[Federal Register Volume 70, Number 63 (Monday, April 4, 2005)]
[Proposed Rules]
[Pages 17018-17027]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 05-6630]


=======================================================================
-----------------------------------------------------------------------

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Part 51

[E-Docket ID No. OAR-2003-0079, FRL-7895-3]
RIN 2060-AJ99


Nonattainment Major New Source Review Implementation Under 8-Hour 
Ozone National Ambient Air Quality Standard: Reconsideration

AGENCY: Environmental Protection Agency (EPA).

ACTION: Proposed rule; notice of public hearing.

-----------------------------------------------------------------------

SUMMARY: The EPA is requesting comment on issues raised in a petition 
for reconsideration of EPA's rule to implement the 8-hour ozone 
national ambient air quality standard (NAAQS or 8-hour standard). On 
April 30, 2004, EPA took final action on key elements of the program to 
implement the 8-hour standard. In that final action, we (the EPA) 
addressed certain implementation issues related to the 8-hour standard, 
including aspects of implementation of the nonattainment major New 
Source Review (NSR) program mandated by part D of title I of the Act 
(CAA or Act).
    Following this action, on June 29, 2004 and September 24, 2004, 
three different parties each filed a petition for reconsideration 
concerning implementation of the 8-hour standard, including both major 
NSR and other issues. By letter dated September 23, 2004, EPA granted 
reconsideration of three issues raised in the petition for 
reconsideration filed by Earthjustice on behalf of several 
environmental organizations. On February 3, 2005, we published a 
proposed rule providing additional information and soliciting comment 
on two of the issues on which we granted reconsideration. Today, we 
provide additional information and seek comment on the third issue, 
which relates to two aspects of the major NSR provisions in the April 
30, 2004 final rules. Specifically, we request comment on whether we 
should interpret the Act to require areas to retain major NSR 
requirements that apply to certain 1-hour ozone nonattainment areas in 
implementing the 8-hour standard, and whether EPA properly concludes 
that a State's request to remove 1-hour major NSR programs from its 
State Implementation Plan (SIP) will not interfere with any applicable 
requirement within the meaning of Section 110(l) of the Act.

DATES: Comments. Comments must be received on or before May 4, 2005.
    Public Hearing. The public hearing will convene at 9 a.m. and will 
end at 5 p.m. on April 18, 2005. All individuals who have registered to 
speak before the date of the public hearing will be given an 
opportunity to speak. Because of the need to resolve the issues raised 
in this in a timely manner, EPA will not grant requests for extension 
of the public comment period. For additional information on the public 
hearing and requesting to speak, see the SUPPLEMENTARY INFORMATION 
section of this proposed rule.

ADDRESSES: Comments. Submit your comments, identified by Docket ID No. 
OAR-2003-0079, by one of the following methods to the docket. If 
possible, also send a copy of your comments to Ms. Lynn Hutchinson by 
either mail or e-mail as identified in the FOR FURTHER INFORMATION 
CONTACT section.
    1. Federal eRulemaking Portal: http://www.regulations.gov. Follow 
the on-line instructions for submitting comments.
    2. Agency Web site: http://www.epa.gov/edocket. EDOCKET, EPA's 
electronic public docket and comment system, is EPA's preferred method 
for receiving comments. Follow the on-line instructions for submitting 
comments.
    3. E-mail: [email protected]. Attention E-Docket No. OAR-2003-
0079.
    4. Fax: The fax number of the Air Docket is (202) 566-1741. 
Attention E-Docket No. OAR-2003-0079.
    5. Mail: Air Docket, Environmental Protection Agency, Attention E-
Docket No. OAR-2003-0079, Mailcode: 6102T, 1200 Pennsylvania Ave., NW., 
Washington, DC 20460. In addition, please mail a copy of your comments 
on the information collection provisions to the Office of Information 
and Regulatory Affairs, Office of Management and Budget (OMB), Attn: 
Desk Officer for EPA, 725 17th St., NW., Washington, DC 20503.
    6. Hand Delivery: Air Docket, Attention E-Docket No. OAR-2003-0079, 
Room B-102, Environmental Protection Agency West, 1301 Constitution 
Avenue, NW., Washington, DC 20460. Such deliveries are only accepted 
during the Docket's normal hours of operation, and special arrangements 
should be made for deliveries of boxed information.
    Instructions. Direct your comments to Docket ID No. OAR-2003-0079. 
The EPA's policy is that all comments received will be included in the 
public docket without change and may be made available online at http://www.epa.gov/edocket, including any

[[Page 17019]]

personal information provided, unless the comment includes information 
claimed to be Confidential Business Information (CBI) or other 
information whose disclosure is restricted by statute. Do not submit 
information that you consider to be CBI or otherwise protected through 
EDOCKET, regulations.gov, or e-mail. The EPA EDOCKET and the Federal 
regulations.gov Web sites are ``anonymous access'' systems, which means 
EPA will not know your identity or contact information unless you 
provide it in the body of your comment. If you send an e-mail comment 
directly to EPA without going through EDOCKET or regulations.gov, your 
e-mail address will be automatically captured and included as part of 
the comment that is placed in the public docket and made available on 
the Internet. If you submit an electronic comment, EPA recommends that 
you include your name and other contact information in the body of your 
comment and with any disk or CD-ROM you submit. If EPA cannot read your 
comment due to technical difficulties and cannot contact you for 
clarification, EPA may not be able to consider your comment. Electronic 
files should avoid the use of special characters, any form of 
encryption, and be free of any defects or viruses.
    Docket. All documents in the docket are listed in the EDOCKET index 
at http://www.epa.gov/edocket. Although listed in the index, some 
information is not publicly available, i.e., CBI or other information 
whose disclosure is restricted by statute. Certain other material, such 
as copyrighted material, is not placed on the Internet and will be 
publicly available only in hard copy form. Publicly available docket 
materials are available either electronically in EDOCKET or in hard 
copy at the Air and Radiation Docket, EPA/DC, EPA West, Room B102, 1301 
Constitution Ave., NW., Washington, DC. This docket facility is open 
from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal 
holidays. The Air and Radiation Docket telephone number is (202) 566-
1742. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., 
Monday through Friday, excluding legal holidays. The telephone number 
for the Public Reading Room is (202) 566-1744 (non-NSR notice says 566-
1741).

FOR FURTHER INFORMATION CONTACT: Ms. Lynn Hutchinson, Office of Air 
Quality Planning and Standards, (C339-03), U.S. EPA, Research Triangle 
Park, North Carolina 27711, telephone number (919) 541-5795, fax number 
(919) 541-5509, e-mail: [email protected].

SUPPLEMENTARY INFORMATION:

I. General Information

A. Does This Action Apply to Me?

    Entities potentially affected by the subject rule for today's 
action include sources in all industry groups. The majority of sources 
potentially affected are expected to be in the following groups.

------------------------------------------------------------------------
          Industry group             SIC \a\            NAICS \b\
------------------------------------------------------------------------
Electric Services................          491  221111, 221112, 221113,
                                                 221119, 221121, 221122
Petroleum Refining...............          291  324110
Industrial Inorganic Chemicals...          281  325181, 325120, 325131,
                                                 325182, 211112, 325998,
                                                 331311, 325188
Industrial Organic Chemicals.....          286  325110, 325132, 325192,
                                                 325188, 325193, 325120,
                                                 325199
Miscellaneous Chemical Products..          289  325520, 325920, 325910,
                                                 325182, 325510
Natural Gas Liquids..............          132  211112
Natural Gas Transport............          492  486210, 221210
Pulp and Paper Mills.............          261  322110, 322121, 322122,
                                                 322130
Paper Mills......................          262  322121, 322122
Automobile Manufacturing.........          371  336111, 336112, 336211,
                                                 336992, 336322, 336312,
                                                 336330, 336340, 336350,
                                                 336399, 336212, 336213
Pharmaceuticals..................          283  325411, 325412, 325413,
                                                 325414
------------------------------------------------------------------------
\a\ Standard Industrial Classification.
\b\ North American Industry Classification System.

    Entities potentially affected by the subject rule for today's 
action also include State, local, and Tribal governments that are 
delegated authority to implement these regulations.

B. What Should I Consider as I Prepare My Comments for EPA?

    You may find the following suggestions helpful for preparing your 
comments.
     Explain your views as clearly as possible.
     Describe any assumptions that you used.
     Provide any technical information and/or data you used 
that support your views.
     If you estimate potential burden or costs, explain how you 
arrived at your estimate.
     Provide specific examples to illustrate your concerns.
     Offer alternatives.
     Make sure to submit your comments by the comment period 
deadline identified.
     To ensure proper receipt by EPA, identify the appropriate 
docket identification number in the subject line on the first page of 
your response. It would also be helpful if you provided the name, date, 
and Federal Register citation related to your comments.

C. Where Can I Get a Copy of This Document and Other Related 
Information?

    In addition to being available in the docket, an electronic copy of 
today's notice is also available on the World Wide Web. Following 
signature by the EPA Administrator, a copy of today's notice will be 
posted in the regulations and standards section of the New Source 
Review home page located at http://www.epa.gov/nsr.

D. What Information Should I Know About the Public Hearing?

    The public hearing will be held at the EPA's facility at 109 TW 
Alexander Drive, Research Triangle Park, NC, or at an alternate 
facility nearby. Please check our Web site at http://www.epa.gov/nsr/ 
for information and updates concerning the public hearing.
    The public hearing will provide interested parties the opportunity 
to present data, views, or arguments concerning the issues raised in 
this notice. People interested in attending or presenting oral 
testimony are encouraged to register in advance by contacting Ms. 
Chandra Kennedy, OAQPS, Integrated Implementation Group, Information 
Transfer and Program Integration Division (C339-03), U.S. Environmental 
Protection Agency, Research Triangle Park, NC 27711; telephone number 
(919) 541-5319 or e-

[[Page 17020]]

mail [email protected] no later than April 14, 2005. 
Presentations will be limited to 5 minutes each. We will assign 
speaking times to speakers who make a timely request to speak at the 
hearing. We will notify speakers of their assigned times by April 18, 
2005. We will attempt to accommodate all other people who wish to 
speak, as time allows.
    The EPA's planned seating arrangement for the hearing is theater 
style, with seating available on a first come first served basis for 
about 250 people. Attendees should note that the use of pickets or 
other signs will not be allowed on either government or hotel property.
    As of the date of this announcement, the Agency intends to proceed 
with the hearing as announced; however, unforeseen circumstances may 
result in a postponement. Therefore, we advise members of the public 
who plan to attend the hearing to contact Ms. Chandra Kennedy at the 
above referenced address to confirm the location and date of the 
hearing. You may also check our New Source Review Web site at http://www.epa.gov/nsr for any changes in the date or location.
    The record for this action will remain open until May 19, 2005, to 
accommodate submittal of information related to the public hearing.

E. How Is This Notice Organized?

    The information presented in this notice is organized as follows:

I. General Information
    A. Does This Action Apply To Me?
    B. What Should I Consider as I Prepare My Comments for EPA?
    C. Where Can I Get a Copy of This Document and Other Related 
Information?
    D. What Information Should I Know About the Public Hearing?
    E. How Is This Notice Organized?
II. Background
III. Today's Action on Reconsideration
    A. Reconsideration Petitions
    B. Schedule for Reconsideration and Status of Final Rules
IV. Rational and Legal Basis
    A. Overview
    B. The Clean Air Act Does Not Compel EPA To Retain 1-Hour Major 
NSR Requirements in Implementing the 8-Hour Standard Because Major 
NSR Is Not a ``Control''.
    C. No State's Removal of 1-Hour Major NSR Requirements From the 
SIP Will Interfere With Any Applicable Requirement Under the Act 
Within the Meaning of Section 110(l)
    D. Request for Comment
V. Statutory and Executive Order Reviews
    A. Executive Order 12866--Regulatory Planning and Review
    B. Paperwork Reduction Act
    C. Regulatory Flexibility Act (RFA), as Amended by the Small 
Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 
U.S.C. 601 et seq.
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132--Federalism
    F. Executive Order 13175--Consultation and Coordination With 
Indian Tribal Governments
    G. Executive Order 13045--Protection of Children From 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211--Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    I. National Technology Transfer and Advancement Act
    J. Executive Order 12898--Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
VI. Statutory Authority

II. Background

    On July 18, 1997, we revised and strengthened the ozone NAAQS to 
change from a standard measured over a 1-hour period (1-hour standard) 
to a standard measured over an 8-hour period (8-hour standard). 
Previously, the 1 hour standard was 0.12 ppm. We established the new 8-
hour standard at 0.08 ppm. See 62 FR 38856. Following revision of the 
standard, we promulgated an implementation rule that provided for 
implementation of the 8-hour standard under the general nonattainment 
area provisions of Subpart 1 of Part D of the Act. See 62 FR 38421. 
Subsequently, the Supreme Court ruled that our implementation approach 
was unreasonable because we did not provide a role for the generally 
more stringent ozone specific provisions of Subpart 2 of Part D of the 
Act in implementing the 8-hour standard. See Whitman v. Amer. Trucking 
Assoc., 531 U.S. 457, 471-476, 121 S.Ct. 903, 911-914 (2001). The Court 
remanded the implementation strategy to EPA to develop a reasonable 
approach for implementation. Id. Accordingly, on June 2, 2003 (68 FR 
32802), we proposed various options for transitioning from the 1-hour 
to the 8-hour standard, and for how the 8-hour standard would be 
implemented under both subpart 1 and subpart 2. On August 6, 2003 (68 
FR 46536), we published a notice of availability of draft regulatory 
text to implement the 8-hour standard. Among other things, this 
proposed rule included certain provisions for implementing major NSR. 
Specifically, we proposed that major NSR would generally be implemented 
in accordance with an area's 8-hour ozone nonattainment classification, 
but we would provide an exception for areas that were designated 
nonattainment for the 1-hour standard at the time of designation for 
the 8-hour standard. If the classification for a 1-hour nonattainment 
area is higher than its classification under the 8-hour standard, then 
under the proposed rule, the major NSR requirements in effect for the 
1-hour standard would have continued to apply under the 8-hour standard 
even after we revoked the 1-hour standard. (68 FR 32821).
    On April 30, 2004 (69 FR 23951), we promulgated Phase I of the new 
implementation rule. In response to comments received on the proposal, 
we revised the implementation approach for major NSR under the 8-hour 
standard. Specifically, we determined that major NSR would be 
implemented in accordance with an area's 8-hour ozone nonattainment 
classification. For those areas that we classify moderate and above, 
major NSR is implemented under subpart 2. We also indicated that, when 
we revoke the 1-hour standard, a State is no longer required to retain 
a nonattainment major NSR program in its SIP based on the requirements 
that applied by virtue of the area's previous classification under the 
1-hour standard. We further indicated that we would approve a request 
to remove these requirements from a State's SIP because we determined 
based on section 110(l) of the Act that such changes will not interfere 
with any applicable requirements of the Act, including a State's 
ability to reach attainment of the 8-hour standard or reasonable 
further progress (RFP) (69 FR 23985). We noted that States will be 
required to implement a major NSR program based on the 8-hour 
classifications. We also emphasized that emission limitations and other 
requirements in major NSR permits issued under 1-hour major NSR 
programs will remain in effect even after we revoke the 1-hour standard 
(69 FR 23986).

III. Today's Action on Reconsideration

A. Reconsideration Petitions

    Following publication of the April 30, 2004 final rule, the 
Administrator received three petitions, pursuant to section 
307(d)(7)(B) of the Act, requesting reconsideration of certain aspects 
of the final rule.\1\ On June 29,

[[Page 17021]]

2004, Earthjustice submitted one of the three petitions that we 
received. This petition seeks reconsideration of certain elements of 
the Phase I Ozone Implementation Rule, including elements of the major 
NSR provisions. With respect to major NSR, Petitioners contend that the 
final rules are unlawful because the rules violate Section 110(l) and 
Section 172(e) of the Act by not requiring 8-hour ozone nonattainment 
areas to continue to apply major NSR requirements based on the area's 
1-hour ozone nonattainment classification. Petitioners also allege that 
EPA acted unlawfully by stating that we will approve a State's request 
to remove 1-hour requirements from the SIP based on our finding that 
such a revision would not violate Section 110(l) for any State. 
Petitioners assert that these major NSR provisions and our rationale 
for them were added to the final action after the close of the public 
comment period. Thus, Petitioners claim, EPA failed to provide notice 
and opportunity for public comment concerning these provision as 
required under CAA Section 307(d)(5). On September 23, 2004, we granted 
reconsideration of three issues raised in the Earthjustice Petition. In 
an action dated February 3, 2005, we issued a Federal Register notice 
addressing two of those issues: (1) The provision that section 185 fees 
would no longer apply for a failure to attain the 1-hour standard once 
we revoke the 1-hour standard; and (2) the timing for determining what 
is an ``applicable requirement.'' 70 FR 5593.
---------------------------------------------------------------------------

    \1\ Petitioners are: (1) Earthjustice on behalf of the American 
Lung Association, Environmental Defense, Natural Resources Defense 
Council, Sierra Club, Clean Air Task Force, Conservation Law 
Foundation, and Southern Alliance for Clean Energy; (2) the National 
Petrochemical and Refiners Association and the National Association 
of Manufacturers; and (3) the American Petroleum Institute, American 
Chemistry Council, American Iron and Steel Institute, National 
Association of Manufacturers and the U.S. Chamber of Commerce. We 
are continuing to review the issues raised in the second and third 
of these petitions for reconsideration.
---------------------------------------------------------------------------

    Today, we seek comment on the third issue raised in that petition, 
which related to elements of the major NSR program. Specifically, we 
request comment on: (1) Whether we must interpret the Act to require 
States to continue major NSR requirements under the 8-hour standard 
based on an area's higher classification under the 1-hour standard; and 
(2) whether revising a State SIP to remove 1-hour major NSR 
requirements is consistent with Section 110(l) of the Act. As 
previously discussed, we proposed an approach concerning whether 1-hour 
nonattainment major NSR requirements must remain in the SIP after we 
revoke the 1-hour standard. (68 FR at 32821-22.) The public had an 
opportunity to comment on the approach we proposed, and in fact some 
commenters advocated replacing the 1-hour major NSR program with the 8-
hour program. Nonetheless, we want Petitioners and others to have every 
opportunity to comment on our approach and to provide additional 
information that they believe to be relevant. For these reasons, we 
provide further explanation of our rationale for this action and 
request public comment on this approach. We will consider these 
comments and then make a final decision regarding the implementation of 
the NSR program under the 8-hour standard.

B. Schedule for Reconsideration and Status of Final Rules

    We plan to take final action on our grant of reconsideration by the 
end of May 2005. A State can only remove 1-hour NSR SIP provisions 
after we revoke the 1-hour standard. We plan to revoke the standard on 
June 15, 2005. Accordingly, no changes in 1-hour major NSR SIP programs 
could occur before June 15, 2005. The final rules concerning 
applicability of major NSR under the 8-hour standard remain in effect 
as promulgated until our final action on this reconsideration.

IV. Rationale and Legal Basis

A. Overview

    It is a basic tenet of administrative law that expert agencies have 
discretion to interpret ambiguous statutory terms. Chevron, U.S.A., 
Inc. v. NRDC, 467 U.S. 387 (1984). We exercised this discretion in 
determining how to implement subpart 2 requirements for major NSR under 
the 8-hour standard, an issue that the Supreme Court has recognized is 
``ambiguous.'' \2\
---------------------------------------------------------------------------

    \2\ See Whitman, 531 U.S. at 484 (``The statute is in our view 
ambiguous concerning the manner in which Subpart 1 and Subpart 2 
interact with regard to revised ozone standards, and we would defer 
to the EPA's reasonable resolution of that ambiguity.'')
---------------------------------------------------------------------------

    In determining how to implement the provisions of subpart 2 for the 
major NSR program under the 8-hour standard, we considered the 
statutory requirements, Congressional intent as expressed in the CAA 
legislative history, the history of the NSR regulatory program, and our 
actions on 1-hour ozone Rate of Progress (ROP) plans and attainment 
demonstrations in general as they relate to nonattainment major NSR 
programs. We discuss this information below.
    Our review of this information, as well as public comments on the 
proposed rule, supports our conclusion that once we revoke the 1-hour 
standard, the Act does not require States to retain a nonattainment 
major NSR program in their SIPs based on the requirements that applied 
by virtue of the area's previous classification under the 1-hour 
standard. It also supports our conclusion that, based on section 110(l) 
of the Act, removing the 1-hour major NSR program does not interfere 
with any applicable requirements of the Act, including a State's 
ability to reach attainment of the 8-hour standard and RFP.

B. The Clean Air Act Does Not Compel EPA To Retain 1-Hour Major NSR 
Requirements in Implementing the 8-Hour Standard Because Major NSR Is 
Not a ``Control''

    Section 172(e) applies when we relax a NAAQS. It specifies that we 
``shall provide for controls which are not less stringent than the 
controls applicable to areas designated nonattainment before such 
relaxation.'' By its terms, it does not directly apply to requirements 
to implement the 8-hour standard, because we strengthened the ozone 
NAAQS when we enacted the 8-hour standard. Nonetheless, we view this 
provision as an expression of Congressional intent that States may not 
remove control measures in areas which are not attaining a NAAQS when 
EPA revises that standard to make it more stringent, as is the case 
with the 8-hour standard. See 68 FR 32819. Accordingly, we required 
States to retain certain requirements associated with the 1-hour ozone 
nonattainment classification in implementing the 8-hour standard. See 
generally 69 FR 23951.
    Notwithstanding the requirement to retain certain 1-hour control 
measures, we determined that Section 172(e) and our interpretation of 
Congressional intent does not mandate that States retain 1-hour major 
NSR requirements under the 8-hour standard, because the major NSR 
program does not impose emissions ``controls'' that reduce a 
nonattainment area's emissions below that area's baseline year 
inventory. In this respect, major NSR is not a ``control'' within the 
meaning of Section 172(e). Thus, we concluded that because major NSR 
programs based on 1-hour classifications would not contribute emissions 
reductions below baseline levels, those provisions are not ``controls'' 
that need to be preserved in implementing the 8-hour standard.
    The term ``controls'' as used in Section 172(e) is ambiguous. In 
determining whether the reference to ``controls'' in Section 172(e) 
covers 1-hour NSR requirements, and thus whether we should interpret 
the Act as requiring such controls to remain effective after revocation 
of the 1-hour standard, we looked first to the CAA statutory language 
and structure. We reasoned that ``[t]he role of the NSR permitting 
program as a growth measure, rather than a control measure, is 
evidenced in the structure of the Act,

[[Page 17022]]

which delineates nonattainment NSR and control measures as separate SIP 
requirements,'' citing, among other things, Section 110(a)(2)(A) and 
110(a)(2)(C). (69 FR at 23986). Similarly, Section 172(c), which 
identifies the requirements for nonattainment plans, lists requirements 
for implementation of control measures separately from the provision 
requiring permits for new and modified major stationary sources. 
Compare Sections 172(c)(1) and (c)(6) (referring to control measures) 
with Section 172(c)(5) (referring to permits for new and modified major 
stationary sources).
    Second, to resolve the ambiguity over whether the term ``controls'' 
in section 172(e) covers 1-hour NSR requirements, we further looked to 
Congress' purpose in creating the major NSR program. The 1970 statute 
did not contain any provisions concerning permitting of new sources, 
either in attainment or nonattainment areas. The statute set 1975 as 
the deadline to meet the NAQQS in most regions, with some extensions 
until 1977. By the time of the 1977 Amendments, many areas had missed 
their attainment deadlines, and it became apparent that, despite 
significant progress, SIPs were inadequate to achieve the NAAQS in many 
areas of the country.
    In 1977 Congress considered whether new source growth could be 
allowed in areas not attaining the NAAQS.

    A major weakness in implementation of the 1970 Act has been the 
failure to assess the impact of emissions from new sources of 
pollution on State plans to attain air quality standards by 
statutory deadlines. States have permitted growth on the assumption 
that a deadline was sufficiently distant so that future emissions 
reductions could be made to compensate for the initial increases. It 
can now be seen that these assumptions were wrong. Some mechanism is 
needed to assure that before new or expanded facilities are 
permitted, a State demonstrate that these facilities can be 
accommodated within its overall plan to provide for attainment of 
air quality standards.
    One mechanism is a case-by-case review of each new or modified 
major source of pollution that seeks to locate in a region exceeding 
an ambient standard. Such a review requires matching reductions from 
existing sources against emissions expected from the new source in 
order to assure that introduction of the new source will not prevent 
attainment of the applicable standard by the statutory deadline. 
This is the mechanism adopted by the Committee as a condition for 
approval of an implementation plan revision under section 110(a)(3) 
and for extensions of the oxidant and carbon monoxide attainment 
deadlines beyond 1982. Sen. Rep. 95-127 at 55 (May 10, 1977).

    Congress thus recognized the need for a balance between the goals 
of attaining air quality standards and providing for new economic 
growth. As part of the 1977 Amendments, Congress amended the Act to, 
among other things, establish a statutory approach to permit growth in 
polluted areas, while requiring attainment of the NAAQS by specific 
deadlines.\3\ This approach established the basic SIP process and 
requirements for attaining the NAAQS.
---------------------------------------------------------------------------

    \3\ Sections 107(d) and 172 of the Act (42 U.S.C. 7407(d) and 
7502; Sections 129(a) and (c) of the 1977 Amendments, Pub. L. No. 
95-95.
---------------------------------------------------------------------------

    The major NSR program's purpose ``is to permit States to allow 
continued growth or expansion in nonattainment areas, so long as this 
growth or expansion is undertaken in a manner consistent with the goals 
and objectives of the Clean Air Act.'' See H.R. Rpt. 95-294 at 210 (May 
12, 1977). Section 172(a)(2) of the Act requires attainment as 
expeditiously as practicable considering the availability and 
feasibility of control measures and Section 172(c)(1) and (c)(6) 
require implementation of all reasonably available control measures as 
expeditiously as practicable to provide for attainment of the NAAQS by 
the area's attainment date. Conversely, Section 173(a)(1)(A) requires 
only that growth due to proposed sources, when considered together with 
the other plan provisions required under Section 172, be sufficient to 
ensure RFP toward attainment. Thus, unlike the control measures 
required by Section 172(c)(1) and (c)(6), major NSR is not a measure to 
reduce emissions to assure attainment; nor did Congress identify the 
program as a control measure to help areas achieve attainment ``as 
expeditiously as practicable.'' Rather, Congress intended that the 
effectiveness of major NSR in minimizing the impact of increased 
emissions should be considered together with the State's other SIP 
measures to assure, consistent with Section 172(a)(2), that emissions 
from new sources will be consistent with RFP. Our interpretation is 
supported by the legislative record wherein Congress stated that

    In allowing new sources to locate, and existing sources to 
expand, in presently unhealthy air areas, the committee realizes 
that some worsening of air quality or delay in actual attainment of 
the national ambient air standards will result. This is inevitable, 
as a result the committee had to accept as a consequence of allowing 
additional economic growth in these area. Id. at 214-215.

Accordingly, based on our analysis of the statutory language and 
structure, and Congress' purpose in creating the major NSR as a measure 
to mitigate emissions growth rather than a measure to reduce existing 
emissions levels, we conclude that Congress did not mean to include 
major NSR within the ``controls'' that are required to be maintained in 
the SIP under our antibacksliding approach and Section 172(e).
    We note that recent case law upheld the Agency's approach of 
looking to Section 110 to determine the meaning of a similar phrase, 
``measures with respect to the control,'' of pollutants in Section 175A 
of the Act concerning maintenance plans.\4\ Greenbaum v. U.S. EPA, 370 
F.3d 527, 536-37 (7th Cir. 2004). In reviewing EPA's determination that 
the phrase did not include nonattainment major NSR, the court found the 
phrase ambiguous, and stated:

    \4\ Section 175A requires that when an area is redesignated from 
nonattainment to attainment, it must submit a plan to provide for 
maintenance of the Standard. The plan must include contingency 
provisions that, in the event of a violation of the Standard, would 
require the State to implement ``measures with respect to the 
control'' of the Standard pollutant that were in the SIP prior to 
redesignation.

    It was entirely permissible, and indeed logical, for the EPA to 
look to Sec.  110 to determine the meaning of the word ``measure'' 
in Sec.  175A as Sec.  110 lists the provisions required to be 
included in a nonattainment SIP.
    Likewise, the EPA's argument that the reference to the Part D 
NSR program in subparagraph C of Sec.  110 [110(a)(2)(C)] would be 
surplusage if it were among the control measures mentioned in 
subparagraph A of Sec.  110 [110(a)(2)(A)] is reasonable.

The Court then deferred to EPA's determination that the phrase did not 
include nonattainment major NSR, and thus that major NSR provisions 
need not be retained in contingency plans. Thus, although major NSR, 
when triggered, results in the requirement to impose LAER and the 
requirement to obtain offsetting emissions, neither of these 
requirements are considered a ``measure with respect to the control'' 
of the relevant NAAQS pollutant within the meaning of Section 175A. 
That is, it is not relevant for determining which former nonattainment 
SIP provisions States must include in contingency provisions. We 
believe this decision supports our determination that a 1-hour major 
NSR program is not a ``control'' measure within the meaning of Section 
172(e). Accordingly, we find that the Act does not mandate that States 
retain the program under the antibacksliding approach implemented in 
transitioning from the 1-hour to the 8-hour standard.

[[Page 17023]]

    Petitioners cite EPA's past characterization of major NSR in a 
Supreme Court brief and a Federal Register notice as a ``pollution-
control measure'' and ``pollution control technology program.'' Pet. at 
5 (June 29, 2004) (quoting EPA Opening Merits Brief in Chevron, U.S.A. 
v. NRDC, S.Ct. 82-1005 (Aug. 31, 1983), 1982 Lexis U.S. Briefs 1005, at 
n.5; accord, 67 FR 80187 (Dec. 31 2002)). These citations are somewhat 
misleading, however, because petitioners isolate single phrases and 
ignore the broader context in which we wrote the words. The Supreme 
Court brief addresses whether EPA reasonably used a plantwide 
definition of ``source'' in the NSR program, and the quoted phrase 
occurs in the context of comparing the NSR and New Source Performance 
Standards (NSPS) programs. See Chevron U.S.A., Inc. v. NRDC, 1982 LEXIS 
Briefs 1005 at n.55 (Aug. 31, 1983). The Federal Register notice 
provision cited by Petitioners makes the statement in a background 
section generally describing the NSR program as a combination of an air 
quality planning and control technology program. In that same paragraph 
of the notice, we also stated that one of the program's purposes is ``* 
* * to maximize opportunities for economic development consistent with 
the preservation of clean air resources.'' Moreover, this alleged 
characterization has no persuasive value in interpreting the meaning of 
``controls'' in Section 172(e) nor the appropriateness of interpreting 
the Act as a whole with respect to backsliding because the cited brief 
and Federal Register notice do not address this issue, nor even touch 
on the subject of antibacksliding generally.
    Petitioners also reference a 1990 House Report describing the 
Subpart 2 classification system as a ``graduated control program''. 
Pet. at 7. That Report states:

    Also included in the graduated control requirements are 
increasing offset ratios that require a greater level of pollution 
reductions from other sources in the nonattainment area to offset 
increases in pollution from new sources or modifications. This 
program is intended to allow economic growth and the development of 
new pollution sources and modifications to continue in seriously 
polluted areas, while assuring that emissions are actually reduced. 
H.R. Comm. on Energy and Commerce, The Clean Air Act Amendments of 
1990--Hearings of H.R. 3030--101st Cong. 234 (May 17, 1990)

Read out of context, this legislative history could be interpreted to 
imply that Congress intended the higher offset requirements in subpart 
2 to act as ``controls.'' However, this language must be read in 
context of the statutory framework.
    First, unlike control measures for which emissions reductions can 
be quantified and relied on in a modeling demonstration to show how the 
measure helps an area reach attainment, the benefits of offsets are 
uncertain. This is because States generally do not know in advance when 
and if any major stationary source will become subject to the major NSR 
offsetting requirements. Accordingly, as discussed further below, 
States do not use the higher offset ratios as a SIP control strategy 
within their attainment plans. But even if a State could project the 
number of sources that would trigger the offset requirement, the State, 
still could not necessarily rely on the higher emissions offset ratios 
to reduce emissions in the area. This is because, in Section 173(c)(1), 
Congress allows a major stationary source to obtain offsets from other 
nonattainment areas. Such an area may be located in another State. In 
this context, offsets serve as a valuable tool in reducing regional 
pollutant transport, but may achieve no actual reductions in the area 
where the new emissions are locating. Accordingly, it would be 
inappropriate for a State to expressly rely on offsets as a State-
imposed regulatory measure or ``control'' to achieve a defined quantity 
of emissions reductions from sources within the State for the purpose 
of reducing the existing emissions inventory. Based on this 
information, and because the legislative history does not address the 
issue of Congress's intent in using the term ``controls'' in Section 
172(e), or the subject of antibacksliding generally, we conclude that 
it lacks persuasive value in interpreting the term ``controls'' in 
Section 172(e) or elsewhere in the Act.
    Petitioners further claim that CAA Sections 173(d) and 173(a)(5), 
referring to lowest achievable emission reduction (LAER) requirements 
as a control technology and control technique, indicate NSR is a 
control measure. As we discuss in this proposed rule, the statute, our 
regulations, and our guidance have established NSR as a growth measure 
for SIP planning purposes. LAER is not a control measure, but instead 
is an emission limitation based on application of a particular control 
technology. Control measures such as reasonably available control 
technology (RACT), transportation control measures (TCM), and 
inspection and maintenance programs (I/M) reduce base year emissions to 
assure RFP and meet attainment. The LAER's purpose is to minimize the 
amount of emissions increase resulting from new or modified major 
stationary sources, not reduce emissions below the base year inventory. 
CAA Sections 173(d) and 173(a)(5) instead contain specific requirements 
related to LAER. CAA Section 173(d) requires States to report 
information on LAER to the RACT/BACT/LAER Clearinghouse.\5\ CAA Section 
173(a)(5) requires consideration of LAER in the alternative sites 
analysis.
---------------------------------------------------------------------------

    \5\ In framing 173(d), Congress did not identify LAER as a 
control obligation. Instead, Congress clearly stated the purpose of 
including 173(d) was to make sure that the LAER control technology 
information is widely available. See The Clean Air Act Amendments of 
1990-Hearings of H.R. 3030, 101st Cong. at 226.
---------------------------------------------------------------------------

    While petitioners present a possible interpretation of the term 
``controls'' as used by Congress in Section 172(e), we do not believe 
that the Statute compels this interpretation. Moreover, to accept the 
Petitioners' interpretation would essentially define ``controls'' in a 
way that would require States to retain all requirements in a SIP upon 
relaxation of the standard. If Congress meant to require States to 
retain all requirements, Congress would have stated so expressly. 
Instead, by using only the term ``controls,'' Congress implied an 
intent that some requirements under the old standard would no longer 
apply under the new standard. We think it is reasonable to interpret 
the term ``controls'' to exclude major NSR, whose purpose is to ensure 
that emissions growth does not interfere with attainment, and for which 
States can not reliably estimate the benefits of mitigating emissions 
increases for SIP planning purposes.

C. No State's Removal of 1-Hour Major NSR Requirements From the SIP 
Will Interfere With Any Applicable Requirement Under the Act Within the 
Meaning of Section 110(l)

    Section 110(l) provides us the legal authority to approve revisions 
to SIPs when we determine that such revisions will not ``interfere with 
any applicable requirement concerning attainment and reasonable further 
progress (as defined in section 171), or any other applicable 
requirement of the Act.'' Petitioners suggest that Section 110(l) 
limits the Administrator's ability to approve any change in a State SIP 
if that change would relax requirements previously contained in the 
SIP. We disagree. Rather, we interpret Section 110(l) to allow such 
changes if the revision is consistent with reasonable further progress, 
and will not interfere either with the area's ability to achieve 
attainment or with any other requirement of the Act.

[[Page 17024]]

    To determine whether a change in major NSR requirements could 
satisfy these criteria, we first reviewed the statutory role of major 
NSR. As discussed above, Congress designed the major NSR program to 
mitigate emission increases from economic growth--not as a program to 
generate emissions reductions to bring an area into attainment. 
Congress distinguished those ``reasonably available control measures'' 
required to bring an area into attainment ``as expeditiously as 
practicable'' as specified in Section 172(c)(1) from the requirements 
of the major NSR program specified in Section 172(c)(4) and (5). 
Moreover, Congress recognized in allowing for growth in nonattainment 
areas, that some worsening of air quality may be inevitable. 
Accordingly, States do not rely on major NSR to achieve emissions 
reductions and reach attainment as expeditiously as practicable and 
thus a change in the program will not interfere with any applicable 
requirement concerning attainment and reasonable further progress.
    We also reviewed the role major NSR plays in State attainment 
planning. While we disagree with Petitioners' assertion that the 
Section 110(l) analysis requires us to analyze changes relative to the 
1-hour standard (after we revoke that standard), and we are not 
granting reconsideration on that issue, we nonetheless looked at the 
effect of removing the major NSR requirements on the State's existing 
1-hour attainment plans to determine what effect it may have for future 
planning under the 8-hour standard.
    Before 1990, Congress provided States with two options for managing 
the impact of economic growth on emissions. A State could either 
provide a case-by-case review of each new or modified major source and 
require such source to obtain offsetting emissions, or the State could 
implement a waiver provision which allowed the State to develop an 
alternative to the case-by-case emissions offset requirement. This 
alternative program became known as the ``growth allowance'' approach. 
In 1990, Congress invalidated some of the existing growth allowances 
and shifted the emphasis for managing growth from using growth 
allowances to using the case-by-case offset approach. Nonetheless, we 
still interpreted the inventory and SIP demonstration requirements in 
the Act to require States to continue to account for future growth in 
their demonstrations. See 57 FR 13554, 13567. In this way, State SIPs 
analyze the impact of growth on emissions in two overlapping ways: (1) 
By establishing a growth projection in the attainment demonstration, 
and (2) by requiring major sources to comply with the major NSR 
requirements.
    In general, States use information from the Bureau of Economic 
Analysis (BEA) to derive growth factors which are then applied to 
different industrial categories to project emissions growth within the 
nonattainment area. Some States project growth based on industry data 
that is specific to their jurisdiction, rather than using national BEA 
data to project the source category increases. A few States project 
growth based on NOX emissions caps imposed by SIP-approved 
regulations (e.g. NOX-SIP call). Finally, a few States 
project no point source growth based on SIP-approved rules that limit 
VOC and NOX emissions in the area. Regardless of which 
process is used, each State arrives at a specific tonnage of emissions 
that represents the expected increase in emissions due to economic 
growth in the State. This growth projection represents increases in 
emissions that come from a variety of different activities such as 
major and minor modifications and increases in utilization at existing 
sources. The SIPs then provide sufficient emissions reductions to bring 
the areas into attainment and provide reasonable further progress even 
accounting for this projected growth.
    The next critical question in determining what effect a change in 
the major NSR requirements might have is whether States adjust this 
growth projection based on applicability of the major NSR program. A 
survey of current nonattainment areas shows that in general States do 
not discount the growth projection based on an assumption of the 
quantity of emissions increases that may be ``offset.'' In fact, we 
discourage States from including offsets as a source of emissions 
reductions in the attainment model because of the difficulties in 
accurately predicting the number of sources that will trigger offset 
reductions and the number of offsets actually achieved. Moreover, the 
method used to derive the growth projection allows no consideration of 
the major stationary source thresholds that apply under the 1-hour 
ozone classification. Finally, we are aware of only one district in 
California that discounts the growth projection assuming a LAER level 
of control in projecting emissions. However, this particular district 
also has a very stringent SIP-approved nonattainment major NSR rule in 
which LAER applies to all sources with potential to emit (PTE) greater 
than 1 lb/day and offsets are required for all sources with PTE greater 
than 4 tpy VOC or NOX. A lower classification under the 8-
hour standard than under the 1-hour standard thus would not change the 
number of sources in this district subject to LAER or offsets. 
Therefore, this district similarly did not rely on the major stationary 
source thresholds or the offset ratios that applied under the 1-hour 
classification as opposed to those that would apply under the 8-hour 
standard to assure RFP or attainment of the 1-hour standard.\6\
---------------------------------------------------------------------------

    \6\ We are referring to South Coast Air Quality Management 
District. There are several other State and local agencies, 
including some in California, in which the classification under the 
8-hour standard is lower than that under the 1-hour standard. We are 
not aware of any of these agencies relying on the major stationary 
source thresholds or the offset ratios under the 1-hour 
classification to assure RFP or attain the 1-hour standard.
---------------------------------------------------------------------------

    Once a State computes the growth projection, these emissions are 
added to the base year emissions inventory and used to project growth 
for rate of progress plan purposes, and to project growth through the 
attainment year in the attainment demonstration model. In the 
attainment demonstration model, States must demonstrate that other 
emissions reduction programs in the SIP will allow the area to reduce 
emissions over time to achieve attainment by the attainment date 
despite the economic growth. Furthermore, the State must also 
demonstrate that the phasing in of emission reductions over time is 
sufficient to achieve reasonable further progress toward attainment. 
This effectively means that whether or not major NSR applies to a given 
activity that increases emissions, the area is projected to reach 
attainment based on other control measures in the SIP.
    This information shows that States have not directly relied on the 
major NSR program as a control measure to achieve reductions and move 
the area toward attainment. For the 8-hour standard, States will 
generally account for growth in the same manner to show attainment of 
the 8-hour standard. The only change may be that some States rely on 
EPA's Economic Growth Analysis System rather than BEA information, but 
these two systems are fundamentally similar in that they rely on 
economic forecasts to project growth in emissions. Accordingly, EPA 
concludes that the removal of 1-hour major NSR requirements from the 
SIP will not interfere with reasonable further progress or attainment 
in any area because all States' attainment demonstrations will account 
for emissions increases related to growth within the attainment 
demonstration, and these projections will not differ based upon the 
major NSR program

[[Page 17025]]

applicable to the area under its ozone classification.
    Petitioners argue that if this logic is accepted, `` a state could 
pluck out any other requirement (including requirements such as 
enhanced I/M or stage II) * * * and argue that the requirement is 
dispensable in light of the area's attainment and RFP plans.'' Pet. at 
12. We disagree that our logic as described here would lead to the same 
conclusion for all programs, because States rely on these other 
programs to generate emissions reductions in the modeling 
demonstration. Nonetheless, we agree with Petitioners that Congress 
``prescribed specific program elements like NSR'' and each State must 
show how these statutory requirements are being met through their SIP 
programs. Id.
    States satisfy this requirement by having the authority to issue 
permits in 8-hour nonattainment areas consistent with the requirements 
of major NSR for the 8-hour standard. Major NSR plays a role in 
assuring that growth from major stationary sources occurs consistent 
with States' plans for meeting reasonable further progress and reaching 
attainment. In 1990, Congress recognized that some States were not 
accurately predicting the growth within their attainment 
demonstrations. Accordingly, in Subpart 2 of the Act, Congress 
specified that areas with more severe ozone nonattainment problems 
should implement higher offset ratios and lower major stationary source 
thresholds. Likewise, we followed the same approach for the 8-hour 
standard by basing the major NSR requirements on the severity of the 
area's 8-hour ozone nonattainment problem. As a policy matter, we 
believe that it is appropriate to look at areas' present day air 
quality in determining what major NSR program requirements are 
necessary to assure future air quality improvements, because an area's 
ability to accommodate economic growth is related to its current air 
quality conditions. An area's classification under the 8-hour standard 
is a more accurate reflection of current day air quality then the 
classification we assigned under a different standard as far back as 
the early 1990's.
    Together, the growth projection methods used in preparing 
attainment demonstrations and the 8-hour major NSR program requirements 
provide overlapping assurance that removing the 1-hour major NSR 
program from the SIP, will not ``interfere with any applicable 
requirement concerning attainment and reasonable further progress (as 
defined in section 171), or any other applicable requirement of the 
Act.''

D. Request for Comment

    For the reasons discussed in this section, we continue to assert 
that at the time we revoke the 1-hour standard, a State is no longer 
required to retain a nonattainment major NSR program in its SIP based 
on the requirements that applied by virtue of the area's previous 
classification under the 1-hour standard. Instead, States must have 
authority to issue major NSR permits consistent with the requirements 
that are associated with the area's designation and classification 
under the 8-hour standard. For the reasons discussed in this section, 
we also continue to assert, based on section 110(l) of the Act, that 
removing the 1-hour nonattainment major NSR program will not interfere 
with any State's ability to achieve attainment of the 8-hour standard 
and will be consistent with RFP.
    We request comment on our determination that the Act does not 
require States to apply major NSR requirements under the 8-hour 
standard based on an area's higher classification under the 1-hour 
standard after we revoke the 1-hour standard, and on our interpretation 
that the term ``control'' as used in Section 172(e) of the Act does not 
include major NSR requirements. We also request comment on our 
conclusion that a State's removal of 1-hour major NSR programs from its 
SIP will not interfere with any applicable requirements of the Act 
including attainment and RFP. We specifically request comment on our 
discussion regarding State and local agency emission projections used 
for RFP and attainment, including whether the statements we have made 
regarding those emission projections are accurate. We also request 
specific information on any instance in which a State or local agency 
relied on major NSR as a control measure to reduce overall base year 
emissions in a rate of progress plan or attainment demonstration.

V. Statutory and Executive Order Reviews

    On April 30, 2004, we took final action on key elements of the 
program to implement the 8-hour NAAQS, including applicability of the 
nonattainment major NSR programs under the 8-hour ozone NAAQS. In that 
action, we did not revise the nonattainment major NSR regulations. With 
today's action we are also proposing no changes to the nonattainment 
major NSR rules. However, we are seeking additional comments on some of 
the provisions finalized in the April 2004 Federal Register notice (69 
FR 23951).

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 proposed rule is not a ``significant regulatory 
action.'' Today's reconsideration notice proposes to retain the 
position we adopted in the final Phase I rule.

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. 
This rule interprets the requirements to develop State or tribal 
implementation plans to satisfy the statutory requirements for major 
NSR. We are not imposing any new paperwork requirements. However, OMB 
previously approved the information collection requirements contained 
in the existing regulations (40 CFR parts 51 and 52) under the 
provisions of the Paperwork Reduction Act. A copy of the OMB approved 
Information Collection Request (ICR) may be obtained from Susan Auby, 
Collection Strategies Division, U.S. Environmental Protection Agency 
(2822T), 1200 Pennsylvania Ave., NW., Washington, DC 20460, or by 
calling (202) 566-1672. Please refer to OMB control number 2060-0003, 
EPA ICR number 1230.17 when making your request.
    Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose

[[Page 17026]]

or provide information to or for a Federal agency. This includes the 
time needed to review instructions; develop, acquire, install, and 
utilize technology and systems for the purposes of collecting, 
validating, and verifying information, processing and maintaining 
information, and disclosing and providing information; adjust the 
existing ways to comply with any previously applicable instructions and 
requirements; train personnel to be able to respond to a collection of 
information; search data sources; complete and review the collection of 
information; and transmit or otherwise disclose the information.
    An agency may not conduct or sponsor, and a person is not required 
to respond to a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations in 40 CFR are listed in 40 CFR part 9.

C. Regulatory Flexibility Act (RFA), as Amended by the Small Business 
Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et 
seq.

    The RFA 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 that the rule will not have a 
significant economic impact on a substantial number of small entities. 
Small entities include small businesses, small organizations, and small 
governmental jurisdictions.
    For purposes of assessing the impacts of 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 121.201); (2) a small 
governmental jurisdiction that is a government of a city, county, town, 
school district, or special district with a population of less than 
50,000; or (3) a small organization that is any not-for-profit 
enterprise that 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. The 
Phase 1 Rule addressed key elements of the program to implement the 8-
hour ozone NAAQS, including the obligations under the major NSR 
program. This reconsideration notice addresses the statutory 
obligations for States and Tribes to implement the major NSR program 
for the 8-hour ozone NAAQS. For the same reasons that we concluded that 
the Phase 1 Rule will not have a significant economic impact on a 
substantial number of small entities, we conclude that our further 
action on aspects of that rule also not have a significant impact on 
small entities.

D. Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. 
L. 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, 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 as to 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.
    In promulgating the Phase 1 Rule we determined that this proposed 
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. Therefore, we 
concluded that the Phase 1 Rule is not subject to the requirements of 
sections 202 and 205 of the UMRA. For the same reasons stated when we 
promulgated the Phase I Rule, we conclude that the issues addressed in 
this notice on reconsideration of an aspect of that rule is not subject 
to the UMRA.
    EPA also determined that this rule contains no regulatory 
requirements that might significantly or uniquely affect small 
governments, including tribal governments.

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. This rule specifies the 
statutory obligations of States and Tribes in implementing the major 
NSR program in 8-hour ozone nonattainment areas. The Act establishes 
the scheme whereby States take the lead in developing plans for EPA to 
approve into the state plan for implementing the major NSR program. 
This rule would not modify the relationship of the States and EPA for 
purposes of developing programs to implement major NSR. Thus, Executive 
Order 13132 does not apply to this rule. Nonetheless, 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

[[Page 17027]]

regulatory policies that have tribal implications.'' This proposed rule 
does not have ``tribal implications,'' as specified in Executive Order 
13175. The purpose of this proposed rule is to seek comment on EPA's 
reconsideration of an aspect of the Phase 1 8-hour ozone rule 
specifying the statutory obligations of States and Tribes in 
implementing the major NSR program in 8-hour ozone nonattainment areas. 
The tribal authority rule (TAR) gives Tribes the opportunity to develop 
and implement Act programs such as the major NSR program, 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. 
For the same reasons that we stated in the Phase 1 Rule, we conclude 
that this proposed rule does not have Tribal implications as defined by 
Executive Order 13175. To date, no Tribe has chosen to implement a 
major NSR program. Moreover, this rule does not affect the relationship 
or distribution of power and responsibilities between the Federal 
government and Indian Tribes. Thus, Executive Order 13175 does not 
apply to this rule.

G. Executive Order 13045--Protection of Children From Environmental 
Health Risks and Safety Risks

    Executive Order 13045: ``Protection of Children from Environmental 
health Risks and Safety Risks'' (62 FR 19885, April 23, 1997) applies 
to any rule that: (1) Is determined to be ``economically significant'' 
as defined under Executive Order 12866, and (2) concerns an 
environmental health or safety risk that EPA has reason to believe may 
have a disproportionate effect on children. If the regulatory action 
meets both criteria, the Agency must evaluate the environmental health 
or safety effects of the planned rule on children, and explain why the 
planned regulation is preferable to other potentially effective and 
reasonably feasible alternatives considered by the Agency.
    This proposed rule relates to reconsideration of one aspect of the 
Phase 1 Rule to implement the 8-hour ozone NAAQS. For the same reasons 
stated with respect to the Phase 1 Rule, we do not believe the Rule, or 
this reconsideration notice, is subject to Executive Order 13045. The 
Phase 1 Rule implements a previously promulgated health based Federal 
standard, the 8-hour ozone NAAQS. 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 38855, 62 FR 38860 and 62 FR 38865).

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

    This rule is not a ``significant energy action'' as defined in 
Executive Order 13211, ``Actions Concerning Regulations 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 in implementing programs under the 8-hour 
ozone NAAQS is found in Chapter 6 of U.S. EPA 2003, 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 and Advancement Act

    Section 12(d) of the National Technology Transfer and Advancement 
Act of 1995 (NTTAA), Pub. L. 104-113, 12(d) (15 U.S.C. 272 note) 
directs EPA to use voluntary consensus standards in its regulatory 
activities unless to do so would be inconsistent with applicable law or 
otherwise impractical.
    Voluntary consensus standards are technical standards (for example, 
materials specifications, test methods, sampling procedures, and 
business practices) that are developed or adopted by voluntary 
consensus standards bodies. The NTTAA directs EPA to provide Congress, 
through OMB, explanations when the Agency decides not to use available 
and applicable voluntary consensus standards.
    Today's proposed rule does not involve technical standards. 
Therefore, EPA is not considering the use of any voluntary consensus 
standards.

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.
    The EPA concluded that the Phase 1 Rule should not raise any 
environmental justice issues; for the same reasons, the issues raised 
in this reconsideration notice 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.

VI. Statutory Authority

    The statutory authority for this action is provided by sections 
307(d)(7)(B), 101, 111, 114, 116, and 301 of the Act as amended (42 
U.S.C. 7401, 7411, 7414, 7416, and 7601). This notice is also subject 
to section 307(d) of the Act (42 U.S.C. 7407(d)).

List of Subjects in 40 CFR Part 51

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Nitrogen oxides, Ozone, Volatile organic 
compounds.

    Dated: March 25, 2005.
Jeffrey Holmstead,
Assistant Administrator for Office of Air and Radiation.
[FR Doc. 05-6630 Filed 4-1-05; 8:45 am]
BILLING CODE 6560-50-P