ``Clean Air Development Community'' (CADC). 
We propose that areas that qualify as CADCs would obtain certain 
flexibilities in implementing CAA programs. We request comments on the 
options listed here and encourage commenters to suggest other ways 
under the CAA that we could encourage development that will result in 
lower emissions.
    In the first option, a CADC would have a more flexible NSR program 
by: (1) Being subject to subpart 1 NSR as opposed to subpart 2 NSR; (2) 
lowering NSR major source thresholds for these areas to make them 
similar to the thresholds for PSD areas; and (3) allowing areas that 
meet certain development criteria (development zones) to receive NSR 
offsets from State offset pools. In the second option, a CADC would be 
able to receive a pool of NSR offset credits equal to the reduced 
emissions from new development patterns. Credits from the pool could be 
provided to any new or modified source in a ``development zone'' as 
offsets.
    The first goal of a CADC option is that it would give communities a 
tool to achieve air quality benefits that can accrue from strategic 
location of new sources. The location of new sources (often major job 
centers) can affect regional development patterns and air emissions. As 
a result, new sources have a dual impact on air quality. The first 
impact is from their own direct emissions and the second impact is from 
the emissions associated with other sources whose development is 
influenced by the new source and any change in travel patterns 
(positive or negative) that may result. This option attempts to 
recognize the net impact that a new source has on a region, not just 
from their own stationary emissions, but also from their associated 
stationary, area and mobile source emissions influenced by the location 
of the new source. It provides a mechanism to recognize the relative 
emissions reductions associated with locating major job centers in 
close proximity with transit, commercial/retail destinations, and 
workforce housing.
    Furthermore, the EPA recognizes that brownfields \74\ are often 
prime candidates to realize these locational benefits. Brownfields, as 
sites of previous economic activity, frequently enjoy excellent 
proximity to a variety of destinations and a range of transportation 
infrastructure. Second, given their potentially contaminated state, 
manufacturing or other industrial uses are often the appropriate type 
of revitalization. The productive re-use of these sites is a priority 
for the Agency. This option will provide flexibility within CAA 
programs to achieve the dual goals of brownfields revitalization and 
reduced air emissions.
---------------------------------------------------------------------------

    \74\ Brownfields are generally considered to be abandoned or 
underutilized properties (especially industrial and commercial 
facilities) where redevelopment or expansion may be complicated by 
possible environmental contamination (real or perceived). However, a 
brownfield site, as defined by The Small Business Liability Relief 
and Brownfields Revitalization Act of January 11, 2002, is any 
``real property, the expansion, redevelopment, or reuse of which may 
be complicated by the presence or potential presence of a hazardous 
substance, pollutant, or contaminant.'' Further information is 
available at: http://www.epa.gov/compliance/resources/faqs/cleanup/brownfields/index.html.
---------------------------------------------------------------------------

    The second goal of a CADC program would be that it would allow 
communities to use the air benefits of their development practices as 
an incentive for locating new sources and their associated economic 
growth.
    Anthropogenic emissions within a region come from three kinds of 
sources: Mobile sources, areas sources, and stationary sources. Thus, 
the ability of a region to accommodate new stationary sources is 
dependent not only on stationary source emissions but also on mobile 
and area source emissions. Localities which choose to engage in 
development that reduces emissions from mobile and area sources, with 
either of these options, could have the opportunity to turn those 
reductions into incentives for siting new economic activity.
    It should be noted that an area that decides to become a CADC is, 
in effect, transferring to the stationary source sector emission 
reductions which normally would remain in the mobile source sector 
where they could, for example, be used for conformity determinations. 
Areas would have to think through the implications for them of doing 
this.
    While we have not decided to go forward with either of these 
options at this time, we are continuing to examine them and, therefore, 
request comment on them. In particular, we request comment and 
suggestions on possible legal rationales for supporting these options 
which would enable them to be implemented through rulemaking. We are 
also very interested in other potential incentives that we could 
provide in addition to or instead of those included in this proposal. 
(We encourage commenters to focus on those incentives that are within 
EPA control.) In addition, we request comment on implementation 
barriers, as well as the analytical complexities in the estimation of 
emission benefits from changes to development patterns that areas would 
need to calculate in order to become a CADC. Public comments will help 
us determine how and whether to include either option in the final 
rulemaking.
    a. What is EPA considering? Option 1: EPA is considering a package 
of three kinds of flexibility for areas subject to subpart 2 whose land 
use development meets certain criteria. First, we would allow CADC's to 
be covered under the NSR program under subpart 1 rather than under 
subpart 2 if: (a) They adopt specific land use measures into their SIPs 
that reduced air emissions; and, (b) they demonstrate that air quality 
would not decrease as a result of using subpart 1 instead of subpart 2. 
This demonstration would have to quantify the emissions reductions from 
adopted land use measures in their SIPs and show that the decreases 
from the land use measures are sufficient to offset any potential 
increase in emissions from using subpart 1 instead of subpart 2. 
Second, we would lower the NSR major source thresholds for CADC areas 
to make them similar to those under the PSD provisions. Third, we would 
allow development zones, areas that meet certain development criteria, 
to receive NSR offsets from ``pools'' or ``banks'' of offsets 
established by the State. (A pool would be created by the State's 
taking action or requiring others to take actions that meet the 
criteria for NSR offsets. The State would then collect these offsets 
and could distribute them to new development that would occur in 
specific areas.) We believe that these actions would help steer 
development to development zones where fewer regional emissions would 
occur than if the development had occurred elsewhere. In addition, the 
change in land use patterns may help areas reduce their mobile source 
emissions. EPA requests comments on whether an area

[[Page 32850]]

should receive all three incentives or only one or two of them.
    Option 2: EPA is also considering a less ambitious program of 
incentives that focuses on the development zones. In this option, the 
reduced emissions from improved development patterns are used to create 
offset pools for use by sources in development zones. We believe that 
this would also help steer development toward development zones 
providing the same benefits discussed above. The main advantage to a 
CADC compared to option 1 is that the offset pool could start with 
considerable offset credits and, therefore, the credits would not have 
to be created through additional actions. It would also have the 
potential of more carefully targeting new development just to the 
development zone instead of anywhere in the CADC.
    b. What would a CADC be? A CADC would be a ``community'' that 
changes its development patterns in such a way that air emissions 
within the non-attainment area are demonstrably reduced. A CADC does 
not have to be, and in most cases probably would not be, an entire 
metropolitan nonattainment area covered by a SIP. A portion of a 
nonattainment area could be designated a CADC in those cases where the 
land use changes did not result in a sufficient emissions reductions to 
allow the entire nonattainment area to qualify. It should be noted, 
however, that if a CADC smaller than the entire nonattainment area was 
designated, any analysis of the effect of any changes in development 
would have to reflect and consider effects on the nonattainment area as 
a whole.
    c. What would a development zone be? EPA proposes that areas that 
meet certain criteria would be considered ``development zones,'' and 
new sources in these development zones could receive offsets from State 
offset pools. The following is a list of possible criteria that EPA 
could use to define those zones. EPA's goal is to help identify zones 
which promote environmentally sound development, the preservation of 
regionally-or locally-designated open space, and sites which have 
adequate, existing infrastructure. Areas would, for example, have to 
be:
    [sbull] Located within an 8-hour ozone nonattainment area.
    [sbull] Located within an ``urbanized area'' as defined by the U.S. 
Census Bureau.\75\
---------------------------------------------------------------------------

    \75\ Urbanized area--an area consisting of a central place(s) 
and adjacent urban fringe that together have a minimum residential 
population of at least 50,000 and generally an overall population 
density of at least, 1,000 people per square mile of land area. 
http://www.census.gov/geo/www.tiger/glossary.html
---------------------------------------------------------------------------

    [sbull] Zoned for industrial use.
    [sbull] Located within 0.25 miles of rail freight facilities.
    [sbull] Located within 0.5 mile of fixed rail or express bus 
transit service.
    [sbull] Designated or qualify for designation as a Federal or State 
redevelopment zone.
    [sbull] Enrolled in a State brownfield remediation plan.
    [sbull] Designated industrial corridor.
    [sbull] Adopting land use density indicators such as population, 
employment, congestion index.
    EPA specifically requests comment on these criteria including 
whether these criteria are appropriate, and if not, how should they be 
changed? We also request comment regarding whether a site must meet all 
or just some of the criteria to qualify.
    d. Why is EPA proposing these ideas? EPA would like to encourage 
land use practices that reduce emissions, and one possible way could be 
through NSR program flexibility. EPA recognizes that the way land use 
occurs in an area can affect emissions in all sectors, including 
stationary, area and mobile sources. For on-road mobile sources, areas 
can already include the emissions impacts of their land use choices 
within their SIP, as well as in their transportation conformity 
determinations. EPA would like to encourage areas to adopt land use 
practices that result in fewer emissions from all sectors by allowing 
areas to apply the benefits from certain land use measures to the major 
stationary source sector and creating special NSR flexibilities for 
areas that do so.
    e. If areas receive NSR flexibility for adopting land use measures, 
can the air quality benefits of land use measures also be applied to 
other sectors? As part of any flexibility, EPA wants to ensure that 
areas do not count the effects of a land use activity twice. For 
example, if areas decide that they want to apply the emissions benefits 
that result from certain land use decisions toward NSR, then they 
cannot also include the air quality benefits of land use choices in 
their motor vehicle emissions budgets in the SIP, or in the area's 
transportation conformity determinations. EPA recognizes that this 
means that areas will have to decide for themselves how to apply any 
emissions benefits of land use activities, and that consultation among 
all affected parties must occur. For many communities, this could be a 
difficult decision that would require the input of many stakeholders 
representing both the mobile and stationary source sectors as well as 
the general public.
    One possible way for areas to avoid double counting would be for 
EPA to give credit only for new measures that are adopted in response 
to this proposal. This approach would ensure that the proposal acts as 
an incentive to encourage new actions that will reduce emissions. Such 
an approach could, however, be seen as unfairly penalizing areas that 
have already taken positive actions. EPA requests comment on how best 
to balance the issues of ensuring fair treatment for all areas, 
preventing double counting, and making this proposal an effective 
incentive.
    For example, areas would continue to include existing land use 
measures in their SIP motor vehicle emissions budgets and in their 
conformity determinations, and apply the reductions from newly adopted 
land use measures to demonstrate they qualify for the type of 
flexibilities proposed here. Quantifying the on-road mobile source air 
quality impacts of land use measures occurs in transportation modeling 
(discussed below). Therefore, in a SIP submission that includes land 
use measures adopted to obtain NSR flexibility, areas would have to 
show that their motor vehicle emissions budgets do not also include the 
effects of the newly adopted land use measures. EPA also recognizes 
that there may be other, potentially easier ways to avoid double 
counting and encourages commenters to submit them.
    f. How would areas quantify the benefits of land use choices? Areas 
would quantify the benefits of land use through their air quality 
modeling process in the SIP process. EPA's guidance, ``Improving Air 
Quality Through Land Use Activities'' (Improving Air Quality Through 
Land Use Activities Report). U.S. Environmental Protection Agency, 
Office of Air and Radiation, Office of Transportation and Air Quality. 
(EPA420-R-01-001, January 2001). It can be found at: http://www.epa.gov/otaq/transp/trancont/r01001.pdf) provides information about 
how land use measures are modeled and possibly quantified. EPA requests 
comment on other potential methods of quantifying the reductions.
    Areas should be aware that quantifying the benefits of land use may 
not be an easy task. EPA sees two potential difficulties in quantifying 
the benefits of land use for application to NSR on which we seek input. 
First, as stated above, it may be very complicated for areas to avoid 
counting the same air quality benefits twice. One way areas might 
reduce the risk of such double counting is to produce two sets of 
modeling. One would be based on the

[[Page 32851]]

current situation, the other based on the proposed land use changes 
made by the community. The difference between these ``before and after 
modeling'' scenarios would show the emission impacts of the land use 
changes. We recognize that this modeling is very complex and resource 
intensive. Complexities arise because in many areas across the country, 
on-road mobile source emissions are estimated using transportation and 
emissions models. The locations where people live and work in an area, 
are important inputs to the transportation planning and modeling 
processes. As such, the long range transportation plan which covers at 
least 20 years into the future was developed to reflect the mobility 
needs for a specific land use scenario. It has been long recognized 
that there is a complicated, dynamic and interrelated relationship 
among air quality, transportation and land use planning. Evaluation may 
need to be iterative. For example, if land use changes are proposed to 
gain air quality benefits, the transportation system may need to be re-
evaluated to insure, that with the new land use scenario, the 
transportation system can continue to provide an acceptable level of 
transportation service to all members of the community. Therefore, it 
may be difficult for areas to precisely quantify the emissions related 
to land use choices from this modeling, given the dynamic nature 
between land use and transportation. In conducting this sort of 
analysis, States should be working closely with MPOs and other 
transportation and planning agencies.
    The second set of difficulties involves setting the timeframe 
before emission benefits can be realized. EPA seeks comment on the 
potential difference in the time period over which benefits may be 
realized from land use strategies compared to the NSR program. Land use 
strategies tend to be long term. Once a particular land use strategy is 
adopted, it may take several years before the change results in air 
quality benefits. For example, suppose an area decides to change its 
zoning regulations to encourage mixed-use development. This strategy 
may ultimately result in lower relative emissions because of people 
making fewer vehicle trips because housing, employment, and shopping 
are located together compared to development patterns that might occur 
without the changes to the zoning regulations, and the increase in 
density may generate transportation options such as transit service, 
bicycling, and walking. However, it may be several years before the 
zoning regulations actually change where people and businesses decide 
to locate. Of course, it should be noted that flexibilities proposed do 
not necessarily mean that new development will occur right away. EPA 
requests comment on how to take this issue of timing into account in 
our proposal to give program flexibility for adopting land use 
measures.
    g. How can changes to land development affect air quality? As 
metropolitan areas continue to expand in both size and population, how 
and where development occurs has significant implications for many 
environmental impacts including air quality. For example, establishing 
land use strategies to increase population and housing densities, and 
support the provision of mixed use development can make transit, and 
bicycle and pedestrian facilities more viable options to driving. These 
strategies may decrease the amount of motor vehicle emissions that 
would occur compared to development patterns if the strategies were not 
established.
    h. What is the connection between land use and NSR? A major new 
source has the potential to be a major economic development generator 
for a region that may influence development and travel patterns. For 
example, if a large new facility were to locate outside of the 
nonattainment area (in many cases this means outside of the area with 
existing development, infrastructure and density) it may affect 
regional travel patterns. Such a facility that hires hundreds of people 
and is located where there are few opportunities to use alternative 
modes of transportation (e.g., mass transit or walking to work) may 
result in greater amounts of VMT and vehicle trips (``VT'') per 
employee than a similar facility accessible by mass transit. For 
example, a long-term effect of locating a large facility in an 
undeveloped area, particularly one that employs a large number of 
people, could be that it ultimately attracts additional development. 
For instance, if enough employees are at the site, the nearby area may 
attract other service industries (e.g., fast food, drycleaners, and gas 
stations). These developments may be low density, auto-dependent, and 
single-use, which may generate additional emissions (both area and 
mobile sources). The NSR program does not consider or offset these 
emissions.
    On the other hand, if a hypothetical source chooses to locate in an 
area that is already developed, it may generate less VMT and therefore 
fewer emissions than one located in an undeveloped area. The source may 
be able to take advantage of the existing infrastructure and service, 
without the construction of new infrastructure elements (roads, sewer 
lines, etc.) that result in their own air emissions and other 
environmental impacts. Such location in existing developed areas may 
not open up new areas to development, nor encourage sprawl. With this 
option, EPA is trying to recognize the indirect impacts of development. 
If communities use CADC techniques, they should, compared to 
communities that do not use such practices, offset some of the indirect 
emissions from new sources. The NSR program only considers the direct 
impacts from a development. This option tries to look more broadly at 
all the impacts of development. We would reduce the requirements of NSR 
and would provide increased program flexibility in exchange for the 
reduced emissions from CADC practices.
    A strategy that recognizes the relationships between stationary, 
area and mobile sources, as well as how these impacts affect total 
environmental quality, is one that will most effectively deal with 
today's environmental problems. That is why multiple offices in EPA--
the Air Office, the Water Office, the Policy Office and the Brownfields 
Office--all have programs encouraging development patterns that reduce 
environmental impacts. These programs use a variety of tools: 
regulations, information, and partnerships to encourage such 
development. It would be consistent with these other Agency efforts to 
develop a way to use flexibilities in CAA programs to encourage CADC 
practices. It would also be supportive of the many States and 
localities that are interested in accounting for the air quality 
benefits of their development choices.
    i. Are there other environmental impacts that result from land use 
choices? Yes, low density development patterns tend to disturb more 
land and create more impervious cover over a region (e.g., paved 
roads), harming a region's water quality and disrupting habitat. 
Because of the close interaction between development and the 
achievement of national environmental goals, EPA has long been engaged 
in addressing their environmental impacts. The Office of Water seeks to 
address the impacts of development through its watershed programs, non-
point source programs, source water protection efforts, the National 
Estuary Program, and Total Maximum Daily Load programs. When EPA 
reviews projects under the National Environmental Policy Act, it 
examines the secondary and cumulative impacts of development generated 
by Federal actions. The Brownfields Office, recognizing the

[[Page 32852]]

necessity of engaging the private sector, has sought specifically to 
encourage development on brownfields.
    j. What are some of the land use strategies measures included in 
``Improving Air Quality Through Land Use Activities''? The guidance 
includes a number of different activities that may generate on-road 
mobile source emissions reductions. A sampling of them includes:
    [sbull] Grant incentives to build concentrated activity centers: 
encouraging pedestrian and transit travel by creating high density 
mixed use nodes that can be easily linked by a transit network.
    [sbull] Change zoning regulations to allow or encourage mixed-use 
development; this encourages pedestrian travel by putting compatible 
land uses next to each other.
    [sbull] Build, or require developers to install, pedestrian and 
bicycle facilities; and increase the number of sidewalks, paths, 
crosswalks, bike lanes, etc., to make walking and bike use safe.
    [sbull] Transfer unused development capacity in outlying areas to 
increase density above existing limits in central areas and near 
transit nodes; this moves development away from outlying areas and 
toward already developed areas.
    [sbull] Provide incentives such as reduced parking requirements to 
new in-fill development; this takes advantage of existing 
infrastructure and discourages driving.
    EPA were to go forward with this concept the Guidance would be 
formally incorporated by reference.
    k. Does the CAA include the concept of increased flexibility in the 
NSR program in cases where development is targeted in appropriate 
areas? Yes, Section 173(a)(1)(B) replaces the traditional requirement 
that a new or modified stationary source in a nonattainment area obtain 
offsets with a growth allowance concept in specially designated zones 
to which ``economic development should be targeted.'' EPA recognizes, 
however, that this proposal differs in many respects from section 173.
    l. Does this option mandate any changes to local land use 
decisions? No. The CAA, in Section 131, clearly supports the position 
that land use decisions are local. This option would simply recognize 
that areas that choose to develop in certain patterns are doing more to 
improve air quality and that such efforts should be rewarded.
    m. How would this option be enforced? Since the CADC measures would 
be in the SIP, they could not be changed without EPA approval of a SIP 
revision. If measures are changed they must be replaced with other 
measures of equal or greater effectiveness, and otherwise meet the 
requirements of section 110(l) concerning anti-backsliding. Failure to 
do so would mean that either of these options would no longer apply to 
the area. EPA understands that it does not have the authority to 
control local land use decisions. The choice always rests with the 
community, however, it doesn't get the advantages of being a CADC 
unless it puts the measures in its SIP. Should it decide to change a 
land use measure in the SIP, the issue for EPA would be whether or not 
other new measures yield sufficient reductions to allow the area to 
remain a CADC. The land use measure itself would be approved. EPA 
requests comments on how best to enforce these options.
    n. What are the relative advantages of the two options? The first 
option provides greater incentive for communities and is, therefore, 
more likely to encourage changes to land development policies. The 
second option is simpler since it does not make changes to NSR. As a 
result, unlike option 1, it does not require communities to estimate 
the increased emissions that could result from changing NSR 
applicability--which admittedly would be difficult.
    o. What are the disadvantages of this proposal? In addition to the 
modeling issues discussed above in section f, there are several other 
issues associated with providing flexibilities, such as reducing NSR 
requirements, for areas that adopt CADC land use measures. It may be 
difficult to ensure that the CADC land use measures are implemented by 
areas participating in the option. It may also be difficult to design 
penalty measures if those land use measures are not implemented by 
areas. In addition, if the CADC should fail to achieve its envisioned 
land use pattern, how would the MPO model the area for purposes of 
conformity. By encouraging growth in established areas, this option may 
raise environmental justice concerns and unanticipated costs for low-
income residents. Some States may have difficulties managing and 
tracking offset pools. EPA requests comment on all of these issues and 
how we can best resolve them.
10. Tribal Concerns
    In addition, we expect that some Tribal areas will be designated as 
nonattainment because of pollution that is transported from the 
surrounding State(s) and will have little control over the ability of 
areas under their jurisdiction to attain the air quality standards. In 
the event that such an area fails to attain by the attainment date, 
additional flexibility for the Tribes will be needed to address the 
fairness issues created by transported nonattainment problems. Tribes 
have asked that we consider providing offset set-asides in order to 
address these issues. We request comment on whether emission offset 
set-asides, possibly generated by innovative measures to promote 
additional emissions reductions, are an appropriate method to help 
level the playing field for the Tribes in order to support economic 
development in Tribal areas. In any case, we believe that some 
provisions will need to be made for Tribal areas, because they will 
have limited ability, if any, to generate offsets on their own. We may 
also need to work with States to help provide the Tribes access to 
offsets from non-Tribal areas. Also, it is important to recognize that 
the NOX SIP Call does not provide for an emissions budget 
for Tribes. Therefore, we are asking for comments on how to provide a 
set-aside to provide fair access to development in these areas.

P. How Will EPA Ensure That the 8-Hour Ozone Standard Will Be 
Implemented in a Way Which Allows an Optimal Mix of Controls for Ozone, 
PM2.5 and Regional Haze?

1. Could an Area's 8-Hour Ozone Strategy Affect Its PM2.5 
and/or Regional Haze Strategy?
    Many of the areas that are violating either the 8-hour ozone or 
PM2.5 NAAQS, may be violating both of these NAAQS. Thus, in 
many cases, States will have ozone and PM2.5 nonattainment 
areas with overlapping boundaries. Requirements for regional haze apply 
to all areas. Each State is responsible for developing SIP revisions to 
meet all the requirements relevant to each nonattainment area for each 
pollutant as well as developing a regional haze plan. In some cases, 
ozone control measures may also be useful for a PM2.5 
control strategy or a regional haze plan. Similarly, controls for 
PM2.5 may lead to reductions in ozone or regional haze. For 
example, considered in isolation, a metropolitan area's ozone strategy 
might be based on additional VOC emissions reductions; if the area 
needs NOX reductions for PM2.5 attainment, 
however, an optimal approach might include a more complex ozone 
strategy using both NOX and VOC reductions. We believe 
integration of ozone and PM2.5 attainment planning will 
reduce overall costs of meeting multiple air quality goals.
    Many of the factors affecting concentrations of ozone also affect

[[Page 32853]]

concentrations of PM2.5. Emissions of NOX and/or 
VOC will lead to formation of organic particles and the precursors of 
particulate nitrate, as well as ozone. The presence of ozone is an 
important factor affecting PM2.5 formation; as ozone builds 
up, so do OH radicals which are instrumental in oxidizing gas phase 
SO2 to sulfuric acid. The sulfuric acid may be converted to 
sulfate particles, increasing the PM2.5 concentration. 
Further, the local ozone concentrations may be decreased by the 
reaction of ozone with nitric oxide; thus, in some large urban areas, a 
decrease in local NOX emissions can result in higher local 
ozone concentrations, leading to higher OH radical concentrations and 
increases in secondary PM2.5. Because the precursors for 
ozone and PM2.5 may be transported hundreds of kilometers, 
regional scale impacts may also need to be considered.
2. What Guidance Has EPA Provided Regarding Ozone, PM2.5 and 
Regional Haze Interaction?
    As described in an earlier section of today's proposed rulemaking, 
States must develop ozone attainment demonstrations for many 
nonattainment areas. General criteria for attainment demonstrations are 
contained in 40 CFR part 51, appendix W (i.e., ``EPA's Guideline on Air 
Quality Models''). EPA's May 1999 draft ``Guidance on the Use of Models 
and Other Analyses in Attainment Demonstrations for the 8-Hour Ozone 
NAAQS'' provides a set of general requirements that an air quality 
model should meet to qualify for use in an attainment demonstration for 
the 8-hour ozone NAAQS. The draft guidance encourages States to 
integrate ozone control strategies with strategies designed later to 
attain the NAAQS for PM2.5 and to meet reasonable progress 
goals for regional haze. In addition, the draft guidance presents some 
modeling/analysis principles to help States develop data bases and 
capabilities for considering joint effects of control strategies for 
ozone, PM2.5 and regional haze. Because emissions and 
meteorological conditions vary seasonally, the guidance recommends 
assessing the effects of an ozone control strategy on annual 
PM2.5 concentrations by estimating effects on mean 
PM2.5 for each season and using the resulting information to 
estimate annual impacts. Emission estimates for VOC, NOX, 
primary PM2.5 , sulfur dioxide and ammonia will be needed. 
In addition, the modeling should separately estimate the effects of the 
ozone strategy on the major components of PM2.5 : mass 
associated with sulfates, nitrates, organic carbon, elemental carbon, 
and all other species. We believe that this approach is adequate to 
ensure that the 8-hour ozone standard will be implemented by States in 
a way that allows an optimal mix of controls for ozone, 
PM2.5, and regional haze.
    Similarly, EPA's attainment demonstration guidance for 
PM2.5 and regional haze states that models intended to 
address secondary PM problems should also be capable of simulating 
ozone formation and transport (January 2, 2001, ``Guidance for 
Demonstrating Attainment of Air Quality Goals for PM2.5 and 
Regional Haze''). The formation and transport of secondary PM are 
closely related to processes that are important in the formation and 
transport of ozone. Thus, it makes sense for programs designed to 
control ozone to be cognizant of programs to reduce PM2.5 
and improve visibility and vice versa. The PM2.5 guidance 
suggests conducting a ``mid-course review'' of an approved 
PM2.5 plan to review changes in air quality resulting from 
implementation of plans to reduce PM2.5, regional haze, and 
ozone. (EPA guidance on mid-course review of attainment demonstrations 
is described earlier in today's proposed rulemaking.)
    We realize that in some cases development of control plans will be 
complicated by the need to assess the impact of the precursors of 
ozone, PM2.5, and regional haze. The question arises whether 
such areas may be provided more time to perform the more complicated 
analyses such that an effective multi-pollutant strategy may be 
developed. However, the statute provides no express relief for these 
situations. Thus, the State is still responsible for developing and 
submitting demonstrations which show that each standard will be 
attained by the applicable date or dates provided.
3. What Is EPA Proposing?
    Today, we propose to continue the policy of encouraging each State 
with an ozone nonattainment area which overlaps or is nearby a 
PM2.5 nonattainment area to take all reasonable steps to 
coordinate the required revisions for these nonattainment areas and 
meet reasonable progress goals for regional haze. Specifically, we 
encourage States conducting modeling analyses for ozone to separately 
estimate effects of a strategy on the following: mass associated with 
sulfates, nitrates, organic carbon, elemental carbon, and all other 
species.

Q. What Emission Inventory Requirements Should Apply Under the 8-Hour 
Ozone NAAQS?

    The Consolidated Emissions Reporting Rule (CERR) (67 FR 39602, June 
10, 2002) has established basic emission inventory requirements. 
Specific SIP-related inventory issues will be detailed in a guidance 
document. An important difference between inventories submitted in 
response to the CERR and SIP inventories is the issue of approvability. 
While it is likely that an inventory submitted under the CERR would be 
identical to the inventory submitted as part of a SIP, the SIP 
inventory will need to go through public hearing and formal approval by 
EPA as a SIP element. This public process can be combined with the 
public process the State undertakes for other SIP elements. The 
following discussion presents more details on the emission inventory.
    Emission inventories are critical for the efforts of State, local, 
and Federal agencies to attain and maintain the NAAQS that EPA has 
established for criteria pollutants including ozone. Pursuant to its 
authority under section 110 of title I of the CAA, EPA has long 
required States to submit emission inventories containing information 
regarding the emissions of criteria pollutants and their precursors. 
EPA codified these requirements in 40 CFR part 51, subpart Q in 1979 
and amended them in 1987.
    The 1990 CAA Amendments revised many of the provisions of the CAA 
related to attainment of the NAAQS and the protection of visibility in 
mandatory Class I Federal areas (certain national parks and wilderness 
areas). These revisions established new periodic emission inventory 
requirements applicable to certain areas that were designated 
nonattainment for certain pollutants. In the case of ozone, section 
182(a)(3)(A) required that States submit an emission inventory every 3 
years for nonattainment areas beginning in 1995 for calendar year 1993. 
The inventory must include emissions of VOC, NOX, and carbon 
monoxide (CO) for point, area, mobile (on-road and non-road), and 
biogenic sources.
    In 1998, EPA promulgated the NOX SIP Call (Sec.  51.121) 
which calls on the affected States and the District of Columbia to 
submit SIP revisions providing for NOX reductions in order 
to reduce the amount of ozone and ozone precursors transported across 
State borders. As part of that rule, EPA established emissions 
reporting

[[Page 32854]]

requirements for States subject to the SIP Call.\76\
---------------------------------------------------------------------------

    \76\ Although the United States Court of Appeals has remanded 
certain limited issues regarding the NOX SIP Call to the 
Agency, those issues do not include the reporting requirements. See 
Michigan v. EPA, 213 F. 3d 663 D.C. Cir. 2000) and Appalachian Power 
Co. v. EPA, 251 F. 3d 1026 (D.C. Cir. 2001).
---------------------------------------------------------------------------

    In 2002, EPA promulgated the CERR. (67 FR 39602, June 10, 2002). 
The CERR consolidates the various emissions reporting requirements that 
already exist into one place in the CFR, establishes new reporting 
requirements for PM2.5 and its precursors and establishes 
new requirements for the statewide reporting of area source and mobile 
source emissions.
    The CERR establishes two types of required emission inventories:
    [sbull] Annual inventories, and
    [sbull] 3-year cycle inventories.
    We anticipate that States will use data obtained through their 
current annual source reporting requirements (annual inventories) to 
report emissions from larger point sources annually. States will need 
to get data from smaller point sources every 3rd year. States may also 
take advantage of data from emission statements that are available to 
States but not reported to EPA. New nonattainment areas for the 8-hour 
standard that are classified under subpart 2 will need to establish an 
emission statement program as specified under section 182(a)(3)(B). We 
published guidance on emission statements in July 1992 titled, 
``Guidance on the Implementation of an Emission Statement Program.'' As 
appropriate, States may use the emission statement data to meet their 
reporting requirements for point sources. We are interested in States' 
comments on their experience with the emission statement program and 
how the implementation of the emission statement program can be 
improved. States are also required to inventory area and mobile source 
emissions on a statewide basis for the 3-year cycle inventory. Mobile 
source emissions should be estimated by using the latest emissions 
models and planning assumptions available. The latest approved version 
of the MOBILE model (MOBILE6 at the time of this proposed rulemaking, 
see 67 FR 4254, January 29, 2002) should be used to estimate emissions 
from on-road transportation sources, in combination with the latest 
available estimates of VMT. EPA has issued a guidance memo titled 
``Policy Guidance on the Use of MOBILE6 for SIP Development and 
Transportation Conformity'' dated January 18, 2002, that provides 
additional information on the use of the MOBILE6 model. The NONROAD 
model is currently available in draft form and can be used for initial 
estimates of off-road mobile source emissions. We expect that the final 
version of the NONROAD model will be released in late 2004, which will 
not be in time for States to use it for their 2002 emission 
inventories, which are due June 1, 2004. However, by the time EPA's 
rulemaking on implementation of the 8-hour ozone standard is final and 
States need to begin preparing SIPs, a new draft version of NONROAD 
will have been released in connection with a planned proposal in early 
2003 regarding regulation of certain non-road engine categories. When 
the NONROAD model is final, States may choose to update their 2002 
emission inventories using the final NONROAD model. By merging the 
information on point sources, area sources and mobile sources into a 
comprehensive emission inventory, State and local agencies may do the 
following:
    [sbull] Set a baseline for SIP development,
    [sbull] Measure their progress in reducing emissions,
    [sbull] Have a tool they can use to support future trading 
programs,
    [sbull] Answer public requests for information.
    Most importantly, States need these inventories to help 
nonattainment areas develop and meet SIP requirements to reach the 
NAAQS.
    In April 1999, we published ``Emissions Inventory Guidance for 
Implementation of Ozone and Particulate Matter National Ambient Air 
Quality Standards (NAAQS) and Regional Haze Regulations,'' EPA-454/R-
99-006. We will be updating this guidance and are soliciting comment on 
several key points to be addressed in the revised document. These 
points are:
    [sbull] Section 182(a)(1) requires that marginal and above ozone 
nonattainment areas submit an emission inventory 2 years after 
designation as nonattainment in 1990. For nonattainment areas 
classified under subpart 2 for the 8-hour ozone standard, we propose to 
interpret this to mean that an emission inventory would be required 2 
years after designation (i.e., in 2006 if EPA designates areas in 
2004). The CERR requires comprehensive triennial emission inventories, 
beginning with the 2002 inventory year, regardless of an area's 
attainment status. Because these emission inventories will be 
available, we propose that the emission inventories required by the 
CERR are sufficient to meet the provisions of section 182(a)(1).
    [sbull] In the past, there have been instances where portions of 
Tribal areas have been included in designated nonattainment areas, but 
when the baseline emission inventory was prepared, emissions from the 
Tribal lands were not included. This has had the effect of preventing 
the Tribes from generating emission reductions from existing sources to 
develop emission offsets, as well as impairing the ability of the State 
to model as accurately as possible. We are encouraging the States and 
Tribes to work together to ensure that the information used in 
developing the baseline emission inventory is inclusive of all 
emissions from the nonattainment area.
    [sbull] The emission inventory is used as a tracking metric by some 
programs such as emission trading, NSR offsets trading and RFP. This 
requires that a year is designated as a ``baseline'' year and used as 
the reference for the particular program.
    An external review draft of the emission inventory guidance titled 
``Emission Inventory Guidance for Implementation of Ozone and 
Particulate Matter National Ambient Air Quality Standards (NAAQS) and 
Regional Haze Regulations'' is available at: http://www.epa.gov/ttn/chief/eiinformation.html. Comments on this document are due at the same 
time as comments on this proposed rulemaking. However, the review of 
the emission inventory guidance is not part of this proposed 
rulemaking. Comments submitted on the emission inventory guidance 
should be identified as such and will not be docketed nor will a 
comment/response summary of these comments be a part of the final 8-
hour ozone implementation rule. Instructions on how to submit comments 
are included with the draft guidance document.

R. What Guidance Should Be Provided That Is Specific to Tribes?

    This section summarizes guidance for Tribes offered in various 
parts of this proposal. The TAR (40 CFR part 49), which implements 
section 301(d) of the CAA, gives Tribes the option of developing TIPs. 
Unlike States, Tribes are not required to develop implementation plans. 
Specifically, the TAR, adopted in 1998, provides for the Tribes to be 
treated in the same manner as a State in implementing sections of the 
CAA. EPA determined in the TAR that it was inappropriate to treat 
Tribes in a manner similar to a State with regard to specific plan 
submittal and implementation deadlines for NAAQS-related requirements, 
including, but not limited to, such deadlines in CAA sections 
110(a)(1), 172(a)(2), 182, 187, and 191. See 40 CFR 49.4(a). If a Tribe 
elects to do a TIP, we will work with the

[[Page 32855]]

Tribe to develop an appropriate schedule which meets the needs of each 
Tribe, and which does not interfere with the attainment of the NAAQS in 
other jurisdictions. The Tribe developing a TIP can work with the EPA 
Regional Office on the appropriateness of applying RFP and other SIP 
requirements that may or may not be appropriate for the Tribe's 
situation.
    The TAR indicates that EPA is ultimately responsible for 
implementing CAA programs in Indian country, as necessary and 
appropriate, if Tribes choose not to implement those provisions. For 
example, an unhealthy air quality situation in Indian country may 
require EPA to develop a FIP to reduce emissions from sources on the 
reservation. In such a situation, EPA, in consultation with the Tribe 
and in consideration of their needs, would work to ensure that the 
NAAQS are met as expeditiously as practicable. Likewise, if we 
determine that sources in Indian country could interfere with a larger 
nonattainment area meeting the NAAQS by its attainment date, we would 
develop a FIP for those sources in consultation with the Tribe, as 
necessary and appropriate.
    The TAR also provides flexibility for the Tribe in the preparation 
of a TIP to address the NAAQS. If a Tribe elects to develop a TIP, the 
TAR offers flexibility to Tribes to identify and implement--on a Tribe-
by-Tribe, case-by-case basis--only those CAA programs or program 
elements needed to address their specific air quality problems. In its 
proposed Tribal rule, we described this flexible implementation 
approach as the ``modular approach.'' Each Tribe may evaluate the 
particular activities, including potential sources of air pollution 
within the exterior boundaries of its reservation (or within non-
reservation areas for which it has demonstrated jurisdiction), which 
cause or contribute to its air pollution problem. A Tribe may adopt 
measures for controlling only those sources or ozone precursor 
emissions, as long as the elements of the TIP are ``reasonably 
severable'' from the package of elements that can be included in a 
whole TIP. A TIP must include regulations designed to solve specific 
air quality problems for which the Tribe is seeking EPA approval, as 
well as a demonstration that the Tribal air agency has the authority 
from the Tribal government to develop and run their program, the 
capability to enforce their rules, as well as the resources to 
implement the program they adopt. In addition, the Tribe must receive 
an ``eligibility determination'' from EPA to be treated in the same 
manner as a State and to receive authorization from EPA to run a CAA 
program.
    We would review and approve, where appropriate, these partial TIPs 
as one step of an overall air quality plan to attain the NAAQS. A Tribe 
may step in later to add other elements to the plan, or EPA may step in 
to fill air quality gaps as necessary and appropriate. In approving a 
TIP, we would evaluate whether the plan interferes with the overall air 
quality plan for an area when Tribal lands are part of a multi-
jurisdictional area.
    Because many of the nonattainment areas will include many 
jurisdictions, and in some cases both Tribal and State jurisdictions, 
it is important for the Tribes and the States to work together to 
coordinate their planning efforts. States need to incorporate Tribal 
emissions in their base emission inventories if Indian country is part 
of an attainment or nonattainment area. Tribes and States need to 
coordinate their planning activities as appropriate to ensure that 
neither is adversely affecting attainment of the NAAQS in the area as a 
whole.

S. What Are the Requirements for OTRs Under the 8-Hour Ozone Standard?

    Section 176A of subpart 1 provides the authority to establish 
interstate transport regions where transport of air pollutants from one 
or more States contributes significantly to a violation of a NAAQS in 
one or more other States. When a transport region is established, 
section 176A requires that a transport commission, comprised of 
representatives from the States in the transport region, also be 
established. The role of the transport commission is to assess the 
degree of interstate transport of the pollutant and precursors 
throughout the transport region and to evaluate strategies for 
mitigating the interstate pollution.
    Section 184 of subpart 2 establishes additional provisions for 
OTRs. Section 184(a) specifically established an OTR comprising 12 
Northeast and Mid-Atlantic States and the District of Columbia in order 
to address the longstanding problem of interstate ozone pollution in 
that region. The general provisions of section 176A apply to any OTR 
established under section 184. To date, the existing OTR is the only 
transport region for any pollutant that has been established and is 
subject to the section 176A requirements.
    Section 184(b) of subpart 2 sets forth specific VOC and 
NOX control requirements to be applied throughout the entire 
OTR, in both attainment and nonattainment areas, to reduce interstate 
pollution. These additional regional control requirements are part D 
NSR (for VOC and NOX), RACT (for VOC and NOX), 
enhanced vehicle I/M, and Stage II vapor recovery (for vehicle 
refueling) or a comparable measure. Some of these requirements 
duplicate requirements for ozone nonattainment areas that are 
classified under subpart 2.
    We believe the clearest legal interpretation of section 184 is that 
the current OTR and section 184 control requirements apply for purposes 
of the 8-hour standard. We believe that this interpretation would not 
result in any new control requirements for any area in the OTR because 
these control requirements are not associated with an area's 
designation or classification and already apply regionwide under the 1-
hour ozone standard. Rather, these statutory obligations would remain 
in place for areas in the existing OTR. If a new OTR is established for 
purposes of the 8-hour standard pursuant to section 176A, that area 
would also be subject to the provisions and additional control 
requirements of section 184.
    Because all areas in the existing OTR, including attainment areas, 
are subject to part D NSR for NOX and VOC and a number of 
other control measures, areas in the OTR would not be able to take full 
advantage of either the transitional option proposed for NSR or the 
Agency's existing approach for early reductions, both of which are 
discussed elsewhere in this proposed rulemaking.

T. Are There Any Additional Requirements Related to Enforcement and 
Compliance?

    Section 172(c)(6) requires nonattainment SIPs to ``include 
enforceable emission limitations, and such other control measures, 
means or techniques * * * as well as schedules and timetables for 
compliance, as may be necessary or appropriate to provide for 
attainment * * *'' The current guidance, ``Guidance on Preparing 
Enforceable Regulations and Compliance Programs for the 15 Percent 
Rate-of-Progress Plans (EPA-452/R-93-005, June 1993)'' is relevant to 
rules adopted for SIPs under the 8-hour ozone NAAQS and should be 
consulted for purposes of developing appropriate nonattainment plan 
provisions under section 172(c)(6). This document provides States with 
guidance on how to prepare enforceable stationary and mobile source 
regulations for their ROP plans. Developing clear, concise, enforceable 
rules and establishing strong compliance programs helps to ensure that 
the emissions reductions projected for specific control strategies are 
actually achieved. The document

[[Page 32856]]

identifies the minimum criteria and the information sources that we 
will use to evaluate the enforceability of regulations, and to 
determine compliance with Federal guidelines and regulations. States 
should follow the guidelines provided in this document as part of their 
quality assurance process involved in the development of control 
measures for their ROP plans and their attainment demonstrations.

U. What Requirements Should Apply to Emergency Episodes?

    Currently, subpart H of 40 CFR part 51 specifies requirements for 
SIPs to address emergency air pollution episodes and for preventing air 
pollutant levels from reaching levels determined to cause significant 
harm to the health of persons. We anticipate proposing a separate 
rulemaking in the future to update portions of that rule. This separate 
rulemaking may be done in conjunction with revisions to the emergency 
episode rules that will address the PM2.5 NAAQS.

V. What Ambient Monitoring Requirements Will Apply Under the 8-Hour 
Ozone NAAQS?

    Ozone monitoring data play an important role in designations, 
control strategy development, and related implementation activities. 
The ambient monitoring requirements are listed in 40 CFR part 58.
    We plan to modify these existing ozone monitoring requirements as 
part of the National Air Monitoring Strategy. These changes are being 
undertaken in a separate rulemaking effort. We plan to propose a 
national strategy introducing NCore (national core monitoring sites) as 
a replacement for traditional national air monitoring stations/State 
and local air monitoring stations (NAMS/SLAMS) monitoring currently 
codified at 40 CFR part 58.
    Part of the NCore network \77\ would include the existing ozone 
monitoring sites that currently support the NAAQS-related activities. 
The number and location of the original sites would likely be very 
similar to the current network. The regulatory modifications are 
expected to include ozone monitoring requirements based upon the 
population of an area and its historical/forecasted ozone air quality 
values.
---------------------------------------------------------------------------

    \77\ A description of the NCore can be found at the following 
Web site: http://www.epa.gov/ttnamtil/files/ambient/monitorstrat/sec4.pdf.
---------------------------------------------------------------------------

    In addition, we anticipate that we will include a requirement for 
measuring multiple air pollutants at select locations. The NCore sites 
are expected to include high-sensitivity nitrogen oxide (NO) and total 
reactive oxides of nitrogen (NOy) measurements at locations 
across the nation to support the tracking of national emission strategy 
efforts such as the NOX SIP Call and, if created, a statute 
codifying the Clear Skies Bill, which addresses NOX 
reductions across the nation.
    Each State, local, and Tribal air monitoring agency is being asked 
to assess the adequacy of its air pollution monitoring networks, 
including those sites that measure ozone. We will work with these 
agencies to develop network plans to ensure approval of all network 
designs. On a local basis, there will be some relocation, addition and 
removal of ozone sites as a result of regional network assessments.
    The CAA requires that ozone precursor monitoring be conducted in 
any ozone nonattainment area classified as serious, severe, or extreme. 
We adopted regulations reflecting the statutory requirements in 40 CFR 
part 58 in 1994 as the Photochemical Assessment Monitoring Stations 
(PAMS) program. Areas that would be designated under the 8-hour ozone 
NAAQS are not directly addressed in 40 CFR part 58 for ozone precursor 
monitoring.
    The PAMS monitoring will be retained in areas currently designated 
as 1-hour ozone serious, severe, and extreme nonattainment areas. The 
monitoring strategy regulation revisions will consider the possibility 
of reducing some of the sampling schedules. We also intend to promote 
the use of individually designed PAMS networks to address the very 
specific ozone and ozone precursor data needs in PAMS areas.
    The revised regulation will also cover all areas that are 
classified as serious or above for the 8-hour NAAQS. Once an area is 
bumped up to serious or above, it would be subject to the enhanced 
monitoring rule and would be required to develop appropriate PAMS 
plans. Where practical, PAMS stations should be incorporated into 
multi-pollutant NCORE level 2 sites \78\ that include NOy, 
meteorological and CO (a good indicator of mobile emission 
measurements.) Alternative plans are recommended for 8-hour bump-up 
areas. This will be reflected in the 40 CFR part 58 changes as well.
---------------------------------------------------------------------------

    \78\ A description of the NCore level 2 stations can be found at 
the following Web site: http://www.epa.gov/ttnamtil/files/ambient/monitorstrat/sec4.pfd.
---------------------------------------------------------------------------

W. When Will EPA Require 8-Hour Attainment Demonstration SIP 
Submissions?

1. Background
    The time for submission of attainment demonstration SIPs is linked 
to whether the requirements are specified under subpart 1 or subpart 2. 
In general, all areas designated nonattainment are subject to the 
planning requirements of subpart 1. However, if the area is subject to 
a more specific requirement under subpart 2, the subpart 2 planning 
obligation controls. As proposed elsewhere in the discussion concerning 
classification options, some, if not all, 8-hour ozone standard 
nonattainment areas will be subject to the subpart 2 planning 
obligations.
    Section 172(b) (in subpart 1) provides that at the time EPA 
promulgates the designation of an area as nonattainment with respect to 
a NAAQS under section 107(d), the Administrator shall establish a 
schedule for submission of a plan that meets the CAA's requirements for 
nonattainment areas. This schedule may not extend beyond 3 years after 
the date of nonattainment designation.
    Under subpart 2 of the CAA, attainment demonstration SIP submission 
deadlines for areas designated nonattainment for the 1-hour ozone 
standard are linked to the date of enactment of the CAA Amendments, 
i.e., from November 15, 1990. This date is also the date by which most 
of these areas were designated and classified by operation of law. See 
CAA section 107(d)(1)(C) and 181(a). Moreover, in subpart 1, Congress 
linked the time for SIP submission to the time of designations. See CAA 
section 172(b). Because such dates have long since passed, we believe 
that it is reasonable to tie the SIP submittal dates to the date of 
nonattainment designations and classifications for the 8-hour standard. 
\79\ While the submission date for all SIP requirements in subpart 2 
will be tied to the date of nonattainment designations, this section of 
the proposed rule discusses the requirement to submit an attainment 
demonstration. For purposes of the discussion here, we are assuming 
that designations will occur in 2004.
---------------------------------------------------------------------------

    \79\ Since we anticipae that areas will be designated and 
classified on the same date, we will use the term ``designation'' to 
represent the date of designation and classification.
---------------------------------------------------------------------------

    Subpart 2 requires attainment demonstration submissions at 
different times depending on an area's classification. Section 182(a) 
does not require an attainment demonstration for marginal areas. 
Section 182(b)(A)(1)

[[Page 32857]]

requires moderate areas to submit an attainment demonstration no later 
than 3 years after the date of enactment. Section 183(c)(2) requires 
serious (and higher classified) areas to submit an attainment 
demonstration no later than 4 years after date of enactment. As 
provided above, we propose to interpret these times to run from the 
date of an area's nonattainment designation. Despite the fact that the 
CAA's provisions for the timing of submission of attainment 
demonstration SIPs for subpart 1 areas differs from that of subpart 2 
areas, we do not believe it is appropriate or desirable to require 
States to submit attainment demonstrations for areas designated 
nonattainment under the 8-hour standard at greatly different times. We 
recognize that photochemical grid modeling--required by the CAA for 
interstate moderate nonattainment areas, as well as serious and higher-
classified areas--will be performed on large enough scales to address 
transport and will in most cases encompass a number of nonattainment 
areas. These numerous nonattainment areas may differ by classification 
(some areas may be intrastate moderate areas, some inter-state moderate 
areas, and others serious and above nonattainment areas). Some areas 
that may require attainment demonstrations may be subject to subpart 1 
while others may be subject to subpart 2. Furthermore, the control 
strategies that may be modeled for all the areas in the modeling domain 
will likely be modeled simultaneously, especially if all the areas are 
located in a single State. Also, we believe that techniques for 
photochemical grid modeling, while they were more time-consuming when 
the 1990 CAA Amendments were enacted, are now more standardized and 
less time-consuming. In light of this, we do not believe it is 
reasonable to defer submission of attainment demonstrations beyond 3 
years after designation.
    The TAR, which implements section 301(d) of the CAA, gives Tribes 
the option of developing TIPs. Specifically, the TAR provides for the 
Tribes to be treated in the same manner as a State in implementing most 
of the CAA. However, in the TAR, EPA determined that it was 
inappropriate to treat Tribes in a manner similar to a State with 
regard to schedules. Therefore, Tribes are not required to submit a 
TIP, nor, if they choose to submit a TIP, are they required to submit a 
TIP in the same timeframe as the States. Where a Tribe chooses to 
develop a TIP, we will work with them to develop an appropriate 
schedule that meets the needs of the Tribe but does not interfere with 
timely attainment of the NAAQS on Tribal land or in other 
jurisdictions.
2. Option Being Proposed
    In light of the above discussion and rationale, we are proposing to 
require all nonattainment areas that are required to perform 
photochemical grid modeling--regardless of coverage under subpart 1 or 
2 or regardless of classification under subpart 2--to submit an 
attainment demonstration within 3 years after designation.
    We believe this proposal would result in a closer synchronization 
of the 8-hour ozone and PM2.5 attainment demonstration SIP 
submittal dates. We discussed the integration of ozone and 
PM2.5 schedules at the three public meetings and numerous 
conference calls that were held with stakeholder groups. A majority of 
commenters were supportive of integrating the SIP attainment plan 
submission schedules for ozone and PM2.5 because integration 
would optimize control strategies, save time and planning resources, 
streamline deadlines, and maximize cost effectiveness, among other 
benefits.
    The PM2.5 standard is anticipated to be implemented 
under subpart 1 of the CAA, which requires a SIP submission by a date 
set by EPA, which can be no later than 3 years from designation. Since 
we are proposing that all 8-hour ozone nonattainment areas that are 
required to perform photochemical grid modeling submit their attainment 
demonstration SIPs within 3 years after nonattainment designation, this 
would result in a high degree of synchronization and thus allow 
comprehensive analyses that would evaluate controls to attain both air 
quality standards. As noted above, we are assuming for this proposed 
rulemaking that ozone designations will be promulgated in the 2004 
timeframe; currently under TEA-21, designations for PM2.5 
would occur beginning in 2004, and must be completed by the end of 
2005. Thus, the later-designated PM2.5 areas would not be 
required to submit their attainment demonstration SIPs until after the 
ozone SIPs are due. Additional discussion of the benefits of 
integrating the planning for both standards appears elsewhere in this 
proposed rulemaking.

VII. Proposal of Integrated Frameworks Using Various Options

    As noted above, we are presenting two possible integrated 
frameworks that comprise an option from each of the above 
implementation elements to illustrate how they may work in conjunction 
with each other. In addition to soliciting comment on the options 
presented for the individual elements, we are also soliciting comment 
on how the options can be grouped into an integrated implementation 
framework. The following frameworks should be considered illustrative 
of possible ways of combining the element options. For final 
rulemaking, however, we may develop a consolidated framework that uses 
a different combination of the options proposed above, based on 
comments received and other information that comes to light during the 
public comment period.
    We are proposing for comment two integrated frameworks:
    [sbull] Framework 1--an approach considered similar to traditional 
implementation,
    [sbull] Framework 2--an approach considered more flexible than 
traditional implementation.
    Table 5 illustrates how element options may be combined to form 
these two frameworks. Elements for which we are proposing only one 
option would be common to either framework. For elements for which we 
are proposing several options, only one option has been selected for 
purposes of illustrating the frameworks depicted below.
    In addition, there are several proposed elements where options are 
presented that only apply to areas that would be covered by subpart 1; 
these elements include RACT for subpart 1 areas and the NOX 
waiver requirement as it would apply to subpart 1 areas. These elements 
are not shown in Table 5 below, since they are only applicable to 
subpart 1 areas.

[[Page 32858]]



  Table 5.--8-Hour Ozone NAAQS Implementation Elements/Options Grouped
                      Into Frameworks for Proposal
    [This table only summarizes the options and approaches; the full
 description of the approach or option in the proposed rulemaking should
                              be consulted]
------------------------------------------------------------------------
   Implementation element          Framework 1           Framework 2
------------------------------------------------------------------------
A. Will subpart 1 or subpart  Classify all areas    Areas with a 1-hour
 2 govern classifications?     under subpart 2       design value = 0.121 ppm
                               values. (Option 1)    would be classified
                                                     under subpart 2
                                                     using 8-hour design
                                                     values. Areas with
                                                     a 1-hour design
                                                     value < 0.121 ppm
                                                     would be covered
                                                     under subpart 1.
                                                     (Option 2)
B. Will areas under subpart   N/A.................  No classification.
 1 be classified?                                    (Option 1)
C. When may the State treat   When the area         When the area
 measures that applied for     attains the 8-hour    achieves the level
 purposes of the 1-hour        ozone standard and    of the 1-hour
 standard as contingency       is designated         standard.
 measures, consistent with     attainment.
 section 110(l).
D.1. How will the 15 percent  All areas classified  A moderate area that
 VOC ROP requirement apply?    as moderate or        already achieved a
                               above for the 8-      15 percent VOC
                               hour NAAQS must       reduction for the 1-
                               achieve a 15          hour ozone standard
                               percent reduction     would be considered
                               in VOC emissions      to have met the 15
                               for the first 6       percent requirement
                               years after the       already and may
                               base year (2002).     instead implement
                               (Option 1)            RFP consistent with
                                                     section 172(c). An
                                                     area classified as
                                                     serious or above
                                                     that already
                                                     achieved a 15
                                                     percent VOC
                                                     reduction would be
                                                     considered to have
                                                     met the 15 percent
                                                     requirement so it
                                                     could choose to
                                                     achieve an average
                                                     of three percent
                                                     per year of VOC or
                                                     NOX reductions for
                                                     the 6-year period.
                                                     (Option 2)
D.2. What is the baseline      All areas would use a 2002 baseline year
 year for the emission              for preparation of the emissions
 inventory used for RFP/ROP?                   inventory.
D.3. What restrictions on      All emissions reductions that occur after
 creditable measures for RFP/    the baseline emissions inventory year
 ROP under the 8-hour           from post-1990 Federal measures and any
 standard (subpart 2 areas       other measures would be creditable for
 only) will apply?                 ROP/RFP, except those specifically
                                  prohibited in section 182(b)(1)(D).
D.4. What will RFP be for     N/A.................  a. Areas with
 areas classified under                              attainment dates 3
 subpart 1?.                                         years or less after
                                                     designation. As
                                                     with marginal
                                                     areas, those areas
                                                     would not be
                                                     subject to a
                                                     separate RFP
                                                     requirement.
                                                    b. Areas with
                                                     attainment dates
                                                     between 3 to 6
                                                     years after
                                                     designation.
                                                    No separate RFP
                                                     demonstration
                                                     required except RFP
                                                     would be met if a
                                                     State demonstrates
                                                     emissions
                                                     reductions needed
                                                     for attainment
                                                     would be achieved
                                                     by the attainment
                                                     date. (Option 1)
                                                    c. Areas with
                                                     attainment dates
                                                     beyond 6 years
                                                     after designation.
                                                    The RFP plan
                                                     submission would be
                                                     due with the
                                                     attainment
                                                     demonstration
                                                     within 3 years
                                                     after designation
                                                     and would need to
                                                     provide for certain
                                                     increments of
                                                     reductions from the
                                                     baseline emission
                                                     year out to the
                                                     attainment year,
                                                     proportionate to
                                                     the time between
                                                     the base year and
                                                     the attainment
                                                     year. (Option 1)
D.5. How would the 8-hour       The area would develop new baseline and
 ROP requirement fit with        new ROP emission reduction targets for
 the 1-hour ROP requirement?    the 8-hour standard for the entire area
                               and could drop the 1-hour standard target
                                for any periods that overlap with an 8-
                                            hour RFP period.
E. What's the RACT            N/A.................  If the area is able
 requirement for areas                               to demonstrate
 covered under subpart 1?.                           attainment of the
                                                     standard as
                                                     expeditiously as
                                                     practicable with
                                                     emission control
                                                     measures in the
                                                     SIP, then RACT will
                                                     be met, and
                                                     additional measures
                                                     would not be
                                                     required as being
                                                     reasonably
                                                     available. (Option
                                                     2)
F. What will be the NSR       Status quo approach   Three options which
 requirement?.                 for all areas--       could be
                               areas subject to      implemented in
                               NSR obligations for   conjunction with
                               their 8-hour          each other: Status
                               classifications       quo approach for
                               under subpart 2.      all areas (subpart
                               (Option 1)            1 areas get subpart
                                                     1 NSR, subpart 2
                                                     areas get subpart 2
                                                     NSR) (Option 1);
                                                    AND
                                                    A more flexible NSR
                                                     program (i.e.,
                                                     allowing a pool of
                                                     offsets, more
                                                     flexible technology
                                                     control
                                                     requirement) for
                                                     areas that submit
                                                     early SIPs
                                                     (``transitional''
                                                     NSR program)
                                                     (Option 2);

[[Page 32859]]

 
                                                    AND
                                                    A CADC program,
                                                     which would allow a
                                                     more flexible NSR
                                                     program for areas
                                                     that adopt CADC
                                                     provisions. (Option
                                                     3)
------------------------------------------------------------------------

VIII. Other Considerations

A. Will EPA Be Contemplating Incentives for Areas That Want To Take 
Early Action for Reducing Ozone Under the 8-Hour Standard?

    This section discusses the extent to which we are providing 
incentives for areas that wish to voluntarily expedite the path to 
cleaner air by initiating early planning and control actions for 
reducing ground-level ozone prior to EPA's designations for the 8-hour 
ozone NAAQS. State, local and Tribal air pollution control agencies 
have continued to express a need for added flexibility in implementing 
the 8-hour ozone NAAQS, including incentives for taking action sooner 
than EPA requires for reducing ground-level ozone. We are encouraging 
localities to make decisions that will achieve clean air sooner than 
otherwise is mandated by the CAA. Early planning and early 
implementation of control measures that improve air quality will likely 
accelerate protection of public health. We issued our policy on early 
planning on November 14, 2002. We are not proposing action on this 
approach in this rulemaking and, therefore, we are not requesting 
comment on this issue.
1. What Are the Ozone Flex Guidelines for the 1-Hour Ozone NAAQS?
    In June 2001 we announced the ``Ozone Flex Guidelines'' program 
(Ozone Flex), which supports and rewards innovative, voluntary, local 
strategies to reduce ground-level ozone. Ozone Flex is a framework for 
local communities to develop voluntary solutions for areas concerned 
about potential future nonattainment of the 1-hour ozone standard. 
Ozone Flex is intended to achieve emissions reductions and avoid future 
nonattainment problems in those areas designated attainment for the 1-
hour standard. While this program is only available to areas to address 
the 1-hour ozone standard, it also recognizes that areas may secure 
emissions reductions and public health benefits toward attaining the 8-
hour ozone standard prior to EPA's designation of areas. These 
voluntary measures may be creditable to future planning efforts for the 
8-hour standard, to the extent allowed by the CAA and EPA guidance or 
rules. Any emissions reductions targeted for a period after the base 
year would provide ``credit'' for a State, local, or Tribal area in any 
future plan. Emission reduction credits toward meeting RFP are 
discussed elsewhere in this proposed rulemaking.
2. What Is the ``Early Action Compact'' for Implementing the 8-Hour 
Ozone NAAQS?
    Following EPA's issuance of the ``Ozone Flex Guidelines'' for 
continued attainment of the 1-hour standard, the Texas Commission on 
Environmental Quality (TCEQ) encouraged EPA to consider additional 
incentives for early planning towards achieving the 8-hour ozone NAAQS. 
On March 20, 2002, the TCEQ submitted to EPA the Protocol for Early 
Action Compacts Designed to Achieve and Maintain the 8-hour Ozone 
Standard (Protocol). The Protocol was designed to achieve emissions 
reductions and clean air sooner than would otherwise be required under 
the CAA for implementing the 8-hour ozone NAAQS. The TCEQ proposed that 
the Protocol would be formalized by ``Early Action Compact'' agreements 
(Compacts) primarily developed by local, State and Federal (EPA) 
officials. The principles of the Compacts are the following:
    [sbull] Early planning, implementation, and emissions reductions 
leading to expeditious attainment and maintenance of the 8-hour ozone 
standard;
    [sbull] Local control of the measures employed, with broad-based 
public input;
    [sbull] State support to ensure technical integrity of the early 
action plan;
    [sbull] Formal incorporation of the early action plan into the SIP;
    [sbull] Designation of all areas as attainment or nonattainment in 
April 2004, but, for Compact areas, deferral of the effective date of 
the nonattainment designation and/or designation requirements so long 
as all Compact terms and milestones continue to be met; and
    [sbull] Safeguards to return areas to traditional SIP attainment 
requirements should Compact terms be unfulfilled (e.g., if the area 
fails to attain in 2007), with appropriate credit given for reduction 
measures already implemented.
    Under this approach, an early, voluntary 8-hour air quality plan 
would be developed through an Early Action Compact agreement for each 
area that approaches or monitors exceedances of the 8-hour standard and 
that is designated attainment for the 1-hour ozone standard. This 
approach would also apply to maintenance areas for the 1-hour ozone 
standard to the extent such areas continue to maintain that standard. 
One-hour ozone maintenance areas are areas that were previously 
designated nonattainment for the 1-hour ozone standard, but were 
redesignated to attainment pursuant to section 107(d)(3)(E) and subject 
to the requirements of section 175A of the CAA.
    Under a Compact, the local area would commit to develop a SIP based 
on recent emission inventories and air quality modeling demonstrating 
attainment of the 8-hour standard by 2007. In addition, the area would 
identify additional local controls beyond Federal and State 
requirements, which would be implemented by 2005. According to the 
Protocol, we would recognize the local area's commitment to early, 
voluntary action by designating the area nonattainment in April 2004 
(at the time of national designations for all areas of the country), 
but deferring the effective date of the nonattainment designation for 
participating Compact areas that are monitoring a violation of the 8-
hour ozone standard, so long as all terms and milestones of the Compact 
continue to be met, including submission of the early action SIP 
revision no later than December 31, 2004.\80\ We circulated the 
Protocol to

[[Page 32860]]

numerous organizations for review and comment. A copy of the revised 
Protocol is available in the docket for this proposed rulemaking.
---------------------------------------------------------------------------

    \80\ If a Compact area had air quality meeting the 8-hour 
standard for the period on which designations are based, we would 
designate the area as attainment without a deferred effective date.
---------------------------------------------------------------------------

3. What is EPA's Response to the Texas ``Early Action Compact?''
    In a letter dated June 19, 2002, from Gregg Cooke, Administrator, 
Region 6, to Robert Huston, Chairman, TCEQ, EPA endorsed the principles 
outlined in the Protocol. The Protocol was subsequently revised on 
December 11, 2002, based on comments from EPA. Upon the completion of 
Compacts by December 31, 2002 in areas that meet the requirements of 
the Protocol (including 1-hour maintenance areas), we intend to honor 
the commitments established in these agreements. Any control measures 
identified by a Compact area must be submitted to EPA for approval as a 
SIP revision.
    In a proposed settlement with nine environmental groups, we agreed 
to designate areas for the 8-hour ozone standard by April 15, 2004. 
This deadline gives States and Tribes ample time to update their 
recommendations by April 15, 2003 for nonattainment area boundaries. 
EPA lodged the proposed consent decree on November 13, 2002 with the 
U.S. District Court for the District of Columbia. Also on November 14, 
2002, we issued a guidance memorandum outlining the new designations 
schedule, requirements for designating Tribal areas, and discussing the 
impact of the designation schedule on areas that are developing early 
action compacts. (Memorandum dated November 14, 2002, from Jeffrey R. 
Holmstead, Assistant Administrator, to EPA Regional Administrators.)
    We have entered into early action compacts with a number of areas 
of the country. As a result, we will designate all areas of the country 
either attainment or nonattainment in April 2004 (including Compact 
areas). At that time, we plan to propose to defer the effective date of 
the nonattainment designation for participating Compact areas that are 
monitoring a violation of the 8-hour ozone standard, provided all terms 
of the agreement continue to be met, including timely completion of all 
Compact milestones. However, as the Compacts were signed prior to the 
2004 designations process, the Agency cannot prejudge the outcome of 
designations. Consequently, States are advised that if EPA determines 
that any portion of a compact area should become part of an 8-hour 
ozone nonattainment area, that portion would no longer be eligible for 
participation in the Early Action Compact, and the effective date of 
the nonattainment designation for that portion of the Compact would not 
be deferred. Also, as noted above, this proposed rulemaking does not 
propose to establish attainment/nonattainment designations, nor does it 
address the principles that will be considered in the designation 
process, nor does it take comment on the Early Action Compact program.
4. Did EPA Consider Other Options for Incentives for Areas That Take 
Early Actions for Reducing Ozone?
    We did consider another option, which is discussed in a separate 
document available in the docket.\81\
---------------------------------------------------------------------------

    \81\ Additional Options Considered for ``Proposed Rule to 
Implement the 8-Hour Ozone National Ambient Air Quality Standard.'' 
U.S. Environmental Protection Agency, Office of Air Quality Planning 
and Standards, Research Triangle Park, NC, March 2003.
---------------------------------------------------------------------------

5. What Is the Difference Between the Early Action Compact Program and 
the Transitional NSR Program?
    Appendix D of this proposed rulemaking contains a table comparing 
the two programs. It should be noted that areas that may be initially 
eligible for the Early Action Compact but that become ineligible later 
may still be eligible for the transitional NSR program.

B. Clarification of How the Transition from 1-Hour to 8-Hour Standard 
Will Work for Early Action Compact Areas, for Conformity, and for NSR 
and PSD

    Appendix E presents a table that describes our interpretation of 
the applicability of conformity and traditional NSR and PSD under the 
various potential transition scenarios. This table is included for 
informational purposes only and does not constitute part of the 
proposed rule. It is intended only to inform comment on the proposal 
itself. As discussed elsewhere in this preamble, we are proposing 
options for how areas will transition from the 1-hour standard to the 
8-hour standard. Under one of the options, we would revoke the 1-hour 
standard 1 year after the effective date of the 8-hour designations. 
For Early Action Compact areas, the nonattainment designation for the 
8-hour ozone standard is promulgated, but the effective date of that 
designation is deferred as long as the area continues to meet compact 
milestones. These milestones are described in the Holmstead memorandum 
referenced earlier. Shortly after December 2007 (i.e., by April 2008), 
we intend to make a determination of whether the area attained the 8-
hour ozone standard. For all Compact areas, under the transition option 
described earlier in this paragraph, we would revoke the 1-hour 
standard for these areas 1 year after the effective date of the 
designation of attainment or nonattainment for the 8-hour standard. 
Therefore, on the 1-year effective date of the determination we make in 
April 2008, which will include the designation of Compact areas, the 1-
hour standard would be revoked (in approximately May or June of 2009).

C. How Will EPA's Proposal Affect Funding Under the Congestion 
Mitigation and Air Quality Improvement (CMAQ) Program?

    Depending on the specific characteristics of a nonattainment area, 
revocation of the 1-hour ozone standard will have varying effects on 
some Federal transportation program funds apportioned to the States 
through a formula established by the TEA-21. The TEA-21 establishes 
eligibility for the CMAQ program transportation funds for nonattainment 
and maintenance areas, designated under section 107(d) of the CAA (42 
U.S.C. 7407(d)), provided the area is, or was, classified in accordance 
with CAA sections 181, 186, and 188. Eligibility, in part, establishes 
an area's ability to use CMAQ funding. Areas designated nonattainment 
after December 31, 1997 are also eligible, but without regard to 
classification.
    The amount of CMAQ funds available to States for use in 
nonattainment and maintenance areas is set at levels authorized by TEA-
21. The funds are apportioned to States through the statutory formula 
contained in section 104(b) of title 23. The formula is based on a 
State's weighted population, which takes into account the 
classifications of ozone and CO nonattainment and maintenance areas, 
and the population in such areas. The formula does not account for PM 
nonattainment areas.
    As we revoke the 1-hour ozone standard under implementation of the 
new 8-hour ozone NAAQS, changes regarding the designation and 
classification of these nonattainment and maintenance areas, will 
change the amount of CMAQ funds apportioned to each State under the 
current apportionment formula, and thus available to these areas. Some 
States with 1-hour ozone nonattainment and maintenance areas will lose 
CMAQ funding while others may gain without a statutory change. The 
changes in funding will depend on how much a State's weighted 
population changes because of the revocation.

[[Page 32861]]

    Furthermore, after revocation any 1-hour ozone nonattainment or 
maintenance area that is not also designated nonattainment under the 8-
hour or the existing CO or PM-10 standards will lose the ability to 
spend CMAQ funding. Since 1-hour ozone designations will no longer be 
in force, the authorized ability to use CMAQ funds under 23 U.S.C. 
149(b) will be limited to existing CO and PM-10 nonattainment and 
maintenance areas and areas designated after December 31, 1997, such as 
those designated under the 8-hour standard.
    Finally, nonattainment areas designated under the 8-hour ozone 
standard would all be eligible for CMAQ funding, but the formula for 
determining the amount of funds apportioned to the States would only 
take into account the areas that are classified pursuant to CAA 
sections 181, 186, and 188. Areas designated but not classified under 
the 8-hour standard would not be included in the apportionment formula, 
and States with such areas will not receive any CMAQ funding because of 
those areas. As noted elsewhere in this proposal, EPA is requesting 
comment on various concepts for classifying nonattainment areas under 
the 8-hour standard.
    We are aware that apportionment of CMAQ funds is calculated yearly 
and varies according to changing population, and severity of air 
pollution. The TEA-21 is due for reauthorization in October, 2003, and 
adjustments to the CMAQ eligibility criteria and apportionment formula 
may be possible. We understand the importance of CMAQ funding to States 
and nonattainment areas and are prepared to work with DOT and Congress 
to minimize the unintended impact of the 8-hour ozone NAAQS, on those 
funds.

D. Are There Any Environmental Impact Differences Between the Two Major 
Classification Options Being Proposed?

    Both of the major classification options being proposed would 
result in attainment by an expeditious attainment date. However, the 
EPA analysis of costs of the options notes that they do not necessarily 
have the same environmental impact. The subpart 2-only option is more 
expensive for some of the 10 areas analyzed in the cost analysis--
largely because subpart 2 ROP requires more emissions reductions, and 
it requires these reductions by 2008, 2 years earlier than the 
attainment date of 2010 that is assumed for the analysis areas. This 
would result in an earlier air quality benefit. We have not performed 
air quality modeling to determine the increment of air quality benefit 
from the subpart 2-only option compared to the option under which some 
areas are covered under subpart 1.

IX. Statutory and Executive Order Reviews

    Upon promulgation of the NAAQS, the CAA requires EPA to designate 
areas as attaining or not attaining the NAAQS. The CAA then specifies 
requirements for areas based on the designation. This proposed rule 
fleshes out the statutory requirements that non-attainment areas are 
obligated to meet. In some instances, the statute is ambiguous 
regarding the statutory obligations that apply--thus we are proposing 
various options that we believe are consistent with the ambiguous 
language of the statute. One option attempts to provide a flexible and 
least-cost approach for States to apply to the sources that States may 
choose to regulate. The other option follows a more traditional 
statutory interpretation.\82\
---------------------------------------------------------------------------

    \82\ U.S. EPA, Cost, Emission Reduction, Energy, and Economic 
Impact Assessment of the Proposed Rule Establishing the 
Implementation Framework for the 8-hour, 0.08ppm Ozone National 
Ambient Air Quality Standard, prepared by the Innovative Strategies 
and Economics Group, Office of Air Quality Planning and Standards, 
Research Triangle Park, NC, April 24, 2003.
---------------------------------------------------------------------------

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.''
    Pursuant to the terms of Executive Order 12866, it has been 
determined that this rule is a ``significant regulatory action'' 
because it raises novel legal or policy issues arising out of legal 
mandates. As such, this action was submitted to OMB for review. Changes 
made in response to OMB suggestions or recommendations will be 
documented in the public record.

B. Paperwork Reduction Act

    This action does not impose an information collection burden under 
the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

C. Regulatory Flexibility Act

    The Regulatory Flexibility Act generally requires an Agency to 
prepare a regulatory flexibility analysis of any rule subject to notice 
and comment rulemaking requirements under the Administrative Procedures 
Act or any other statute unless the Agency certifies 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 today's proposed rule on 
small entities, small entity is defined as: (1) A small business that 
is a small industrial entity as defined in the U.S. Small Business 
Administration (SBA) size standards. (See 13 CFR 121.); (2) a 
governmental jurisdiction that is a government of a city, county, town, 
school district or special district with a population of less than 
50,000; and (3) a small organization that is any not-for-profit 
enterprise which is independently owned and operated and is not 
dominant in its field.
    After considering the economic impacts of today's proposed rule on 
small entities, I certify that this action will not have a significant 
economic impact on a substantial number of small entities. This 
proposed rule will not impose any requirements on small entities. 
Rather, this rule interprets the obligations established in the CAA for 
States to submit implementation plans in order to attain the 8-hour 
ozone NAAQS.

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, EPA 
generally must prepare a written statement, including a cost-benefit 
analysis, for proposed and final rules with ``Federal mandates'' that 
may result in expenditures to State, local,

[[Page 32862]]

and Tribal governments, in the aggregate, or to the private sector, of 
$100 million or more in any 1 year. Before promulgating an EPA rule for 
which a written statement is needed, section 205 of the UMRA generally 
requires EPA to identify and consider a reasonable number of regulatory 
alternatives and adopt the least costly, most cost-effective or least 
burdensome alternative that achieves the objectives of the rule. The 
provisions of section 205 do not apply when they are inconsistent with 
applicable law. Moreover, section 205 allows EPA to adopt an 
alternative other than the least costly, most cost-effective or least 
burdensome alternative if the Administrator publishes with the final 
rule an explanation why that alternative was not adopted. Before EPA 
establishes any regulatory requirements that may significantly or 
uniquely affect small governments, including Tribal governments, it 
must have developed under section 203 of the UMRA a small government 
agency plan. The plan must provide for notifying potentially affected 
small governments, enabling officials of affected small governments to 
have meaningful and timely input in the development of EPA regulatory 
proposals with significant Federal intergovernmental mandates, and 
informing, educating, and advising small governments on compliance with 
the regulatory requirements.
    EPA has determined that this rule does not contain a Federal 
mandate that may result in expenditures of $100 million or more for 
State, local, and Tribal governments, in the aggregate, or the private 
sector in any 1 year. The estimated administrative burden hour and 
costs associated with implementing the 8-hour, 0.08 ppm NAAQS were 
developed upon promulgation of the standard and presented in Chapter 10 
of U.S. EPA 1997, Regulatory Impact Analyses for the Particulate Matter 
and Ozone National Ambient Air Quality Standards, Innovative Strategies 
and Economics Group, Office of Air Quality Planning and Standards, 
Research Triangle Park, NC, July 16, 1997. The estimated costs 
presented there for States in 1990 dollars totaled $0.9 million. The 
corresponding estimate in 1997 dollars is $1.1 million. Should the more 
traditional classification option be adopted as the implementation 
framework, these costs may increase modestly, but would not reach $100 
million. Thus, today's rule is not subject to the requirements of 
section 202 and 205 of the UMRA.
    The CAA imposes the obligation for States to submit SIPs to 
implement the 8-hour ozone NAAQS; in this rule, EPA is merely fleshing 
out those requirements. However, even if this rule did establish a 
requirement for States to submit SIPs, it is questionable whether a 
requirement to submit a SIP revision would constitute a Federal mandate 
in any case. The obligation for a State to submit a SIP that arises out 
of section 110 and part D of the CAA is not legally enforceable by a 
court of law, and at most is a condition for continued receipt of 
highway funds. Therefore, it is possible to view an action requiring 
such a submittal as not creating any enforceable duty within the 
meaning of section 421(5)(9a)(I) of UMRA (2 U.S.C. 658(a)(I)). Even if 
it did, the duty could be viewed as falling within the exception for a 
condition of Federal assistance under section 421(5)(a)(i)(I) of UMRA 
(2 U.S.C. 658(5)(a)(i)(I)).
    In the proposal, EPA has determined that this proposed rule 
contains no regulatory requirements that may significantly or uniquely 
affect small governments, including Tribal governments. Nonetheless, 
EPA carried out consultations with governmental entities affected by 
this rule.

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.''
    This proposed rule 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. As described in section D, above 
(on UMRA), EPA previously determined the costs to States to implement 
the 8-hour ozone NAAQS to be approximately $1 million. While this 
proposed rule considers options not addressed at the time the NAAQS 
were promulgated, the costs for implementation under these options 
would rise only marginally. This rule fleshes out the statutory 
obligations of States in implementing the 8-hour ozone NAAQS. Finally, 
the CAA establishes the scheme whereby States take the lead in 
developing plans to meet the NAAQS. This proposed rule would not modify 
the relationship of the States and EPA for purposes of developing 
programs to implement the NAAQS. Thus, Executive Order 13132 does not 
apply to this proposed rule.
    Although section 6 of Executive Order 13132 does not apply to this 
rule, EPA actively engaged the States in the development of this 
proposed rule. EPA held regular calls with representatives of State and 
local air pollution control agencies. EPA also held three public 
hearings at which it described the approaches it was considering and 
provided an opportunity for States and various other governmental 
officials to comment on the options being considered.
    In the spirit of Executive Order 13132, and consistent with EPA 
policy to promote communications between EPA and State and local 
governments, EPA specifically solicits comment on this proposed rule 
from State and local officials.

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 9, 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.'' This proposed rule does not 
have ``Tribal implications'' as specified in Executive Order 13175.
    This proposed rule concerns the implementation of the 8-hour ozone 
standard in areas designated nonattainment for that standard. The CAA 
provides for States and Tribes to develop plans to regulate emissions 
of air pollutants within their jurisdictions. The proposed regulations 
flesh out the statutory obligations of States and Tribes that develop 
plans to implement the 8-hour ozone NAAQS. The TAR gives Tribes the 
opportunity to develop and implement CAA programs such as the 8-hour 
ozone NAAQS, but it leaves to the discretion of the Tribe whether to 
develop these programs and which programs, or appropriate elements of a 
program, they will adopt.
    This proposed rule does not have Tribal implications as defined by 
Executive Order 13175. It does not have a substantial direct effect on 
one or more Indian Tribes, since no Tribe has implemented a CAA program 
to attain the 8-hour ozone NAAQS at this time. Furthermore, this 
proposed rule does not affect the relationship or

[[Page 32863]]

distribution of power and responsibilities between the Federal 
government and Indian Tribes. The CAA and the TAR establish the 
relationship of the Federal government and Tribes in developing plans 
to attain the NAAQS, and this proposed rule does nothing to modify that 
relationship. Because this proposed rule does not have Tribal 
implications, Executive Order 13175 does not apply.
    Assuming a Tribe is implementing such a plan at this time, while 
the proposed rule would have Tribal implications upon that Tribe, it 
would not impose substantial direct costs upon it, nor would it preempt 
Tribal law. As provided above, EPA has determined that the total costs 
for implementing the 8-hour ozone by State, local, and Tribal 
governments is approximately $1 million in all areas designated 
nonattainment for the standard. The percentage of Tribal land that will 
be designated nonattainment for the 8-hour ozone standard is very 
small. For Tribes that choose to regulate sources in Indian country, 
the costs would be attributed to inspecting regulated facilities and 
enforcing adopted regulations.
    Although Executive Order 13175 does not apply to this proposed 
rule, EPA consulted with Tribal officials in developing this proposed 
rule. EPA has encouraged Tribal input at an early stage. EPA supports a 
national ``Tribal Designations and Implementation Work Group'' which 
provides an open forum for all Tribes to voice concerns to EPA about 
the designation and implementation process for the 8-hour ozone 
standard. These discussions have given EPA valuable information about 
Tribal concerns regarding implementation of the 8-hour ozone NAAQS. The 
work group sends issue summaries and suggestions for addressing them to 
the newly formed National Tribal Air Association, who in turn will send 
them to Tribal leaders. EPA has encouraged Tribes to participate in the 
national public meetings held to take comment on early approaches to 
the proposed rule. Several Tribes made public comments at the April 
2002 public meeting in Tempe, Arizona.
    Furthermore, EPA will send individualized letters to all federally 
recognized Tribes about this proposal and will give Tribal leaders the 
opportunity for consultation. 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 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 
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 proposed rule is not subject to Executive Order 13045 because 
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. Nonetheless, we have evaluated the 
environmental health or safety effects of the 8-hour ozone NAAQS on 
children. The results of this evaluation are contained in 40 CFR part 
50, National Ambient Air Quality Standards for Ozone, Final Rule (62 FR 
38855-38896; specifically, 62 FR 38854, 62 FR 38860 and 62 FR 38865).

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

    This proposed rule is not a ``significant energy action'' as 
defined in Executive Order 13211, ``Actions That Significantly Affect 
Energy Supply, Distribution, or Use,'' (66 FR 28355, May 22, 2001) 
because it is not likely to have a significant adverse effect on the 
supply, distribution, or use of energy.
    Information on the methodology and data regarding the assessment of 
potential energy impacts is found in Chapter 6 of U.S. EPA 2002, Cost, 
Emission Reduction, Energy, and Economic Impact Assessment of the 
Proposed Rule Establishing the Implementation Framework for the 8-Hour, 
0.08 ppm Ozone National Ambient Air Quality Standard, prepared by the 
Innovative Strategies and Economics Group, Office of Air Quality 
Planning and Standards, Research Triangle Park, N.C. April 24, 2003.

I. National Technology Transfer Advancement Act

    Section 12(d) of the National Technology Transfer Advancement Act 
of 1995 (NTTAA), Public Law No. 104-113, section 12(d) (15 U.S.C. 272 
note) directs EPA to use voluntary consensus standards (VCS) 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 VCS bodies. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable VCS.
    This proposed rulemaking does not involve technical standards. 
Therefore, EPA is not considering the use of any VCS.
    EPA will encourage the States and Tribes to consider the use of 
such standards, where appropriate, in the development of the 
implementation plans.

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations

    Executive Order 12898 requires that each Federal agency make 
achieving environmental justice part of its mission by identifying and 
addressing, as appropriate, disproportionate high and adverse human 
health or environmental effects of its programs, policies, and 
activities on minorities and low-income populations.
    EPA believes that this proposed rule should not raise any 
environmental justice issues. The health and environmental risks 
associated with ozone were considered in the establishment of the 8-
hour, 0.08 ppm ozone NAAQS. The level is designed to be protective with 
an adequate margin of safety. The proposed rule provides a framework 
for improving environmental quality and reducing health risks for areas 
that may be designated nonattainment.

List of Subjects in 40 CFR Part 51

    Environmental protection, Air pollution control, Intergovernmental 
relations, Ozone, Particulate matter, Transportation, Volatile organic 
compounds.

    Authority: 42 U.S.C. 7408; 42 U.S.C. 7410; 42 U.S.C. 7501-7511f; 
42 U.S.C. 7601(a)(1).

    Dated: May 14, 2003.
Christine Todd Whitman,
Administrator.

X. Appendices

    Note: The following appendices will not appear in the Code of 
Federal Regulations.


[[Page 32864]]



Appendix A

Comparison of Subpart 1 & 2 Requirements

    This is only an outline of the general requirements of subparts 
1 and 2 and should not be relied on for regulatory purposes.

----------------------------------------------------------------------------------------------------------------
                                                                                   Subpart 2
             Element                       Subpart 1         ---------------------------------------------------
                                                                   Classification              Requirement
----------------------------------------------------------------------------------------------------------------
Attainment Dates: For all areas,   Up to 5 years after        Marginal................  3 years from CAA
 attainment should occur as         nonattainment                                        Amendments enactment.
 expeditiously as practicable,      designation; may extend
 but no later than specified        up to 10 years based on
 timeframe.                         specified considerations.
                                                              Moderate................  6 years from CAA
                                                                                         Amendments enactment.
                                                              Serious.................  9 years from CAA
                                                                                         Amendments enactment.
                                                              Severe-15...............  15 years from CAA
                                                                                         Amendments enactment.
                                                              Severe-17...............  17 years from CAA
                                                                                         Amendments enactment.
                                                              Extreme.................  20 years from CAA
                                                                                         Amendments enactment.
RFP..............................  ``Annual incremental       Marginal................  None.
                                    emissions reductions''.
                                                              Moderate................  15% VOC reduction from
                                                                                         baseline within 6 years
                                                                                         of enactment.
                                                              Serious.................  Moderate req't plus 9%
                                                                                         VOC/NOX reductions for
                                                                                         years 7-9 after CAA
                                                                                         Amendments enactment.
                                                              Severe-15...............  Serious req't plus 9%
                                                                                         VOC/NOX for years 9-15
                                                                                         after CAA Amendments
                                                                                         enactment.
                                                              Severe-17...............  Serious req't plus 9%
                                                                                         VOC/NOX for years 9-17
                                                                                         after CAA Amendments
                                                                                         enactment.
                                                              Extreme.................  Severe req't plus 9% VOC/
                                                                                         NOX for years 9-20
                                                                                         after CAAA enactment.
Milestone Compliance               Not required as such;      Marginal/moderate.......  No further requirement.
 Determination.                     contingency measures
                                    supposed to be
                                    implemented upon failure
                                    to meet RFP.
                                                              Serious & above.........  Requires milestone
                                                                                         compliance
                                                                                         demonstration to be
                                                                                         made following
                                                                                         milestone; failing area
                                                                                         must elect one of the
                                                                                         following:
                                                                                        1. bump-up.
                                                                                        2. implement contingency
                                                                                         measures.
                                                                                        3. economic incentive.
Attainment demonstration           EPA sets date which can    Marginal................  None.
 submission.                        be no later than 3 years
                                    after designation.
                                                              Moderate................  Due 3 years after CAA
                                                                                         Amendments enactment.
                                                              Serious.................  Due 4 years from CAA
                                                                                         Amendments enactment.
                                                              Severe..................  Due 4 years from CAA
                                                                                         Amendments enactment.
                                                              Extreme.................  Due 4 years from CAA
                                                                                         Amendments enactment.
NSR and RACT major source          100 TPY..................  Marginal................  100 TPY
 applicability.
                                                              Moderate................  100 TPY
                                                              Serious.................  50 TPY
                                                              Severe..................  25 TPY
                                                              Extreme.................  10 TPY
NSR offsets......................  1 to 1........  Marginal................  1.1 to 1
                                                              Moderate................  1.15 to 1
                                                              Serious.................  1.2 to 1
                                                              Severe..................  1.3 to 1
                                                              Extreme.................  1.5 to 1

[[Page 32865]]

 
NSR permits......................  Permits required.........  All.....................  Construction permits for
                                                                                         new or modified major
                                                                                         stationary sources pre-
                                                                                         1990 permit program
                                                                                         corrections.
Bump-up to higher classification.  NA.......................  All except severe &       Required to bump-up to
                                                               extreme.                  higher classification
                                                                                         if area doesn't meet
                                                                                         attainment date.
NOX control for RACT.............  No specificity...........  Moderate & above; all     Requirements under this
                                                               areas in OTC.             subpart for major
                                                                                         stationary VOC sources
                                                                                         (NSR & RACT) also apply
                                                                                         to all major NOX
                                                                                         sources, unless EPA
                                                                                         approves NOX waiver.
NOX control for NSR..............  No specificity...........  Marginal & above........
Emission inventory...............  Required in nonattainment  All.....................  Comprehensive emissions
                                    area; no express                                     inventory within 2
                                    requirement for updates                              years of enactment;
                                    or emission statements.                              update every 3 years
                                                                                         (until area attains).
                                                                                         Provision for
                                                                                         submission to State of
                                                                                         annual emissions
                                                                                         statements from VOC and
                                                                                         NOX stationary sources.
RACM/RACT........................  General requirement for    Marginal & above........  Pre-1990 RACT fix-up.
                                    RACM including RACT.
                                                              Moderate & above........  RACT for all CTG sources
                                                                                         and all other major
                                                                                         sources.
I/M..............................  Nothing specified........  Marginal................  Pre-1990 corrections to
                                                                                         previously required I&M
                                                                                         programs immediately
                                                                                         upon CAA Amendments
                                                                                         enactment.
                                                              Moderate................  Basic I&M.
                                                              Serious & above.........  Enhanced I&M within 2
                                                                                         years of CAA Amendments
                                                                                         enactment.
Conformity (transportation and     Required.................  All.....................  No additional
 general).                                                                               specificity.
Stage II vapor recovery (VOC)....  Not specified............  Moderate & above........  Stage II for gas
                                                                                         stations within 2
                                                                                         years.
Consequences of failure to attain  EPA to specify additional  Marginal, moderate and    Bump-up for failure to
                                    requirements; up to 10     serious.                  attain.
                                    more years to attain.
                                                              Severe and extreme......  Fee system; continued
                                                                                         ROP; possible stricter
                                                                                         NSR major source cut-
                                                                                         offs.
Maintenance......................  Requirement for            All.....................  No additional
                                    maintenance plans for                                specificity.
                                    areas redesignated from
                                    nonattainment to
                                    attainment.
Contingency measures.............  Required for failure to    All.....................  Required for failure to
                                    make RFP or attainment.                              meet ROP milestones or
                                                                                         attain.
Enhanced (ambient) monitoring      Not specified............  Marginal and moderate...  Not specified.
 (PAMS).
                                                              Serious & above.........  Ambient ozone precursor
                                                                                         monitoring (VOC and
                                                                                         NOX).
VMT demonstration and              Not specified............  Marginal and moderate...  Not specified.
 transportation control measures
 (TCMs) if needed.
                                                              Serious & above.........  Demonstration of whether
                                                                                         current aggregate
                                                                                         vehicle mileage,
                                                                                         emissions, congestion
                                                                                         levels are consistent
                                                                                         with attainment demo.
Clean fuels program..............  Not specified............  Marginal and moderate...  Not specified.
                                                              Serious & above.........  Certain percentage of
                                                                                         fleet vehicles for 1998
                                                                                         and higher to be clean
                                                                                         vehicles and use
                                                                                         alternative fuels (if
                                                                                         needed).

[[Page 32866]]

 
Reformulated Gasoline required     Not specified............  Marginal, moderate &      Not specified.
 under section 211(k)(10)(D),                                  serious.
 which requires the use of
 reformulated gasoline in 9
 covered areas, and areas that
 are bumped-up to Severe under
 section 181(d)).
                                                              Severe & above..........  Prohibition of sale of
                                                                                         gas that has not been
                                                                                         reformulated to be less
                                                                                         polluting.
TCMs to offset growth in VMT       Not specified............  Marginal, moderate &      Not specified.
 emissions.                                                    serious.
                                                              Severe & above..........  Enforceable
                                                                                         transportation control
                                                                                         strategies and TCMs to
                                                                                         offset any emissions
                                                                                         growth due to VMT
                                                                                         growth.
Clean Fuels for Boilers..........  Not specified............  Marginal, moderate,       Not specified.
                                                               serious & severe.
                                                              Extreme areas...........  Use of clean fuels or
                                                                                         advanced technology for
                                                                                         certain boilers that
                                                                                         emit more than 25 TPY
                                                                                         of NOX.
TCMs during heavy traffic hours..  Not specified............  Marginal, moderate,       Not specified.
                                                               serious & severe.
                                                              Extreme areas...........  Option to have TCMs
                                                                                         during periods of heavy
                                                                                         traffic that reduce use
                                                                                         of high polluting or
                                                                                         heavy-duty vehicles.
New Technologies.................  Not specified............  Marginal, moderate,       Not specified.
                                                               serious & severe.
                                                              Extreme areas...........  New or future
                                                                                         technologies for
                                                                                         emissions reductions.
----------------------------------------------------------------------------------------------------------------


        Appendix B.--``Applicable Requirements'' Under Subpart 2
------------------------------------------------------------------------
           Element               Classification          Requirement
------------------------------------------------------------------------
RFP.........................  Moderate............  15% VOC reduction
                                                     from baseline
                                                     within 6 years of
                                                     enactment.
                              Serious.............  Moderate req't plus
                                                     9% VOC/NOX
                                                     reductions for
                                                     years 7-9 after CAA
                                                     Amendments
                                                     enactment.
                              Severe-15...........  Serious req't plus
                                                     9% VOC/NOX for
                                                     years 9-15 after
                                                     CAA Amendments
                                                     enactment.
                              Severe-17...........  Serious req't plus
                                                     9% VOC/NOX for
                                                     years 9-17 after
                                                     CAA Amendments
                                                     enactment.
                              Extreme.............  Severe req't plus 9%
                                                     VOC/NOX for years 9-
                                                     20 after CAA
                                                     Amendments
                                                     enactment.
Milestone Compliance          Serious & above.....  Requires milestone
 Determination.                                      compliance
                                                     demonstration to be
                                                     made following
                                                     milestone; failing
                                                     area must elect one
                                                     of the following:
                                                    1. bump-up.
                                                    2. implement
                                                     contingency
                                                     measures.
                                                    3. economic
                                                     incentive.
NSR and RACT major source     Marginal............  100 TPY
 applicability.
                              Moderate............  100 TPY
                              Serious.............  50 TPY
                              Severe..............  25 TPY
                              Extreme.............  10 TPY
NSR offsets.................  Marginal............  1.1 to 1
                              Moderate............  1.15 to 1
                              Serious.............  1.2 to 1
                              Severe..............  1.3 to 1
                              Extreme.............  1.5 to 1
NSR permits.................  All.................  Construction permits
                                                     for new or modified
                                                     major stationary
                                                     sources pre-1990
                                                     permit program
                                                     corrections.
NOX control for RACT........  Moderate & above;     Requirements under
                               all areas in OTC.     this subpart for
                                                     major stationary
                                                     VOC sources (NSR &
                                                     RACT) also apply to
                                                     all major NOX
                                                     sources, unless EPA
                                                     approves NOX
                                                     waiver.

[[Page 32867]]

 
NOX control for NSR.........  Marginal & above....  ....................
RACM/RACT...................  Marginal & above....  Pre-1990 RACT fix-
                                                     up.
                              Moderate & above....  RACT for all CTG
                                                     sources and all
                                                     other major
                                                     sources.
I/M.........................  Marginal............  Pre-1990 corrections
                                                     to previously
                                                     required I&M
                                                     programs
                                                     immediately upon
                                                     CAA Amendments
                                                     enactment.
                              Moderate............  Basic I&M.
                              Serious & above.....  Enhanced I&M within
                                                     2 years of CAA
                                                     Amendments
                                                     enactment.
Stage II vapor recovery       Moderate & above....  Stage II for gas
 (VOC).                                              stations within 2
                                                     years.
Maintenance.................  All.................  No additional
                                                     specificity.
Enhanced (ambient)            Serious & above.....  Ambient ozone
 monitoring (PAMS).                                  precursor
                                                     monitoring (VOC and
                                                     NOX).
VMT demonstration and         Serious & above.....  Demonstration of
 transportation control                              whether current
 measures (TCMs) if needed.                          aggregate vehicle
                                                     mileage, emissions,
                                                     congestion levels
                                                     are consistent with
                                                     attainment demo.
Clean fuels program.........  Serious & above.....  Certain percentage
                                                     of fleet vehicles
                                                     for 1998 and higher
                                                     to be clean
                                                     vehicles and use
                                                     alternative fuels
                                                     (if needed).
Reformulated Gasoline*......  Severe & above......  Prohibition of sale
                                                     of gas that has not
                                                     been reformulated
                                                     to be less
                                                     polluting.
TCMs to offset growth in VMT  Marginal, moderate &  Not specified.
 emissions.                    serious.
                              Severe & above......  Enforceable
                                                     transportation
                                                     control strategies
                                                     and TCMs to offset
                                                     any emissions
                                                     growth due to VMT
                                                     growth
Clean Fuels for Boilers.....  Extreme areas.......  Use of clean fuels
                                                     or advanced
                                                     technology for
                                                     certain boilers
                                                     that emit more than
                                                     25 TPY of NOX.
TCMs during heavy traffic     Extreme areas.......  Option to have TCMs
 hours.                                              during periods of
                                                     heavy traffic that
                                                     reduce use of high
                                                     polluting or heavy-
                                                     duty vehicles.
New Technologies............  Extreme areas.......  New or future
                                                     technologies for
                                                     emission
                                                     reductions.
------------------------------------------------------------------------
* Required under section 211(k)(10)(D), which requires the use of
  reformulated gasoline in 9 covered areas, and areas that are bumped-up
  to Severe under section 181(d).


  Appendix C.--Comparison of Transitional NSR and Early Action Compact
                                Programs
------------------------------------------------------------------------
                                Transitional new     8-hour Early action
      Program elements         source review (NSR)         compact
------------------------------------------------------------------------
Eligibility *...............  --Meet 1-hr standard  --Must have
                              --Must be 8-hr         monitoring data
                               nonattainment.        meeting 1-hr
                              --Must be covered      standard.
                               under Subpart 1 **.  --Must be designated
                                                     attainment for 1-hr
                                                     standard.
Initiation Date.............  Submit attainment     Signed compact by 12/
                               demonstration by      31/02.
                               designations date
                               (4/15/04).
Other Dates.................  --All measures must   --Submit progress
                               be implemented by     reports every 6
                               12/31/05.             months beginning 6/
                              --Projected            03.
                               attainment of 8-hr   --Describe planned
                               standard by April     measures by 6/16/
                               2007.                 03.
                                                    --Submit local plan
                                                     to State by 3/31/
                                                     04.
                                                    --Submit SIP to
                                                     State by 12/31/04.
                                                    --Implement all
                                                     measures by 12/31/
                                                     05.
                                                    --Submit progress
                                                     report to certify
                                                     continued
                                                     implementation &
                                                     air quality
                                                     improvements.
                                                    --Area must attain 8-
                                                     hr standard by 12/
                                                     31/07.
Benefits....................  --BACT instead of     --Deferred effective
                               LAER (cite NSR        date of
                               workshop manual).     nonattainment
                              --No required          designation.
                               emission offsets.    --Implies no NSR or
                                                     conformity.
                                                    --Implementation of
                                                     measures earlier
                                                     than required by
                                                     CAA (early
                                                     reductions in
                                                     emissions).
Consequences................  If 2007 attainment    --Nonattainment
                               date is missed,       designation becomes
                               State must submit     effective soon
                               by April 2007 a       after failure to
                               Part D NSR plan,      meet milestone.
                               which meets          --Nonattainment
                               requirements under    requirements must
                               sec. 51.165 (i.e.,    be met (NSR,
                               traditional           conformity, RACT,
                               nonattainment NSR).   etc) if missed
                                                     milestone.
------------------------------------------------------------------------
* Areas not eligible for Early Action Compact may still be eligible for
  transitional NSR.
** Areas in the Ozone Transport Region are not eligible for transitional
  NSR because they are not covered under Subpart 1 for purposes of NSR
  applicability.


               Appendix D.--Glossary of Terms and Acronyms
------------------------------------------------------------------------
 
------------------------------------------------------------------------
ACT................................  Alternative control techniques

[[Page 32868]]

 
BACT...............................  Best available control technology
bump-up............................  Reclassify to higher classification
CAA................................  Clean Air Act
CAAA...............................  1990 Clean Air Act Amendments
CADC...............................  Clean Air Development Community
CASAC..............................  Clean Air Scientific Advisory
                                      Committee
CERR...............................  Consolidated Emissions Reporting
                                      Rule
CFR................................  Code of Federal Regulations
CO.................................  Carbon monoxide
Compacts...........................  Early Action Compact Agreements
CSA................................  Clear Skies Act
CTGs...............................  Control techniques guidelines
DOT................................  Department of Transportation
EPA................................  Environmental Protection Agency
FACA...............................  Federal Advisory Committee Act
FIPs...............................  Federal implementation plans
FMVCP..............................  Federal Motor Vehicle Control
                                      Program
GAM................................  Generalized additive models
HAPs...............................  Hazardous air pollutants
HEI................................  Health Effects Institute
LAER...............................  Lowest achievable emission rate
MACT...............................  Maximum achievable control
                                      technology
MCR................................  Mid-course review
MPO................................  Metropolitan Planning Organization
NAAQS..............................  National Ambient Air Quality
                                      Standards
NAMS...............................  National Air Monitoring Stations
NCore..............................  National Core Monitoring Sites
NMMAPS.............................  National Morbidity, Mortality, and
                                      Air Pollution Study
NOX................................  Nitrogen oxides
NOy................................  Reactive oxides of nitrogen
NO2................................  Nitrogen dioxide
NSCR...............................  Non-selective catalytic reduction
NSR................................  New source review
NTTAA..............................  National Technology Transfer
                                      Advancement Act of 1995
OH.................................  Hydroxyl
OMB................................  Office of Management and Budget
OTAG...............................  Ozone Transport Assessment Group
OTC................................  Ozone Transport Commission
OTR................................  Ozone Transport Region
Ozone Flex.........................  Ozone Flex Guidelines Program
PAMS...............................  Photochemical Assessment Monitoring
                                      Stations
PM.................................  Particulate matter
PM2.5..............................  Fine particle
ppm................................  Parts per million
Protocol...........................  Protocol for Early Action Compacts
                                      designed to achieve and maintain
                                      the 8-hour ozone standard
PSD................................  Prevention of significant
                                      deterioration
RACM...............................  Reasonably available control
                                      measures
RACT...............................  Reasonably available control
                                      technology
RFP................................  Reasonable further progress
ROP................................  Rate of progress
RPOs...............................  Regional Planning Organizations
SBA................................  Small Business Administration
SIPs...............................  State implementation plans
SLAMS..............................  State and Local Air Monitoring
                                      Stations
TAR................................  Tribal Authority Rule
TCEQ...............................  Texas Commission on Environmental
                                      Quality
TCMs...............................  Transportation control measures
TEA-21.............................  Transportation Equity Act for the
                                      Twenty-first Century
TIP................................  Tribal implementation plan
TSP................................  Total suspended particulates
UMRA...............................  Unfunded Mandates Reform Act of
                                      1995
VCS................................  Voluntary consensus standards
VMT................................  Vehicle miles traveled
VOC................................  Volatile organic compound
VT.................................  Vehicle trips
------------------------------------------------------------------------


[[Page 32869]]


   Appendix E.--Application of Conformity, New Source Review and Prevention of Significant Deterioration under
                                            Various Transition Cases
----------------------------------------------------------------------------------------------------------------
                                         And its 8-hr         How would conformity     How would traditional \1\
  If an area's 1-hr situation is:       situation is:                apply?                  NSR/PSD apply?
----------------------------------------------------------------------------------------------------------------
Designated Attainment (never been   Designated Attainment  Under 1 hr std: Conformity  Under 1 hr std: PSD
 nonattainment).                                            does not apply.             continues to apply until
                                                                                        the 1-hr standard is
                                                                                        revoked.
                                                           Under 8 hr std: Conformity  Under 8 hr std: PSD
                                                            does not apply.             applies (Note: PSD
                                                                                        applies as long as area
                                                                                        is attainment for the 8-
                                                                                        hr std.)
                                    Designated Nonattain-  Under 1 hr std: Conformity  Under 1 hr std: PSD
                                     ment.                  does not apply.             applies until the 1-hr
                                                                                        standard is revoked (but
                                                                                        nonattainment NSR
                                                                                        requirements for 8-hr
                                                                                        std. would tend to
                                                                                        override).
                                                           Under 8 hr std: Conformity  Under 8-hr std:
                                                            applies 1 year after the   (1) NSR under 40 CFR
                                                            effective date of           appendix S applies
                                                            designation (2005).         before SIP (containing
                                                                                        Sec.   51.165(a) NSR
                                                                                        program) is approved by
                                                                                        EPA.
                                                                                       (2) Nonattainment NSR
                                                                                        under Sec.   51.165
                                                                                        applies after SIP
                                                                                        approval
                                    Early Action Compact   Under 1 hr std: Conformity  Under 1 hr std: PSD
                                     (EAC).                 does not apply.             continues to apply to
                                                           Under 8 hr std: Assuming     EAC areas until the 1-hr
                                                            all milestones are met,     standard is revoked.
                                                            conformity would not       Under 8 hr std: Assuming
                                                            apply through 2007. If      all milestones are met,
                                                            the area is violating in    PSD would apply through
                                                            2007, its nonattainment     2007.\2\ If the area is
                                                            designation would become    violating in 2007, it
                                                            effective 4/15/2008, and    would become subject to
                                                            conformity would apply 1    nonattainment NSR. If
                                                            year later (4/15/2009).     area is not violating in
                                                            If area not violating in    2007, the area would be
                                                            2007, the area would be     designated attainment,
                                                            designated attainment,      and PSD continues to
                                                            and no conformity would     apply
                                                            apply.
Designated Nonattainment..........  Designated Attainment  Under 1 hr std: Conformity  Under 1 hr std:
                                                            applies until 1 year        Nonattainment NSR
                                                            after the effective date    applies until it is no
                                                            of the area's designation   longer an ``applicable
                                                            under the 8-hr standard     requirement'' (see
                                                            (2005).                     proposal on anti-
                                                                                        backsliding).
                                                           Under 8 hr std: Conformity  Under 8 hr std: PSD
                                                            does not apply.             applies.\3\
                                    Designated             Under 1 hr std: Conformity  Under 1 hr std:
                                     Nonattainment.         applies until 1 year        Nonattainment NSR
                                                            after the effective date    continues to apply until
                                                            of the area's designation   it is no longer an
                                                            under the 8-hr standard     ``applicable
                                                            (2005).                     requirement'' (see
                                                           Under 8 hr std: Conformity   proposal on anti-
                                                            would apply 1 year after    backsliding).
                                                            the effective date of the  Under 8 hr std: (1)
                                                            area's designation (2005).  Nonattainment NSR under
                                                                                        appendix S applies until
                                                                                        the nonattainment NSR
                                                                                        SIP (containing Sec.
                                                                                        51.165(a) NSR program)
                                                                                        is approved by EPA;
                                                                                       (2) Nonattainment NSR
                                                                                        applies under Sec.
                                                                                        51.165 after SIP
                                                                                        approval.
                                    (EAC: Not eligible)
Designated attainment with          Designated Attainment  Under 1 hr std: Conformity  Under 1 hr std: PSD
 Maintenance Plan.                                          applies until 1 year        applies until 1-hr std.
                                                            after the effective date    is revoked.
                                                            of the area's designation  Under 8 hr std: PSD
                                                            under the 8-hr standard     applies.
                                                            (2005).
                                                           Under 8 hr std: Conformity
                                                            does not apply.

[[Page 32870]]

 
                                    Designated             Under 1 hr std: Conformity  Under 1 hr std: PSD
                                     Nonattainment.         applies until 1 year        applies until the 1-hr
                                                            after the effective date    standard is revoked.
                                                            of the area's designation  Under 8 hr std:
                                                            under the 8-hr standard    (1) NSR under 40 CFR
                                                            (2005).                     appendix S applies
                                                           Under 8 hr std: Conformity   before SIP (containing
                                                            would apply 1 year after    Sec.   51.165(a) NSR
                                                            the effective date of the   program) is approved by
                                                            area's designation under    EPA;
                                                            the 8-hr standard (2005).  (2) Nonattainment NSR
                                                                                        under Sec.   51.165
                                                                                        applies after SIP
                                                                                        approval.
                                    Early Action Compact.  Under 1 hr std: 1-hour      Under 1 hr std: PSD
                                                            conformity applies until    continues to apply until
                                                            1 year after the            the 1-hr standard is
                                                            effective date of the       revoked.
                                                            area's designation under   Under 8 hr std: Assuming
                                                            the 8-hr standard (4/15/    all milestones are met,
                                                            2009, or earlier if the     PSD would apply through
                                                            area misses an EAC          2007.\2\ If the area is
                                                            milestone).                 violating in 2007, it
                                                           Under 8 hr std: Assuming     would become subject to
                                                            all milestones are met,     nonattainment NSR. If
                                                            conformity would not        area is not violating in
                                                            apply through 2007. If      2007, the area would be
                                                            the area is violating in    designated attainment,
                                                            2007, its nonattainment     and PSD continues to
                                                            designation would become    apply.
                                                            effective 4/15/2008 and
                                                            conformity would apply 1
                                                            year later (4/15/2009).
                                                            If area not violating in
                                                            2007, the area would be
                                                            designated attainment,
                                                            and no conformity would
                                                            apply.
----------------------------------------------------------------------------------------------------------------
\1\ Traditional NSR is nonattainment NSR under 40 CFR part 51, either Sec.   51.165 or appendix S.
\2\ PSD applies even if the attainment designation under the 8-hr standard is not yet effective.
\3\ Generally, nonattainment NSR requirements would supersede most PSD requirements. However, note that in
  specific instances PSD may mandate additional analyses, such as preconstruction monitoring or analysis of
  impacts on Class I areas.

[FR Doc. 03-13240 Filed 5-30-03; 8:45 am]
BILLING CODE 6560-50-P